Sitting of 24 November 1914

Preamble
The House met at a quarter before Three of the clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Aberdeen Corporation Order Confirmation Bill,
Read a second time.

SUPERANNUATION ACT, 1887.
Copy presented of Treasury Minute, dated 17th November, 1914, granting a retiring allowance to Mrs. Sarah Katherine Storey, Salaried Sub-postmistress, Monasterevan, Portarlington, Post Office, under the Act [by Act]; to lie upon the Table.
COLONIAL REPORTS (ANNUAL).
Copy presented of Report. No. 819 (Trinidad and Tobago, Report for 1913–14) [by Command]; to lie upon the Table.

NEW WRITS.
For Londonderry City in the room of David Cleghorne Hogg, esquire, deceased.—[Mr. Illingworth.]
For King's County (Tullamore Division) in the room of Edmund Haviland-Burke, esquire, deceased.—[Mr. Patrick O'Brien.]
For County of Galway (East Galway Division) in the room of John Roche, esquire, deceased.—[Mr. Patrick O'Brien.]

ORAL ANSWERS TO QUESTIONS.
  WAR IN EUROPE.

    SPIRITUOUS LIQUORS (FRANCE AND RUSSIA).
    Mr. HOGGEasked the Secretary of State for Foreign Affairs, whether he can give the exact particulars of the Czar's
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    ukase with regard to the sale of spirituous liquors in Russia; and whether he can also give particulars with regard to France?
    The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Edward Grey): I have recently instructed His Majesty's representatives at Petrograd and Bordeaux to obtain for me particulars in regard to temperance reforms. As soon as these particulars reach me I will communicate with the hon. Member.

    WOMEN'S PATROL CORPS (SCOTLAND).
    Mr. DUNCAN MILLARasked the Secretary for Scotland, whether he will authorise the formation of a women's patrol corps in Scotland on the same lines as the corps which has been formed in England, so as to deal with cases of female offenders, especially in the neighbourhood of military camps?
    The LORD ADVOCATE (Mr. Munro) (for the Secretary for Scotland): My right hon. Friend is in communication with the promoters of this movement in Scotland, as well as with the military and naval authorities, as to proposed arrangements for women patrols.

    INTOXICATING LIQUOR (TEMPORARY RESTRICTION) ACT, 1914).—(APPLICATION IN SCOTLAND.)
    Mr. DUNCAN MILLARasked the Secretary for Scotland in what districts in Scotland the provisions of the Intoxicating Liquor (Temporary Restriction) Act, 1914, have been put into operation, and the hours during which licensed premises have been closed in each case under the powers conferred by Section 1 of the Act?
    Mr. MUNRO: Following recommendations under the Statute by the respective sheriffs, action has been taken by the Licensing Courts of Greenock and Dundee. In the case of Greenock the Licensing Court has directed that public-houses should be closed at 9 p.m., that sale for consumption off the premises should be stopped at 7 p.m., and that soldiers may be supplied with liquor for consumption on the premises between the hours of 5 p.m. and 8 p.m. In the case of Dundee the Licensing Court has directed that all licensed premises shall be closed at

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    9 p.m. A recommendation by the sheriff in regard to Gourock is under consideration by the Licensing Court of the burgh. The sheriff of Caithness. Orkney and Shetland reports that the licence-holders in Wick, Lybster, and Thurso under voluntary arrangement close their premises at 9 p.m., that licensed premises in Kirkwall are closed at 8 p.m. by order under the Defence of the Realm Regulations, and that by similar order the sale of liquor in Lerwick to naval and military forces is prohibited after 8 p.m.

    HERRINGS (EXPORT).
    Mr. FELLasked the Parliamentary Secretary to the Board of Agriculture if his attention has been called to the interpretation of the recent Order prohibiting the export of certain classes of herrings to Italy and Greece; if it was intended that such Order should apply to the case of smoked herrings which are consumed in those countries and not in Germany and Austria; if he is aware that several steamers with cargoes of these smoked herrings are now hung up in English ports, and losses are being incurred by the shippers in consequence of the interpretation put on the Order; and if he proposes to take any action in the matter?
    The PRESIDENT of the BOARD of TRADE (Mr. Runciman): The export of herrings of the character referred to is prohibited to certain European countries, including Italy and Greece, except under licence. Applications for licences can, however, be made through the usual channels, and where they relate to consignments of herrings specially cured for Mediterranean countries they will probably in the great majority of cases receive favourable consideration.
    Mr. FELL: May I ask if it is clear from the interpretation of the Order that smoked herrings from the Mediterranean markets will come under the Order?
    Mr. RUNCIMAN: It is intended that they should come under it.

    FREE MEDICAL ATTENDANCE AND DRUGS.
    Sir HENRY CRAIKasked the Secretary to the Board of Education, as Vice-Chairman of the Committee on the Provision of Free Medical Attendance and Drugs, when necessary to the dependants
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    of men serving with the Army, whether any arrangements have been arrived at to make use of the offer of the British Medical Association to provide free medical attendance to such dependants; and what arrangements have been made for the supply of the necessary medicines?
    The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Dr. Addison): The special committee set up for the purpose have prepared a scheme for utilising the generous offer of the British Medical Association and have issued instructions to local representative committees in England and Wales, together with a supply of special medical books for issue to suitable dependants of men serving with the Army or the Navy. The scheme is now in operation throughout England and Wales, except in a few areas where a local scheme had been adopted. The local arrangements vary, but, as a rule, the books, which are accepted as evidence of bona fides by doctors and chemists working under the scheme, are issued by the local representative committee, assisted by the Soldiers' and Sailors' Families Association. The scheme has also been brought into operation in Scotland, where it is being worked by the Soldiers' and Sailors' Families Association. The Pharmaceutical Society of Great Britain generously offered on behalf of their members to supply the necessary medicines and appliances at cost price. The cost price of medicines and appliances supplied under the scheme is being defrayed from a grant made out of the Prince of Wales's Fund. The work of checking and pricing prescriptions is being undertaken at considerable expense by the Pharmaceutical Society under a system approved and inspected by the committee.

    STEAMSHIP "AQUITANIA."
    Mr. WATTasked the First Lord of the Admiralty at what date the steamer "Aquitania" was launched and what date was ready for sea; what was the price reported to be paid for her by her owners; at what date was she taken over by the Government, and how much money was spent on gutting her out and fitting her for the Admiralty's work; is the Government under contract to replace the whole of the fittings, etc., taken out of her; and, if so, will he say what it is estimated such replacement will cost his Department?
    The PARLIAMENTARY SECRETARY to the BOARD of ADMIRALTY (Dr. Macnamara): The "Aquitania" was launched on the 21st April, 1913. She was ready for sea about 30th May, 1914, that being the date of starting her first voyage. The Admiralty have no knowledge of the price paid by the Cunard Company for the vessel. She was taken over by the Admiralty on the 31st July, 1914. The work of removing superfluous woodwork from the ship, and fitting her out for Admiralty purposes, was carried out by the Cunard Company, the figures of the actual cost not yet being available. Liability as to replacement of fittings, etc., is set forth in the agreement with the company, Command Paper, No. 1703, of 1903. Negotiations are now in progress with the company as to the extent of those liabilities.

    ADMIRALTY CLOTHING CONTRACTS.
    Mr. WATTasked the First Lord of the Admiralty whether his Department is at present giving out large orders for clothing; whether it refuses to deal with contractors who can supply only small quantities per week; whether he is aware that tailors in the large provincial cities are suffering from unemployment at the same time as the Government Departments cannot get delivery of clothes; and, if so, whether he will see that smaller makers get a fair share of the orders?
    Dr. MACNAMARA: The quantities of clothing for the Navy obtained from the trade have been considerably increased during the War. Orders have been placed with many firms, both large and small. Very close attention has been paid to representations received as to the existence of unemployment, and there is no intention of excluding small makers. In this connection, I may say, speaking of Admiralty contracts generally, that during the present emergency the Admiralty have availed themselves of the services of a large number of firms not previously on the list for orders of a non-confidential character, and that it is always open to firms to make application.
    Mr. WATT: Can the right hon. Gentleman say what is the definition of "small firm"?
    Dr. MACNAMARA: A firm which is not a large one.

    MERCHANT SHIPPING.
    Sir GEORGE TOULMINasked the Prime Minister whether he is aware that there is at the present moment a considerable demand for merchant shipping; and whether, in order to meet this demand, he can initiate steps for the prompt sale of all merchant ships prizes of war, thus enabling them to be utilised at once for the carriage of merchandise?
    Dr. MACNAMARA: There is a lack of shipping, and it would be to some extent relieved by the prompt sale of the prizes. The whole matter is receiving careful attention.

    NATURALISATION CERTIFICATES.
    Mr. BUTCHERasked the Secretary of State for the Home Department whether, in view of the fact that the Aliens Restriction Act, 1914, and the Regulations made thereunder have no application to naturalised Germans and Austrians, and that in some cases such persons are at least as dangerous to the State as non-naturalised Germans and Austrians, he will at once introduce legislation empowering the Secretary of State in all proper cases at his discretion, and not merely in cases of fraud or misrepresentation, to cancel the certificates of naturalisation of such persons or to suspend them during the period of the War so as to make these persons amenable to the provisions of the Aliens Restriction Act, 1914, and the Regulations made thereunder?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. McKenna): I have considered the proposal, which has been made very widely, that power should be taken to withdraw naturalisation certificates at discretion in the case of persons who are dangerous to the State. I think that, apart from any objection to the proposal in principle, as a matter of practice any circumstances of danger to the State which would justify the use of such a power would also afford sufficient ground for action against the individual in question under the very wide powers conferred by the present law—in particular the Defence of the Realm Acts.
    Mr. BUTCHER: Is it not desirable that, in cases such as those referred to, it should be possible to put in force the Regulations made under the Aliens Restriction Act? Without some such power is it not impossible to enforce those Regulations?
    Mr. McKENNA: As I understood his question, the hon. Member wishes to leave in the Home Secretary a discretion to suspend certificates. I very much doubt whether that discretion ought ever to be exercised unless there are circumstances of suspicion, and, if there are circumstances of suspicion, the person suspected can already be proceeded against under the law. It would be bad policy, I submit to the hon. and learned Member, to give a discretion to any Secretary of State which would enable him to supersede the law.

    STREET LIGHTING (LONDON).
    Mr. BOWERMANasked the Home Secretary if he will consider the desirability of advising the Admiralty authorities to considerably relax the existing stringent regulations governing the lighting of London's streets; and whether, in the interest of public safety, he will cause instructions to be issued to the proprietors and drivers of all mechanically-propelled vehicles whereby the speed at which such vehicles are driven through the streets at night may be materially reduced?
    Mr. McKENNA: In this matter I act on the advice of the Admiralty authorities, and in their opinion the existing regulations could not safely be relaxed at present. A warning has already been issued by the Commissioner of Police as to the necessity of driving with the utmost care through the dimly lighted streets, and I hope that the drivers of all vehicles will show a proper public spirit in complying very strictly with this injunction.
    Mr. BOWERMAN: Can the right hon. Gentleman say when that suggestion or instruction was issued?
    Mr. McKENNA: I could not give the date, but it was recently.
    Mr. BOWERMAN: I take it that the Home Office is alive to the importance of the matter?
    Mr. McKENNA: Yes. The Home Office is quite alive to it. I would remind my hon. Friend that in the recent figures which I gave it appeared that there had not been any increase of accidents in London owing to the restricted lighting.
    Colonel YATE: Has the speed limit in London been reduced at all?
    Mr. McKENNA: No. There has never been any speed limit in London streets except under the ordinary law.
    Colonel YATE: Would it not be a good occasion to fix a speed limit?
    Mr. McKENNA: The Commissioner of Police advises me that the enforcement of a speed limit in London is extremely difficult. His opinion is that it would be inadvisable to fix any speed limit other than that imposed by the ordinary law.

    IMPERIAL OTTOMAN ARSENALS COMPANY.
    Mr. KINGasked the President of the Board of Trade whether he is aware that the armament firms of Vickers and Armstrong have promoted the Imperial Ottoman Arsenals Company, a Turkish undertaking for supplying ships and munitions of war to an enemy State, and that these firms hold moneys advanced as debentures on the undertaking; and whether he will take steps to have moneys so advanced returned forthwith to the investors?
    Mr. RUNCIMAN: The trustees for the bondholders have already instituted proceedings for the purpose of obtaining the return of the money subscribed for bonds of the Imperial Ottoman Docks, Arsenals, and Naval Constructions Company. The matter is being dealt with by the Court, and is not one in which the Board of Trade can take action.

    NAVAL RESERVE (CLERKS' OVERTIME).
    Mr. GOLDSTONEasked the President of the Board of Trade whether he has now received the sanction of the Treasury for payment of extra overtime and Sunday duty performed by the clerks in the office of the Registrar-General of Shipping and Seamen who have been engaged, since the outbreak of the War, in connection with the mobilisation of the Royal Naval Reserves; and, if so, when payment will be made?
    Mr. RUNCIMAN: The sanction of the Treasury has been received, and arrangements for the payment of extra overtime and Sunday duty are now being made.

    RECRUITING.
    Mr. STEWARTasked the Under-Secretary for War how many recruits have enlisted in Ulster since the commencement of the War?
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): I would refer the hon. Member to the reply I gave to the hon. Member for Brentford on the 18th instant, and to the reply given to the hon. Member himself by my right hon. Friend the Prime Minister yesterday.
    Mr. HOGGEasked the Under-Secretary for War what has been done by the committee of officers, under the presidency of the Adjutant-General, in providing facilities for employing the leisure of recruits in our camps; and can he say what staff has already been appointed to meet the need?
    Mr. TENNANT: Arrangements are being made by the General Officer Commanding for lectures on hygiene and military subjects to be given by specially selected officers, among whom will be included officers returned from the scat of War. Most of the spare time will be thus occupied, but the General Officers Commanding are making arrangements locally for entertainment as and when the opportunity arises.

    COMMISSIONS TO GYMNASTIC INSTRUCTORS.
    Mr. NICHOLSONasked how many commissions have been given to gymnastic instructors since the War began; and whether it is intended to give any more commissions than the two already given to the musketry instructors at Hythe?
    Mr. TENNANT: Twelve commissions have been given to gymnastic instructors and six additional commissions are about to be given to musketry instructors at Hythe.

    ARMY CLOTHING.
    Mr. WATTasked the Under-Secretary of State for War whether his Department proposes to take the initiative in making arrangements whereby the tailors of large cities such as Glasgow, at present suffering severely from unemployment in that trade, will get a share of the large orders of the War Office, or whether his Department means to wait until the tailors
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    club together to supply sufficient quantity to be worth the attention of the clothing inspectors?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Harold Baker): Knowledge of local conditions should place local firms in a better position than the War Department for taking the initiative in this matter. In some places the trade is already being organised with a view to securing a share of War Office orders. The Department will be glad to receive any applications from representative bodies able to submit collective tenders on behalf of such firms.
    Mr. WATTasked the Under-Secretary for War whether the Scottish regiments at present stationed at Kettering have yet been paid the 7s. 6d. per man promised them for the loss to them of their own boots and clothing; and whether this sum is considered by his Department sufficient return in view of the length of time these regiments have been in training?
    Mr. BAKER: The payment of 7s. 6d. represents a daily rate to cover wear and tear of civilian clothing for a month. In cases where it is necessary to extend the period, the daily rate will be extended also up to a total limit of 15s. Inquiry is being made into the case of the Scottish regiments at Kettering.

    MILITARY HUTS.
    Mr. TYSON WILSONasked the Under-Secretary for War whether the sub-contract for the supply of materials in connection with the erection of huts by Mr. Randolph Meech, of Hamworthy, Poole, contains the Fair-Wages Clause; and whether he has yet received any reply from the two contractors concerned with regard to the complaint that the carpenters were not receiving the proper rate of wages?
    Mr. BAKER: Replies from the two contractors concerned show that the orders placed with Mr. R. Meech did not contain the Fair-Wages Clause. Instructions are being issued to all firms acting on behalf of the War Office that this Clause should be included in all contracts made by them. Mr. Meech has been asked for his remarks on the complaint, and directions have been given that pending a satisfactory explanation no further orders are to be placed with him.
    Mr. TYSON WILSON: Would the hon. Gentleman consider the advisability of appointing one or two ex-inspectors for the time being to see that the Fair-Wages Clause is observed?
    Mr. BAKER: I think that the Fair-Wages Clause is almost universally included. This happened to be a particular emergency order—over the counter, so to speak—and it was only for that reason that it was not in the contract. I doubt if there was a signed contract.

    BILLETING HORSES.
    Mr. FELLasked the Under-Secretary of State for War if his attention has been called to the sum paid to licence holders for billeting horses when compared with the sum paid to others for the same accommodation; if the sum of 1s. 9d. per day paid at present prices of feeding stuff does not represent a loss, why the ordinary rate of 2s. 7½d. for the same should not be paid to them; and if he will take steps in the matter?
    Mr. BAKER: The statutory rate of 1s. 9d. covers the cost of forage supplied by a licence holder. The position of a private occupier with regard to billeting is altogether different, and this is recognised by a higher rate.
    Mr. FELL: Is it suggested that it costs a licensed victualler 10½d. less to keep a horse than an ordinary individual; if that is not so, is this not an indirect war tax, in addition to the other taxes upon the licensed victualler?
    Mr. BAKER: No, Sir, I do not think that that is so. If the hon. Gentleman will put himself in the position of a private occupier I think he will see that that is not the case, as the billeting of the horses causes to the private occupier considerably more inconvenience, expense, and disturbance.

    TENDERS FOR FURNITURE.
    Mr. JOWETTasked the Financial Secretary to the War Office whether firms are being asked by the War Office to tender for furniture at dates on which it is impossible to do so, having regard to the time necessary for application to be made for specification forms through the post; and whether he proposes to take any action in the matter?
    Mr. BAKER: The proportion of replies to invitations to tender for furniture does not suggest that the time allowed has been insufficient for the preparation of tenders. The urgent need of securing early supplies renders it necessary to obtain tenders with the minimum of delay, but every effort is and will be made to allow as much time as possible for their return.

    RE-ENLISTMENT OF SOLDIERS.
    Mr. JOWETTasked the Financial Secretary to the War Office whether ex-soldiers who re-enlist are entitled to any extra rate of pay for which they had qualified during their previous service; and, if not, has he received complaints on the ground of unfair treatment of re-enlisted soldiers as compared with soldiers who have not served before?
    Mr. BAKER: Broadly speaking, the-rates on re-enlistment correspond to the old rates. I have not received any complaints. If my hon. Friend will give me particulars, I will have inquiry made.

    RE-ENLISTMENT OF SOLDIERS.

      Office of Works (Edinburgh Office).
      Mr. HOGGEasked the hon. Member for Dumfries, as representing the First Commissioner of Works, whether Mr. Oldrieve has now retired; what new arrangements have been made at the Edinburgh office; and in what different relationship it stands to the London office, if any?
      Mr. GULLAND (Lord of the Treasury): Mr. Oldrieve retired as from the 15th of September. The only new arrangements made have been the transfer of Holyrood Palace to the Ancient Monuments Branch. No change has been made in the relationship between the Edinburgh and London offices.
      Mr. HOGGEasked the hon. Member for Dumfries, as representing the First Commissioner of Works, whether any further steps are now being taken to proceed with the erection of new Government offices in Edinburgh?
      Mr. GULLAND: I understand the preliminary inquiries necessary in the case of a scheme of such importance are steadily proceeding.

      London Education Authority (Promotion of Teachers).
      Mr. KINGasked the President of the Board of Education whether he is aware that the London education authority selects a limited number of teachers for a promotion list, and debars all teachers not on the list from promotion in council schools, but consents to the appointment in non-provided schools of teachers who are not on the promotion list; whether he will state what are the qualifications which the London education authority requires in a candidate for admission to the promotion list; whether the Board of Education has approved these qualifications as fit and proper for teachers in council schools and as unnecessary for teachers in non-provided schools; and whether he will represent to the London education authority the desirability of treating all teachers and all schools equally?
      The PRESIDENT of the BOARD of EDUCATION (Mr. Pease): The principles on which a local education authority promotes teachers in council schools and consents to the appointment of teachers in voluntary schools are within their own discretion and the Board have no power to intervene in this matter unless a question arises between the local education authority and the managers of a voluntary school which requires determination under Section 7 (3) of the Act of 1902.
      Mr. KING: Has the right hon. Gentleman seen those regulations, and is he aware that they contravene at least the spirit of the Act of 1902?
      Mr. PEASE: I have no power to intervene, and I do not bear the regulations in memory at the present moment.

      Anglo-Portuguese Commercial Treaty.
      Mr. WATTasked the Secretary of State for Foreign Affairs whether the Anglo-Portuguese Commercial Treaty now before Parliament will solve the difficulty so long experienced by British motor-car manufacturers of getting these articles and parts thereof into Portugal on the same terms as French manufacturers under the Most-Favoured-Nation Clause?
      Sir E. GREY: The answer is in the affirmative, but the Treaty has not yet been ratified.

      Royal Dockyard Workers (Petition).
      Mr. BARNESasked the Secretary to the Admiralty if he has yet considered the
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      petition of the dockyard workers sent him last year, backed by deputations to the Admiralty in April last, and made the subject of Debate in the House of 27th July last; and, if so, will he say with what result?
      Dr. MACNAMARA: In dealing with this year's petitions I received a number of general deputations in London in April and May. Later I visited Haulbowline, Pembroke Dock, Devonport, Portsmouth, Chatham, Sheerness, and Dover, and received at those places some 300 deputations representing many classes and sections of the employés. When War broke out the work had not been completed. Since then, pressing duties have made it impossible for me either to complete my round of the naval establishments or to dissect the mass of evidence collected with the care necessary to the issue of properly considered decisions. Nor would it have been desirable, in the cases of the interviews not yet held, to detach the men in any numbers from their work for the purpose of coming before me. But I desire to assure the men that any decisions the Board may arrive at in regard to the petitions will, so far as their nature admits, have effect as if the present inevitable delay had not occurred. I should like also to take this occasion to thank the men, in the name of the Board, for the splendid way they have, in all the yards, played their part in this present emergency.
      Mr. BARNES: Can the right hon. Gentleman say approximately when he expects to translate those expressions into deeds?
      Dr. MACNAMARA: I cannot say. What I have said is that any delay now shall not prejudicially affect the men concerned.

ORDERS OF THE DAY.
  BILLS PRESENTED.
    POOR RELIEF (IRELAND) BILL.
    "To authorise the modification or repeal of Section nine of the Poor Relief (Ireland) Act, 1847, as respects certain Poor Law-unions in Ireland." Presented by Mr. BIRRELL; to be read a second time Tomorrow, and to be printed. [Bill 17.]
    NATIONAL INSURANCE (NAVY AND ARMY) BILL.
    "To amend Section forty-six of the National Insurance Act, 1911, as respects the present War." Presented by Dr. ADDISON; to be read a second time To-morrow, and to be printed. [Bill 18.]
    ROYAL MARINES BILL.
    "To extend the term of service of the Royal Marine Force during the present War." Presented by Dr. MACNAMARA; to be read a second time To-morrow, and to be printed. [Bill 19.]
    NAVY AND MARINES (WILLS) BILL.
    "To enable the Admiralty to dispense with compliance with the requirements of the Navy and Marines (Wills) Acts, 1865 and 1897, in the case of Seamen and Marines dying during or in consequence of the present War." Presented by Dr. MACNAMARA; to be read a second time To-morrow, and to be printed. [Bill 20.]
  WAR IN EUROPE.
    NAVAL AND MILITARY SERVICES.

      PENSIONS AND GRANTS (SELECT COMMITTEE).
      The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George): I beg to move, "That the Select Committee have leave to sit notwithstanding the adjournment of the House:
      That the Committee have leave to adjourn from place to place:
      That the Committee have leave to send their Report, if they think fit, and the House is not sitting, to the Clerk of the House, who shall thereupon give directions for the printing of the Report and its circulation, and shall lay the Report upon the Table of the House at its next meeting."
      Mr. BOOTH: May I ask whether this Committee has yet sat, whether it has elected a chairman, and whether there is any proposal to add any further members to the Committee?
      Mr. RAFFAN: Before this Resolution is agreed to there are one or two matters that it would be extremely useful if the Chancellor of the Exchequer would give some information to the House upon. A question of the greatest importance is whether or not this matter is to be treated as an administrative one, whether any decision arrived at by the Committee will come into force as a result of that decision, or whether it will come as a recommendation before the House, so that when a Report is presented the House will have an opportunity of reviewing the decision. Then it would be extremely convenient if the right hon. Gentleman could give us some information as to the nature of the evidence that the Committee propose to hear. Naturally the Committee will desire, in the first instance, that their sittings should not be unduly prolonged; on the other hand, that they should hear all interests which are entitled to be heard.
      It would be well that those who desire to give evidence should know what interpretation the Committee is likely to put upon this question of evidence. For instance, would the mayor of a town who has been engaged in the administration of relief, or the chairman of a relief committee—who might desire to make suggestions as to the manner in which the pensions and grants should be given—or in a colliery district would a colliery proprietor or a labour leader, who takes an interest in these matters, be entitled to come forward and say that the allowances are inadequate because of the wages earned by the men when they volunteered for the front? Assuming that these men would be heard, who on the Committee should be communicated with? The only other point I desire to mention is this: I observe that the Committee asks for leave to adjourn from place to place. Does that mean that the Committee may sit not merely in London, but in provincial centres? I understand that the answer to that question is in the negative. Well, then, may I inquire when the Committee will decide these points, so that those who consider they have useful evidence to present may have the opportunity of putting it before the Committee!
      Mr. LLOYD GEORGE: In reply to the hon. Member for Pontefract, I may say

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      that the Committee met yesterday and elected me as its chairman. In reply to the hon. Member for Leigh, I think it is rather premature to make any statement in regard to the nature of the evidence. The Committee have not come to any final conclusion, because they have not had an opportunity of going into the various questions presented for consideration. We shall begin first of all by taking the official evidence, and that will give the Committee a very good idea of the scope of the inquiry which they have been set up to prosecute. They will not decide finally what evidence they will reject until they have gone into the matter a little more fully than they have done at present. My hon. Friend will perceive that there is a very general desire that the Committee should come to a decision at the earliest possible moment because of administrative necessity. If every chairman of a relief committee were to appear, and give evidence, we should never come to an end of our inquiries, and meanwhile certain matters which are clamouring for decision would be postponed to the detriment of the Services in keeping alive an agitation which in itself is doing a lot of harm, apart from any particular grievances which are being ventilated. With regard to the question whether the Committee will report soon, I think that is the general desire. Their report will be in the nature of a recommendation from a Committee of the House of Commons to the Executive, and whatever they recommend the Government will give a decision immediately upon it, and not wait until Parliament again meets. We cannot possibly come to a decision this week, and therefore we want to have power to sit during the time the House is in suspense. With regard to the point about adjourning from place to place, unless we had those powers we should have to sit upstairs, which may not always be convenient, and it is necessary we should get the authority of Parliament in order to enable us to sit in places outside.
      Mr. J. WARD: There is one question I want to ask the right hon. Gentleman. He seemed to throw doubt upon whether the House would act upon the recommendation of the Committee. Is it not a fact that the Prime Minister has already told the House that it was the intention of the Government, in setting up the Committee, to immediately act upon its report?
      Mr. A. C. MORTON: Will the meetings of the Committee be open to the public?
      Mr. LLOYD GEORGE: I hope not.
      Mr. WARD: I must press the right hon. Gentleman for an answer. Reports of this kind are sometimes laid upon the Table and the result is that nothing is done until many days have expired. I should like to know whether the statement of the Prime Minister that the Government would take the recommendations of the Committee and act upon them holds good, or whether we are to understand that if the Government think fit they may delay the matter for fifty or sixty days by laying it on the Table?
      Mr. LLOYD GEORGE: The whole point of the Motion is that we should act upon the Report of the Committee at once. This Motion would not be necessary if we had to wait until the House again meets.
      Question put, and agreed to.

  MEMORIAL TO FIELD-MARSHAL EARL ROBERTS.
  Resolution reported,
  "That an humble Address be presented to His Majesty praying that His Majesty will give directions that a monument be erected at the public charge to the memory of the late Field-Marshal Earl Roberts, with an inscription expressing the admiration of this House for his illustrious military career and its gratitude for his devoted services to the State, and assuring His Majesty that this House will make good the expenses attending the same."
  Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.
  To be presented by Privy Councillors or Members of His Majesty's Household.

  GOVERNMENT WAR OBLIGATIONS BILL.
  Order for Second Reading read.
  Motion made, and Question proposed, "That the Bill be now read a second time."
  Sir HENRY DALZIEL: I should like to ask the Chancellor of the Exchequer

  953
  whether he is prepared to give us any information—I do not say immediately—but later on, as to the parties who are going to get advantage from this Bill? I understand that roughly, this Bill is divided into three portions. It gives the Government power to advance money to the Bank of England under certain guarantees; it also gives guarantees to traders on account of losses suffered owing to the War, and also under circumstances described in the Schedule of the Bill, and there is a special Clause in connection with loans made to members of the Stock Exchange. With regard to that the Government are taking very wide powers. They are taking powers to advance money, I suppose, to certain members of the Stock Exchange. I am not prepared to say that that is not necessary and in the public interest, but I think it is a legitimate request to make, that the Government should, in proper time, let the public know who are the firms that so benefit. I am sure the Chancellor of the Exchequer will have strict regard to economy in this matter, but it is due to the public to know who are the firms that get the benefit.
  Mr. LLOYD GEORGE: I would have made a statement upon the Second Reading, but I thought it would be much more convenient to do so on Thursday. I agree with my hon. Friend that there ought to be a full statement made to the House which would be a general summary of what we are doing in the form of guarantees to various interests. I agree with the desire expressed the other day that there should be discussion upon the subject. I think it is very desirable, because these guarantees are very novel in character, and I think the House is not merely entitled, but, if I may respectfully say so, it is the duty of the House to examine what has been done. I think it would be very much more convenient, subject to what the House thinks upon the matter, if this were done on Thursday rather than today, because there is a very heavy Agenda to-day, which will take probably the whole of the evening up to a late hour, and as the House would like to have a fairly ample discussion upon this subject, I suggest they should allow me to postpone my statement until Thursday, when all the points raised by my hon. Friend can be discussed.
  Sir H. DALZIEL: On what Motion would that be?
  Mr. LLOYD GEORGE: On the Motion for the Third Reading of this Bill.
  Sir H. DALZIEL: It would be too late for Committee then.
  Mr. BOOTH: I want to draw attention to a point which I think is a Second Reading point. In the title of the Bill the phrase is used "for the purposes of the present War," but when I turn to the operative Clauses—particularly the Insurance Clause—I do not find anything that limits it to the present War. It seems to me that with regard to insurance matters Clause 3 would be looked upon very differently if it was to be permanent from what it would be if it were only emergency legislation for the purposes of the War. I do not know whether it is an oversight in the drafting or not, but I find nothing in the Clause that corresponds with the title. The title seems definite. This may be a Committee point. Clause 3 is an important Clause so far as I am concerned. It relates to policies of insurance or reinsurance, and there is nothing in the Clause to show this is emergency legislation. It would be very unfair if insurance companies who had made deposits and paid their Stamp Duties and conformed to all the Government regulations should find themselves in competition with other firms not engaged in insurance at all. I submit as emergency legislation for the War this may do a good deal, but if it is to be permanent it would meet with a good deal of opposition.
  Mr. SPEAKER: The Clause to which the hon. Member refers deals with insurance against risk of the King's enemies. When the War has come to an end the King will have no enemies.
  Mr. BOOTH: I am very much obliged, Mr. Speaker, but contracts formed against the King's enemies may run for a considerable number of years after the War is over. My point is that I do not think the text of the Bill is as definite as the title of the Bill. I understood this was to be emergency legislation, and that words would be put in limiting it to the War or to some reasonable period after the War.
  Mr. HODGE: The House has been very generous to the Government with respect to War legislation, but it appears to me to be rather a tall order not to have an explanation of this Bill until Thursday. I would suggest to the right hon. Gentleman that if it is more convenient to him to postpone his statement, he should move the adjournment of the Second Reading until Thursday.
  Mr. LLOYD GEORGE: There, again, I am entirely in the hands of the House, and if the House prefers waiting for the statement on the Second Reading on Thursday—
  Mr. BOOTH: Why not?
  Mr. LLOYD GEORGE: Then there would be a good deal to be said for my hon. Friend's proposal. I have no objection at all to proceed at the present moment and to give a full explanation of the circumstances. I am sorry to say that it would take some time, and there are other matters we have to deal with now. Should anything arise in the course of the discussion which would make the House feel that there should be some Amendment of the Bill, we should consider on the Committee stage those particular points.
  Sir H. DALZIEL: May I suggest to the right hon. Gentleman that he should take the Committee stage at the end of the Second Reading discussion? I do not anticipate any Amendments of importance.
  Mr. LLOYD GEORGE: If the House will consent to the Second Reading being taken to-day, then the Committee stage might be taken to-day. I am only suggesting Thursday for the general discussion, for it is difficult to have the general discussion on the Committee stage, whereas on Thursday the House could range over the whole sphere of the action of the Government and criticise it in every detail.
  Question put, and agreed to.
  Bill read a second time, and committed to a Committee of the Whole House for to-morrow (Wednesday).

  CONSOLIDATED FUND (No. 1) BILL.
  Read, considered in Committee, and reported without Amendment; to be read the third time to-morrow (Wednesday).

  FINANCE BILL.
  Considered in Committee.
  [MR. WHITLEY in the Chair.]

  FINANCE BILL.

    CUSTOMS AND EXCISE.
    In lieu of the duty of Customs payable on tea imported into Great Britain and
    956
    Ireland there shall, as from the eighteenth day of November, nineteen hundred and fourteen, until the first day of July, nineteen hundred and fifteen, be charged, levied, and paid the following duty (that is to say):—
    Tea, the pound … eight pence
    Question, "That this Clause stand part of the Bill," put, and agreed to.

    CLAUSE 2.—(Addition to Customs Duties on Special Kinds of Beer.)
    (1) In addition to the duties of Customs payable on beer of the description called mum, spruce, or black beer, imported into Great Britain or Ireland, there shall, as from the eighteenth day of November, nineteen hundred and fourteen, be charged, levied, and paid the following duties (that is to say):—

    £

    s.

    d.

    For every thirty-six gallons of beer where the worts thereof are, or were before fermentation, of a specific gravity—

    Not exceeding one thousand two hundred and fifteen degrees

    3

    9

    0

    Exceeding one thousand two hundred and fifteen degrees

    4

    0

    10

    (2) This Section shall extend to Berlin white beer, and other preparations, whether fermented or not fermented, of a character similar to mum, spruce, or black beer.
    Question, "That the Clause stand part of the Bill," put, and agreed to.

    CLAUSE 3.—(Addition to Customs Duty on All Other Beer.)
    In addition to the duties of Customs payable on every description of beer (other than is specified in the last preceding Section) imported into Great Britain or Ireland, there shall, as from the eighteenth day of November, nineteen hundred and fourteen, be charged, levied, and paid the following duty (that is to say):—

    £

    s.

    d.

    For every thirty-six gallons where the worts thereof were before fermentation of a specific gravity of one thousand and fifty-five degrees

    0

    17

    3

    and there shall be allowed and paid in respect of all such beer a similar addition to the drawback granted on exportation, shipment for use as stores, or removal to the Isle of Man, by Section four of the Customs and Inland Revenue Act, 1881;
    And so as to both duty and drawback in proportion for any difference in gravity.
    Motion made, and Question proposed. "That the Clause stand part of the Bill."
    Mr. CHAMBERLAIN: Does the Chancellor of the Exchequer propose to make any statement in regard to this Clause?
    Mr. LLOYD GEORGE: I think I stated the last time I addressed the House on the subject of the Finance Bill that I was in communication with the brewing industry of the country and with the retail trade as well. The hon. Member opposite made a very moderate and powerful appeal to the House for the reconsideration of the duty on beer, and of the figure which the Government suggested to the House. I am not saying, without having considered the matter, that it is a very heavy increase in the duty which is imposed. I must say that the way in which the trade has accepted, I will not say the actual figures, but accepted the fact that they must be prepared to face an increase in taxation is a thing which is in itself a gratifying symptom of the present moment. They have not protested in the slightest degree against the imposition on their trade of a very heavy duty. They have protested against details and have made strong representations on the subject. They have submitted to the Government very detailed figures showing that if the figure were placed at 17s. 3d. it would be impossible for them, even with the addition of ½d. on the half-pint, to carry on their business without very severe loss, which would amount in many cases to difficulty, if not bankruptcy. The conclusion we came to was this. Supposing a new brewery were started at the present moment and adapted itself to the diminution in the quantity of beer which will be consumed, we think that the 17s. 3d. imposed by the Government would enable them not merely to pay the duty, but also to have a reasonable margin of profit. But that is not quite the case here. You are dealing with a trade which has its own establishment—an establishment which is adapted to the present rate of consumption. With the compulsory curtailment of the hours of labour and the removal from Great Britain of a very considerable number of people who might fairly be regarded as probable customers, and also with the inevitable reduction in the consumption which will be effected, we came to the conclusion that it might be impossible for the trade for a year or two or even three years, to adapt
    958
    itself immediately to the demand upon it in these circumstances. Therefore, although we think 17s. 3d. a perfectly fair thing as a standard, there ought to be some relief granted for the first three years on the amount of the charge, so as to give the trade time to cut down its establishment charges, to effect economies, and generally to put itself in a position to adapt itself to such an enormous increase upon its charges. The proposal which we make is this: We stand by the 17s. 3d. duty per barrel, but we propose that up to 31st March, 1916, there should be a rebate of 2s. per barrel and that the actual charge should be 15s. 3d., that after 31st March, 1916, and up to 31st March, 1917, there should be a rebate of 1s., and that after that date the full duty of 17s. 3d. should apply. This should give the trade the necessary time to adapt itself to the new condition which is undoubtedly imposed upon it by this enormously increased duty. I am bound to say that the right hon. Gentleman opposite (Mr. Chamberlain) thinks that we ought to go further and make a little more liberal and generous allowance. If we did that, we should be unfair not merely to the general tax payer, but also to the general public who are paying this ½d.
    I think the trade are entitled, as a whole, to ask that the Government should impose the duty upon them in such a way as not to inflict a serious injury upon their business. This is not a temperance proposal; it is a fiscal proposal for the purpose of raising money for the War, and we are bound to consider it from that point of view. I have considered it exclusively from that point of view: as an instrument for the raising of money for the purposes of the War. I have set before myself as an object that this money ought to be raised without inflicting any unfairness upon the trade itself and without doing any injury to it that we can possibly avoid. Of course, the reduction in consumption is bound also to diminish profits. That is in the nature of every tax upon commodities of any sort or kind. That we cannot avoid, but within those limits it is right that the Government should be called upon to consider this problem from the point of view of imposing a charge merely for fiscal purposes, and they ought to do it with the least possible injury to the particular trade upon which they are imposing the duty. I am sorry the right hon. Gentleman does not think that we have gone quite far enough, but I think we shall find on the whole that the

    959
    trade will not suffer very much from this imposition. There will undoubtedly be a reduction in consumption which will not be due to this charge.
    Sir G. YOUNGER: There has already been a very large reduction.
    Mr. LLOYD GEORGE: Not very large. There has undoubtedly been some reduction in the amount consumed which is attributable to the curtailment of the hours of business, but I am not sure that the public will not gradually accommodate itself to the change of hours. The removal of one or two million men across the seas within the next twelve months will also undoubtedly have an effect. The Government are not responsible to make up that loss, and I do not think that it ought to be taken into account; but when you come to a reduction that can be directly attributable to the tax of between 30 and 50 per cent., then, I think, the trade are entitled to ask us to impose it in such a form as not to do any injustice to their business, and not to do any severe damage to them. That is the point of view from which we have approached the matter. I might give one or two figures on this occasion. It is a very difficult duty to adjust, because the charge, as the Committee will realise, is not a charge upon the actual barrel. If you said, "Here is a barrel of beer, we will charge 25s. upon it," it would be a very easy matter. But the barrel of beer for duty purposes is purely an abstraction. It is something which is called "a standard barrel," the standard barrel being a question of gravity, and not of bulk. You have got in every barrel of beer 288 pints, but for business purposes you have only 272 pints—16 are waste in some shape or another. It is lost by the publican when he transfers the beer from the barrel to the pewter. Then you have the dregs as well. Yon have eight pints of dregs and eight pints of waste. Therefore the publican has for sale 272 pints. That has to be taken into account when you are fixing your duty. The standard barrel of beer is a 55 degree beer. That is not drunk by the public as a general rule, except in Ireland. They like to get it really good, solid, thick, and stimulating, and it is mostly drunk there in the form of stout. I do not think there is very much beer in the ordinary sense drank there. Stout is beer for the purposes of taxation, luckily. In Scotland I am told the average is about 47 degrees.
    Sir G. YOUNGER: I thought it was higher.
    Mr. LLOYD GEORGE: I am told it is 47.
    Sir G. YOUNGER: Then it has gone down.
    Mr. LLOYD GEORGE: This is the information I got only this morning. The average in England is about 51 degrees, but that includes all classes of beer. It includes your bottle beer and also your lager beer. There is a very great difference in the taxation according to the gravity of the beer itself. A 55 degree beer would pay the full 25s. They like to have something really stimulating in the right hon. Gentleman's constituency, and they drink beer of very strong gravity in the Midlands. I do not think they do so in the hon. and learned Member's (Mr. Harold Smith's) constituency. They rather like it light Take the 55 degree beer. There you pay the full 25s. Take the average beer for the whole of England. They pay 23s. 6d. What does that mean? They pay on a barrel of average beer something like 1s. 6d. less than the charge we are imposing. All that, from the trade point of view, is a kind of margin created for the purpose of enabling the brewer and the publican to tide over their difficulties. But you take the cheap light beer which is sold sometimes in London and in the Home Counties, and I am not at all sure that it is not sold very largely in the West. That is a 41 degree beer. There, instead of paying 25s. on your barrel, you pay 18s. 7½d. roughly. That shows how difficult it is to adjust this tax. A brewer who is selling the 41 degree beer will get 6s. 5d. in the gravity to begin with, and we are allowing another 5s.
    Sir G. YOUNGER: He sells the beer cheaper.
    Mr. LLOYD GEORGE: That is a false point, and I am very surprised that the hon. Baronet should make it. The publican charges a halfpenny per half pint in respect of that particular transaction, and a halfpenny on a barrel is 22s. 8d.
    Sir G. YOUNGER: No—
    Mr. LLOYD GEORGE: If the hon. Baronet will allow me, I will finish my argument. He can answer me afterwards. A halfpenny a half pint is 22s. 8d. per barrel. We are charging 17s. 3d., so there is 5s. 5d. to enable the publican to adapt

    961
    himself to the diminution of business. I agree it is not enough upon all gravities, but on the lower gravities he gets not merely 5s. 5d. but also 7s., which is given in in the difference of gravity, and it ought to enable him at any rate to get along very well by charging the extra halfpenny. The House of Commons has drawn this distinction between the heavy and lighter beers, because it wants to encourage the trade in lighter beers, and I should be sorry to take away the financial inducement we are now offering to publicans to push the lighter beer rather than the heavier one. That is why, instead of altering the charge on gravity, we thought it better to make an allowance for the first two or three years to enable the publican to adapt himself to the altered conditions. I understand there will be a new Clause moved to-night, and in it we shall provide for a rebate of 2s. per barrel up to the 31st March, 1916, and a rebate of 1s. per barrel up to the 31st March, 1917. Having regard to the fact that both brewers and publicans have stocks in hand upon which they are charging the extra halfpenny at the present moment—
    Mr. JOHN WARD: In the same way as the grocers are charging the extra duty on tea.
    Mr. LLOYD GEORGE: Having regard to these facts, I think the concession made by the Government ought to enable the trade to bear this additional charge without serious injury.
    Sir W. ESSEX: Can the right hon. Gentleman say at what he estimates the cost of this concession?
    Mr. LLOYD GEORGE: About £450,000 for the present year, and between £3,000,000 and £4,000,000 for the three years.
    Mr. CHAMBERLAIN: I had hoped I should have been able to dispense with the necessity of making any observations as to whether or not I exactly agreed with this provision, but I am afraid I must occupy the time of the Committee, although I will not keep it very long, in explaining my position. As I came into the House this afternoon, I met an hon. Friend who suggested that I was occupying a very awkward position at the present time, and I am inclined to agree with that. At this moment I do not know whether I have to resign from the Cabinet of which I am not a Member. I am afraid I have to do so. In other words, I find
    962
    myself so much divided in opinion from the Chancellor of the Exchequer that I cannot, by my silence, take any responsibility for the decision of which the Government has arrived. I desire at once to say that, in the confidential conversations which I have had with the Chancellor of the Exchequer and his colleagues since I was invited to discuss the details of the Budget with the right hon. Gentleman, I can make no complaint whatever of the spirit in which he has approached the questions with which we have had to deal. I am not merely ready, but I am desirous to admit that he has looked at the questions which came before him as revenue questions pure and simple, and has not allowed himself to diverge towards any ulterior objects which might have had a place in other Budgets, but which clearly ought to be excluded from an emergency Budget of this kind. It is not therefore of the spirit of the Chancellor of the Exchequer or of the purpose to which he has set himself that I complain.
    But I differ from the judgment which he has formed. I think that the burden which he thinks he can appropriately place on the trade to correspond with the increase of a ½d on the half-pint of the consumer is heavier than the trade can fairly be asked to bear. At this stage I may just say, in passing, that I recognise, as the Committee must have recognised, that when I accepted the invitation of the Chancellor of the Exchequer to confer with him and his colleagues privately on these matters I forwent the ordinary freedom of criticism, because it is not possible at one moment to be in the most confidential discussion with a Minister and then to play your part in debate as if nothing had passed between you. Therefore I am not going to make an elaborate argument such as I might have presented to the Committee under other circumstances. If I did so, I should necessarily base myself in part on facts which came to my knowledge owing to my collaboration with the right hon. Gentleman, although in the majority of cases, certainly, they would no doubt have been available to me if I had never been called into consultation at all and had sought to obtain them for myself. At the same time I realise that limits are placed on my action by the fact that I did enter into the consultations, and I think the House will understand my desire to keep well within those limitations, rather than to

    963
    run any risk of transgression. I can quite understand a great many people making a simple arithmetical calculation as to the number of half-pints in a standard barrel on which duty will be charged, and the additional number of half-pints which there are in an average barrel as such, and supposing that the trade, either in the shape of the brewer or the publican, had the whole of the addition. That is not so. Even if there is a general rise of a ½d. on the half-pint, it does not follow that every half-pint that is sold will carry the extra ½d. with it. When you sell a half-pint only I think it will, but when you sell by the gallon or the jug probably something of the ½d. will be given back in increased measure. If the order is large enough, some of the extra halfpennies may be taken off.
    Mr. CHANCELLOR: What about the glass which is less than a half-pint.
    4.0 P.M.
    Mr. CHAMBERLAIN: If the hon. Member studies the trade he will find that a very small part of the trade in workmen's beer is done by the glass. It is usually sold by the half-pint. But for the purpose of the discussion of this tax I really think we should only confuse our minds by going into that question. At any rate I want to keep to very simple facts. How much of that ½d. the trade will be able to get, and on how many of the half-pints in the barrel the trade will be able to get the additional ½d. is a thing nobody, not even a brewer himself, can say at the present time with absolute certainty. He will not get the whole of it, and he will not get anything that you can prove or any result that you can arrive at by a purely mathematical calculation. The effect of raising the price will be, undoubtedly, to give a great shock to the consumption and cause a great fall in the consumption. At the moment, in my opinion, the fall will be very heavy. It will tend in the course of succeeding months and years to recover, but it will not get back to the point where it was before the additional duty was imposed. That is the reason for a sliding scale, such as the Chancellor of the Exchequer has proposed, and I am glad that he has at any rate gone that far. I want the Committee to consider for a moment what the effect of such a reduction of consumption is upon the brewers' profits. People sometimes
    964
    speak and argue as if it were the case that if you reduce the sale from four barrels to three you reduce the profits in the same proportion. That is not so. I am going to take a purely imaginary figure, which has no relation to the facts, merely in order to illustrate my argument. Having asked the Committee to bear in mind that the object set before us by the Chancellor of the Exchequer is, as far as this tax is concerned, to leave the profit to the trader as little altered as possible—he wants the publican and the brewer to get out of the increased price such a sum as will pay them their old profits, if they are reasonable and average traders, and will enable them to pay him the increased duty that he asks—I ask the Committee to look at the case I am imagining. Suppose you sold four barrels of beer at a profit of 5s. each, you made a profit of 20s. on the four barrels. Suppose that the result of your tax alone, without the other circumstances to which the Chancellor of the Exchequer alluded, is to reduce the consumption by one-quarter, then instead of selling four barrels you will sell three. Suppose you make the old profit on them, are you as well off? Of course you are not. Your total profit is then 5s. on each of the three barrels, or 15s. in place of the 20s. Accordingly, if you want to make the man as well off as he was before, you have to enable him now, when he sells only three barrels, to make the same total profit on the three barrels that he previously made on the four barrels. In other words, subject to one consideration, in order to make the three barrels produce the same profit of 20s. that was produced by the four barrels, he must make a profit on each barrel of 6s. 8d. instead of 5s.
    It may be asked are there no reductions he can make in his expenditure. What deductions can he make? It is an extremely difficult figure to arrive at. The Chancellor of the Exchequer has said, and I fully bear out what he said, that representative brewers placed before us with great candour and fairness figures drawn from their own experience—the kind of figures which in ordinary circumstances are the secret of the partners in a business and revealed to nobody else. Even with the aid of those figures it is extraordinarily difficult to arrive at any result. No man of business experience will pretend that in any business it is possible to reduce your standing charges in the same proportion as that in which your turnover is reduced. It is true that if you equip a new brewery,

    965
    with a knowledge of all the new conditions, so that it shall be made to turn out just the amount of trade you can do, you can work on the most economical figure. But when you take a brewery equipped and started to turn out 100 units and if to-morrow your trade drops from 100 units to 75 units, you cannot cut down expenses in the same proportion or in anything like the same proportion. Those are very important factors. If you examined the different brewers and if they told you exactly what they believed, you would get different results and different estimates from each of them, partly according to the nature of their trade, and partly according to their own expectations of what the course of the trade generally would be. It is impossible for any of us to pretend to make such calculations accurately. Anyone who has not examined all these questions carefully is not in a position to form an estimate of what the trade can afford to do at all, and the mere fact that you say you are going to add ½d. to the half-pint to the consumer is absolutely no guide, without a detailed examination of all these factors of the tax, as to whether it would be fair to the brewer.
    I do not suppose the Chancellor of the Exchequer will mind my saying that I think probably he has given away a little more than he would have done if he had never been in conference. He might have come without my assistance to exactly the same decision. At any rate, I am not prepared to say that he refused, and he certainly did not refuse, me a hearing, and I am not prepared to say that he refused me any concessions. That being so, I do not want to say what is the further concession for which I should ask, or what is the figure I myself would have selected on such information as was available. I do not think it would serve any public purpose. I am quite ready to state it to the Chancellor of the Exchequer, but I do not think it is necessary for me to state it here. But I do have to say that, in my opinion, the margin allowed for these circumstances which I have been attempting to sketch to the Committee is not sufficient, and that I cannot assume personal responsibility, even in the way I might otherwise have done, and do, in regard to some other matters in the Budget, subject to the limitations imposed upon me. Considering these circumstances, I cannot assume personal responsibility for the result, even as a compromise. That is all that it is
    966
    necessary for me to say in personal explanation. I hope it will not be necessary for me, under all the circumstances, to take any part in the discussion to which the Chancellor of the Exchequer's proposal gives rise.
    There is, however, one general observation I should like to add. The Chancellor of the Exchequer spoke of this tax as a War Tax. So it is. But that is a phrase which is open to misunderstanding, and a misunderstanding which might be dangerous. All the new taxes which the Chancellor of the Exchequer is now putting on is war taxation, but if anybody thinks that all of it can come off when the War ends, or even three months or six months or twelve months after the close of the War, they are making a great mistake. However high the yield of the taxation is during the War, it will be but a small fraction of the liabilities which will be maturing during the War, even should the rest of them be met by a loan. After the War is over, there will be gradually, for a term of years, other liabilities maturing under the guarantees which the Government have had to give, and which will form the subject of discussion in the Bill dealing with guarantees to-morrow. For a generation—it may be for two generations—we shall still be paying part of the cost of this War, and therefore you must not put on a tax under the impression that, after all, it is only going to last for a year or two years, and therefore it does not very much matter. You have got to bear in mind that huge additional resources will be required for many years after peace has been made. I do not mean to say that we may not in time look forward to some reduction in our burden; but the man would be rash indeed who, at the present stage of the War, before we are in sight of peace, counted upon such reduction in armaments as a result of this War as would enable him to counterbalance to any considerable degree the enormous additional burden caused by the War itself. That is a factor which ought to be impressed upon our countrymen at once, because, while it is right that they should make this great sacrifice now, it is not right that we should delude them into believing that they are making it only momentarily. They have got to bear it for many years, and they have got to be as stubborn in bearing their burden as the men in the trenches are stubborn in bearing theirs. That is germane to the appeal I should have made to the Chancellor of

    967
    the Exchequer for greater indulgence at the moment. If these duties were only to remain in force for a short time, if within a few months of the close of the War the whole of the taxes would come off and the ½d. charged to the consumer would come off, the right hon. Gentleman might say, "I must get the last farthing I can." I do not say that has been the attitude of the Chancellor of the Exchequer on the point, but a Minister or Members of the House might say we must make hay while the sun shines. What the taxes will produce during the War is only a small part of what they will have to produce in the long years after the War, and it is far more important, to my mind, to bring them into operation without economical hardship and friction. It is far less dangerous to drop a little money at the beginning than to produce a sense of injustice, and it would be a wise policy for the House of Commons, in imposing such large burdens, either on Income Tax payers or on traders, to be very generous in the inception, and to make up their minds that the more smoothly they can set their taxes to work the larger will be the revenue that in the long run they will get out of them.
    Mr. SHERWELL: I should like to follow the spirit and attitude of the right hon. Gentleman (Mr. Chamberlain) in discussing what we must all regard as essentially a very important fiscal question. I am sure that in no part of the Committee will the right hon. Gentleman's spirit and attitude be more appreciated than by those who sit on these Benches. I listened with very special relief to the announcement which the Chancellor of the Exchequer made a few moments ago. Like all, I suppose, who have attempted to grasp any of those intricacies connected with this question to which the Chancellor of the Exchequer referred, I must frankly say I felt when the right hon. Gentleman put forth his original proposal that he was pressing the trade further than it could be fairly be called upon to bear the burden, and that consideration was the more important because I thoroughly appreciate the spirit in which the Chancellor of the Exchequer has approached this matter from a desire to treat it and judge it on purely fiscal grounds, and not from any propagandist or temperance point of view. I will not say that the Chancellor of the Exchequer
    968
    has fully met my misgivings in the concession which he has just announced. He has said, very properly, that if he went further in the way of concessions he might be doing an injustice to the taxpayer himself. When the Government puts forward a proposal which, by its very nature, has for one of its consequences a very great burden upon trade, and if the Chancellor of the Exchequer proposes a tax upon a particular trade which inevitably, in the very nature of things, tends to reduce the volume and measure of the trade done by that industry, he is bound to have some regard to the consequences which make themselves apparent in the reduction of the volume of trade.
    Another point that has to be considered is that by the very nature of our fiscal system, and by the Exchequer demands which require that duty shall be paid by a particular industry on a particular date, you inevitably create in regard to this particular industry a necessity for a large volume of what I may call floating capital by which the Treasury itself may be advanced the amount of money which otherwise it might, in the ordinary processes of trade, have to wait a very considerable period for, and we must never lose sight of the fact in regard to this particular proposal that the State fixes a limit to the period within which the duty must be paid, whereas the trade itself on its part has to provide a much longer period of credit for its customers in that trade. But I am inclined to think, on reflection, while personally I should desire that the Chancellor of the Exchequer could have seen his way to extend the provisional period a little longer still, the trade will find a material benefit and advantage from the proposal which the Chancellor of the Exchequer has made. After all, the real injustice which the original proposal placed upon the trade was that the Chancellor of the Exchequer was calling for the advance of a considerable sum of money in the form of a duty which the brewer had no possible chance of getting back from his customers except within a much longer period. It seems to me that one inevitable consequence of this new proposal which the right hon. Gentleman has made will be that in the transitional period the trade may be able to accommodate itself to the altered conditions by revising the credit period which at present the brewers allow to their customers. I imagine that if the brewing industry can take into reconsideration the

    969
    period of trade credit they may very considerably soften for themselves the pressure of this new tax even when the transitional period has passed.
    But, after all, the real disadvantage of this, as of all kindred proposals, is the inevitable inequality of incidence which is bound up in them. The Chancellor of the Exchequer has said that he is seeking by this tax—and that may possibly be within limits one of its indirect results—to give an advantage to the brewers of the lighter beers. I am not quite sure that that is the best way to bring about equality. I have long held that in reference to taxation, both of beer and spirits and all excisable liquors, a much more thorough and simple as well as scientific plan would be to tax these products according to their alcoholic strength. Throughout the Continent in recent years there has been an increasing tendency to tax beer according to its alcoholic strength—to divide the products of beer into certain categories according to alcoholic strength and tax them relatively to their alcoholic strength—but I believe, and I sincerely hope, that the time will come, when the pressure of this war taxation has passed, when the Treasury and the Inland Revenue may have time to reconsider the whole basis of our taxation of the liquor trade, both in reference to the Excise product and the manufactured product and the Licence Duty, and seek for a basis of taxation which will be more free from the inequalities which now attach to the existing system than is the case at present. But, on the whole, I confess to a sense of distinct relief at the concession which the right hon. Gentleman has announced this afternoon, and I hope and believe that the trade may, in the transitional period, by altering their period of trade credit, adapt themselves to the increased taxation.
    Sir G. YOUNGER: I should like to thank the hon. Member for the extremely able and temperate way in which he has dealt with the Chancellor of the Exchequer's statement. His speech shows his very intimate knowledge with the question. I endeavoured the other day to make a certain number of points which the hon. Member has now reasserted, and I shall adhere to the position I then took up, that the right hon. Gentleman has not anything like discovered the enormous effect his new taxation is going to have on the pockets of the publican, not arising altogether from the existing circumstances,
    970
    but arising in a very great measure, as I am sorry to see from telegrams which have just been sent to me, from the objection which the public has to any extra cost being put on its drink. We know what happened when the Whisky Tax was increased, and I am sorry to say the very same thing is happening apparently in England owing to the increase in the price of beer. These telegrams are addressed, not to me, but to the National Trade Defence Association, in Queen Anne's Chambers. They come from Portsmouth, and they say that already the customers there are avoiding beer, and the drop in sales is from 50 to 64 per cent. That, I earnestly hope, is not going to continue and I am not going to make any point about it. I hope that feeling will vanish before long and that there may be some moderate return, though there cannot possibly be an entire return to the original sales. For my own part, and on behalf of those who saw the Chancellor of the Exchequer, I have to thank him for the very kindly way in which he heard what we said, and the careful way in which he no doubt had gone into the figures. They were very striking figures. They bear out, I should think, in every case what I said to the House last Thursday. In some cases they went far beyond the figures I gave and the statements I made about the effect of this reduction. In some cases they were positively alarming, and I think the right hon. Gentleman will admit that if his calculation of the drop is borne out—35 per cent. of loss in sales—one or two very important concerns will cease to pay very much interest on their capital. The figure which the Chancellor of the Exchequer has fixed today for the first year is beyond the limit of these particular people to meet, and still continue to make a profit on their trade.
    I am in the position of not being able to do anything more than accept the decision of the Government. I deplore it. I think it is an unfortunate decision. I think with the hon. Member (Mr. Sherwell) that the limit has been placed too high and that a lower limit ought to have been fixed. This is a case in which you should not adopt the usual practice. The usual practice in ordinary circumstances, I understand, is to take the highest possible figure, and say, "if I find my calculations are wrong, if I am hurting you or anything of that kind, I have a revising Budget in April next and shall reduce it if

    971
    you satisfy me that you are unable to bear the burden, which I had no intention of imposing on you." That in ordinary circumstances would be quite a proper course to take, but I do not think the circumstances are ordinary. I do not think anyone can calculate what the effect of the tax is going to be. We are harassed, and have to face difficulties of every sort and kind. The navigation of our rivers is stopped and extra railway charges in consequence have to be paid. In my own case the navigation of the Forth has been stopped, and instead of being able to send our product by steam we shall have to send it by rail at an extra charge of 2s. 6d. per barrel. That is a matter that should be taken into account. It is no fault of ours. We are absolutely shut out from the use of what has been our waterway all these years, and that is a very important factor in our business. At the moment, therefore, the right hon. Gentleman ought not to take the course I have indicated, but ought to begin at the lowest point of the scale, and if it is found in April or at the time of the next Budget that too large an allowance has been made, and too big a margin left, I shall be most happy that he shall increase it. That is the real way to deal with the situation.
    He has rather taken too high a figure in his last figure of 15s. 3d. Whether the trade will ever be able to pay 16s. 3d. or 17s. 3d. remains to be seen. I dare say he will be open to argument about that. He does not want to penalise us, and I am sure he will treat us fairly and honestly, but he is putting a heavy burden, quite unintentionally, which I do not think the trade can possibly bear. I do not know whether he is in a position to make any alteration in his proposal. I do not know whether the Government has finally decided, if so, I shall leave it at that; but I should like to ask him one or two questions. First of all, he has made no provision whatever for granting a rebate of duty on faulty beer or returned beer? He is not dealing with spirits. He is not dealing with a stable article, but with an article which is extremely difficult to manufacture, and however careful you are and whatever care you may take in the selection of your materials, a little difficulty in fermentation may produce a beer which is unsaleable. That beer cannot be sent out, and if it is, it is very likely returned. When it is returned another barrel has to be
    972
    brewed to make it good. Of course the man loses his character and all that, but the revenue does not lose by it. The beer is not consumed, and it is replaced by another cask which can be consumed. There is no provision to make any allowance for beer returned, and that is a terrible burden on the trade. Two per cent. or 3 per cent. is about the average of returned beer in the best regulated brewery. Under these circumstances to lose 5s. or 6s. a barrel is one thing, but when it comes to losing 24s. it is perfectly impossible. I shall press the right hon. Gentleman to introduce a Clause into the Bill to deal with that question. I have brought it before him myself, and I know his advisors have mentioned it, and I beg him to consider it in a favourable way. There is another point I should like to ask him whether he has considered. I do not know whether he thinks Clause 7 would protect his revenue against an increase of brewing at home. Of course, if home brewing is to be restricted to an article only containing 16 degrees of alcohol my hon. Friend (Mr. Leif Jones) may safely drink it, because it would be rather weaker than the stone ginger beer, which I was once told he rather affected.
    Mr. LEIF JONES: I have avoided it since the hon. Baronet warned me against it.
    Sir G. YOUNGER: I am sorry for that, because the hon. Member must have seriously disappointed his palate. If that is intended to produce revenue it is all right, but if the Chancellor of the Exchequer is going to put a heavy duty like this on beer he will largely encourage the manufacture of home beer and very seriously reduce his revenue, and very likely increase smuggling. My right hon. Friend has already challenged the Chancellor of the Exchequer upon his statement that this is a War Tax. I am certain that if this price of beer is established permanently there will also be that permanently established tax—of course in proper relation to the income. Therefore it is all the more important that you should not make a start of this kind without endeavouring to construct the new proposal, not on revolutionary but upon reasonable lines. As to what has been said about the profits upon the large stocks of beer in hand before the imposition of the extra duty, it has been said that very large profits are going to be made by the brewers. I should like to tell the House what is happening

    973
    Scotland. Reference has been made to certain stocks held by brewers in Scotland, but I can say, speaking from my own experience, that every gallon of that stock was cleared by customers at the old price and not a shilling extra profit will be made by myself or by anyone else.
    Mr. LLOYD GEORGE: I did not specially say that it would come to the brewer, but to the trade, and in the case which the hon. Baronet has mentioned it goes to the trade.
    Sir G. YOUNGER: It will, of course, be a plum to the retailer, and he thoroughly needs it. I only wish to make it clear that these people should be treated perfectly fairly, and no unfair attempt should be made to obtain any benefit out of the increased duty. I have nothing more to say, except to thank the Chancellor of the Exchequer for what he has said, although I am not altogether satisfied with his statement. I still believe that if he honestly intends, as I am sure he does, to carry out this revolution in the trade without penalising anyone, and if we can show him by actual experience that he is penalising the trade, he will put the matter right in the future.
    Mr. J. H. THOMAS: I am sure we all appreciate the spirit in which this Debate is being conducted, and I am not desirous of discussing this question from a temperance standpoint. The hon. Member for Ayr Burghs (Sir G. Younger) has read a telegram to the House which indicates that a serious decrease has taken place in the sale of beer, and will continue. The hon. Baronet regrets this, and that is the only difference I have with him. Incidentally I might say that I should like to alleviate the anxiety of the hon. Baronet, but, judging from our experience in the past, I feel sure that if the Chancellor of the Exchequer had come here to-day and made his proposal 10s. 3d., the hon. Baronet opposite would have got up and said that it was too much.
    Sir G. YOUNGER: No. I think the Chancellor of the Exchequer will confirm me when I say that I mentioned a higher figure than 10s. 3d.
    Mr. THOMAS: Some hon. Members have been at great pains to point out that if any further burdens are placed upon the trade it will be done for, and I was judging the hon. Baronet's remarks from that point of view. I congratulate the hon. Baronet upon having succeeded in
    974
    taking £3,000,000 from the Chancellor of the Exchequer's Budget. The primary point I wish to deal with is to try and show that this is one of the clearest illustrations of the unfair methods of indirect taxation. In the two taxes which were primarily intended to deal with the poor man, namely, the Tea Duty and the Beer Duty, immediately 3d. is put on tea the poor people are charged 1d. extra for a quarter of a pound, and if they buy a few ounces of tea the proportion is more. Consequently, whilst the Chancellor of the Exchequer gets 3d. per pound on tea the poor people are paying 4d. extra in taxation. In the particular case we are dealing with, and taking the figures of the Chancellor of the Exchequer himself, it works out something like this: The right hon. Gentleman gets 15s. 3d. on beer as a contribution to the War Taxes. Already I have seen a circular from the brewers in Nottingham and Derby intimating to the publicans that the taxes to them amount to £1. This applies to the taxes already charged, and over and above that they themselves are only paying 15s. 3d. They have charged the publican £1, and the public are called upon to pay £1 2s. 8d., or, in other words, the poor people who have been talked about so much in this matter are paying £1 2s. 8d. as their contribution on the increased price of beer, while the Exchequer gets 15s. 3d. There again you have another illustration of the unfair manner in which the poor people are always called upon to bear the burden, and I submit that with the original margin between 17s. 3d. and £1 2s. 8d., which the Chancellor of the Exchequer clearly indicated was making every allowance for wastage, I regret the further concession of £3,000,000 in this connection.
    Mr. SAMUEL ROBERTS: I wish to ask the Chancellor of the Exchequer if he is prepared to make any concession in the Customs Duty on what is called black beer? Will he make the same concession which he has promised with regard to home-brewed beer? I am told that black beer is more a food for invalids than ordinary beer, and the trade in black beer is very much affected by this high duty. I have a letter from a large retailer in black beer, and he says that the effect of the additional duty will practically be to kill the trade. I am sure the Chancellor of Exchequer did not wish to interfere with the trade in connection with a food for invalids. I should be very glad to know

    975
    whether he is ready to make any abatement in regard to black beer to correspond with what he has promised in regard to home-brewed beer?
    Mr. LEIF JONES: I am in agreement with the views which have been put forward by the Chancellor of the Exchequer that this tax should be borne by the consumers and should not fall upon the brewing trade. I have listened carefully to the views expressed by the hon. Baronet opposite upon the duty as it has been proposed, and what I find is that there is an absence of any sort of figure which will give any evidence that what is allowed to the brewing trade by the Chancellor of the Exchequer is not sufficient to cover any demand which is now being made upon them.
    Mr. CHAMBERLAIN: We have had the opportunity of laying such figures before the Chancellor of the Exchequer, and we formed our opinion on such detailed information.
    Mr. LEIF JONES: I have made some calculations of my own and I propose to go into them. As far as I can judge, the margin allowed to the brewing trade by the £1 charged to the consumer will really cover the whole cost to the brewing trade. I take the figures for the financial year ending April this year, and I find that the brewing trade has paid a tax in round figures on 35,000,000 standard barrels; but really they sold to the public 37,500,000 barrels.
    Mr. CHAMBERLAIN: Where did you get those figures from?
    Mr. LEIF JONES: I think they are fairly correct.
    Mr. CHAMBERLAIN: I have asked the hon. Member where he got his figures from? I suppose he got them from the Excise returns, and they do not deal with standard barrels sold.
    Mr. LEIF JONES: Yes, I got them from the Excise returns. My calculation was made for the financial year. I have got the exact returns from the calendar year 1913, but these figures have been calculated for me, and they have not been published. It docs not really affect the argument, or, at any rate, only in a fractional degree.
    Mr. CHAMBERLAIN: Is the hon. Member quite certain that he is speaking of standard barrels?
    Mr. LEIF JONES: My point is that in paying the tax the brewer pays a proportion of thirty-five in taxes, and receives from the public thirty-seven and a half payments in selling a barrel. That proportion will be continued for every pint of beer which is sold, and taking that proportion of thirty-seven and a half to thirty-five, and reducing it, it comes down to the proportion of fifteen to fourteen.
    Sir G. YOUNGER: Does the hon. Member suppose that on these light beers the publican is going to get an extra 1d. per pint?
    Mr. LEIF JONES: Yes.
    Sir G. YOUNGER: No, he will not, because he will sell a larger measure.
    Mr. LEIF JONES: I believe that he will charge the extra 1d. a pint on these light beers, and I am informed that he is already doing it. Where the trade have been paying fourteen times 17s. 3d., in the future they are going to receive from the public fifteen times 24s. In other words, you have to spread a profit of 24s. over every fourteen barrels sold. In other words, there is an extra gain to the trade in selling to the public of 24-14ths of a shilling on every barrel sold, or very nearly 1s. 9d. a barrel, to add to the margin of allowance in the Chancellor of the Exchequer's figures. This is very complicated, and I am not sure whether I have made clear to the Committee what is perfectly clear to myself. Before the concession was made by the Chancellor of the Exchequer the tax was to be 17s. 3d. a barrel, and the trade was going to get From the public a penny a pint, which would amount to 24s. That gives us—
    Colonel WALKER: What about the waste?
    Mr. LEIF JONES: The Chancellor of the Exchequer takes a figure of 22s. 8d. I think that that made a very generous allowance to the trade for wastage and so on, and I think that the trade have ways of preventing that waste. My impression is that 24s. is a great deal nearer what they will get than 22s. 8d. At any rate I am going to show that the margin is sufficient to cover them. Assume for the moment they will get 24s.—that is, 6s. 9d. on the barrel. They will sell fifteen barrels for every fourteen on which they pay duty to the Chancellor of the Exchequer, which gives another 1s. 9d. on the standard barrel. That means that on every standard

    977
    barrel brewed on which they pay duty to the Government they have a margin of 8s. 6d. a barrel, which is amply sufficient to cover any loss that is foreseen on the figures of the Chancellor of the Exchequer. The calculation of the Chancellor of the Exchequer was that the reduction in the trade was going to amount to 35 per cent. That means a reduction of about 12,000,000 barrels in the year. Take a profit of 10s. a barrel, which is allowed commonly as compensation to the trade for loss of trade, and on this basis the loss due to loss of trade would not exceed £6,000,000. But assuming, again, the Chancellor of the Exchequer's figures, the trade are going to sell next year somewhere about 23,000,000 barrels, being a reduction of 35 per cent. below last year's figures, and the compensation at 8s. 6d. a barrel, which the brewers will receive, will amount to a little over £9,500,000. The loss of profit due to decreased sales is only £6,000,000 on the Chancellor's own showing, which means that there is £3,500,000 going into the pockets of the brewing trade with which to finance the scheme of the Chancellor of the Exchequer. I would like the hon. Baronet to produce figures which would upset those figures. The hon. Baronet exhibits a certain amount of mirth—
    Sir G. YOUNGER: The hon. Gentleman's calculations are perfectly ludicrous. He has wholly forgotten that the brewer's profit is gone owing to the drop in trade of 35 per cent.
    Mr. LEIF JONES: I do not see what fault the hon. Baronet can find with the argument, except that he says the trade are not going to charge a penny on the pint, which I have yet to see.
    Sir G. YOUNGER: There will be a larger measure.
    Mr. LEIF JONES: On this 23,000,000 barrels they will receive extra from the public, over and above the tax, £9,500,000. The loss on the 12,000,000 barrels which they do not sell, taking it at 10s. a barrel which is a very ample allowance for the trade—is only £6,000,000, which means that the brewing trade will have £3,500,000 out of which to make new payments to the Exchequer to finance the business. The trade is perfectly safe in the matter. I do not wish it to be otherwise. But with the new concessions which the Chancellor of the Exchequer
    978
    announced to-day it seems to me that the members of the trade may be perfectly easy in their own minds that the adjustment which they have to make will be well greased by the amount of money which they have passing through their hands in order to put the system into operation, and that they have nothing to fear, which is the purpose of the House and my purpose at this moment, because I have no wish to put this on the brewing trade. I contend that the figures prove, that the burden will fall entirely, as it is intended to fall, on the consumer, and the hon. Baronet may rest easy with that assurance.
    Colonel WALKER (indistinctly heard): From the figures which the hon. Gentleman has given, the House will recognise that he is not a business man. His speech reminds me of the story of the man who used to make shawls, and he sold them so cheaply that he lost 2s. 6d. on every shawl which he made. He was asked how then did he manage to make a profit on his business, and his reply was that it was owing to the number that he sold. The important point which the hon. Gentleman does not take properly into account is the cost of production. Then there is the question of the enormous disturbance of the trade to the country, which would be caused by the reduction of the output of large businesses to less than two-thirds of what it is at the present moment. How would the Chancellor of the Exchequer like the doubling of the burden on a department such as the postal service? He would say at once that it would reduce my output. He is so fond of reducing people's output; why does he not reduce his own first, and see what it looks like at the end of three months? He is going to take three months' experience of this tax, just to see how it goes, and whether he will lose money or not, and he will be able to find out no doubt, as Chancellor of the Exchequer, from the Income Tax returns, what the profits are of the firms who are affected. No doubt in a trade like this the weakest will go to the wall. The strongest only can carry on. But we should think of the trade as a whole, and should have some consideration for those who are not in as strong a position as others. At the same time we are going to pay this tax as patriots to finance this War, without a growl or a frown. We are going to stand up like men and do our share. But this tax will have one very great effect. Immediately the War

    979
    ceases, it will be the excuse for every workman in the country to demand more money for his drink. It will lead to turmoil among the labouring classes. The result will be that you will immediately increase the cost of production of every article in the Kingdom.
    Question put, and agreed to.
    Clauses 4 and 5 added to the Bill.

    CLAUSE 6.—(Amendment of Law as to Determination, of Gravity of Worts of Beer.)
    (1) The Inland Revenue Act, 1880, shall have effect as though, as the table to be used for determining the original gravity of worts of beer, there were substituted for the table set out in the First Schedule to that Act the revised table an original copy of which, marked Table A, has been signed by the Chairman of the Commissioners of Customs and Excise, and deposited in the office of the King's Remembrancer of the Royal Courts of Justice:
    Provided that where the original gravity has been ascertained by the officer in accordance with the said revised table under Section 15 of the Inland Revenue Act, 1880, a deduction of three-quarters of a degree shall be allowed from the gravity so ascertained for the purpose of the charge of duty in accordance with Subsection (3) of Section 13 of the Inland Revenue Act, 1880 (which requires the duty to be charged according to the gravity as entered in the book by the brewer, or as ascertained by the officer, whichever is the higher).
    (2) Any definite quantity of worts to be distilled for the purpose of ascertaining original gravity under Section 15 of the Inland Revenue Act. 1880, shall, before being distilled, be cleared from sediment by filtration.
    (3) Where it is necessary to ascertain the original gravity of beer, whether for the purpose of duty or for any other purpose of the Customs Acts or of the Excise Acts, the original gravity shall be ascertained in the manner prescribed by Section 15 of the Inland Revenue Act, 1880, as amended by this Act.
    Motion made, and Question proposed. "That the Clause stand part of the Bill."
    Sir G. YOUNGER: This is a very knotty proposal indeed, and I do not understand it. It is altering a system that has been in operation for a very great number of
    980
    years, owing, I believe, to some scientific flaw in the specification table, with which I need not trouble the House. But there is a very novel and extraordinary Section of this Clause, which says that this particular table has been signed by the chairman of the Commissioners of Customs and Excise, and deposited not in the Vote Office, and not attached to the Bill, but deposited in the office of the King's Remembrancer of the Royal Courts of Justice. Who is he? Where does he exist? I understand that, when he was asked to provide a copy of this table, he stated that he had never heard of it. I understand that a small committee of the brewers have agreed with the Excise authorities on this matter. But I do submit that, when there is anything of this kind, it should be put into the Schedule of the Bill, or should be available in the Vote Office, and it ought not to be hidden away, if it exists at all, in some remote office in the City. I do not even know where it exists.
    Mr. LLOYD GEORGE: The hon. Baronet is perfectly right. This is a matter that was discussed between the brewers and the Customs and Excise authorities for a very long period. I believe that it is practically an agreed new Schedule. What was felt was this, that when we put a duty on beer it was of very great importance that the Schedule should be on a much more scientific basis than the present one. It gives nothing to the Exchequer.
    Sir G. YOUNGER: Three halfpence a barrel, or twopence.
    Mr. LLOYD GEORGE: I am told that it is practically very little. With regard to the second point raised by the hon. Baronet, I understand that the new Schedule is deposited in the Vote Office. It is there now.
    Sir G. YOUNGER: I sent actually to this gentleman, and he had not got it.
    Mr. LLOYD GEORGE: It is in accordance with precedent that these Schedules should be deposited with this very important official. It is in accordance with the ancient traditions of this realm, from which I do not like to depart. I have never done so in my life. Therefore it was deposited with this ancient official on this occasion. If this had not been done, we should have had the hon. Baronet the Member for the City of London (Sir F. Banbury) complaining of our innovation. This is not a time for innovation, and

    981
    therefore I thought that the best plan was to adhere to this very ancient and honoured custom. But the Schedule is now in the Vote Office. The committee of brewers have gone into the matter very fully, and the Schedule is there for anybody who wishes to see it.
    Question put, and agreed to.

    CLAUSE 7.—(Certain Liquors Not to be Treated as Beer.)
    Liquor made elsewhere than upon the licensed premises of a brewer of beer for sale which on analysis of a sample thereof at any time is found to be of an original gravity not exceeding one thousand and sixteen degrees, and to contain not more than two per cent. of proof spirit, shall not (though but for this Section within the definitions of beer contained in Section two of the Inland Revenue Act, 1880, as amended by Section four of the Customs and Inland Revenue Act, 1885, or in Section fifty-two of the Finance (1909–10) Act, 1910) be deemed to be beer within those definitions.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Sir G. YOUNGER: I would like to know whether this Clause is a protective Clause against home brewing?
    Mr. LLOYD GEORGE: The idea is to exempt from duty certain beverages which are now technically beer. The Clause is inserted to protect both the brewer and the revenue against invitations.
    Question put, and agreed to.

    CLAUSE 8.—(Reduction of Licence Duty where Hours of Sale are Curtailed. 4 and 5 Geo. V., c. 77.)
    (1) If the holder of a retailer's on-licence proves that the sale or consumption of intoxicating liquor on his premises has in any year been suspended during any hours under the Intoxicating Liquor (Temporary Restriction) Act, 1914, he shall be entitled to a repayment of any duty paid by him in respect of his licence at the rate per annum of one-fifteenth part of the duty for every hour or part of an hour that the sale or consumption has been so suspended, but the amount repaid under this Section shall in no case exceed one-fourth part of the whole duty.
    This provision shall not have effect as respects premises in any area to which the Secretary of State orders that it is
    982
    not to apply owing to the increased opportunities afforded for the sale of intoxicating liquor due to the concentration of troops in the area.
    (2) In order to make provision for the case where hours of sale are curtailed by Section seven of the Temperance (Scotland) Act, 1913, the holder of a retailer's on-licence in Scotland shall (in addition to any other relief granted by this Section) be entitled to a rebate of two-fifteenths of the duty payable by him in respect of his licence.
    5.0 P.M.
    Sir G. YOUNGER: I beg to move, in Sub-section (1), after the word "retailer's" ["If the holder of a retailer's"], to leave out the word "on-licence," and to insert instead thereof the word "licence."
    The Amendment has reference to the case of the ordinary beer retailer who holds an off-licence. The Clause will be extremely hard upon him, and he ought, in fairness, to have, some concession made to him. There is the half-holiday once a week, and so on, and, as the hon. Member for Aberdeen knows, there is a grievance in Scotland in regard to this matter. A fully-licensed house in Scotland, in many of the country districts, pays actually less than the grocer, £5 and £10 minimum, while the beer seller with an off-licence pays £14. If a concession is given to one part of the trade, it ought to be given to the other.
    Mr. LLOYD GEORGE: This case has been put before me by communications I have received from representatives of the beer off-licence holders. The difficulty is this, that speaking of the majority of off-licensed holders, they are not affected in the same way as holders of full licences.
    Sir G. YOUNGER: Some of them.
    Mr. LLOYD GEORGE: I should like to hear something about their grievance. If the hon. Gentleman can point out to me where there is any real grievance, then I will certainly consider it. The hon. Member referred to the trade in Scotland, and I should like to hear about that. If you take an ordinary grocer's licence, you find that the grocer does not open at more than from eight or nine in the morning until eight at night. Any order of the magistrates therefore, while it nominally affects him, does not do so really. Why

    983
    therefore should he get an allowance in respect of diminished trade because of a curtailment of hours which does not affect him in the slightest degree?
    Sir G. YOUNGER: The right hon. Gentleman has altogether forgotten the off-beerseller, who is a man that pays more Licence Duty than the others, and why is he not to get some allowance?
    Mr. J. M. HENDERSON: Formerly grocers were entitled to sell at eight a.m., and now they cannot sell before ten a.m. There is a reduction there.
    Mr. LLOYD GEORGE: If the hon. Baronet the Member for Ayr Burghs and my hon. Friend will give me particulars and put before me practical cases of grievance, I shall consider them. I agree there is a nominal grievance, but if it can be pointed out to me that there is a practical grievance, and that these retailers close their premises at a time they have been in the habit of keeping open, and that they are doing that under the order of the magistrates, then I am prepared to consider it. But I do object to giving a privilege which is extended to people whose opportunities of doing business are not curtailed—giving them the same privileges as people obtain whose business is really curtailed. If the hon. Gentleman will give me any particular facts on the subject there will be no difficulty in dealing with the matter when it comes before me. I am not objecting on principle, but on the ground that I do not think that those for whom the hon. Gentlemen speak are in the same position as other portions of the trade. I am prepared, how-ever, to consider the matter between now and the Report stage.
    Mr. WATT: As my hon. Friend said, grocers formerly could open at eight o'clock in the morning, but in some instances they did not take advantage of that, and opened at ten o'clock. Under the Temperance (Scotland) Act, licensed grocers are no longer able to open their premises before ten o'clock, and they are on all fours in that respect with public-houses. Under the enactment to which I have referred, they have suffered loss. Similarly public-houses have suffered loss, but public-houses are getting an advantage from the Chancellor of the Exchequer which grocers are not receiving. They hold that they are entitled to be put on the same footing, now
    984
    that they are precluded from opening before ten o'clock.
    Mr. DENNISS: I should like to call the attention of the Chancellor of the Exchequer—having had some experience in this matter—to the fact that an enormous number of off beer licences are granted in this country, for the same hours as ordinary licences. If you go to any village in England you will find two on-licensed premises, where drink can be consumed on the premises, and two other places where beer is not consumed on the premises.
    Mr. J. M. HENDERSON: The whole trouble is deeper seated; it is that you can have a fully licensed house for £5, while the grocers pay £10 and £14. As the hours of the latter are being curtailed some part of the alleviation should be granted to them. I am quite sure if the Chancellor of the Exchequer looks into it, he will come to the conclusion that they have a very great grievance, and there is now the opportunity of giving them some form of alleviation.
    Amendment negatived.
    Amendment made: In Sub-section (1), leave out the words "but the amount repaid under this Section shall in no case exceed one-fourth part of the whole duty."—[Mr. Lloyd George.]
    Sir G. YOUNGER: I beg to move, in Sub-section (1), after the word "premises" ["not have effect as respects premises"], to leave out the words "in any area."
    As the Clause stands, I do not think it is fair. In the first place, there is no definition of the word "area"; and, in the second place, the licence holders of an area may get no benefit at all. Therefore I propose that it should read, "This provision shall not have effect as respects premises to which the Secretary of State orders that it is not to apply," and so on. I think a man ought to have the opportunity of proving whether or not he has any advantage before he is penalised in this way. I think it is grossly unfair, besides not being workable. Supposing a particular camp is in question, what would be the area affected by that camp? I submit that each case ought to be tested on its merits.
    Mr. J. WARD: I think it is quite apparent to those who visit country

    985
    districts where camps are established at the present time that something of the description contained in the Bill is necessary. As to whether the provision of the Bill exactly meets the case, I do not know. I have had plenty of opportunities, of which I have availed myself, to visit villages in my own region and the camps now established on Salisbury Plain. There are public-houses in different villages around the Plain which did very little trade before the War broke out. The existence of these great camps of the New Army now being organised in different parts of the country has resulted in public-houses that have hitherto done scarcely any business beyond merely catering for the ordinary population of their respective districts are now doing an enormous business. As a matter of fact, you can go to village public-houses, where once scarcely a customer was to be seen, and find them crowded. If you take the Hampshire side of Salisbury Plain, where there are places filled with troops, in barracks, tents, or huts, you find that the village public-houses have had their business, owing to the presence of this military population, enormously increased. As a matter of fact, the soldiers have to go where they can get accommodation, sometimes going miles, and those public-houses are crowded out. Under these circumstances, I imagine that a Clause of the suggestion suggested here is necessary. I do not know whether the term "area" is suitable, or how the ground is to be covered, but I certainly think that some provision of the kind suggested ought to be made. In these cases instead of losing trade these people are making immense profits as a result of the War. I have seen village public-houses absolutely loaded four or five miles away from camp.
    Mr. LLOYD GEORGE: I hope the hon. Baronet will not press this Amendment. The effect might be to convert the Secretary of State for War into a sort of licensing authority to pick and choose amongst the various public-houses of the neighbourhood. That would be an invidious task to cast upon him. In practice the area practically would be defined by the War authorities. You cannot ask them to say that this public-house should be in and that public-house out. They have got to take into account the whole circumstances and prescribe an area, and to consider whether the number of available customers of all classes has increased.
    986
    In such areas you have privates and officers and the various drafts attached to the battalion, and therefore I think the hon. Baronet may depend on it that all kinds of licensed premises will derive some benefit by the fact that you have got an aggregation of troops in that area. I think it is very much better to leave the words as they are, and that an area should be prescribed rather than that individual public-houses should be singled out and that the Secretary of State for War should be converted into a sort of licensing authority.
    Sir G. YOUNGER: I have no objection to the definition of an area, but I would suggest some sort of provision which would not refuse to a man a concession owing to some advantage which he had never received. There will be many cases of the kind, I am told. I know nothing myself about these matters, and the right hon. Gentleman knows I am not in a position, nor do I desire, to press any Amendment. I can only state the case to him, and leave him to decide as he thinks best. I am bound to bring these matters under his notice. I quite agree it would be a cumbrous thing for the Secretary of State for War to arrange this, but the licensing authority could satisfy themselves. I have stated the case; the Chancellor may or may not consider it. I can do nothing more.
    Mr. CHAMBERLAIN: I do not wish to suggest any Amendment, but I would suggest that when the Secretary of State or the authority that is to make this order comes to consider the particular area they should not be bound by a Local Government Board area, but that it should be an area of drinking, so to speak. It might seem a very simple thing to take a parish area which might produce the kind of thing mentioned by my hon. Friend. If it is clearly understood that the Secretary of State may take what I may call a drinking area and not a Local Government area he ought to be able to do substantial justice.
    Mr. LLOYD GEORGE: I will convey that suggestion to the Secretary of State for War.
    Amendment, by leave, withdrawn.
    Amendment made: At the end of the Clause insert the words:—
    "(3) The amount of any duty repaid or allowed under this Section shall in no

    987
    case exceed one-fourth part of the whole duty payable by the licence holder in respect of his licence."—[Mr. Lloyd George.]
    Question proposed, "That the Clause, as amended, stand part of the Bill."
    Sir G. YOUNGER: I hardly think the period of credit is long enough. There is one point I want to ask the Chancellor to consider against the Report stage to-morrow and that is the propriety of dealing with the question of rebate. Will the right hon. Gentleman undertake to look into the question and suggest a Clause to-morrow? He ought to do so; I press him very hard to do so, and I think it is his duty to do so.
    Mr. LLOYD GEORGE: No one knows better than the hon. Baronet that this is a very difficult practical question and there are unlimited possibilities for fraud upon the revenue unless it is very carefully safeguarded. I have gone into the case but I have not yet satisfied myself that I have found a scheme which, while being perfectly fair to the wholesaler and the retailer, will be equally fair to the revenue. I should rather not be forced to deal with the question in this particular Budget. It is one of the things that I have got in my mind. I thought it might be one of the ways I could meet the trade and the proposal I made to-day was the alternative. I am rather inclined to consider the best method of doing this because I conceive infinite possibilities of the revenue being imposed on, and the hon. Baronet knows that perfectly well. There are many who would take advantage of perhaps reducing the amount of duty and which they would regard as within the limits of the law. I am afraid that between now and to-morrow it will be quite impossible to come to any decision on the question, which is one which involves a very considerable amount of money.
    Sir G. YOUNGERmade an observation which was inaudible in the Reporters' Gallery.
    Mr. LLOYD GEORGE: I quite agree. It is in respect of beer—
    Sir G. YOUNGERmade an observation which was inaudible.
    Mr. LLOYD GEORGE: I agree, but even then it does run to hundreds of thousands of pounds, so that it is a matter to
    988
    be carefully considered. It is not as if I were departing from any rule—
    Sir G. YOUNGER: You are trebling your duty.
    Mr. LLOYD GEORGE: The only ground really for a consideration of the question is that I am proposing to treble the duty. Up to the present the Customs and Excise have invariably refused to consider this question, and successive Governments have invariably refused to alter that decision for reasons which I think are very, very strong. Therefore I should rather myself have a little longer time to consider it. I promise to do so, and on the next occasion for considering the question of the finances of the year, if I am responsible for the revenue of the country, I will give it very careful consideration, and with an open mind and with a desire to do what is fair by the trade. By that time, too, we will be in a better position to know the effects of the duty and to adjust the asperities of the tax.
    Sir G. YOUNGER: Nobody has got any time to consider it. You have a revolutionary proposal chucked at your head one day and you have got to submit or otherwise you are not doing your duty to your country. It is very hard lines, and this is a very important matter, as the Chancellor very well knows. With all respect I say to him now it was his duty to ask the experts properly to prepare a statement and a scheme for dealing with the matter, and now for six months you leave open the question of the whole of the difficulty of arranging prices and as to whether the retailer is or is not to receive credit for those returns. I quite admit that some people are not honest, but we must safeguard from fraud the brewer as well as the revenue, because the brewer would be swindled just as much as the revenue, and they are both in the same boat in this respect.
    Clause agreed to.
    Clauses 9 and 10 agreed to.

    CLAUSE 11.—(Increase of Income Tax and Super-tax.)
    (1.) In order, as far as may be, to provide for the collection of Income Tax (including Super-tax) for the last four months of the current Income Tax year at double the rates at which it is charged

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    under the Finance Act, 1914, the following provisions shall have effect:—

    (a) The amount payable in respect of any assessment already made of Income Tax chargeable otherwise than by way of deduction, or of Super-tax, shall be treated as increased by one-third, and any authority to collect the tax, and remedy for non-payment of the tax, shall apply accordingly; and

    (b) An assessment of any such Income Tax or Super-tax not already made shall be made for an amount one-third more than that for which it would have been made if this Act had not passed; and

    (c) Such deductions shall be made in accordance with regulations prescribed by the Commissioners of Inland Revenue in the case of dividends, interest, or other annual sums (including rent) due or payable after the fifth day of December nineteen hundred and fourteen as will make the total amount deducted in respect of Income Tax for the year equal to that which would have been deducted if Income Tax for the year had been at the rate of one shilling and eightpence; and

    (d) Sub-section (1) of Section 14 of the Revenue Act, 1911, shall apply, in cases where both the half-yearly payments referred to therein have been paid before the passing of this Act, as if this Act were the Act imposing Income Tax for the year, and as if one shilling and eightpence were the rate ultimately charged for the year; and

    (e) Where the amount of any exemption, relief, or abatement under the Income Tax Acts is to be determined by reference to the amount of Income Tax on any sum, the amount of the tax shall be calculated at one shilling and eightpence, with a proportionate reduction where the relief is granted under Section 6 of the Finance Act, 1914; and where Income Tax is payable in respect of a part only of a year, the tax shall be deemed to be at the rate of one shilling and eightpence.

    (2) For the purpose of the Provisional Collection of Taxes Act, 1913, or of continuing Income Tax for any future Income Tax year, the rate of Income Tax for the current year shall be deemed to be two shillings and sixpence.
    Sir F. LOW: I beg to move, at the end of Sub-section (e), to insert the words "Persons paying Income Tax direct shall be allowed to pay same by two equal instalments, the first of which shall be due on the 1st day of January and the second on the 31st day of March."
    When the Bill was down for Second Reading the question of the payment of Income Tax by instalments was raised by the hon. Member for Wigan (Mr. Neville) and by the hon. Member for Warwick and Leamington (Mr. Pollock). The Financial Secretary to the Treasury and the Attorney-General dealt with questions raised during the course of the evening, but so far as I can remember they made no allusion whatever to this question. I have put this Amendment down for the purpose of eliciting some expression of opinion, at all events, from the right hon. Gentleman in charge of the Bill with regard to payment of Income Tax by instalments. As the matter exists at present Income Tax on property and on securities is payable as it accrues due, quarterly or half-yearly or even monthly, as the case may be. But with regard to Income Tax which is payable out of earnings it is all collected in one lump sum at the beginning of January. It has been represented by several hon. Members that that practice, especially on the professional classes, constitutes a very grave hardship. At a very expensive period of the year when money is outgoing in various directions there is a large sum to be paid for Income Tax. As the law is being altered by this Bill in the future a far larger sum than has ever been payable in the past will become due in January.
    I suggest to those who have charge of the Bill that this is a matter which requires and deserves attention. To take out of the pockets of professional people this very large sum—large relatively to their income—in one lump is an enormous hardship upon those who have to pay it, and I have proposed this Amendment as a very slight alleviation. The practical result will be to make the tax payable in two instalments with an interval of three months. I have made the second instalment payable on the 31st March in order to bring it within the financial year. That would give a very appreciable relief to the taxpayer, without, as far as I can see, causing any difficulty or embarrassment to the Treasury. The Treasury will merely have to wait a period of three months for the second instalment. I should have liked to propose a much more

    991
    drastic Amendment, namely, that the Income Tax should be spread over the year; but on consideration it seemed to me that that would be too large a matter to take up in the present state of affairs. Therefore I have put forward this little measure of alleviation, and I very urgently press upon the Treasury authorities the absolute necessity of giving some such relief. We have almost at the end of the year a large increase of Income Tax, and it is obvious that many people who had not expected this increase will, if such a large demand is made at the beginning of January, be very seriously embarrassed. It must be borne in mind that at the present time the raising of money upon securities or anything of that sort is a very difficult matter, and very grave pecuniary embarrassment may be brought upon many well deserving people if the tax has to be paid in one lump sum.
    The ATTORNEY-GENERAL (Sir John Simon): My hon. and learned Friend has raised a matter of very great importance with which I wish to deal in the manner that such an important matter deserves; but I am a little embarrassed because he was not able to put his Amendment on the Paper, and consequently I have to do my best to gather its terms from my hon. Friend's description of his intention. I do not pause to criticise his proposal in point of form. It would certainly need to be looked at before such a proposal could be adopted in order to define more precisely the cases to which it was intended to apply. But I do not trouble about that at all. My hon. Friend's intention was explained by his speech, and I want to deal with the matter in a broad way. My hon. Friend did not refer to the fact that the collecting of Income Tax by instalments has been tried before. There is nothing new about it. Anybody who turns to Section 176, I think it is, of the Income Tax Act, 1842, will find that that enactment provided for the collection of Income Tax in four quarterly instalments, payable on the 20th June, the 20th September, the 20th December, and the 20th March. The Committee will observe that there was an attempt to divide the year into equal portions. My hon. Friend cannot make an equal division, because more than half of the fiscal year has already gone by. I will point out presently a great practical difficulty that would arise from his proposal. What was the experience of the revenue in relation to the provision of
    992
    1842? Income Tax was collected under that provision, or at any rate that was the law relating to its collection from 1842 to 1868. I alter my phrase and say that that was the law because, as a matter of fact, it was found even at that time that the attempt to collect by instalments went too far, and I believe that in practice people usually paid in two, and not four, instalments. That was altered by Parliament in 1868, and since that date, I believe, Income Tax has been due to be paid for the year at one specified time—at a date, be it noted, which is decidedly at the later end of the fiscal year.
    The experience which immediately emerged as the result of the change was that collection was much more effective and rapid, and much less expensive. So that apart from the special necessities of the time, I do not think it can be doubted that it was a wise change for Parliament to make, and that, at any rate in ordinary times, it is well that Income Tax should be collected at one date, and not be spread by instalments over the year. My hon. Friend says "Yes, but we have here a special difficulty which calls for special treatment." I want to deal with that point quite sympathetically. It is quite true that the occasion is special in two ways, perhaps in more. It is special, because there is a substantial increase in the duty, and because there may be in some cases special difficulty in paying the tax. It is special in a third way, I think, because it is specially important that we should collect a substantial amount of money without frittering that money away unnecessarily in the process of collection. But it would not at all have the easy consequences which my hon. Friend supposes if we adopted his proposal. If you say that half the Income Tax becomes due on the 31st March, you will not collect more than the smallest fraction of the second instalment on that day. You will not get in this financial year at all the Income Tax which Parliament sets out to get. I do not know whether everybody's experience is the same as mine, but I confess quite freely—and I do not believe that I have been specially favoured by the authorities—that I do not find my self compelled, as one of the first good resolutions of the New Year, to draw my cheque for Income Tax. There are a good many people who do not, as a matter of fact, pay on the nail. Of course there has to be a certain reasonable amount of give-and-take in the matter.

    993
    I submit, therefore, that it is a mistake, as a matter of effective administration, to divide the tax in two. Moreover, the date suggested would have the result of postponing the payment of a very large sum of money, running into millions, until it was not part of the revenue of this year at all. Taxation is counted as the revenue of a particular year, not because of the date of the Act of Parliament under which it is charged, but according to the time when it is collected. My hon. Friend is quite right when he says that we must consider hard cases, such as that of a man who had every reason to expect that he would this year enjoy the ordinary income that he has enjoyed for years past, but who, owing to the special circumstances connected with the War, finds that his income this year has dropped substantially. It is obviously right that we should deal with these cases, and we have made a proposal which I hope the Committee will consider one well worth making and well worth adopting to deal with them. That proposal is contained in Clause 12. That will still leave cases where the income of the taxpayer for this year is, in fact, less than the income in respect of which he is assessed. Still, the modification is substantial, necessarily involving, as it does, a considerable loss to the revenue, and therefore a considerable concession to the taxpayer, and I am afraid that under the circumstances it is as far as we can go. As my hon. Friend will see, I have assumed that he was making his suggestion not as an improvement in Income Tax machinery in general, though that might have appeared to be the case from his speech, but as something called for in view of the special difficulties in which we now stand. I have not occupied a moment's time in criticising the form of the proposal. While desiring to be as generous and reasonable as we can, I suggest that the right way to meet the difficulty is by Clause 12, and not by making, side by side with Clause 12, a concession of quite another kind, reversing the method by which Income Tax has been collected for so long and undoubtedly postponing a large part of the revenue which in the circumstances we must raise.
    Sir F. BANBURY: The right hon. and learned Gentleman has not quite, I think, understood the object of the Amendment of the hon. and learned Gentleman opposite. That object, so far as I understand it, is this: Supposing a person whose
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    income is £4,000 a year—the ordinary case quoted—has spent in a year £4,000, less the amount which he has reserved for the payment of the Income Tax in the ordinary way, and that Income Tax is increased by a considerable amount. I gather that the hon. and learned Gentleman thinks that it will be rather difficult for that person to find the extra money, because at this time it is not easy to borrow money on any kind of securities, or to find the money which he did not expect so suddenly to have to pay. It may be difficult for him to find the money.
    Sir F. LOW: That is precisely the point.
    Sir F. BANBURY: I think the right hon. and learned Gentleman adduced arguments against the proposal which related to something else. I believe that is sometimes done by hon. Gentlemen learned in the law.
    Mr. POLLOCK: I am sorry that the right hon. Gentleman the Attorney-General has not been able to meet the hon. and learned Gentleman behind him. What are the arguments of the Attorney-General? It really comes to this: He made an interesting speech telling us the history of Clause 176 of the Income Tax Act of 1842, which was the Section under which payments for particular periods were allowed. That Section was abolished in 1874. Up to that time—I may be corrected, but I think I am quite right—nobody had ever heard of an Income Tax anything like what is intended at the present time. My impression is that in 1874 even the sixpenny Income Tax was very much resented. About that time Mr. Gladstone declared that he would abolish even the sixpenny Income Tax. In 1874 the method of instalment may have been a very bad one. I think it is quite possible, with the growth of the country, that men should be able to pay a sixpenny Income Tax by one instalment. So that the history of the matter does not help us very much. No history can show us a parallel to the present time, and no difficulties occurred up to 1870 which were anything like the parallel of what we are likely to suffer in January, 1915. The right hon. and learned Gentleman does not criticise the form of the Amendment. If so, we need not bother for the moment as to whether or not we take 31st March or 1st March, because if there is no criticism of the form, we feel quite confident that the hon. and learned Gentleman the Member for Norwich will immediately

    995
    agree to insert 1st March as the best he can get, instead of 31st March. If there is any difficulty in meeting the revenue or the Income Tax next year, we could modify these details quite well on Report. We could modify the whole Clause, and so could meet the difficulty of the Attorney-General. If you make a second instalment on 1st March you would probably have got rid of the difficulty. Modifications could be made in the actual proposals which ought to meet the real principle which underlies this very valuable Amendment.
    I am going to put one more point. It is one which I put last night, but as the Attorney-General was not present in the House, he is not likely to have heard it. It bears very closely upon the suggestion that the Attorney-General makes that Clause 12 will really meet all that is required up to the present time. I asked last night: Will it? If I understand the principle of the Income Tax at all, you pay your Income Tax for the financial year which closes on 5th April. Look at what Clause 12 does. It does this: it brings forward Section 133, as modified by Section 6 of the Act of 1865, and enables the Income Tax payer to make use of it. What are the benefits and exemptions which they get under these two Clauses? They get the right to go to the Commissioners of Income Tax and to show that by reason of a bad year they should be entitled to have a modification of the assessment made upon them. A provision is made in Sections 133 and 134 that the repayment of the taxes they have already paid shall be made to them. Let us see what Clause 12 does. Clause 12—and we are grateful for it—enables a man after payment has been made in January which is an excessive payment, to have the advantage of going before the Income Tax Commissioners in April or May and getting repayment. The cases are likely to be so many that I do not suppose repayment will take place till June. The result, is that you will be taking advantage of Clause 12 to the full, and you will put the Income Tax payer in this position: he will have paid in January what he will have the right to get back in June. The Financial Secretary was probably right when he seemed to have some doubt as to whether it will be possible for the abatement to be made in the early months of the year, or in the early weeks of the year, because the Income Tax Commissioners
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    may say, "Oh, we will take your current year up to 31st December." I doubt whether they have any such power, or legal right.
    If they do that they may be flying in the face of Statutes. If they adhere to their present system, as laid down by Statute, I think it is quite clear that what will happen is immediate payment in January, and possible repayment in June. Then comes the suggestion—because, after all, the hon. and learned Member for Norwich makes it no more than as a suggestion of a principle—he suggests that there should be some sort of delay in the final complete payment in the early weeks of the year. If there was a delay in the payment if not of a half, even of a tenth or an eighth, to the later period, it would give the Commissioners some time, perhaps, in which to meet the case, and give the benefit of Clause 12. The position might then not be this: that the tax-payer will have paid and the Commissioners will repay; the position might more fairly then be this: the payment of a portion, the Commissioners holding their hand as to a smaller balance up to one-seventh or one-eighth, then seeing whether or not that account is adjusted, or whether there is anything more to pay. It seems to me that the hon. and learned Gentleman for Norwich has embodied in this Amendment a principle which is a very valuable principle, and one which might well be adapted in order really to make of use the principles which are laid down in Clause 12. Without something of this sort, we shall fail to obtain the full benefits offered in Clause 12. Therefore, while the Attorney-General says that Clause 12 ought to be a benefit, I beg to point out where it is not, and I also think that no reason whatever has been shown why in this very difficult year of heavy burdens we should not have some sort of remission in which perhaps the Income Tax payer and the Commissioners might meet on terms of greater equality, so that the Commissioners might not have the opportunity of taking what ultimately may prove not to be theirs, and be compelled to repay what they never ought to have taken.
    Sir EDWIN CORNWALL: It seems to me that the hon. and learned Gentleman the Member for Norwich, and the last speaker, are straining the point too far. The last speaker admits that if the Amendment were accepted it would have to be 1st March. Can anyone then really argue in favour of the extra expense of

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    collecting the tax twice for the difference between a date when any Income Tax payer who can prove that it is a hardship to pay promptly will at all events get a month's grace from the Inland Revenue people? This would bring him to 31st January. Can it be seriously argued that we ought to ask the Government to go to expense in collecting a tax in two instalments for the sake of the dates between 31st January and 1st March? I do not really think that ought to be seriously pressed upon the House. I dare say it would be convenient if our system of taxation was so arranged that the Income Tax, now it is such a heavy burden, could be collected half-yearly. That is not the system, and that is not the Amendment. I think, under all the circumstances, it would be very unwise for hon. Members to press the Government to accept the Amendment.
    Mr. WATSON RUTHERFORD: May I point out what has not been mentioned, that this particular Amendment is simply a matter of relief for the man who is earning income—that is to say, the professional man, or one in similar case, because people who own property pay their Income Tax quarterly. Their Income Tax is deducted from the quarterly rents. People who have Government Stock pay their Income Tax quarterly, because it is deducted from the quarterly payments of incomes paid by the Bank of England. People with shares in railway and other companies as a rule pay the Income Tax half-yearly, seeing it is deducted from the half-yearly dividend payments. In the case, however, of the professional man who is making, say, £4,000 or £5,000 a year, he is called upon on 1st January to pay the whole of his Income Tax out of his own pocket, so to speak. Instead of it being deducted from him, he is called upon to find the money and pay it over in one lump sum on 1st January. There is therefore a particular hardship upon that class of person. I think that the principle suggested in the Amendment would do something—it would not do much—to put that class of person on something like an equitable footing with the rest of the people who con-contribute to Income Tax. For that reason I should be very glad personally to see something done in the direction of enabling that section of the community to pay their Income Tax in reasonable instalments. If I might make a suggestion to the hon. and learned Member who
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    moved the Amendment, it would be that he should, on his part, make some concession to the Inland Revenue authorities that those people who desire to have the power to pay their Income Tax in two instalments should pay the earlier instalment at an earlier date than 1st January, and, if they do so, that they should have a corresponding right to postpone the second instalment for an equal period after 1st January—say, a month or two months on each side of that date.
    Sir J. SIMON: Unfortunately there are already less than two months from 1st January.
    Mr. RUTHERFORD: The right hon. Gentleman understands that it is not a particular date that is of importance to the taxpayer. It is being called upon at one moment to pay the whole of a particular tax in one lump sum out of his own pocket. No other contributor of Income Tax does that. As I have pointed out, all these other classes find it spread over a period, and pay in a manner which they do not feel in the same way that the class feels on whose behalf this Amendment has been moved.
    Mr. C. E. PRICE: I sincerely trust that the Attorney-General will not accept this Amendment, particularly in the form in which it has been suggested by the hon. Member opposite (Mr. Pollock). He said that in this matter we have nothing to learn from history. I am quite sure that those who have read what took place in 1868—I quote from memory—will have discovered that every argument which is being used to get one payment in January and another later was pressed to the full against the instalment plan. When the change was brought about by Mr. Gladstone the amount which came to the revenue as the result of the one collection made an extraordinary difference in comparison with the four collections that previously were made. I am quite sure that if we accept this Amendment in any shape or form we shall be going back upon the benefit of the experience we have gained since 1868. The change Mr. Gladstone brought about was most beneficial.
    Mr. POLLOCK: Would the hon. Gentleman say what the Income Tax was then?
    Mr. PRICE: That does not affect the argument at all. I am talking of what

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    would be the effect on the Treasury if it divided the collection into two instead of one, and I say all experience shows that the change brought about by Mr. Gladstone was most beneficial. The hon. Member for the West Derby Division of Liverpool referred to the case of big companies and railways, but the expenses there would be entirely different from what they would be calculated separately, and therefore if the Treasury had to look to every individual who does not happen to be a shareholder, they will find themselves in the position of having to employ a considerably larger staff. The hon. Baronet the Member for the City referred to an individual having £4,000 a year and who, when called upon to pay this tax, may find that he has spent more than his income. I think a man living so near the total amount of his income as that the payment of the tax would leave him on the wrong side is a very imprudent individual.
    6.0 P.M.
    Sir F. BANBURY: There are very many imprudent individuals in the country.
    Mr. PRICE: There may be many imprudent individuals in the country, but you do not legislate on behalf of imprudent individuals. I am quite sure if you make this departure you will simply have the experience you had before the change was brought about by Mr. Gladstone.
    Lord HUGH CECIL: I do not deny that there are a great many difficulties, such as the hon. Member pointed out and such as the Attorney-General indicated, in levying Income Tax by instalments. In respect to the amount of this Income Tax I might point out to my hon. and learned Friend the Member for Leamington that there was once an Income Tax of 2s. I do not know how it was levied. I think the Attorney-General would add to the debt the Committee owes him if he explained how he conceives the provisions of this Act will work in respect of people whose incomes are derived from unsettled profits, and especially people whose income year goes up to the 31st of March. I heard of the case of a trader who says "I really do not know, if I am asked on the 1st of January, what my income will be, because I do not make up my books until the 31st March, and as I understand this current year is to be taken into account in the three years' average I cannot tell you what my income is until I
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    have made up my books." That is all I want to make clear. I think it is a difficulty, and a great many people do not understand how the levy is to be made.
    Mr. BUTCHER: May I put a point to the same connection. The Attorney-General announced the other night that in levying Super-tax a new concession would be made. The illustration he gave was this. He took the case of a man with £6,000 a year, and he said if a man proved that his income for Super-tax in the year of charge was one-third less than the amount upon which he should he charged according to the period of average, he would be allowed to pay upon the diminished sum.
    The CHAIRMAN: That comes on on an Amendment to the next Clause, standing in the name of the hon. Baronet the Member for the City.
    Sir J. SIMON: I shall endeavour to deal with the point put by the Noble Lord, and, if I may say so, I understand the point put by the hon. and learned Gentleman who has just sat down. He referred to the Super-tax case by way of illustration. I answer the Noble Lord in this way: As I conceive it, the way it will work out is something like this—and what I am going to suggest would also have a bearing on the criticism of the hon. and learned Gentleman the Member for Leamington, because I do not agree that you will have what he suggests—that is to say, an unduly large sum paid on the 1st of January, followed some months later by a large rebate. I think what will happen will be this: Of course some incomes will not be affected by this difficulty at all, as the hon. Member for the West Derby Division of Liverpool pointed out. One of the difficulties of the Amendment of my hon. and learned Friend is that probably it would apply to everybody. His proposal is that if a man this year is making an income three times as big he shall nevertheless only pay half his tax on the 1st January. Take a case such as the Noble Lord mentioned, where this year a trader or a commercial man or a professional man is earning an income which fluctuates, and says to himself, "Here I am offered a concession so that I may bring my income of this year into the average for last year and the year before, in place of being assessed upon the average obtained by historical data. But what is the good of telling me that, because I do not know what my income

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    this year will be until this year comes to an end?" If he makes up his books at the close of the 31st March his case is the most difficult of all. I imagine what will happen is that if you find a taxpayer of that sort who is having a thoroughly bad time, and he says to the Inland Revenue before the New Year "it is already plain to me that my income this year is going to be a good deal below the figure I am assessed at," I am sure his appeal will be successful.
    I imagine what the Inland Revenue would say is this—and the same would apply to Super-tax, but I do not want to go into that now—they would say, "What is your estimate by 1st January, when three-quarters of the year is over?" He will offer some figure. If they think that is fair, the Inland Revenue will say, "Let us take that estimate, and we will average it with last year and the year before, and pay on the average of the three years. If it turns out by the 31st March that you have underestimated your last three months as compared with what you have actually received, there will be something more to pay. But if it turns out that your last three months were worse than you thought, then possibly you have paid too much." That, I think, the Noble Lord will see tempers the harshness, and the apparent difficulties of our proposals, and I am quite confident that is in practice the way the thing has got to be done. Everybody knows that the way in which the Inland Revenue proceeds is to ask for an estimate, and there is an adjustment if it is a little wrong. That is what I am informed is the intention of the Inland Revenue. We quite appreciate that there are many professional and commercial people who find themselves in such a position, and it would be most unreasonable not to meet a genuine case in a fair way. I hope that is the way it will be met. If this Amendment were adopted it would affect all people, even those whose incomes are bigger than usual, and it is not the way in any case to deal with special cases. It does not apply to extra Income Tax, and so far from a man who has to pay Income Tax on profits and accounts, being hard hit in comparison with a man who receives rents, I think the hon. Member for West Derby will see Income Tax on profits is favoured as compared with other Income Tax, three-fourths being always paid in arrear, but as to one-quarter it is paid in advance. If the suggestion I make, after communication with the authorities, is a
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    fair suggestion, I hope my hon. and learned Friend may see his way, having raised this very important point, to withdraw this Amendment.
    Mr. POLLOCK: While one is very grateful to the Attorney-General for what he has said, the problem, I am afraid, still remains. Perhaps the Attorney-General will say where the Commissioners get the right to say that the year ends on 31st December, rather than the ordinary financial year. I may be wrong, but I always understood, for the purpose of Income Tax, you had to make the financial year the same as the Treasury. [HON. MEMBERS: "No, no!"] Is it done by custom, or by regulation or by Statute?
    Sir J. SIMON: By Statute.
    Mr. POLLOCK: Then you can make your year end at any period you please.
    Sir J. SIMON: Section 100 of the Income Tax of 1842 provides that in respect of Schedule D the assessment is to be the just average of three years, ending on such a date in the year immediately preceding the year of assessment on which accounts have usually been made up or the 5th April.
    Mr. POLLOCK: That explains what was in my mind. So it will not be a concession to the trader. They will have to work on the same system as heretofore. Otherwise there is considerable difficulty as between the trader and the Treasury. If the Treasury do not hold him to the same year, he may choose a year in which his receipts are very much worse. On the other hand, if he keeps to the usual period of the year, they will keep him to the normal average and not allow him a period of the year in which he should choose to make up his books. I think the Attorney-General in his answer has been too liberal, from the Treasury point of view, when he indicated that the Commissioners were to allow us to make up our books to a period of the year never before allowed.
    Sir J. SIMON: I said nothing of the kind.
    Sir F. LOWE: I understand from the Attorney-General that the question I have raised will be considered by the proper authorities, and therefore I ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. RUPERT GWYNNE: In answering the point raised by the Noble Lord the Member for Oxford University (Lord Hugh Cecil) we were told that the case would be met of the difficulties with traders' books where they are made up in March by allowing that trader to assess the amount which he thought he would be likely to have as his income at the end of the year. Will the right hon. Gentleman give the Committee an assurance that instructions to that effect will be sent out by the Commissioners? The right hon. Gentleman was rather careful to say that he imagined it would be so. It would make it very much simpler if instructions were issued from the Treasury that this is to be the way in which the difficulty is to be met.
    Sir F. BANBURY: Personally, I do not think there is any doubt about this point, but some doubt has been expressed to me as to the way in which Income Tax is going to be taken on foreign bonds. I suppose it will be deducted at 1s. 8d.? It is deducted differently on English companies and Consols and foreign bonds.
    Sir A. MARKHAM: Where a company makes up its books to the 31st December this year and an interim dividend has been declared at the end of June with respect to trading profits and no dividend is payable to the half-year and where the Income Tax has been deducted from the debentures, I want to know whether the Treasury will make a claim?
    Sir J. SIMON: The effect of Section 11 as regards dividends on shares in English companies is, I think, that so far as the dividends are on shares in English companies, the object of this tax is to secure that the total dividend paid for the year shall contribute in Income Tax so much by adding the different contributions together as will make it come to 1s. 8d. for the whole. Where there are two dividends paid half-yearly, one of which has already been paid and one which is going to be paid, then the dividend which has already been paid in the summer has suffered a reduction of 1s. 3d. Assuming the same interest was paid in December, then you would want to subtract such an amount in December as would have this result, that if you added the two half-years together the total sum contributed would be 1s. 8d. to the whole year. Suppose a man in the first half of the year receives £100 and receives another £100 at Christmas, the £100 he has already received has suffered
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    tax at the rate of 1s. 3d., which is the tax at the old rate. If the whole is treated as one total, the rate will be at 1s. 8d. The hon. Member opposite says it may happen that you do not get any dividend for the second part of the year and what has happened is that the man has got for the year a dividend which has only suffered the lower rate of tax, and he points out what will have happened is that if we had known in time we should have deducted a little more. That is provided for, because there is a provision the effect of which is that as soon as the shareholder has received his dividend, less the lower duty, the shareholder in making his own return of profits and gains will have to account for the difference. Now I come to the point raised by the hon. Baronet the Member for the City of London (Sir F. Banbury). The hon. Baronet puts to me a question about foreign bonds. As the hon. Baronet knows, generally speaking, interest which comes from abroad is dealt with on the principle that it is taxed as received, and I think I am right in that statement. Before the end of the Debate I will make certain on this point, but I believe that when you deal with interest on foreign bonds it is payable half-yearly and you deal with them as you do with shares in an English company. [HON. MEMBERS: "No!"] At any rate we shall come to the matter on Report, and then I will make the point quite clear.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): With regard to the point raised by the hon. Member for Eastbourne, it is our intention to give instructions to the surveyors.
    Sir A. HENDERSON: Will the right hon. Gentleman answer my point, where there are five months at 1s. 3d. and one month at 1s. 2d.?
    Sir J. SIMON: I will make a statement on Report which will meet what the hon. Baronet has been good enough to tell me.
    Question put, and agreed to.

    CLAUSE 12.—(Relief in Respect of Diminution of Income due to War.)
    (1) Section 133 of the Income Tax Act, 1842, and Section 6 of the Revenue Act, 1865 (which provide for the reduction of assessments or the repayment of duty in certain cases where the profits of the year of assessment fall short of the sum on which the assessment has been made) shall, notwithstanding their repeal by

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    Section 24 of the Finance Act, 1907, have effect as respects any assessment to Income Tax for the current Income Tax year where it is proved to the satisfaction of the Commissioners by whom the assessment has been made that the diminution of profits and gains on account of which relief is claimed under those Sections is due to circumstances attributable directly or indirectly to the present War, whether those circumstances are a specific cause of the diminution of income within the meaning of Section 134 of the Income Tax Act, 1842, or not; and in any case where relief can be given under this Section, the said Section 134 shall not apply.
    (2) Section 59 of the Taxes Management Act, 1880 (which relates to the statement of a case on a point of law), shall apply to cases in which relief is claimed under this Section.
    Sir F. BANBURY: I beg to move, in Sub-section (1), after the words "Income Tax" ["any assessment to Income Tax"], to insert the words "including Super-tax."
    The right hon. Gentleman said that he would give some rebate to those Income Tax payers who found that owing to the circumstances of the moment they did not receive the income which they had returned to the Commissioners. The Super-tax payer has to return the income of the previous year. This year, in the return in which he makes about April or May, he makes it for the income he has actually received, and not for the preceding year. It may happen that in this year 1914–15 the income he will receive will not be the income which he thought he would have received if the War had not taken place, and therefore the Attorney-General very rightly promised us that he would make some concession with regard to those whose income had decreased by one-third, who would then be entitled to be charged Super-tax on the reduced amount. That seemed to be a very large reduction, and it would certainly be rather hard on the man with £900,000 a year that he should have to lose £3,000 of his income before he got any benefit from the reduction. I quite agree that a email diminution of a few hundred pounds ought not to count, but I should have thought that some diminution like one-eighth would have been very much fairer. I find to my astonishment that no Amendment has been put into the Finance Act dealing with this question. I was under the impression that
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    the right hon. Gentleman had said that he would deal with this point in the Finance Bill in the same way in which he was going to deal with the Income Tax, but the Financial Secretary to the Treasury yesterday read out from the OFFICIAL REPORT a statement by the right hon. Gentleman, which I must have missed, to the effect that this proposal which he was then discussing with regard to the Super-tax should be dealt with by the Inland Revenue. Personally I have a very great objection to leaving these things to be dealt with by the Inland Revenue. If it is right that some concession should be made it should be made by Parliament, and we should have a knowledge of what is being done. I would point out another objection to leaving this matter to be dealt with by the Inland Revenue. Who is to know that the Inland Revenue have power to do this?
    Without being in any way derogatory to the right hon. Gentleman, I venture to say that the great bulk of the people have not read his speech last Thursday, and I think it is fortunate that they have not. I fancy a very large number of solicitors have not read it, and therefore the Super-tax payer who asks a solicitor whether any concession has been made with regard to the Super-tax, that solicitor will look at the Finance Bill of this year and he will see nothing whatever in it about a concession with regard to the Super-tax, and he will say to his client, "You must have made a mistake, because there is nothing in the Finance Act about this Super-tax concession." May I also point out that the right hon. Gentleman's speech does not bind the Inland Revenue authorities, and they can throw the right hon. Gentleman over and say they are very sorry but they did not authorise him to make that speech and do not choose to abide by it. Whatever concession we are going to have let us have it in the Bill. In order that there might be some peg on which to hang a discussion, I have put down an Amendment to insert the words "including Super-tax." I was quite aware when I put this Amendment down that the right hon. Gentleman would not accept it, because it would allow the Super-tax payer to make a claim if his income was diminished in a small degree. It was late last night when I put my Amendment down, and not being learned in the law I am not good at drawing Amendments which have to meet the critical eye of the Attorney-General, and so I thought that a little tiny Amendment

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    would be the best. I have, in order to meet the right hon. Gentleman, a manuscript Amendment which, if this is carried. I propose to move. It is to add at the end of the Section these words:—
    "Provided that this Section shall not apply in the case of Super-tax unless the income of the year of payment falls short of the sum on which the assessment has been made by at least one-eighth."
    That will, I think, meet the desire of the right hon. Gentleman, except that the amount by which the income has to be diminished will be rather smaller than he proposed. He proposed a third, and I propose an eighth. I do not particularly care about the eighth. I merely put that down as a figure. I know the right hon. Gentleman will probably say that my Amendment is not framed in legal phraseology, and that I have put in "the year of payment," instead of "the year of assessment." "The year of payment" are the words which appear in the Act of 1865, but I was advised by my hon. and learned Friend, who tells me that "the year of payment" is probably better than "the year of assessment." "The year of payment" seems clearer, and therefore I intend, if my Amendment is carried, to put that in.
    Sir J. SIMON: The hon. Baronet really does not quite do me justice when he asks that I should not attack his Amendment on a technical point. I understand that he moves the Amendment in order to raise a substantial point. He has made it quite plain that he is disappointed by finding the Bill as introduced does not contain any provision about Super-tax. I quite understand the inference was drawn that it should, possibly owing to the fact that I found the subject, as we all do, a rather difficult one to explain. It was intended, at any rate, that, as regards Super-tax, regulations should be made, which the Inland Revenue Commissioners would promulgate, and which, of course, must be followed by their collectors. I sympathise with the hon. Baronet when he says that so far as we can, it is better to have these things down in an Act of Parliament rather than to do them by regulation. It is a pity, however, for people always to assume that you can put into an Act of Parliament every single thing and every minute consideration which ought in common fairness to be considered by a revenue collecting
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    authority. There are concessions as there are cases in which there ought to be give and take, which are not to be found in an Act of Parliament, but which a department doing its business in a proper way, as I believe the Inland Revenue Department undoubtedly does, would, of course, make. Still, it is quite right to say that as far as possible we ought to put the thing into the Bill, though I do not want the Committee to imagine I am suggesting this because I have not carried out what I announced. I think it is quite a reasonable request to make, but, while that is so, I must quarrel with the hon. Baronet if he says, "Do not say a 'third'; take some other fraction, say, an 'eighth.'" It must be understood if we put this in the Bill that we put in what the Committee was disposed to regard in the circumstances as a concession which was well worth having and which was what the Inland Revenue could afford.
    As a matter of fact, the concession to Super-tax payers does not follow quite the same scheme as the concession to ordinary Income Tax payers, and while on the one hand it may be said to be worse for them, in another respect it is better for them. It is worse for them because you do not make any concession at all unless their income is reduced by one-third, and it is also worse for them because we are not proposing to relieve them permanently of Super-tax; we are postponing the payment of the difference. It is a question, therefore, of delaying the collection as against reducing the burden. But it is better for them, because we do not ask them to take a new average. We take this year in which they are charged, and it is this year of charge we look at for the purpose of determining whether they ought to get relief, whereas the ordinary Income Tax payer does not get relief by reference to this year of charge, but by reference to a new average which he introduces. That being so and accepting the spirit of the suggestion that it should be done in this way, I suggest to the hon. Baronet that we should not insert the words, "including Super-tax" here, but that we should leave Sub-section (1) of Clause 12 as it is and should add a new Sub-section which will make our intentions plain, and, what may be equally important, give them statutory force and effect. This is the way in which I suggest the new Subsection (2) dealing with Super-tax only, should run:—
    "Where it is proved to the satisfaction of the Commissioners for the special

    1009
    purposes of the Acts relating to Income Tax that the actual income from all sources of any individual charged to Super-tax for the current Income Tax year is or will be less than two-thirds of the income on which he is liable to be so charged he shall be entitled to postpone the payment of so much of the Super-tax payable by him as represents the difference between the tax payable on the income on which he is liable to be assessed and the tax which would have been payable by him if he had been assessed on his actual income, and any amount of which the payment is so postponed shall, subject to any provisions which may be made by Parliament, become payable on the 1st day of January, 1916."
    That puts in statutory form the three things which I suggest. First, it says no relief to Super-tax payer unless he satisfies the Special Commissioners that his actual total income this year is two-thirds or less of the figure on which he is assessed for Super-tax. Secondly, it says, if he shows that, he shall only be asked to pay this year the Super-tax that he would be liable for if he were assessed on the total income which he had actually got. And, thirdly, it says we do not cancel the difference, but we postpone it. We will not collect it this year. Consequently it will become, subject to any provision Parliament makes in the meantime, payable in the year 1916. Whether that is adequate or not, it states quite clearly and fairly what I suggested the other day, and, if we do it in that way, we shall have it on the face of the Bill. If that would carry out what the hon. Baronet has in mind, I should be prepared to move it. I hope he may be prepared to withdraw his Amendment. Then we should all agree that we should have the thing on the face of the Statute, which I think is what he desires.
    Mr. RAWLINSON: I am very much, indebted to the Attorney-General for inserting in the Bill that which he promised to us in a very vague form the other night, but the Amendment which we have now got in writing is, as I thought at the time, a most illusory Amendment and one exceedingly difficult to work. The Attorney-General, who is very accurate in all these matters, says that the question of average does not come into the question of the Super-tax at all. It certainly does.
    Sir J. SIMON: I never said anything of the kind.
    Mr. RAWLINSON: Yes, certainly. The right hon. Gentleman said that it was an advantage.
    Sir J. SIMON: I never really said anything of the kind. I pointed out, in the case of the ordinary Income Tax payer who in this present year finds that his income has dropped below the sum on which he is charged, that he will not get relief on the basis of his actual income this year, but he will have to bring it into an average which will not only take in this year but also last year and the year before. I also said, as regards the Super-tax payer, that if he comes within this concession at all, the effect of the concession is not to use his actual total income this year in order to secure an average, but to use it as a figure in respect of which he is going to pay, apart from any average.
    Mr. RAWLINSON: I quite understand that, and I am very much obliged to the right hon. Gentleman for putting it even more clearly than he did before. Of course, the Super-tax payer has equally, as far as he is an Income Tax payer, to deal with averages. Look at the difficulty in which he is placed. The Super-tax payer is assessed nominally for the year up to the 5th April last. Super-tax payers are assessed at the present moment presumably for money which has been received or has been earned up to 5th April last. The concession made by the Government is that if you can show that in the existing year—nominally up to the 5th April next, 1915—there has been a drop in your income you are then to get this concession. How is a Super-tax payer to know that his income up to 5th April next is going to be diminished by one-third? He has to pay from the 1st January. It is difficult enough if he is a person who earns a business income and has got to get his average there, but when you come to Super-tax payers it is an impossibility. Supposing for the moment that I am a Super-tax payer called upon to pay on the 1st January. How can one possibly deal with the question whether or not his income of the present year has been reduced by one-third? I put that to any fair-minded person as being a practical impossibility. The result is that the Super-tax payer must pay on the whole amount on the 1st January, because

    1011
    no Commissioner has power to do otherwise than make him pay. I protest most strongly against this loose method we have been having lately of giving instructions to permanent officials to do that which they have no power to do by Act of Parliament. No Inland Revenue Commissioner has the slightest power—the Attorney-General knows that as well as anybody—not to enforce on the 1st January payment from Super-tax payers who cannot prove that there has been a reduction of one-third between 5th April, 1914, and 5th April, 1915. This is the position, and therefore a man has to pay on the 1st January.
    But when it comes to the 5th April, what concession is the Government making? If the man can show there has been a reduction of one-third of his income during this particular year, what is going to happen? He will have paid it to the 1st January, and he will have the trouble and annoyance of proving to some Commissioners that his income has been reduced by one-third. After he has done that he may probably get an order for a reduction of the amount, and for repayment, if he is lucky. There is no power, as far as I can see in this Section, to give a rebate, but, later on, we can deal with that point. If he works hard he may get his repayment by about July; otherwise the matter may go over the Long Vacation, and the repayment will be delayed until September or October. The whole amount is payable on the 1st January following, and that is the concession which is given to the Super-tax payer. I do not suppose that the Super-tax payer meets with much sympathy, either in this or in the other House. I do not suppose that I have more sympathy with him than any other of His Majesty's subjects. But even a criminal is entitled to some sort of justice, and, at all events, when you are doing him justice, you should not pretend that you are letting him off easily when you are doing nothing of the kind. I submit that this Super-tax Amendment is illusory in its character. I will deal with the details when the Amendment comes under discussion. All I will say at the present moment is, that the thanks of the House are due to my hon. Friend the Member for the City of London for the action he has taken, although he has attacked the lawyers severely, and even I, who drafted this Amendment, have not escaped his criticism.
    Mr. DAVID MASON: I do not think the hon. and learned Gentleman who has just spoken has really grasped the point at issue. It must be perfectly clear to any Super-tax payer that his payment is based on his income as assessed under Schedule D. Further than that, in the great majority of cases, people make up their books to the 31st December, and even if, in some few cases, the books are made up to the 31st March, it surely will be easy to make an estimate for those three months on the basis of the income for the preceding nine months. Very definite instructions are given that the assessment shall be based on the last balance sheet, and therefore many of the difficulties which the hon. and learned Gentleman suggested are quite imaginary.
    Mr. RAWLINSON: This has reference to Income Tax, not to Super-tax.
    Mr. DAVID MASON: Super-tax is, equally with Income Tax, based on Schedule D, and any gentleman who has the great privilege of paying Super-tax will confirm what I say, that the Super-tax assessment is based on Schedule D. I do not think there need be any difficulty whatever in this matter, and I submit that the explanation of the Attorney-General is perfectly clear and lucid.
    Sir F. BANBURY: I wish to ask leave to withdraw my Amendment. The explanation of the Attorney-General may be satisfactory in spirit, but I hardly think it is quite adequate in fact.
    Amendment, by leave, withdrawn.
    Mr. J. M. HENDERSON: I beg to move, at the end of Sub-section (1), to add the following Sub-section:—
    "(2) Provided that in the case of members of the Territorial and other Forces of the Crown, engaged in any profession or business at the time when they are called up for military or other service, there shall be deducted from the amount of their assessment for Income Tax on earned income, such portion of such assessment as they shall prove to the satisfaction of the Commissioners they have been unable to earn by reason of such military or other service of the Crown."
    I do not want to repeat what I said last night, but, as a matter of fact, we all know many men who are in the Territorial and other Reserve Forces, men engaged in business, who, as from the 1st August, closed their businesses or offices and have

    1013
    not since been able to earn a single penny piece at their business or profession. All I ask—and I am sure the House will readily grant it—is that these men should not be damnified by having to pay tax for an income which they have not had the power of earning, by reason of their service under the Crown. The only argument which could be used against that proposal would be that it will deplete the Treasury of so much money, and, as we need money, we are bound to get it as well as we can. But that argument ought not to be employed in cases of this nature. These men have left comfortable homes; they have shut up their offices, they have faced the anxiety and perils of the campaign, and many have been wounded and probably will never be quite the same men again. I think we ought, in justice, to say to them, "We will not charge you with any Income Tax in respect of that period during which you have been clearly unable to earn an income."
    Sir J. SIMON: I think every Member of the Committee will have full sympathy with the subject of my hon. Friend's proposal, and certainly everybody will warmly share the spirit in which he expresses it. The question really is, not whether the class of citizens to whom he refers are worthy of special relief, but what is the best way in which to give it. We do not differ in the least in the view which the hon. Member has so well expressed, and, really, when you say that the Income Tax and the Super-tax is the contribution which those who sit at home must pay in an unusual degree, as their share in the international struggle, then those who are already making their contribution out in the field and in the trenches can hardly be treated in the same manner. That is perfectly natural and right, but it is not easy to find the best way in which to secure that end. My hon. Friend has, I see, realised that it would not do to confine his proposal to the members of the Territorial Force, and proposes to include the other forces of the Crown. That would appear to be quite right, but I doubt whether it ought to be limited to those called up for military service. I do not see, if we are making this concession, why it should not also be granted to those serving in the Fleet just as much as to those who are serving the country in the ranks of the Army. We ought to include the Navy as well as the Army in everything that we do.
    1014
    Then there is a further extension which I should like to suggest. Although we naturally think first of all of the soldiers and the sailors who are serving, either as officers or men, at this time, it appears to me that the principle on which the hon. Gentleman wishes to apply is one that might very well be extended, under all proper limitations, to those who are not themselves actually serving as officers or men in the armed Forces of the Crown, but to those who, none the less, are a very essential part of the active contribution which professional people are making at the front. Therefore I propose to make the Clause—if I am allowed—to cover the cases of those who are working outside the United Kingdom for the British Red Cross Society or the St. John's Ambulance Association. Some of the very hardest cases are the cases of doctors who have sacrificed not merely their income for the time being but all that continuous professional connection means in the case of a medical man. They have sacrificed all that, and have gone away without a moment's hesitation: they have given up their ordinary professional prospects in order to help to tend the wounded at the front.
    What I want to propose is to bring in any person who, during the present War, has been serving not as a member of any military or naval force of the Crown, but in any work at the front, with the British Red Cross Society, the St. John's Ambulance Association, or any other body with a similar object. The question is: What is the best way to do that? I think that, in substance, what my hon. Friend proposes is quite right, but the suggestion I am making is that we shall go a little further. I apologise to the Committee for going into technical points. But it will be remembered that the concession contained in Clause 12 of this Bill was based on this, that as far as cases which come within it are concerned, you revive a combination Section—Section 133 of the Act of 1842, and Section 6 of the Act of 1865. We are reviving the two in combination, and we say to ordinary people, we cannot take the income of the present year as the figure upon which we are going to charge you, but we will allow you to bring it in in certain cases for the purpose of the assessment. It seems to me that what we ought to do in the cases of those who are within the Clause which is now suggested, is to say to them, "We do not ask you to make any average at all; take your income for this year just at what it is, neither more

    1015
    7.0 P.M.
    nor less, and you may substitute that for any other figure which would be the figure on which, otherwise, you would be assessed." If we do that, then the officer, soldier, sailor, or doctor, even although the latter may belong to the British Red Cross Society or some kindred organisation and not be actually under military law, will at the end of their period of service for their country be granted relief according to the time during which they have been so working. If they are able to show that for a larger part of the year they have not carried on their ordinary engagements, we shall proportion the relief to the actual amount the man has earned. That will be effective if we add some words at the end of this Clause. I may say that the right hon. Gentleman opposite (Mr. Chamberlain) has been good enough to see that they cover the ground, and we are indebted to him for giving us the benefit, in this and other matters of detail, of his great experience. What we should like to do is this: We should like to say that the provisions of this Clause, in its aplication to the case of any person who in connection with the present War is or has been serving as a member of the Military or Naval Forces of the Crown, or in any work abroad, such as that of the British Red Cross Society or the St. John's Ambulance Association, or in any other body with similar objects, shall be construed as if those provisions referred only to Section 133 of the Income Tax Act, 1842, and contained no reference to Section 6 of the Act of 1865. I hope that the Committee and the public will follow that, and see that what it means is that, so far as the Income Tax of this year, 1914–15, is concerned, we do not apply any average, and that we do not apply any figure that is based upon past years to anybody who is or has been serving as a sailor or soldier, or in connection with Red Cross work at all. But we say to him, "Just in proportion as you have sacrificed your income to serve the country at the front, just in proportion shall the Income Tax be removed from your shoulders, and you will be asked to pay on the sum you have earned this year." This is not put in in order that the revenue may exact more if it appears that during a small portion of the year the Income Tax payer has had a very good time; this is a concession to make it possible to treat him as somebody who, in this great year
    1016
    of crisis, is asked to make a contribution strictly proportionate to the annual income, however small it may be.
    Mr. CHAMBERLAIN: I desire to say how glad I am to hear the concession which the Attorney-General has announced. It did not come as a surprise to me, for, as the Committee know, I have been in consultation with the authorities. I am sure that it will not only meet with the general approval of this House, but with universal approval outside. Take the case of a professional man. That of a doctor is the commonest case. He foregoes the whole of his professional income, and goes on military pay, or perhaps on no pay at all. It would really be an outrage to say to a man who has foregone that income voluntarily, because of the circumstances of the time, in order that he might take up service for his country, "You shall pay as if you had earned the income which you gave up in order to serve."
    Mr. J. M. HENDERSON: I very willingly withdraw my Amendment in favour of the Amendment indicated by the Attorney-General.
    Amendment, by leave, withdrawn.
    Sir J. SIMON: I beg to move, at the end of Sub-section (1), to add the words:—
    "The foregoing provision in its application to the case of any person who in connection with the present War is or has been serving as a member of any of the Military or Naval Forces of the Crown, or in any work abroad of the British Red Cross Society, or the St. John's Ambulance Association, or any other body with similar objects, shall be construed as if that provision referred only to Section 133 of the Income Tax Act, 1842, and contained no reference to Section 6 of the Revenue Act, 1865."
    Mr. BOYTON: May I ask the right hon. Gentleman whether he intends this concession to be restricted to those who serve abroad only? For instance, will there be any concession made to the doctor of a Territorial regiment, say, the second battalion, where he has left his practice in London, and gone to the station of the Territorial regiment?
    Sir WALTER ESSEX: I should like to point out that this very important concession is embodied in words which give it only by reference. This Amendment will

    1017
    go to the Press to-morrow, and be scanned very eagerly by relatives of men to whom it will apply, but its value will be largely masked by phraseology not appreciated or understood by the ordinary reader. To make it clear it only needs to quote one or two words from these two Acts of Parliament.
    Sir A. MARKHAM: Can the right hon. Gentleman say whether the Government have any estimate as to what the concession will cost them?
    Colonel YATE: I should like to ask the Attorney-General whether the term "doctors" includes men like dentists. I know of a dentist who gives up his practice every Friday to Monday to go abroad and help in the hospital ships and other places. Will that man be also included, although a dentist and not a doctor?
    Mr. RUTHERFORD: There is just a question as to where the exact meaning of the word "abroad" comes in.
    The CHAIRMAN: The word "abroad" does not govern the words "Military or Naval Forces of the Crown," but only the subsequent words.
    Mr. RUTHERFORD: I am a little afraid that owing to the presence of the word "abroad" in some part of the sentence many men of whom we know in the Territorial Force, either as officers or men, who have had to go to the opposite ends of the United Kingdom and do as they are told, either there or abroad, but who have not been sent abroad, will not get the benefit of this Clause. I suggest that the word should be put in such a position that there can be no possible mistake on that very important point.
    Sir F. LOW: Some of us understand what this Amendment means, but as a matter of substance it strikes me that if it is to go in in the form proposed the persons affected by it will not understand anything at all about it, because who is there serving with the Forces, unless he happens to be a barrister who has had some experience of Income Tax matters, who will understand the reference to Section so-and-so of the Income Tax Act? Surely it is possible in drafting this Amendment to make the concession granted quite clear, or will some announcement be made, or some circular be framed, explaining to the people concerned precisely what it does mean? I would suggest to the Attorney-General
    1018
    that this is a very unfavourable specimen of what we are always being troubled with—legislation by reference, and that it is very desirable that a concession made to show in some small way the appreciation of this House of those who are serving the country at the moment should be made as clear as possible to them, so that they understand precisely the benefit that is being granted to them.
    Mr. LEACH: In discharging my duties daily among wounded soldiers in some of the military hospitals, I am always meeting medical men who have given up their profession and their time to the assistance of wounded soldiers. Is it quite clear that these men will be included?
    Mr. JONATHAN SAMUEL: I should like to support the suggestion made by my hon. Friend the Member for Norwich (Sir F. Low) and the hon. Member for Stafford (Sir W. Essex). I raised the point myself last night with regard to Clause 12 upon another matter. There are no fewer than four references to this Clause already.
    Mr. RUTHERFORD: Why not leave out the word "abroad"?
    Mr. J. SAMUEL: That does not touch my point at all. There are already four references to Sections of Acts of Parliament in this Clause. If this Amendment is added to the Clause it means that nobody will understand what the Clause means. It is quite impossible for any officer or man to understand a Clause like this with regard to any remission or rebate of the Income Tax unless they go through all these Acts of Parliament. I said the same last night with regard to property owners and others who are going to get relief in respect of diminution of income. I defy any man in the country to understand what this Clause means unless he consults a solicitor and, perhaps, takes counsel's opinion. From what one can see in the House of Commons, I think the lawyers who are present appreciate this legislation by reference. It is a thing to be strongly deprecated. All Clauses of this character should be self-contained, so that the public should be able to understand what the law is in regard to this matter. I hope the Attorney-General will accept this suggestion.
    Sir J. SIMON: The hon. Member for East Marylebone (Mr. Boyton), and also the hon. Member for the West Derby Division of Liverpool (Mr. Rutherford), wanted

    1019
    to be assured as to the place in the Clause where the word "abroad" came in. I must apologise for not having put the Clause on the Paper, but the Committee will understand that it is not a very easy matter. I should not like my hon. Friend (Mr. J. Samuel) to suppose that there has been any conspiracy between the lawyers to wrap it up. On the contrary, our object has been to get it as clear as we can. It is not very easy. The person who is to get this advantage is any person who in connection with the present War is or has been serving as a member of any of the military or naval forces of the Crown. That is not qualified by the word "abroad" at all. It will include anybody who, at any time in connection with the present War, has served, or is serving, under military or naval law, I do not know, but I imagine that a medical officer serving with a Territorial regiment is certainly under military law. If so, he is a person who, in connection with the present War, is serving as a member of a military corps. The only place where we introduce the condition that a man must have served abroad is when we extend it to those who are working, for instance, in connection with the British Red Cross Society or the St. John's Ambulance Association, or any other body with a similar object. There is a certain number of people who are giving gratuitous help in connection with these societies at home; but it would be a strong thing to say that if they stay at home they are to get the same relief as soldiers at the front. Then I am asked whether it cannot be expressed in a form which will be understanded of the soldier in the trenches. What the soldier in the trenches is provided with I do not know, but I am quite certain that he is not provided with copies of Acts of Parliament, however plainly expressed, and it is not true that people who enjoy the relief which the Income Tax Clause sometimes gives them gloat over the Clause. I will undertake to say that there is not one of us—except in connection with these debates or some case in the Courts—who gets his Income Tax information by looking at the Income Tax Act.
    Mr. J. SAMUEL: Yes.
    Sir J. SIMON: My hon. Friend says he does.
    Mr. J. SAMUEL: I do not say I do; but when you see the Income Tax assessor he does not place this information before the
    1020
    Income Tax payers. That is really the difficulty, and therefore men go to their solicitors for advice.
    Sir J. SIMON: I am going to do a very unprofessional thing. It is very wrong that anyone should give advice which would otherwise be got for a suitable remuneration from a solicitor; but I flatter myself I can state what this Clause does—if that is any relief to the hon. Gentleman—in language which will be understood, though there are reasons which are really good reasons why we should have the Clause in this form. This is what the Clause does. It provides that officers and men who serve in the Military or Naval forces of the Crown in connection with this present War will not be taxed, either Income Tax or Super-tax, on past averages, but only on the income that they actually earn this year, 1914–15, and the same concession is made to those who have been engaged abroad in connection with the present War in any work with the British Red Cross Society and the St. John's Ambulance Association, or any other body, with a similar object.
    Mr. BUTCHERmade an observation which was not heard in the Reporters' Gallery.
    Sir J. SIMON: Call it his income. Persons who are not concerned to look at Acts of Parliament only speak of Income Tax on their income. It will never do to put that into this Act of Parliament. It would be a delightful thing if we could take advantage of emergency legislation to revise, recast, and re-enact the whole of the Income Tax law. I sometimes think it will only be by general consent and sub silentio that this desirable consummation will ever be reached. If the hon. Member imagines that it is some perversity of mine that it is put in this way, and if he thinks it will be better to write it out, he can go into the Library, find Section 133 of the Income Tax Act of 1842, and write it into this Clause, and when he has done that he will find that he has produced a provision about four times as long and quite as difficult to understand as this. I hope the Committee will see that as long as a plain statement is made, that at any rate will give to anyone who wants it what is in ordinary English the effect of this Clause, and I am very glad to think it is going to be generally received as a reasonable and satisfactory concession. Then I was asked to what extent this concession would involve loss of revenue. Of course loss of

    1021
    revenue is the same as gain to the person we are trying to treat in what is after all only an ordinary fair way. The estimate is this. In respect of ordinary Income Tax, leaving out Super-tax, this concession, it is estimated, will this year lose the revenue £150,000, and in a full year, supposing of course that the War went on to next year, it will lose them £225,000, and as regards Super-tax it is estimated that this year it will lose the revenue £40,000, and in a full year it would lose the revenue £60,000. These are substantial sums and I am certain, although no doubt we must find these sums in some other way, there is no burden which the country as a whole will more readily accept.
    Question, "That those words be there inserted," put, and agreed to.
    Further Amendment proposed: After the words last inserted, insert the words, "(2) Where it is proved to the satisfaction of the Commissioners for the special purposes of the Acts relating to Income Tax that the actual income from all sources of any individual charged to Super-tax for the current Income Tax year is or will be less than two-thirds of the income on which he is liable to be so charged, he shall be entitled to postpone the payment of so much of the Super-tax payable by him as represents the difference between the tax payable on the income on which he is liable to be assessed and the tax which would have been payable by him if he had been assessed on his actual income, and any amount of which the payment is so postponed shall, subject to any provisions which may be made by Parliament, become payable on the 1st day of January, 1916."—[The Attorney-General.]
    Mr. POLLOCK: I desire to ask the Attorney-General's attention to this Clause, because I can fully appreciate its value. I want to make two suggestions to him. They are really matters of drafting to carry out his purpose. The year on which Super-tax is assessed is the year last passed. It has nothing to do with the current year, and as the matter stands it will be necessary to put a word or two in to make clear what is the contrast that is intended to be created by the Sub-section. I suggest that these words will be required after the words "so much of the Super-tax payable by him as represents the difference between the tax payable on the income on which he is liable to be," and I think you want to add the words
    1022
    "and has been assessed," because that is the actual assessment which you are dealing with—"liable to be and has been assessed, and the tax which would have been payable by him, if he had been assessed on his actual income." Does that mean in the year only in which the Super-tax was assessed? It does not really mean that. It means the current year, and if the Attorney-General asks his advisers they will advise that he should add the words "assessed on his actual income for the current year," or perhaps for the year last passed. I believe these two Amendments are necessary to make the intention of the Clause clear.
    Sir F. BANBURY: I am very much obliged to the right hon. Gentleman for putting his concessions into the Bill, but they are very poor concessions. They amount really to nothing at all. My hon. and learned Friend said that Super-tax payers are criminals, but even a criminal is entitled to justice. I do not know that I altogether regard a Super-tax payer as being a criminal, but even if he is, let us give him justice. All that this concession means is that after a very great deal of trouble with the Inland Revenue you may be able to enjoy for about two months a certain sum of money which you have to refund at the end of that period, so that really all that will happen will be that you will save the interest on a small sum of money for a very short time. If the right hon. Gentleman is desirous of making a concession, and if he limits it by saying that no concession is to be made until the Super-tax payer has lost a third of his income, at any rate when that loss has occurred he might make some substantial concession. I really do not understand what the object of postponement is. If you are going to make a concession, let it be a concession; and if he has lost a third of his income, why should not the right hon. Gentleman say that the Super-tax shall be assessed upon the actual income which he has, leaving out any question of disposal?
    Mr. RUTHERFORD: It has been pointed out by my hon. Friend that this really does not amount to very much of a concession. I should like to ask one question with regard to it. Will the payers of Super-tax be obliged to take advantage of this astounding concession, because, if they will, it will double the labour, the annoyance and the difficulties of dealing with these complications of Super-tax, and the

    1023
    Lord deliver us from the concessions which the Attorney-General is now offering to give!
    Sir J. SIMON: Shall I withdraw it?
    Mr. RUTHERFORD: The idea that hours should have been wasted on this point last week, yesterday, and to-day and then when we come to see what this great concession is for the unfortunate payer of Super-tax whose income has gone down by more than a third—no one else is to get it unless he has lost a third of his income—we find that for two or three months he is going to have a postponement of part of that tax. It reminds me of Mr. Micawber, who paid that celebrated debt by giving a bill. When he paid it he said, "I always intended to pay that money, and thank God it is paid." Anything more illusory and unsatisfactory than this astonishing concession to Super-tax payers which we have listened to from the Attorney-General has never been mentioned in this House.
    Mr. J. M. HENDERSON: I wish to say a few words, after which I will appeal to my right hon. Friend to withdraw the Amendment. The concession amounts to practically nothing. It amounts to this: That if you have £6,000 and you are reduced to £4,000 you will be asked to pay only £52 on 1st January, and £16 next January, postponing £163 for twelve months. But that will not do, because you have no right to make that concession, great as it is, to a £6,000 man and refuse it to a £5,000 man who gets down to £4,000, or a £5,500 man who gets down to £4,000. You have no right to take an arbitrary sum and say that at £6,000 you have lost a third, but you who have lost a fourth or a fifth get no concession at all. It is no concession. It is merely a postponement of payment, and it is doing an injustice to other people. There is one concession which the right hon. Gentleman might make, and I appeal to him to consider it. The Super-tax is made up in a great many cases of one portion under Schedule D, and, so far as it is made up from Schedule D, the Super-tax payer ought to be entitled to the benefit of Section 12, just the same as anyone else. I do not know whether that appeals to my right hon. Friend or not. But there is this to be said for the Super-tax payer: This is a consolation to him, at all events. It will enable us to get level with the Treasury
    1024
    by-and-by. Super-tax is based, so far as unearned increment is concerned, upon the income of the last year. We will take our £6,000 a year man who has been reduced to £4,000. Remember that next year the tax will be doubled, and next year, no matter how well his income has recovered, he will only pay on £4,000. Therefore, if his income recovers next year, he would only pay on the £4,000 and save the double tax on the other £2,000, so that he is made right by next year. The only question is as to the withdrawing of the Amendment and substituting another which would give the Super-tax man the benefit, so far as Schedule D is concerned, of Section 12 of the Act. Subject to that, I suggest the withdrawal of the Amendment.
    Mr. BUTCHER: I agree with some of my hon. Friends that the concession given by this Amendment is not a large one. I want to know how this Sub-clause would work out. In order to get the benefit of the Sub-clause, the Super-tax payer must be in a position to say what his income will be next year, and inasmuch as he has got to pay by 1st January next year, he will have to show to the Commissioners how much his income is going to be for the year ending 31st March next. On 1st January he has to satisfy the Commissioners that his income for the year ending 31st March will be one-third less than it would have been if calculated in the normal way. I say it is absolutely impossible for a man to say in January next year what his income will be by the end of March. Take the case of a man who gets most of his income from dividends on securities. That is just the time when they would show the greatest loss. Dividends paid in August or September this year have felt the effect of the War, but dividends paid in February and March would just begin to show the effect of the War. It is practically impossible for any man, I do not care how intelligent, to estimate how much his dividends in February and March next year will fall from the normal. I ask the House to suppose the case of any man who takes the benefit of this concession. Suppose he estimates his income up to 31st March at more than it actually turns out to be, and he pays more tax than he ought to pay, what does the Attorney-General do then? Will he give him back what he has overpaid? It seems to me that that is the only thing to do. Surely he ought to be allowed to get back in April the amount overpaid in January.

    1025
    Will the Attorney-General explain how the Clause would work out from the point of view to which I have referred?
    Sir J. SIMON: I will deal, in the first place, with the point raised by the hon. Member opposite (Mr. Butcher). The answer to his question is the same as the answer which I gave just now on another Amendment. The explanation in the one case applies in the other. The hon. Member for the West Derby Division of Liverpool (Mr. Watson Butherford) said he did not wish this thing to be conceded at all. I do not think the Bill would be in any way damaged by omitting the Clause. The revenue will be advantaged. As I explained the other day we propose to give Super-tax payers the right to pay the Super-tax by instalments. I thought payment by instalments was supposed to be advantageous to this class. If a man's income this year is only £4,000 and he is asked to pay Super-tax on £9,000, he has to pay on 1st January £408 6s. 8d. in respect of Super-tax. If this Clause passes he will not pay £408 on 1st January, and he will only have to pay £52 16s. 6d. He will have to pay the balance twelve months later. Does anybody say in regard to this concession, "Let us withdraw it"? It appears to me that there is a concession which is fair in the circumstances, and I would invite those who think the concession is worth having to take without grumbling what is allowed to the taxpayer.
    Sir F. BANBURY: May I say that through the course of a long life I have thought it wise to take anything you can get in the shape of a concession.
    Amendment agreed to.
    Mr. DENNISShad given notice of an Amendment to add the following words at the end of Sub-section (2):—
    "Provided that no officer on active service shall be assessed to any larger sum in respect of Income Tax or Super-tax than he would have been if this Act had not been passed."
    The CHAIRMAN: This Amendment is covered by another Amendment which has already been moved.
    Mr. DENNISS: This Amendment is the corollary of the Clause proposed by the Attorney-General, and I want to propose it in somewhat different terms, namely:—
    "Provided that no person who is or has been serving in the Military or
    1026
    Naval Forces shall be assessed to any larger sum in respect of Income Tax or Super-tax than he would have been if this Act had not been passed."
    I am going to ask the Committee to say that the tax should not be increased in respect of these men. The Attorney-General said the other day that officers were making their contribution in the field. Surely it was never intended to put the increased tax on officers and men. They are already paying their Income Tax in the field by helping to protect the income by which we live. In drawing up the Amendment in its original form I was thinking more of the Regular Army and the private soldier. I now extend it to all men in the Services who have incomes. In that case, the objection applying to the soldier is gone. That was the objection made by the Financial Secretary to the Treasury. The second objection which was stated was that officers were going to have their salaries increased. I think that has nothing to do with the spirit of the Amendment, and I ask the House to consider what would happen. I have had a great deal of experience of officers and men in the Army, some of my family having been connected with the Service. My youngest boy gets 5s. 3d. a day. He has gone through Sandhurst in the usual way. As he was wounded at Mons he came back. He lost the whole of his kit. He has to be doctored at home, and it costs nearly half his year's pay to do that and to get a new kit. I ask whether, on the top of that, he is to be asked to pay Income Tax of 1s. 8d. on the money he happens to possess himself? It seems to me extremely hard in such a case that the tax should be raised. These men are paying their contribution in the field, and when they are risking their lives and limbs they ought not to be asked to pay the increased tax.
    Sir J. SIMON: I am making a proper concession to those who are serving with the armed forces of the Crown. What I have proposed is intended to be a concession, and I could not agree to add this further concession. The concession which the hon. Member proposes would have this disadvantage: it would operate so that the richer the man the greater the disproportion will be in the relief he would get. The principle we have enshrined in the Bill is that everybody who has to pay the tax, so long as he is serving at the front,

    1027
    shall pay in proportion to his actual income. That seems to me to be the proper rule to adopt. There may be cases where the burden will be severe, but I hope the hon. and learned Gentleman will agree to take the concession we have already put in the Bill.
    Lord HUGH CECIL: On this point I think that the Government might consider the question of the officers' pay, which is a rather different proposition—that is to say, whether officers and soldiers should not be exempt from Income Tax on the pay which they receive?
    Sir J. SIMON: Obviously there are more ways than one of meeting that difficulty. One is the way which the hon. and learned Member has suggested for consideration, and of course we will consider it. Another is to increase the pay, especially of the officers who get the smallest pay, and it is that second measure which may commend itself to most people.
    Mr. DENNISS: As originally drafted this Amendment was that no officer on active service should be assessed to any larger sum in respect of Income tax or Super-tax than he would have been if this Act had not passed. I am very much obliged to the right hon. Gentleman for what he has said, and before asking me to withdraw my Amendment would like to know if he can say when it is likely that the question of officers' salary shall be considered and when it is likely to be raised?
    Sir J. SIMON: I am afraid that is a matter as to which I cannot say.
    Mr. DENNISS: The difficulty is that if that is not done soon we ought to have some relief now. Perhaps between this and the Report stage the right hon. Gentleman may be able to get some little information.
    Sir A. MARKHAM: I would ask the right hon. Gentleman whether he could not find out a little more. As I understand him, he says on behalf of His Majesty's Government that this difficulty would be overcome by increasing the officers' pay. We find officers, such as second-lieutenants, getting very much less pay than certain classes of workmen, and if the right hon. Gentleman says that this matter is receiving the attention of His Majesty's Government it will give great satisfaction throughout the country.
    Mr. NIELD: Will the right hon. Gentleman say whether the raising of the officers' pay is rather the reward for their services and has no reference whatever to the burdens put upon them by this Budget?
    Sir J. SIMON: I do not imagine that anybody in this House will think that the observation which I made to the Noble Lord was intended to be a solemn and precise announcement of policy. That, of course, is a matter for the War Office primarily to announce and not for me. The Prime Minister, I think, made a statement about it some days ago, and there was a statement made yesterday by the Financial Secretary to the Treasury. If the hon. Gentleman will look at the OFFICIAL REPORT of yesterday, at col. 882, he will see that the Financial Secretary said, at the bottom of that column:—
    "My right hon. Friend the Prime Minister said the other day in this House that the Government proposed shortly to issue a scheme under which the pay of the lower ranks of officers in the Army was going to be substantially increased at a far greater cost than any remission of taxation would represent."
    I have not the slightest intention of going one word beyond that, but I was referring to the fact that that was one way of doing it, and that it might be a better way.
    Amendment, by leave, withdrawn.
    Question proposed, "That the Clause, as amended, stand part of the Bill."
    Mr. POLLOCK: I desire to call attention to Sub-clause 2. I am sorry that the hon. Member for Stockton-on-Tees is not here, because I am sure he would share the view which I am going to express. Sub-clause 2 looks very unimportant, but it really is very important. In effect it cancels the recent decision of the Court and leaves open to appeal all the decisions of the Income Tax Commissioners. That may be right or wrong, but I do not think that we ought to do it in the case of what may be called emergency legislation. It is a matter which I think needs much more careful consideration. There was a case decided at the end of last year by the Courts, which is reported this year, in which it was held that the Crown in a case in which it had desired to appeal against the decision of the Commissioners of Income Tax, were not able to do so because they had not got the power in reference to these appeals or in reference to these applications for relief under Sections 133 and 134. There may be a great

    1029
    deal to be said on both sides, but I should like to ask the Attorney-General why it is determined now in respect of this matter of release, to enable appeals to be heard and determined, and why it is not decided to adhere to the present practice as laid down in that case, and leave the decision of the Commissioners as final? I am not sure whether it is wise either on one side or the other to have appeals. I think probably in this case, as it is a matter of business, that it would be determined quite satisfactorily and sufficiently by the Commissioners, and I do not think that at the present time we ought to open any avenue for long litigation by means of appeal. For that reason I ask, before this Clause is passed, that some explanation and justification should be given for this Sub-clause 2.
    Sir J. SIMON: This Clause applies what is a new test, namely, whether or not diminution is attributable directly or indirectly to the present War. It is highly desirable that, if that phrase is capable of several interpretations, it should not be interpreted in one part of the country in one way, and in another part of the country in another way, because this is a time when everybody ought to stand on the same level. For that reason we have introduced the Sub-section, and the hon. and learned Gentleman below the Gangway (Mr. Butcher) will remember that when I was endeavouring to explain this proposal a few days ago he asked me if there would be an appeal, and I told him that there would, and I understood that that proposal was regarded on the whole as favourable.
    Question put, and agreed to.

    CLAUSE 13.—(Provision with Respect to War Loans.)
    (1) Any amount raised by the Treasury under the War Loan Act, 1914, which is in their opinion required for the purpose of defraying the expenses of the present War, shall be deemed to be duly raised in accordance with the powers given by that Act, notwithstanding that the amount raised may exceed the supply for the time being granted to His Majesty for the service of the year ending the thirty-first day of March, nineteen hundred and fifteen.
    (2) None of the provisions of the House of Commons (Disqualification) Act, 1782, or the House of Commons (Disqualifications) Act, 1801, shall be construed so as
    1030
    to extend to any subscription or contribution to any loan raised under the War Loan Act, 1914.
    (3) The definition of Government stock in Sub-section (2) of Section five of the Savings Bank Act, 1893, shall be read as if stock issued under the War Loan Act, 1914, were included in the First Schedule to the said Savings Bank Act, 1893.
    Amendment made: At the end of Sub-section (1), add the words,
    "Provided that such excess does not exceed one hundred million pounds."—[Mr. Lloyd. George.]
    Motion made and Question proposed, "That the Clause, as amended, stand part of the Bill."
    Sir A. MARKHAM: I handed in a question at the Table to-day to ask the Chancellor of the Exchequer if he could now tell us to what sum of money this House was committed to the Bank of England in respect to bills of exchange which will come out of this Budget. Can that matter be referred to now?
    The CHAIRMAN: This is not the opportunity. We are engaged now in raising the money and not in spending it.
    Question put, and agreed to.
    Clauses 14, 15, and 16 added to the Bill.

    NEW CLAUSE—(Temporary Belief of Additional Beer Duty.)
    The following rebates of the additional Customs and Excise Duty on beer of seventeen shillings and threepence under this Act shall temporarily be allowed, namely:—

    Period.

    Rebate.

    Reduced Rate.

    Up to the 31st day of March, 1916.

    2s.

    15s. 3d.

    After the 31st day of March, 1916, and up to the 31st day of March, 1917.

    1s.

    16s. 3d.

    and the additional duty of Customs payable in respect of beer of the descriptions called mum, spruce, or black beer, and drawback, shall be proportionately diminished.—[The Attorney-General.]
    Clause brought up, and read the first time.
    Question, "That the Clause be read a second time," put, and agreed to.

    NEW CLAUSE.—(Exemption from Death Duties.)
    The Death Duties (Killed in War) Act, 1914, shall be read and construed as if from the date of the commencement of that Act the remission of Death Duties thereby given applied not only to property passing on the death of the deceased to the widow, lineal descendants, and lineal ancestors, but to all property passing on the death of the deceased.—[Mr. Butcher.]
    Clause brought up, and read the first time.
    Mr. BUTCHER: I beg to move, "That the Clause be read a second time."
    The object of this Clause is to exempt from Death Duties any property which passes upon the death of a man killed in action. That there should be some exemption I suppose no one will dispute. It is a grievous thing, from one point of view, to think that when a man is killed serving his country the revenue of the country should directly benefit by his death and that other taxpayers of the country who do not go out to fight should also benefit indirectly by that death by having to pay less taxation. My own view is that there should be no benefit to the revenue, and no benefit to the taxpayers who stay at home, when a man is killed in action fighting for his country, and therefore that there should be some exemption. The Chancellor of the Exchequer may tell us, perfectly truly, that there was an Act passed earlier in the year which gave a certain exemption in certain classes of property, but the exemption was only given where the property passed to the widow or lineals. Where the property passes to a brother or sister or uncle no exemption of any kind was given. I do not know whether that Act was considered very much or not. It was passed in August, like a great many other Acts, rather hastily to meet emergency cases, but it is now three months since that Act passed and we have had an enormous number of lamentable deaths in consequence of the War and we are better able to judge now, I think, than we were then as to the scale of exemption which we should give these cases; and now that we know the nature of the War and that the number of deaths is likely to be large, I think the Chancellor of the Exchequer might go a little further than he went then and might give exemption when the property passes to others besides widows or lineals.
    1032
    What reason is there for the restriction? Suppose that the property goes to a brother or a sister, owing to a man being killed prematurely, is the Chancellor of the Exchequer going to charge that duty which but for the War might not have been exacted for twenty or forty years? It is bad enough in the case of personal property, but in the case of real property it may come to be a very grievous charge indeed, because it may mean a family estate being broken up by the Death Duties being imposed far sooner than in the ordinary course of things might have been expected. I put this point before the Chancellor of the Exchequer and ask him to give this relief, and I feel confident that the taxpayers of the country who do not go to the front and do not risk their lives will gladly pay the increased taxation which they may be called upon to pay in consequence of the remission.
    8.0 P.M.
    Lord HUGH CECIL: I wish to say a few words in support of this Clause. I think that this Clause does not involve any great sacrifice to the revenue. To the revenue I should think it must be an extremely small matter, because the cases to which this Clause refers, though very sad, are not common. It is not common for men who are too young to marry and have children, to be killed and leave their property therefore to a brother or an uncle. It is in very exceptional cases that they would have any large amount of property, but it does sometimes happen, and I know a case in which it has actually happened. I am quite sure that it will be a reasonable thing, not to exempt from Death Duties altogether, but to charge the duties according to what would have been the amount if the man had lived to the ordinary time of life—that is, charging with the diminution corresponding to the expectation of life which the dead officer had at the time of his death. That is what the Chancellor of the Exchequer has done in respect of the living, and there is no reason for not doing it in the other case. Why should the revenue make a profit—an unexpected profit—out of the death of people killed in action? It is bad finance. Windfalls are an element of uncertainty for the revenue which ought to be avoided, and a tax ought to be levied as regularly as possible, and strictly in accordance with all the elements of finance. Where there are several members of a family interested in a particular landed

    1033
    estate, it inflicts a very great hardship on the whole family, and on the incoming heir, who may be a brother, if by the unexpected incidence of the Death Duties, they are prevented from living in the place to which they are attached, and which is very dear to them. In these cases I think a really serious hardship is inflicted, and, as the amount of revenue involved is very small, I hope the Chancellor of the Exchequer will be prepared to consider the proposal.
    Mr. J. WARD: There is no doubt, as the Noble Lord says, that there may be exceptional cases where those who are left behind might receive some relief; but I think that the general proposition is one which should not be listened to by the Chancellor of the Exchequer, for the simple reason that, after all, workmen, poor people, who are fighting and risking their all leave, by their death their dependants under most unfortunate conditions. Their future income, by the death of the breadwinner of the family, is gone, and I think that is an element which founds as strong a claim as that to which we have just listened. I do not say that it militates against the proposal now before us, but at the same time if you want to give relief to one set of dependants there is no reason why you should not give relief to the other set of dependants. Under these circumstances, seeing that these men, both rich and poor, are giving all they can, inasmuch as they are risking their lives in defence of their country, I do not think one set has any higher claim to consideration than the other.
    Lord HUGH CECIL: No one would dream of attacking the private soldier in respect of anything he possesses; all we suggest is that you should not take so much from the estate of people who are killed in action, because there was no reason to anticipate that they would be killed in action, and their death brings what is a sort of windfall.
    The SOLICITOR-GENERAL (Sir Stanley Buckmaster): I am sure no one is insensible to an argument which is based upon the misfortunes that all families suffer when their relations are lost in this terrible War. I have listened to my hon. and learned Friend the Member for York (Mr. Butcher) who moved this Clause, and to the Noble Lord who seconded it, and I am not at all convinced that this concession ought to be made, for
    1034
    this reason: It seems to me that their argument proceeded upon the hypothesis that this tax affected in some way the man who has suffered for his country. In point of fact it does nothing of the kind. It makes a man who receives the estate pay the tax for that estate which he gets; and if you take the lineals, both ascending and descending, who come unexpectedly into a property to which they could not have reasonably expected, or had little chance to succeed at all, it does not seem unfair that in those circumstances they should pay the tax. The Noble Lord put the case of a brother killed in war. If the brother had not been killed in war, it is perfectly possible that he might have married, and had children, and the surviving brother would never have succeeded at all. It is a painful thing to say that a man has got an advantage by such an accident, but, in truth, the lineal descendant has unexpectedly come into the property by virtue of the calamity, and it does not seem hard, in those circumstances, that he should pay. In reality this very matter was considered at the time the other Bill was before the House, and in Section 2 of that Statute an express provision inserted that in the case of a lineal where the second death took place within a certain period the property should pass and the tax not levied. That did not apply to other than the lineal descendants. That was approved by the House, and I ask hon. Members not to press this Amendment.
    Lord HUGH CECIL: The hon. and learned Member does not realise the great hardship inflicted where there is a house and home concerned, where the relation is a brother, and where there are other dependants deeply interested in the place, and have been accustomed, all their lives to regard it as their home. It would be a very heavy grievance if, owing to the Death Duties, the property and home had to be let or even sold. I grant that it is an uncommon thing, but the cases do arise, and it would be a very great hardship indeed. I do suggest that the revenue might meet that sort of case, and I press the Chancellor of the Exchequer to consider the whole subject between now and Report.
    Mr. LLOYD GEORGE: I have considered this question with my colleagues, and I am very reluctant, exceedingly reluctant, to appear hard in such conditions, but I cannot see how, in justice, I can consent to a proposition of this kind. The

    1035
    Noble Lord knows perfectly well that the first time that relief was given was in the Bill which I introduced earlier in the year, and during the South African War the Government who were pressed upon the point, resolutely refused it in the case of the relatives of those who had fought. I agree with my hon. and learned Friend that there is no case for relief where a man comes unexpectedly into property that he would never have come into at all but for the War. I think I know the case to which the Noble Lord refers, but I am not at all sure whether that is not a case which for personal reasons appeals to a good many people. I think if the Noble Lord looks at the matter all round he will come to the conclusion, hard as it may appear, that all taxation, whether on commodities or property, must cause somebody to suffer hardship. But take a case of this kind. Here is a gentleman who really could not have expected to benefit by the property but for the War. I do not like to use the word "windfall" in this connection, but, from that point of view, and for this particular purpose, it is a windfall. The Noble Lord very properly stated that there was a sentimental attachment to property and houses in these cases, but, after all, they form a very small proportion of the property that becomes subject to the Death Duties as a consequence of the War—I think about 10 per cent. at the outside. I do not think it would be right to say in the circumstances, "You must pay your fair share for the general protection of the community and for the purpose of carrying on the War." We do not say that, for it would sound brutal, but what is the position? As a matter of fact it is a windfall to him under these circumstances, and, although it is with very great reluctance, I think I must say that we have gone to the utmost limit in the measure which we introduced during the course of the year. I regret it very much.
    Lord HUGH CECIL: I do not wish to say anything of a controversial character, but I was glad to hear the Chancellor of the Exchequer recognise that the taxation was personal. That is quite inconsistent with the whole theory of the taxation. Take the case of aggregation. The tax is levied on the estate as though the estate paid, while it is the heir who does so. The family of a millionaire have all to pay on
    1036
    the scale of a million. I am very glad the Chancellor of the Exchequer has made that speech because the admission is valuable.
    Question, by leave, withdrawn.
    Mr. Butcher had given notice to move the following new Clause:—
    "During the continuance of the War no duty of Income Tax shall be levied or payable out of the pay of any officer serving in the Naval or Military Forces of the Crown."
    I have a new Clause on the Paper which is distinct from the Clause which has just been disposed of, and which deals with a subject which has not been discussed.
    The DEPUTY-CHAIRMAN (Mr. Maclean): It is distinct from what has been already decided, but it ought to have come on Clause 12.
    Mr. BUTCHER: We discussed already as to charging a man on his income and not upon his income according to certain averages, and we discussed also charging an officer upon his whole income—that is, his pay and any private income he has. But I do submit that we have not discussed the question which is raised by my new Clause, namely, that an officer ought not to be charged Income Tax on his pay. I would therefore respectfully ask to be allowed to put that question before the Government in order that they may give their views on it.
    Mr. MONTAGU: On the point of Order. The hon. Member for Oldham (Mr. Denniss) had a discussion on an Amendment, and the Noble Lord the Member for Oxford University (Lord H. Cecil) suggested to the Attorney-General an alternative method to that proposed by the hon. Member, in order to relieve soldiers and officers from paying Income Tax, and it was on that particular suggestion of the Noble Lord that my right hon. Friend suggested that the better way to do it would be to increase the pay of the lower ranks of the officers concerned, and, as the Prime Minister has stated, the Government propose to announce a scheme for such increase.
    Mr. BUTCHER: What was discussed was really irrelevant to the Amendment of my hon. Friend the Member for Oldham. I appeal to the Chairman that I am entitled to move the Clause in order to get the views of the Government.
    The DEPUTY-CHAIRMAN: I have listened to what the hon. and learned Member has said, but I am still of opinion that, so far as the Chair is concerned, whatever the hon. Member's view may be, the subject substantially has been disposed of by the discussion that has already taken place.
    Mr. BUTCHERrose—
    The DEPUTY-CHAIRMAN: I cannot allow the hon. and learned Member to argue with the Chair, but I may add, for the hon. Member's satisfaction, that I had an opportunity of consulting with the Chairman before I took the Chair on the point I have mow decided.
    Mr. BUTCHER: I shall raise it on Report.

    NEW CLAUSE.—(Provision for the Dealcoholising of Beer.)
    A drawback of twenty-four shillings shall be paid for every thirty-six gallons of beer of an original gravity of one thousand and fifty-five degrees which, under regulations to be sanctioned by the Commissioners of Customs and Excise, has been subjected to a process of dealcoholisation, so as to produce a beverage containing not more than two per cent. of proof spirit; and for the purpose of such dealcoholisation it shall be lawful, subject to such regulations as aforesaid, to distill spirit on the premises of the brewery.
    Clause brought up, and read the first time.
    Mr. ANEURIN WILLIAMS: I beg to move, "That the Clause be read a second time."
    This is a Clause which I am happy to think will be pleasing both to brewers and publicans and to us temperance people and will not have the effect of costing the Government any substantial sum for the next year or two; altough it might have far-reaching effects in the future. The Clause relates to the dealcoholising of beer. We all know that beer in this country has been made steadily lighter year by year for a considerable time past without any injury to the brewing trade, and probably with great advantage to the public. The object of this Clause is to enable brewers who so desire to produce a beer which is absolutely a temperance beverage. You cannot brew beer so light as that, but you can, after having brewed beer with a considerable amount of alcohol
    1038
    in it, take out of it the alcohol by a process not so long ago invented, and you can leave a liquor which is absolutely non-intoxicating, and which is a palatable liquor which many people like as well as ordinary beer. There are brewers ready to carry out this process, but the state of the law renders it impossible to do so. The result of the process is to take ordinary beer and extract the alcohol from it. Therefore, the net result is that you produce a non-dutiable beverage, and at the same time you produce a certain quantity of alcohol or spirit. It is perfectly clear that it is quite fair, and indeed necessary, that the Government should tax the spirit so produced in the ordinary way. The matter is a technical one, and the interval between Second Reading and Committee has been so short that I have not been able to refer to experts, but I think what I am about to state is correct.
    What happens is this: In the first place, the brewer has to pay full duty on the beer which is only an intermediate stage in the process. In the next place, he has to pay full duty upon the spirit that he produces at the end of the process. In addition to that he is not allowed to carry on the dealcoholising in his brewery, as it is considered to be work for distillers. Therefore he cannot do it in his brewery, and practically he cannot do it at all since the practical difficulties are so great. My Clause would excuse him from duty on the intermediate stage. He is not really producing beer in the sense of an alcoholic dutiable beer. It is only an intermediate stage. He would have to pay the duty when he produced it, but I suggest that when he dealcoholised it he should have a rebate of not quite the whole of the duty, because the Government department would be put to some small expense. If the duty amounted to 25s., I suggest that he should draw a rebate of 24s., leaving the shilling to pay expenses of booking and keeping accounts. I also suggest that the dealcoholising should be allowed to be done in the brewery. In this way the trade would be made possible, and if the process were successful, so as to please the public, the temperance party would be very glad. I think also the brewing interest and the publicans would also be very pleased if they were able to do a business which satisfied the public. I hope that those gentlemen regard temperance people as men and brothers. I have not the slightest suspicion that they want to do injury to the public, but that

    1039
    they want to produce an article which the people will buy. If by this process they can produce an article which is perfectly innocuous, having no alcohol in it, they will, I am sure, be just as willing to produce that as they are to produce the light beers which have come into fashion of recent years.
    I do not think that the possible objections to my proposed Clause are really very serious. I am certain that they are not fatal. In regard to details, I should be only too glad to agree to such Amendments as the Treasury or the Excise authorities considered necessary. It may be suggested that there is something in this proposal that might lead to evasion of the duties. I do not think that that is possible. It will be seen that in the Clause I have provided very carefully that the whole process is to be carried on under regulations made by the Excise and Customs Department. Moreover, there would be no objection at all to the regulations providing that the spirit should be methylated and not sold as ordinary drinking spirit. Another possible objection is there would be a loss of revenue, because the public, if they drank this non-alcoholic, non-dutiable beer, might be paying less to the revenue than they would do if they drank ordinary beer. There would be very little change at present, because this liquor has yet to make its way. It is not yet widely known, although it has been tested and approved by connoisseurs. I would point out that the refusal of the proposal on this ground would really amount to putting a veto on the manufacture of a temperance liquor which might be accepted by many people instead of alcoholic beer, and the Government would be putting pressure upon people to drink intoxicating liquor in order to keep up the revenue.
    At the present time in view of the circumstances of the War we are adopting many exceptional measures to promote temperance. Those measures are, I fully recognise, causing great sacrifice to people engaged in the brewing and publican trade, and I am quite sure the Government will not use the question of revenue as a reason for hindering a measure which would promote the cause of temperance without doing the slightest injury to that trade. This Clause is an act of justice which I hope the Government will accept and the Committee approve. If for any reason the Government are unable to
    1040
    accept it at the present moment, I hope they will at any rate give this important matter their consideration, as it is one which may have far-reaching consequences in the future. Beer has already changed its character very much, and become a much lighter article than it was in the old days, and I do not see that we ought to put any artificial limit to the progress of that movement.
    Mr. MONTAGU: I hope my hon. Friend will not mind my suggesting that we should defer the discussion of this matter in greater detail until the ordinary financial arrangements for the year come to be considered. If he looks at the Finance Bill which we are now discussing he will see that every one of its Clauses deals with emergency taxation, and the provisions incidental thereto, arising directly out of the War. The interesting proposal which he has brought forward would be more applicable to a general discussion of the financial system of the country than to this emergency interim Budget. What he advocates is really a very great departure from our fiscal system. He knows of an interesting new beer made from beer, which has what is to him the advantage of not containing any alcohol. I venture to suggest that he is unduly optimistic if he thinks the proposal that, at the very moment when we are increasing the taxation on other beers, we should exempt this beer from, taxation would be a popular move with brewers and publicans. However that may be, we do not at present tax beer in accordance with the alcohol which it contains. It has already been suggested once this afternoon that that would be a good system. If we adopted that system a beer containing no alcohol would of course escape taxation. As the hon. Member knows, if at present he succeeded in brewing a beer which contained no alcohol but which was a beer, it would be taxed. Beer is taxed on its specific gravity, and not on the alcohol it contains. Brewers may, I am told, arrest fermentation at any time during the process of manufacture in order to limit the quantity of alcohol which shall be contained in the beer when in a finished state. So that the suggestion of my hon. Friend is an alteration in the whole system upon which beer is taxed. The beverage in which he is interested, and in which he desires to interest the Committee, is frankly something which is to be put on the market in competition

    1041
    with other beers. For that reason I would suggest that we should be given longer time to consider so great a departure from our present system, and discuss it when we come to the wider financial questions next year.
    Mr. DENNISS: The teetotaler, if he does not smoke, pays none of the War taxation. If he succeeds in brewing a beer which is a teetotal beverage, that will be the opportunity to which the Chancellor of the Exchequer referred the other day of catching the elusive teetotaler. Therefore we ought to keep the tax on this beer, particularly if it becomes a teetotal beverage. The more teetotal this drink is made, the more necessity there is to tax it.
    Mr. LEIF JONES: I do not think that this proposal has anything to do with taxing teetotalers. I agree that the present is not a very happy time to bring the matter forward, and that it would be better to defer it until we consider the financial arrangements for next year. But I hope my hon. Friend is not going to put the suggestion out of his mind, now that he has disposed of it in the House. I trust that he will consider the point, because I understand that there are two or three processes of this kind which manufacturers are endeavouring to bring to perfection, and the present state of the law, largely in connection with the point touched on by the Secretary to the Treasury, that beer is not taxed on its alcoholic strength, does press very hardly on those who are experimenting. I am sure the Committee will not think that I am a good judge of beer, but I have tasted one of these de-alcoholiscd beers—[An HON. MEMBER: "And you are still here!"]—and, as far as I can judge, it has the same smell and the same taste as ordinary beer. [An HON. MEMBER: "How do you know?"] I have smelt ordinary beer. [An HON. MEMBER: "Taste?"] Taste is from memory of college days. If manufacturers can carry the experiments to perfection and produce a non-alcoholic beer, I think it will probably meet a public demand. Therefore it is an experiment which the Treasury should encourage rather than discourage, though I quite agree that this is not the moment to relieve teetotalers of taxation.
    Motion and Clause, by leave, withdrawn.
    Bill reported; as amended, to be considered To-morrow.

  TRADING WITH THE ENEMY ACT (1914) AMENDMENT BILL.
  [Mr. MACLEAN in the Chair.]
  TRADING WITH THE ENEMY ACT (1914) AMENDMENT BILL.

    CLAUSE 1.—(Constitution of Office of Custodian of Enemy Property.)
    (1) The Board of Trade shall appoint a person to act as Custodian of enemy property (hereinafter referred to as "the Custodian") for England and Wales, for Scotland, and for Ireland respectively for the purpose of receiving, holding, preserving, and dealing with such property as may be paid to or vested in him in pursuance of this Act, and if any question arises as to which Custodian any money is to be paid under this Act, the question shall be determined by the Board of Trade.
    (2) The Public Trustee shall be appointed to be the Custodian for England and Wales, and shall, in relation to all property held by him in his capacity of Custodian, have the like status and his accounts shall be subject to the like audit as if the same were held by him in his capacity of Public Trustee, and the Public Trustee Act, 1906, shall apply accordingly.
    (3) The Custodian for Scotland and Ireland respectively shall have such powers and duties with respect to the property aforesaid as may be prescribed by regulations made by the Board of Trade with the approval of the Treasury.
    (4) The Custodian may place on deposit with any bank approved by the Treasury any moneys paid to him under this Act, or received by him from property vested in him under this Act, and any interest received on account of such deposits shall be paid by the Custodian to the Treasury except so far as the Treasury may authorise the Custodian to retain any such interest for the purpose of meeting any charges on account of the remuneration of the Custodian and expenses incurred by him under this Act:
    Provided that the Custodian for any part of the United Kingdom shall, if so directed by the Treasury, transfer any money held by him under this Act to the Custodian of another part thereof.
    Mr. NIELD: I beg to move, in Subsection (1), after the word "of" ["for the purpose of receiving, holding, preserving, and dealing with such property"], to insert the word "collecting."
    I regard this as being a substantial point in the consideration of this important measure. The Attorney-General said on

    1043
    Friday last, in making a speech upon the Second Reading of the Bill, that he did not desire to extend the provisions of the Act to every kind of payment that might be made to an enemy. He pointed out that that would be making the non-payment of a debt a criminal offence. I would point to what he has done under Clause 2, where penalties are prescribed for those who do not pay money which is owing within a definite time. The object of my Amendment is to give a Custodian power where he knows money is due to get it in, not necessarily by enforcing it, although the penalty which Clause 2 imposes upon the person who owes money and does not pay it within a definite time, will, of course, operate to assist him in getting it. As the Bill is drawn, Section 1 is very much like the Trustee Act, which enables the person embarrassed by the possession of money which he has to pay to somebody to pay it into Court and so to get a quittance. It seems to me that the Custodian ought to be allowed to have the real power of taking the initiative, at any rate in the case of certain creditors from whom he has a right to receive the money, so that the money that is due should be paid.
    I do not think we ought to be unduly tender in regard to the enemy in the construction of this Bill. It may surprise the House to know that in Germany they have powers in relation to matters of this sort which are a very great hardship. I have here in my hand the translation of a letter from one of the many branches of a large English house in Germany, the branch which at this particular place pays no less than £1,000 a year rent under a lease which has yet ten years to run. One of the measures which was promptly taken by the patriotic landlord was to apply for a distress, and to distrain for ten years' rent in advance. That, apparently, is a perfectly legal claim to be made. The firm was distrained upon for no less than £10,000, and have had to provide the money. Under those circumstances it is not unreasonable for us to ask this House that this Bill shall be constructed that, so far as possible, it will enable the money due to a German or Austrian firm to be got, and to be held in safety for those who may ultimately be entitled to it. I do not profess to know how this Act will ultimately work out, and whether or not the funds held will be treated as a gigantic
    1044
    settlement against debts which may be due from them to us. However that may be, it seems to me that we ought to give the Custodian something more than the mere passive right to receive money.
    Sir J. SIMON: I hope the hon. Member will not press his proposal. This Bill may, in the course of its passage through Committee, require to be altered here and there. I do not prejudge that; but we have to deal with the subject as it arises Clause by Clause, and doubtless we shall be able to see what is the proper way to describe what the Custodian shall do. I would ask the hon. Gentleman not, at any rate, at the very outset, to prejudge the matter in the sense in which he suggests. The general idea of the Bill was that the public trustee would be the Custodian in England, and be rather a recipient and guardian. If he were to collect the money it would mean, or might mean, that he would have to bring actions to enforce claims, and I am sure the hon. Gentleman will see at once that that opens up a very grave objection. As things stand, a person in this country cannot be made by a German creditor to find the money while the War is going on. I cannot help thinking it would be rather a strong thing to say, "Oh, that is all very fine, but we are going to put the public trustee, or whoever the Custodian may be, in the position that he can make a man pay here and now." I am sure that the hon. Gentleman will see at once that the Bill has been drawn very carefully, and that it would probably be better to treat the public trustee rather as a person who receives and keeps moneys and gives receipts for them than somebody who actively insists upon the money being paid to him. I think it really would be better to get the Bill as it is at the present time, and consider any suggestions in the line suggested by the hon. Gentleman on Report.
    Mr. NIELD: I am quite ready to adopt the suggestion of the Attorney-General, but I would only observe that there are some people whom it would be better to relieve of the money than allow them to keep it in hand until a later time when they might dissipate it. And also, that it is hardly fair on that section of persons which is required to pay under Clause 2. For some there is a penalty to pay, while others are allowed to retain money in their hands. It is not suggested that there is anything against the Custodian receiving and holding the money instead

    1045
    of leaving it in the hands of those who own it. They would be in a worse position for taking advantage of the money in their hand. However, I adopt the suggestion that if it is found he ought to have such powers he should have them.
    Amendment, by leave, withdrawn.
    Mr. NIELD: I have another Amendment oil the Paper enabling the money to be invested in War stock or other Government securities. When I put that Amendment down, the Amendment by the Attorney-General to enable the money to be invested in securities was not upon the Paper, and I am perfectly willing to allow the Amendment which he has on the Paper to take the place of mine. I do not see why, however, we should drop the alternative in the Bill of placing the money on deposit. However, we can discuss that upon the Attorney-General's Amendment.
    Sir J. SIMON: I beg to move, in Subsection (4), to leave out the words "place on deposit with any bank," and to insert instead thereof the words "invest in any securities."
    Sir W. ESSEX: I do not know why the Government propose to withdraw from itself the right to place this money on deposit in any bank. I conceive that if they limit themselves in dealing with this money to investment in securities there might be a fall in those securities—an injury might be done to the market value of the stock at the end of the War. I do not think it will do any harm to retain power of placing this money in creditable banks on deposit. I should like to hear from the Government why they propose to withdraw the words "place on deposit in any bank."
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. J. M. Robertson): It is a matter of Treasury policy that moneys invested in securities approved by the Treasury would be in the most secure position. The hon. Member suggests that securities might depreciate, but it is considered that securities approved by the Treasury will be the best for the investment of the money.
    Mr. RUTHERFORD: As the Clause stood the Custodian could do nothing but put the money into a bank. Now the Government come down with an Amendment that he is not to put any money into the bank, but that he is to invest in securities.
    1046
    Surely the power to do either of these things would be the better course to adopt, and therefore I suggest the necessity of leaving in the words "placed on deposit with any bank" and adding "or invest them in any security." Surely a moment's consideration of that suggestion would be sufficient to satsfy the Government that they ought to take power to do either the one or the other.
    Mr. RAWLINSON: Is it the intention of the Treasury to interfere as to what this money should be invested in?
    Mr. ROBERTSON: I said securities approved by the Treasury.
    Mr. RAWLINSON: Are the Treasury to interfere?
    Sir J. SIMON: If the hon. and learned Gentleman will look at the Bill he will see where the Treasury comes in.
    Mr. RAWLINSON: We have not got to that, at all events, yet. What I want to know is, Does this mean the money is only to be invested in such investments as the Treasury approve? What is the reason for not taking power to place the money on deposit in banks as well as to invest in securities? What possible objection could there be to giving this discretion? This is really emergency legislation of the Government, for they first put into the Bill the words "place on deposit with any bank," and then they say that is a wholly indefensible position. I think that requires more explanation.
    Mr. HENRY TERRELL: Under this Bill you may be dealing with a large number of small sums. A man may owe £3 or £4 to an enemy. He has got, under this Bill, to pay that to the Custodian. How is the Custodian to invest sums of £2, £3 or £4 in securities? It is absurd! Why not place it on deposit in a bank. The Treasury might limit the banks in which those deposits are to be made. But surely, if you are to invest small sums from time to time, the best thing is to deposit them in banks. That is the course the Courts always take in regard to small sums. The Courts always order small sums to be placed on deposit.
    Sir J. SIMON: I quite follow what the hon. and learned Gentleman suggests. I venture to suggest it is not a case whether the Government are trying to take some advantage of the hon. and learned Member beside him, and suddenly make some monstrous change in the Bill. The

    1047
    suggestion that we have suddenly and unexpectedly introduced the Treasury, will not I think be borne out if the hon. and learned Gentleman studies the Bill. I hope that in the Committee stage we will not get into the habit of regarding each other as double-dyed scoundrels. [HON. MEMBERS "Single-dyed."] We are only trying to do the right thing, and I am anxious to accept any suggestion that commends itself on reflection as an improvement in the Bill. There is force in what has been said, and I should propose to move my Amendment in this way—I am not quite clear how, as a matter of order, it ought to be done. As my Amendment stood it was to leave out the words "placed on deposit with any bank," and to insert the words "invest in any security."
    I think I shall be following the spirit of the suggestions made if I suggest that in place of leaving out the words "placed on deposit in any bank" we should insert after them the words "or invest in any security." Then, both the choice of the bank and the securities will be approved by the Treasury. Of course, the Committee will bear this in mind, that the Public Trustee as a responsible official ought to be answerable to somebody, and further, that he ought to be responsible to somebody responsible to this House. If we do not arrange for some Government Department and somebody who can be had up at this box to answer for what is done, we should be doing what is neither constitutional nor right. The Trustee has always been regarded as a functionary of very great importance, for whom the Treasury answers in this House. It was done not with any desire to perpetrate in the form of emergency legislation some particularly monstrous proposal. We wanted someone here responsible for this money and susceptible to criticism. The Sub-section would then read:
    "The Custodian may place on deposit with any bank or invest in any securities approved by the Treasury any moneys paid to him under this Act."
    Then I am going to suggest that we should insert the words,
    "and any interest received on account of such deposits or investments shall be dealt with in such manner as the Treasury may direct."
    Then we should have a Custodian who really collects and preserves these sums in the general interest, and we should at
    1048
    the same time keep control over this money until the end of the War, and until we see how corresponding moneys are being dealt with in Germany. This proposal would give an opportunity, by means of questions in this House, of discussing and deciding as to what is the proper way to deal with these moneys. I do not know whether that will meet the views of hon. Members opposite or not.
    Amendment, by leave, withdrawn.
    Amendments made: In Sub-section (4), after the word "bank" ["deposit with any bank"] insert the words "or invest in any securities."
    In Sub-section (4), after the word "interest" ["any interest received on account"] insert the words "or dividends."
    9.0 P.M.
    Sir J. SIMON: I beg to move, in Sub-section (4), to leave out the words "shall be paid by the Custodian to the Treasury, except so far as the Treasury may authorise the Custodian to retain any such interest for the purpose of meeting any charges on account of the remuneration, of the Custodian and expenses incurred by him under this Act"; and insert instead thereof "or investments shall be dealt with in such manner as the Treasury may direct."
    Mr. CAVE: It has been represented to me that some of those described in the Bill as enemies are British subjects resident in the enemy country. They may have nothing but these dividends to live upon, and therefore if this is done they will have no means. I take it that it will be within the power of the Treasury to remit some part of the income to persons placed in that position.
    Sir J. SIMON: I think that is so.
    Question put, and agreed to.
    Mr. NIELD: I beg to move, in Subsection (4), at the end of the first paragraph to add the words,
    "And except so far as the same may be required to be applied in payment of any interest under an order of Court made in pursuance of Section five."
    Sir J. SIMON: I think the Clause is quite wide enough without those words.
    Mr. NIELD: Will you consider this point between now and the Report stage?
    Sir J. SIMON: Yes.
    Amendment, by leave, withdrawn.
    Mr. RUTHERFORD: I beg to move, in Sub-section (4), to add at the end of the first paragraph the words:—
    "The Custodian when receiving any property or moneys under the provisions of this Act shall have the power to arrange and settle the claims of any British subject or other persons not being alien enemies, and to agree the amounts and pay and discharge the same before making such bank deposit or payment to the Treasury as aforesaid."
    It has been pointed out to me by more than one very important body of traders, one of which is the British Engineering Society, representing capital to the extent of £100,000,000, and very largely trading generally, that the Custodian should settle any claims there are of any British subjects before parting with any of the moneys which he received under this Act or before they are invested or got out of his control into the hands of the Treasury. I apprehend that there cannot be any objection on account of the War to a British subject's claim being settled. We are trying in this Bill to prevent the payment to people in Germany or Austria of moneys which might help those countries to prolong the War against us, and the one object surely of appointing a Custodian to take charge of moneys or property belonging to German subjects in this country ought to be, first of all, to settle the claims of British subjects upon those moneys or property. The Employers' Association, which is a very large body in Manchester, and the British Engineering Society, which represents a very large body of traders and manufacturers in this country who have a large section of business with Germany, both pointed out to me that it is very desirable, before these moneys go out of the control of the Custodian and into investments, or into the hands of the Treasury, that any claims of British subjects upon them should be adjusted in a businesslike manner and simply the balance invested or handed over to the Treasury. It is with that object entirely that I move this Amendment.
    Of course, a great deal as to the merits and the effect of this Amendment depends upon what we are going to do with Clause 2. If Clause 2 is going to remain as at present printed and all that the Custodian is going to receive are interest, dividends, and share of profits, then I confess there is very little in the suggestion
    1050
    involved in the present Amendment, but there is a general concession of opinion in the country, as evidenced by hundreds of communications—which I am sure the right hon. Gentleman must have received, because, having taken some part in the Debate last week, and I suppose made myself a target for correspondence of this description, I have received a vast quantity—that this Custodian ought to be at liberty to take possession of and charge of all kinds of property belonging to an enemy, as well as simply dividends, interest, or share of profits. Of course, if the scope of the Bill is enlarged, as the vast body of opinion in the country expects that it will be, and thinks it ought to be, then it is clear that the Custodian should have power to properly settle all outstanding accounts before definitely dealing with the balance.
    Sir CLIFFORD CORY: I rise to support this Amendment, because, like the hon. Member, I have had any number of representations made to me by traders, who seem to be rather under the impression that this Bill is framed more in the interests of alien enemies who have businesses in this country than in the interests of this country itself. They find in Germany that a supervisor has been put in charge of every British business, and that his main business seems to be to collect the debts due to those businesses in order to pay German creditors. They therefore feel it is rather hard, when they have debts owed to them by Germans having businesses in this country, which they can fully prove and to meet which there are effects, that there should not be some means of getting those debts paid. I trust the Attorney-General will see his way to accept the Amendment, which would give great relief and satisfaction to traders in this country.
    Mr. WATT: I also desire to support the Amendment, and perhaps if I gave a concrete instance it might make the case clear. A friend of mine has something like £29,000 owing to him by the firm of Krupp's, who have assets in this country to the extent of £225,000. The Custodian should have power to seize that quarter of a million and to pay off the creditors of Krupp's in this country. The idea which I think has prompted this Bill as it now stands is that the Custodian should have power to gather the dividends accruing from that quarter of a million and to pay them to the creditors of that firm in this

    1051
    country, but that would not be sufficient to pay the creditors of Krupp. It does not fellow that the friend of whom I spoke and to whom £29,000 is owing is the only creditor of Krupp's in this country, and if he and the other creditors of the firm are to rely for the payment of their debts on the interests and dividends accumulating from the capital Krupp's possess in this country, then they will have to wait a very long time. If, on the other hand, the Custodian were permitted to lay hands on the whole of the assets, the capital as well as the dividends, and to pay out, after realisation, the sums that are in his hands to the various creditors, the mercantile community of the country would consider this measure of some use, whereas as it at present stands it would be comparatively futile in paying off the creditors of German firms.
    Sir J. SIMON: The speech of my hon. Friend who last addressed the Committee would appear to me to be a general criticism of the Bill—a general impression of the Bill rather than a speech directed to this particular Amendment. But the hon. Member who moved it (Mr. Rutherford), and the hon. Gentleman who supported it (Sir C. Cory), did address themselves particularly to this point. It surprises me it should be thought that this is an Amendment which we ought to put into this Bill. I do not differ in the least from those who have expressed the opinion that our object here should be, first, to prevent the enemy country from getting, directly or indirectly, financial assistance while the War is going on; and, secondly, to see that, as far as may be, we keep a hand on enemy assets in this country, in order that they may be administered fairly and properly and in the way they should be. But what is it that hon. Gentlemen are really asking us to do?
    The Public Trustee, according to this Amendment, is to have the power to settle the claims of anybody other than an alien enemy, as against persons to whom this money might have been paid were it not handed over to the Custodian. The Public Trustee is to do that. He, of course, is not a judge. He has to administer the fund, but he has no judicial machinery for testing the claims. He will never hear the case of the other side. He will never know whether there is a set-off or a counter-claim; but the first person who comes along and tells him he has a claim against the enemy asset is
    1052
    to have the money. Now, surely the proper thing is to have a claim adjusted in a business-like manner. I know lawyers are often told that they do not know much about business, but I decline to admit that a business-like manner of adjusting anybody's claim is to admit it without being proved or tested, and without having any machinery for investigating it, or to admit it without any regard to other claims which have not been heard of, but which may be twenty times as great. Suppose the Custodian came into possession of a sum of £100. Is he to hand it over to the first plausible person who states he has a claim against the money? For all he knows there may be ten people who have equally good claims, far exceeding in amount the £100. Yet, according to this Amendment, the first gentleman who walks into the Public Trustee's Office with his claim is to get the money. It seems to me that this Amendment should, without the slightest hesitation, be rejected.
    Mr. RUTHERFORD: I think the Attorney-General has entirely misapprehended the effect of the Amendment. Nobody has ever suggested that, without a particle of common sense—without a particle of business capacity, the Custodian should hand money over to the first plausible gentleman who presents himself. I am sure that that is not in the Amendment. I do not suggest that this Custodian should be such a consummate ass as to adopt any such course of action as the Attorney-General has suggested. The effect of the Amendment is this. The suggestion is that the Public Prosecutor should be appointed in England. He is a business man. He is practically acquainted with business affairs, and, in his capacity of Public Trustee, he has paid over to me many thousands of pounds. But he has not paid it over because I was a plausible person who had no right to any portion of the money. He has paid it over because he was satisfied I was the right person to receive it. The whole spirit of this Amendment is that the Public Trustee, or the corresponding official in Scotland or Ireland, should, in a business-like manner, settle proper claims against an alien enemy's estate of which he has been placed in possession. Of course, if the Attorney-General has made up his mind that he will decline to strengthen this Bill—
    Sir J. SIMON: I have not done that at all.
    Mr. RUTHERFORD: If we are to have any reasoned Amendment of this kind simply made a mockery of, if it is to be suggested that it means a whole pile of things it does not mean, if in fact we are going to be left with the Bill of the Government, I can tell the right hon. and learned Gentleman that there is not a single section of the trading community that will be satisfied.
    Sir F. LOW: The hon. Member should have regard to Sub-section (2), Section 5.
    Mr. RUTHERFORD: I have read that Sub-section, but we are not upon that at the present time, and when we do come to it we shall find that it only applies to matters dealt with by order of the Court. I am not dealing with getting anything into Court. I know the hon. and learned Gentleman likes to get everything into Court.
    Sir F. LOW: And so does the hon. Member for the West Derby Division of Liverpool.
    Mr. RUTHERFORD: I dare say I have a predilection for sending most things into a place where they can be dealt with in a reasonable manner. But that is not the point. What I am afraid I can see at the very beginning is that the Bill is not going to be made satisfactory at all. If every Amendment we put forward is going to be refused, and if we are to be told that the Custodian is only to take charge of dividends and interests, and of no other money, then I say the Bill will be of no real practical use.
    The DEPUTY-CHAIRMAN: The hon. Member had better confine his remarks to the Amendment.
    Mr. RUTHERFORD: May I ask leave to withdraw the Amendment. I feel it is of no use continuing the discussion upon it.
    Sir C. CORY: In regard to the suggestion that any British creditor would be able to put in a claim without any proof whatever under this Amendment, may I point out that I have handed in another Amendment dealing with this very point, and providing that British creditors should verify their claims by statutory declarations and that the Custodian should not deal with them until they have been adjudicated by the High Court. I must say I think some such Amendment as this is highly desirable.
    Mr. RUTHERFORD: But they will not accept it.
    Mr. H. TERRELL: It seems to me that the criticisms which have been made against this Amendment are quite justified. May I ask my hon. Friend to consider this point: Suppose the Custodian receives the sum of £100. What is to be his next step? Is he to advertise for creditors, or is he to pay over the money to the first man who happens to hear that he has received the cash in respect of debts due to a particular German? Or are you going to have a process such as is well known in bankruptcy and in winding-up proceedings? What, as a matter of fact, when the Custodian receives this sum of money, is he to do? He must either invest it or, under this Amendment, he must consider the claims of British creditors. But how is he to get at the claims of British creditors? How is he to find out what claims there are? He cannot do it unless you introduce machinery such as you have in bankruptcy—the advertisement, the notice to send in statutory declaration in support of the claim, the date fixed for adjudication, and the right of appeal. You would have to introduce the whole of that machinery for determining what the particular claims are and then you would have the process of appeal from the decision of the Custodian. You would also require an arrangement for the apportionment of the money in cases where the claims were greater than the amount in the Custodian's hands. I say the whole thing is a practical impossibility as a matter of business. On the other hand, the procedure provided by Sub-section (2) of Section 5 is practical. There you have a procedure for the purpose of enabling a man who has a claim to go to the Court to adjudicate upon it. You have in the Court the machinery you require, and you would have no need to set up totally new machinery for the purpose of dealing with these matters. It seems to me that to introduce these words would introduce a practical impossibility into the working of this Bill, and I hope the Committee will not adopt the Amendment.
    Mr. MORTON: We are all anxious to help the Government and give them every power for which they ask in dealing with this very troublesome and difficult matter. I trust that the Attorney-General will consider whether there is not some way of meeting this case whereby, while we prevent enemies from getting our money to buy gunpowder with which to blow us

    1055
    up, the just claims of British citizens can be met. The Attorney-General knows very well we are not going to divide on any Amendment, because we are anxious to help him, but I hope he will consider before the Report stage whether there is not some way of meeting this case.
    Sir J. HARMOOD-BANNER: As a business man, I am rather disappointed with what the Attorney-General has said, not because I do not agree with him as to the difficulty of the form of carrying it out, but because I had hoped this Bill would be a means of paying the enemy's creditors out of the enemy's funds. I do not see how the Bill as it now stands is going to do that. An hon. Member opposite raised the question of Krupp's. There are a few legal Gentlemen here who will know how that question was adjudged, and how, by absence of notice, it was impossible to get a decision in the absence of Krupp's, so that the person to whom money was owing was unable to get it. I do not know whether the Attorney-General can tell us whether book debts are to be paid to the Custodian. [HON. MEMBERS: "Everything comes in!"] Of course, if it all comes in, then it forms a fund in the hands of the Public Trustee.
    The DEPUTY-CHAIRMAN: Other Clauses of the Bill deal with the point the hon. Member is now raising—Clauses 4 and 5. I would suggest to the Committee that the matter should not be pressed any further now, and that we are rather wasting time.
    Mr. RUTHERFORD: As the Government will not accept the Amendment, I ask leave to withdraw it.
    Amendment, by leave, withdrawn.
    Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

    CLAUSE 2.—(Payment of Dividends, etc., Payable to Enemy.)
    (1) Any sum which, had a state of war not existed, would have been payable and paid to or for the benefit of an enemy by way of dividends, interest, or share of profits, shall be paid by the person, firm, or company by whom it would have been payable to the Custodian to hold subject to the provisions of this Act and any Order in Council made thereunder, and the payment shall be accompanied by such particulars as the Board of Trade
    1056
    may prescribe, or as the Custodian, if so authorised by the Board of Trade, may require.
    Any payment required to be made under this Sub-section to the Custodian shall be made—

    (a) Within fourteen days after the passing of this Act, if the sum, had a state of war not existed, would have been paid before the passing of this Act; and

    (b) in any other case within fourteen days after it would have been paid.

    (2) Where before the passing of this Act any such sum has been paid into any account with a bank, or has been paid to any other person in trust for an enemy, the person, firm, or company by whom the payment was made shall, within fourteen days after the passing of this Act, by notice in writing, require the bank or person to pay the sum over to the Custodian to hold as aforesaid, and shall furnish the Custodian with such particulars as aforesaid. The bank or other person shall within one week after the receipt of the notice comply with the requirements and shall be exempt from all liability for having done so.
    (3) If any person fails to make or require the making of any payment or to furnish the prescribed particulars within the time required by this Section, he shall, on conviction under the Summary Jurisdiction Acts, be liable to a fine not exceeding one hundred pounds or to imprisonment, with or without hard labour, for a term not exceeding six months, or to both such fine and imprisonment, and in addition to a further fine not exceeding fifty pounds for every day during which the default continues, and every director, manager, secretary or officer of a company, or any other person who is knowingly a party to the default shall, on the like conviction, be liable to the like penalty.
    (4) If in the case of any person firm or company whose books and documents are liable to inspection under Sub-section (2) of Section two of the Trading with the Enemy Act, 1914 (hereinafter referred to as the principal Act), any question arises as to the amount which would have been so payable and paid as aforesaid the question shall be determined by the person who may have been or who may be appointed to inspect the books and documents of the person firm or company, or, on appeal, by the Board of Trade, and if in the course of determining the question

    1057
    it appears to the inspector or the Board of Trade that the person firm or company has not distributed as dividends interest or profits the whole of the amount properly available for that purpose, the inspector or Board may require the whole of such amount to be so distributed, and in the case of a company, if such dividends have not been declared, the inspector or the Board may himself or themselves declare the appropriate dividends, and every such declaration shall be as effective as a declaration to the like effect duly made in accordance with the constitution of the company:
    Provided that where a controller has been appointed under Section three of the principal Act this Sub-section shall apply as if for references to the inspector there were substituted references to the controller.
    (5) For the purposes of this Act the expression "dividends interest or share of profits" means any dividends bonus or interest in respect of any shares stock debentures debenture stock or other obligations of any company, any interest in respect of any loan to a firm or person carrying on business for the purposes of that business, and any profits or share of profits of such a business, and where a person is carrying on any business on behalf of an enemy any sum which had a state of war not existed would have been transmissible by a person to the enemy by way of profits from that business shall be deemed to be a sum which would have been payable and paid to that enemy.
    Mr. H. TERRELL: I beg to move, in Sub-section (1), to leave out the words "and paid" ["would have been payable and paid to or for the benefit of an enemy"].
    I do not quite appreciate what is intended to be effected by the introduction of the words "and paid." The introduction of those words would practically make the Sub-section nugatory. Before it can be applied, and certainly before it can be enforced under Sub-section (3), it would be necessary for the person seeking to enforce it to prove not only that if a state of war had not existed the debt would not have been payable, but also that it could not have been paid. How can one predicate that it would not have been paid if certain circumstances had not arisen that have arisen? If those words are left in it would make it practically impossible to enforce Sub-section (3), and unless there is some reason which I do
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    I not appreciate for the insertion of those words, I shall insist on my Amendment.
    Sir J. SIMON: The question which the hon. and learned Gentleman has raised is an entirely reasonable one, and I quite appreciate that, as one looks at Clause 2, and even as one studies it rather closely, as I have no doubt the hon. and learned Gentleman has done, it is not at first sight apparent why those words should come in. I may, perhaps, say that the suggestion that they should be omitted has been made to me by other hon. Members of the Committee, and I have had the opportunity of conversation with one or two of them, who may take part in this discussion. I hope that Members of the Committee, in spite of the fact that I seemed to be obstinate in regard to the last Amendment, will realise that I have no idea of doing anything in this Bill except to help to make it as good as it can be made. If, after the point has been considered, the Committee really wish to leave out the words "and paid," and I gather that is the general desire, I shall not resist, but I think the result will be found to be other than what is intended. Let me take the case of a company, say, a brewery company, which has debentures held by debenture holders who are entitled to be paid debenture interest. Of course, if it does not make sufficient profit to pay debenture interest it is unfortunate, and they may possibly wind up your company, but, after all, it is not a criminal offence. If you say that every English brewery company which has debentures, some of which are held by enemies and some of which are held by our own friends, shall pay any interest which is payable on those debentures to the Custodian which, if it was not war time, would have been payable to the enemy, and if it does not, then every director, the secretary, and the manager shall all go to prison for six months, you are obviously providing that every brewery company that has not got the money to pay interest on its debentures, because some debenture holders are enemies commits a criminal offence not so to pay it. That is the effect.
    I quite admit that it occurred to me after the Bill had passed through several drafts—it is criticised by those who claim to speak for the commercial community which shows how unfortunate mere human effort is, because I do not think any Bill has been more carefully considered in its phraseology than this Bill—it did

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    occur to me and others who advised me, that unless we guarded against that case we might produce consequences that were never intended. The point of criticism the hon. and learned Gentleman makes is a perfectly fair one. The explanation I am offering to him is that that is the reason for adding the words "and paid" in order to avoid that consequence. He took the point, "Do you not, by adding the words 'and paid,' make your Clause very difficult to work?" I quite appreciate the force of his criticism. I meet it in this way: this Clause is retained at present, although there is an Amendment afterwards to extend it, and it applies primarily to dividends and shares, interest on such things as debentures, and, in some cases, to shares of profits which are divided between different persons.
    Take such a thing as dividends on shares. I apprehend there is not much difficulty in saying whether or not such a dividend is payable and would have been paid if there had been no war, because what happens is that the company has shareholders, some of whom are not alien enemies, while others of them are alien enemies. They declare their dividends and distribute their available profits straightaway to those shareholders who are not alien enemies. They do not, and they must not, pay the corresponding dividends to shareholders who are alien enemies, but there can be no doubt that if war had not broken out they would have paid them, because, of course, you have to pay all your shareholders at the same time. The same thing is true about interest on debentures, and the explanation—I agree the point is rather a fine one—really lies in what I have endeavoured to say. I think it will be found that if you do not put in these words "and paid" you have that consequence which I have indicated, which no one, of course, intends. It is not in the mind of any of us. On the other hand, we shall not in practice have any difficulty in imposing this penalty if this Clause is disregarded, because, of course, the question whether or not it would have been paid, like many another question, is after all one of evidence, and I cannot think of evidence more conclusive than that you have in fact paid all your shareholders or debenture holders who are not alien enemies, but have not paid those who are alien enemies.
    Mr. H. TERRELL: Interest on an ordinary mortgage.
    Sir J. SIMON: I quite agree that would be a difficult case, and it is partly because it is a difficult case that I have done something which brings down upon me the vials of wrath of some hon. Members and have limited this Clause as I have. In Sub-section (5) we have said that the compulsory provisions are in substance limited to dividends and debenture interests and shares and profits, and the like, arising in commercial matters, and the case therefore put by the hon. and learned Gentleman of interest on a private mortgage, which I agree would not be an easy one to argue, is excluded. I am not saying that makes the Clause, even as it stands, entirely easy. Some hon. Members who have approached the subject, and certainly some of those many correspondents who have written to me, have given me to understand that if they had the business, they would do it in five minutes, because it is so simple. But I suffer under the great disability of having had to work at the thing for weeks, and I find it rather difficult. I recommend to the Committee that we should keep in the words "and paid," because if we do not it will be found to be rather inconvenient, and we had better at any rate avoid that unexpected consequence by keeping them in.
    Mr. CAVE: When I first read the Bill and studied it I took entirely the view expressed by my hon. and learned Friend (Mr. Terrell) and I was very desirous that these words should be cut out. But after going further into it I rather doubt whether it is worth while. The Clause goes upon a curious and a new system altogether, and makes it a criminal offence not to pay these moneys to the Custodian, and the moment one has understood that one comes to the conclusion that it is not desirable unduly to extend the effect of the Clause. For myself, I rely much more upon Clause 4, under which any property and any debt may be vested in the Custodian by a simple order, than upon Clause 2, and I do not look for any great result from this particular Clause. It is for the same reason that, although I had intended to move an Amendment to extend this Clause to all debts—in fact I have an Amendment on the Paper which would have that result—I do not to-day propose to move it, because I do not want to create conditions under which it would be criminal for a man not to pay his debts. He may not be able to pay his debts. It would be very unreasonable that such a penalty should fall upon those who are

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    simply prevented from paying money which they owe and which may, no doubt, be recovered by civil process. For that reason my own view at present is against omitting these words. I agree there will be a difficulty in proving in many cases that the money would have been paid. It is easy to say when money would have been payable, but it is often very difficult to say when it would have been paid. Therefore the effect will be very limited, and may, in practice, be confined to cases like the instance given by the Attorney-General, where dividends are payable to whole classes, and you have paid everybody else, but because this man is an alien you have not paid him. In such a case it is clear that the money would have been paid but for the fact that the man was an alien.
    Mr. TERRELL: After the explanation of the Attorney-General I beg leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. RUTHERFORD: I beg to move, after the word "enemy" ["for the benefit of an enemy"], to insert the words "whether payable to such enemy direct or to any agent or person on his behalf."
    This is not an Amendment to which I personally attach very great importance, but I have been asked to move it on behalf of a very important body of traders, whose counsel considered this question and drafted this Amendment, and they have sent it to me and say, "it is submitted that it should be stated in the Act that property here should include all sums of money owing to enemies, whether payable to them direct, or to agents or to persons carrying on business on their behalf." I think it ought to be put into the Bill, but, of course, we are entirely in the hands of the Government. If I spoke rather strongly just now, I hope the Attorney-General will try to forgive me. We are not dealing with this matter in any carping or political controversial spirit. What we are exceedingly anxious to do is to see that this Bill is made as strong as possible, because these are the very people who are suffering to-day in Germany and in Austria. Their shares and property have been taken possession of, and what they are very anxious to be done is that everything that belongs to an alien enemy and can be got hold of should be taken possession of and taken care of here, so that at the end of the
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    War, if Germany and Austria, are not prepared to make compensation, we may have a fund out of which we can compensate them. The idea is to prevent the alien enemy from getting present pecuniary assistance, and, secondly, to protect our own people at the end of the War, so that we shall have a fund out of which our own people can be compensated. I move this at the request of the British Engineers' Society, who seem to think a great proportion of the sums of money which are paid to alien enemies to-day are payable to agents on their behalf and ought to be stopped.
    Sir J. SIMON: I quite understand the spirit in which the hon. Member proposes this, but I am going to suggest that really in this regard the Bill as it stands meets what he has in mind so far as it is proper to meet it. The result of not doing what this Clause says you ought to do is that you become a criminal, and it is very undesirable that we should treat anyone as a criminal because he fails to pay a sum of money which would otherwise have been paid to an agent of an enemy, if he does not know that he is an agent of an enemy. That would be a most disastrous thing. If the intention is, as I suppose it is, to limit it to cases where payment may be made with the knowledge of the payer that, either directly or indirectly, the money will go to the enemy, that is covered by words in Clause 3, which we shall reach shortly. I think the hon. Member will see that his Amendment is one which is not required.
    Mr. RUTHERFORD: I do not press it.
    Amendment, by leave, withdrawn.
    Mr. JOYNSON-HICKShad given notice of an Amendment in Sub-section (1), after the word 'enemy" ["for the benefit of the enemy"], to insert the words "or a limited company registered in Great Britain or Ireland whose shares are held as to upwards of seventy-five per cent. by enemies."
    The CHAIRMAN: I have some doubt whether this Amendment is within the scope of the Bill. It introduces a new subject.
    Mr. JOYNSON-HICKS: The Bill is "to amend the Trading with the Enemy Act, 1914, and for purposes connected therewith." What I am doing is seeking that the definition of the word "enemy" should be widened. Under the original Act

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    "enemy" was a human being. I am going to add to that enemy a limited company, and I venture to say that the suggestion I am going to make is one of considerable substance and one of great importance outside the House. It was discussed to some extent on the Trading with the Enemy Bill, and it was suggested that an alteration would be made. I submit that I am proposing to-day to add to the human enemy the impersonal enemy, and I believe that is within the scope of the Bill.
    The CHAIRMAN: It is rather a nice point, and I do not propose to exercise my power to rule the Amendment out, although I am still doubtful if it is not going beyond the original Act.
    Mr. JOYNSON-HICKS: I beg to move the Amendment. It is important to prevent the enemy from getting money, whether the money is payable to a human being or to a limited company trading in this country. I am prepared to say that there are companies 75 per cent. of whose shareholders are German. There are a large number of companies in this country with English names which are simply alter egos of alien enemies. There are Germans in Germany promoting companies here which are composed entirely of shareholders residing in Berlin. I have no doubt Members of the House have heard of a company bearing the name of "The British Incandescent Mantle Works." It is a company with 30,000 shares which are held by three gentlemen residing in Berlin. That is not a British company at all. There is another company with the useful English name "Henry Hill and Co., Ltd." Who would imagine that that is a German concern with 30,000 shares, 29,997 of which are held in Vienna? That is an entirely alien enemy concern. There was recently in our Courts a case in which the "Continental Tyre Company" sued an English citizen for £4,000 or £5,000. The defendant said, "This is a purely German firm, I am going to pay the money to anybody who can give a good receipt for it." He said he would rather pay it over to the Government as custodian to be kept for any purpose for which it was being held. The Court held that under the provisions of our law, as it now is, the Continental Tyre Company and all those other companies are really English concerns, although the whole of their capital is held by Germans. An English
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    debtor was ordered to pay £5,000 to a German company, and I have no doubt that we shall find before very long that that money will find its way to Germany in meal or malt. When this matter was brought before the House some time ago, the President of the Board of Trade assured me that the position was receiving the careful consideration of the Government. The Attorney-General said the matter had been engaging the attention of the Government and that it was the intention of his right hon. Friend to produce immediately a proposal dealing with this question.
    Sir J. SIMONwas understood to say that the question had been dealt with.
    Mr. JOYNSON-HICKS: If the Attorney-General refers to the Clause for allowing an inspector to be appointed, I venture to say that that does not deal with the question. At all events, he did not deal with it effectively, as was proved by what took place in the Court yesterday. I read the report of the case in the newspapers. Nothing has been done by the Government to deal with such a case. I think this Amendment does afford some means of dealing with this difficult question. If the Attorney-General has another mode, I will accept any suggestion he makes, but, in default of any other Amendment, I move my Amendment.
    Sir J. SIMON: I am glad that you have seen your way to let the hon. Gentleman raise this point, because it is one which excites a great deal of interest and concern, no doubt, among those who have thought over this subject, and which it is very proper should be considered in this connection. When I say that, I include the Government and those who have been doing their best to make what they thought were good suggestions about this matter. It is perfectly true that when you are at war with a great industrial community like that in the Empire of Germany, our modern joint-stock company law does justify any reasonable business man in saying, "I do not quite like the position. It seems to be unjust that merely because some enterprise is registered at Somerset House as a joint-stock company, therefore, whatever the composition of its directorate, or the national attachments of its shareholders, it is treated not as an alien enemy." That is a perfectly natural point of view, and one which has been very carefully considered since the beginning of the War, and one as to which it is

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    desirable to make much more stringent regulations, and to make them in the Bill. But it does not follow, because all that is true, that the right way to do it is to say bluntly, "You are going to call this English company an alien enemy, and there is an end of it." There may be other and better ways, but it is a very fair question to raise, and I would point out what has been done already, and what we propose to do if the House accepts the suggestions which are contained in this Bill, improved, as no doubt they will be, by the general consent of the Committee. In the first place, the hon. Gentleman will find that after I made the statement which he quoted from the OFFICIAL REPORT, in September, the Trading with the Enemy Bill was introduced, and it was to the proposals which were contained in that Bill that I was referring. I am not asking the Committee to say that this was adequate, but let us begin by seeing what it was, and not by assuming that nothing was done. The provisions contained in the original Act of September last dealing with this matter were in Section 2, and the provisions that are important are these: Where you have a limited company in whose case one-third or more of the issued share capital of the directors of the company, immediately before or at any time since the commencement of the present War, was held by or on behalf of, or consisted of persons subjects of or resident in or carrying on business in, States for the time being at war with His Majesty's Government, then the Board of Trade could appoint not merely an inspector, but a controller. The test there applied is much more severe than the test which the hon. Gentleman now suggests. He says where you have 75 per cent. of the share capital held by alien enemies, whereas in the Act already passed there is power in any case under the Section to which I have referred—
    Mr. CAVE: That Section only authorises the appointment of an inspector. It is the next Section which authorises the Board of Trade to appoint a controller.
    Sir J. SIMON: I am much obliged. I should have put it rather more accurately. Where you have one-third or more of the shareholders or the directorate belonging to the class indicated, then the inspector can be appointed, and in the next Section 3 there is power for control. This has turned out to be rather too narrow, and it is because experience has gone to
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    show that that is the case that we are asking to have much wider powers now. But let it be remembered that there was power to appoint a controller in any case where the Board of Trade in reference to the company thought that an offence under the Act had been or was likely to be committed in connection with the trading or business. I only mention this in order that we may have it before us. I am not contending that it was enough, but it is better to see what it was; and further, then we propose in the present Bill quite a number of other regulations, and I think that the combined effect ought to go a long way to meet the case which the hon. Gentleman suggested. First of all, under the Section which we are now discussing any company, not only a company predominantly German, but any British company which has got any shareholder who is an enemy, and which is distributing dividends, has got to pay the dividend that goes to that shareholder or those shareholders to the Custodian. That does not merely apply to companies that have got their directorate or shareholding list predominantly German. It applies to all. But of course the cases which are important are cases such as those which the hon. Gentleman gave by way of illustration—I do not know the facts but I take the illustration—where the whole of the shareholders of the company are people who are in Germany. There, of course, practically all the profit for dividend en bloc will be transferred into the custody of the Custodian.
    10.0 P.M.
    It may be said that a company like that which is controlled by alien enemies is not likely to go on declaring dividends when the only result will be to pass the dividends over to the Custodian. We thought of that and so we have got a provision which the hon. Gentleman will find in the Clause that if you have a company of that sort which is substantially German, and if the question arises as to what is the sum which, if there was no war, would be distributable by such a company, then the inspector or the controller, as the case may be, can in a proper case after full investigation decide that it shall be subject to the action of the Board of Trade. That is a very stiff regulation, and will have to be exercised, of course, by the control of inspectors who are accomplished accountants, and who will be able to see that the effect of the Clause is not avoided. You find that many of these companies, though they profess to

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    be British, none the less have got in trust or in other ways, whether as debts or whatever it may be, certain property which really belongs to alien enemies, and they are accountable for it to some alien enemy. Nobody knows what they are doing with it. We have provided in Section 3 that any British company that holds or manages or controls any property not merely on account of, but on behalf of any enemy, shall have to make a return to the Custodian, the object being when we find a case where the amount is substantial and where it is profitable—I am far from saying every case—I think it would be quite wrong to do it in every case—to provide that in proper circumstances the Custodian may get the property transferred to him.
    Mr. JOYNSON-HICKS: Does the right hon. Gentleman suggest that any person who controls or manages the business on behalf of the company does not mean the whole company?
    Sir J. SIMON: My words should not be reasonably so interpreted, but the fact that they could be so interpreted is shown by the hon. and learned Gentleman having interpreted them in that way. The illustration I gave is something to the point. It is said that there may be enterprises in this country which, under the eye of our law, are British, but which are so hostile in character that they would transmit funds directly to Germany, or if not directly, they might, none the less, create a credit. For instance, in the minds of many people there is the case where some German company here has got a certain balance which it does not turn immediately into dividends, but declares the balance in New York, and New York in turn may inform some kindred enterprise in Germany that there is this credit available. That would happen in companies the directorate of which, or the general flavour of which, is German, or hostile. These are just the cases where we could put in an inspector or a controller. We have provided in Clause 10, Subsection (3):—
    "If any person without lawful authority deals, or attempts, or directly or indirectly offers, proposes, or agrees to deal with any money or security for money or other property which is in his hands, or over which he has any claim or control for the purpose of enabling an enemy to obtain money or credit
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    thereon or thereby he shall be deemed to be guilty of the offence of trading with the enemy within the meaning of the principal Act."
    In the case of a company the penalties are very severe. I want the Committee to feel that we have seriously approached this question. We have not in the least acted like a Government which thought that what it did in the month of September was good enough in the month of November. On the contrary, those who advise me—and I have received a great deal of most valuable help—have not spared any effort to find out what are the directions in which we can very effectively put a stop to this danger. It is our duty to do that, and many tradesmen feel that it is the way in which they can serve their country, by making quite certain that in carrying on their business they do not really finance the enemy. I fully sympathise with the view, therefore, that we should make the thing as effective as we can, and I suggest to the hon. and learned Gentleman that it is by methods such as this that we shall most wisely deal with this matter. It is a very serious thing to say that a company registered under the English law, and so undoubtedly a British enterprise, to insist that it is an enemy. That would be a most unfortunate result, because the gain to our own company law is that it should be regarded by other companies in the world as the model within which they are prepared to come and live. Therefore what we ought to do is to take adequate precautions in this national emergency. No precautions are too great, but do not let us undermine the great principle on which a great deal of our commercial credit and reputation has grown up. I quite agree that while the War is going on we ought not to allow new registration merely to disguise what are German concerns assuming in time of war the appearance of a British company.
    In order to prevent that we have Clause 9, which in terms prohibits it. I suggest that that is really the wise way. Are we to call a limited company in this country German because of the fact that it has got German shareholders, though it is actually carrying on business in this country, is actually paying rent to a British landlord, paying rates and taxes to a British municipality, and which is probably employing British labour and paying them wages? To say such a company shall not receive a single copper of its profits, is to

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    deprive the British landlord of his rent, the British Treasury of his taxes, the British rate collector of his rates, and the British people employed of their wages. And it should be remembered that some of those enterprises are, in their turn, supplying British manufacturers and British purchasers of things which they want. It is not that I do not sympathise with the view so widely expressed that we really must deal with these companies of German character, but I do submit that the proper and British way to do it is not to say that a company registered under British law is an enemy. While this War is going on, if a company is registered under the British law, we will, by legislation such as this, take security of an absolute kind for inspection and control, in order to see that in carrying on the business it does not help the enemy.
    Mr. SANDERSON: I sympathise with my hon. Friend in raising this matter, which is of the very greatest importance. I have given considerable thought to it since the Bill was introduced, but I do think the Amendment of my hon. Friend goes too far, for the reason which the Attorney-General has put so forcibly before the House. I think the result of his Amendment would be to prevent a company which is German in its constitution carrying on business in this country at all; it would prevent it, as the Attorney-General pointed out, from employing British labour; it would prevent it from manufacturing things which this country wants manufactured; but, at the same time, I do think it is most important to see that a company is not put in the position of using British money for the purpose of supplying it to Germany. I submit that the proper way to deal with such a company as that concerned in the case reported in to-day's "Times," and where every single shareholder is in Germany and the only resident shareholder in this country is also a German, is to put in a receiver. With that kind of company the only feasible way of dealing with it is to put a receiver in. Very often you want a particular man to carry on the particular business, but you ought to have the receiver put in who can deal with the money and see that it is paid to the proper people, and not used for the purpose of supplying funds to Germany to carry on the War. It seems to me that may be done under Clause 11 of this Bill if it is extended a little further. I have intimated
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    to the Attorney-General that I intend to move an Amendment to make it a little more effective than it is. It seems to me that the Board of Trade might very well say, "Here is a company which is really a German company; inasmuch as this is really a German company, we ask the Court to appoint a controller." Then if the controller is appointed I cannot see that any great hardship is done, because he will see that the German company is not taking British money and sending it out of the country.
    Sir A. MARKHAM: The Committee have listened to a very forcible speech from the Attorney-General and a speech which was very special pleading, but I must say my sympathy is with the Mover of this Amendment. Let me give a case. The largest electrical firm in the world, known as the "A. E. G.," practically controls all electrical industry in Germany. This company is held largely by a German company and the Dresdner Bank, and has now a trading house in London, carrying on a large business, buying electric goods and selling them of British manufacture and of American manufacture and other manufactures. It is carrying on a general trade in this country—why? It is doing so in order that after the War is over its business will still be a going concern.
    I feel that this War is so wicked and so wrong that, although I have done a very large business with Germany, both buying and selling, I will never in my life either buy or sell with a German company again. That is my feeling, and therefore I regard the view of the Attorney-General as very different from the general view of the House. Let me put this case. In to-day's German Marconi official intelligence the managing director of the A. E. G. is cited as being an authority which the German people should recognise as one of chief hatred against this country. That is a gentleman whose firm you are going to help to keep going in London, merely for the purpose of carrying on their business so that they may have a going concern at the end of the War. What would the Germans do in a like case? Does anyone seriously think if Germany had a limited liability company's law, such as ours, she would permit what we are going to permit. I know there are great difficulties in the matter, but at the same time, if the House is going to look at this

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    question from the point of view of Germans and the company law, surely the right way to deal with the company law is this. We pride ourselves on our commercial integrity, and on our company law, but surely anyone who looks at this question from the standpoint of a public company at work would say that the provisions of the company law should not apply to such companies during the War, and that the company should cease trading. There is nothing unreasonable in that, or nothing to bring discredit on commercial trading in this country. Nobody in these days when we try to come to an agreement likes to go against the Government, but I feel that there is a great deal of trading going on by alien enemies. When I say that I shall never have any more trading with the enemy the House will feel the reason I have come to the conclusion to support the Amendment of the hon. Gentleman.
    Mr. DUKE: I can share to a very great extent the personal view the hon. Member has expressed. As to one's future relations with those who are at present enemies; but I cannot follow the hon. Member in the course he proposes, which is that we should so transform the commercial life of this country—that, because we are at war with Germany at the present time, we should make it impossible for any German private citizen to possess any interest in a British company. That is an act of war upon the individual citizen of the enemy country which transcends anything I believe that has ever been done, at any rate since the middle ages.
    Sir A. MARKHAM: The hon. Gentleman is misrepresenting what I said. All I wanted was that alien enemies should not trade.
    Mr. DUKE: I think I fully understand. The meaning of the proposal is that if an alien enemy has a share in a British company, that share shall be extinguished. [HON. MEMBERS: "No!"] Then there is no logical force in anything that has been said. If you are not carrying it to that extent you are not consistent with the proposals you make. The position is this, as I understand it. There are, carrying on legitimate business in this country and under the sanction of our law, certain companies, the capital of which has been provided by foreigners. Foreign capital has been imported here and is being employed in English concerns and to a very
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    great extent for our purposes. As the Attorney-General said, these concerns are to a large extent employing British labour; they are occupying premises of British landlords; they are bearing British burdens. It so, happens that the capital of the alien enemy is locked up in this country. But the present proposal has the effect, so far as the company is concerned, of practically prohibiting it from carrying on business here. Take either, of the extreme cases to which reference has been made. Is it really intended that these companies shall be blotted out? There is no intermediate course. If hon. Members are ready, in the face of the civilised world, to take the course of blotting out enemy property, let us set about it with the deliberate design. But I think we have arrived at a point where it is quite plain that we are not dealing with the question of trading with the enemy; we are dealing with the question of transforming the municipal law of this country so that if an enemy state comes into being every citizen of it shall be penalised.
    As I have said, I take the personal view of the hon. Member opposite; but I am not content to join in a course of procedure which will have the effect of confiscating enemy capital and the capital of individual citizens. That is the effect of it—to destroy the concern, to make it impossible for it to be carried on here, to confiscate the personal interest of all these alien enemies. I think that would be wrong. I do not think the country is prepared to do it. If the people outside this House, who have not given to it the study which all of us know the right hon. Gentleman has given with a desire to promote the public interest, really realise that every assistance which is given to the enemy by means of these commercial concerns is given with the peril of involving the person who gives it in prosecution and conviction in this country, I do not think that public opinion outside this House will run on the lines upon which we know it does run. The real safeguards are those which the right hon. Gentleman pointed out—that immediately this money which is made or exists in this country is even proposed to be used for the purpose of assisting the public enemy, every person who is party to that proposal or attempt becomes a criminal, and may be prosecuted. The real remedy is that citizens of this country who know the danger should bring to

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    the notice of the proper authorities, especially the Board of Trade, those quarters in which the danger exists, in order that the money which is made in this country may be kept and circulated here, and the enemy prevented from getting the benefit of it, without our going in defiance of our own law or damaging our own interests.
    Mr. RADFORD: I do not yield to the hon. Baronet in the matter of patriotism, but I disagree with him in the measure by which he proposes to give effect to his sound sentiments. I cannot help thinking that if we were to carry out the proposal contained in the present Amendment, we should be disfiguring our municipal law, and doing something which is not in accordance with the law of nations as recognised amongst civilised people. I merely rise to point out that in the Preamble of the Bill it is stated:—
    "Whereas it is expedient to make further provision for preventing the payment of money to persons and bodies of persons resident or carrying on business in any country with which His Majesty is for the time being at war (which persons and bodies of persons are hereinafter referred to as 'enemies').…"
    The purport of the Bill, as described in the Preamble, and as described in the principal Act, is to deal with persons resident or carrying on business in a country with which this country is at war. It is, therefore, inconsistent and incongruous, if not almost an absurdity, to introduce by this Amendment something which is altogether foreign to the scope of the Bill, and to divert our legislation into a channel which was apparently never contemplated by the authors of this measure. I do not know whether the point has been raised, but having regard to the preamble, I would ask whether this Amendment is admissible at all?
    The CHAIRMAN: That point was raised from the Chair. I stated that I had considerable doubt whether this matter did come within the scope of the Bill, but that I was anxious on an important discussion of this kind to err rather on the side of freedom than on that of restriction.
    Mr. GERSHOM STEWART: After listening to the speech of the hon. Baronet the Member for Mansfield. I would like to say that I, as a layman, support his view. I do not think that the answers
    1074
    of the Government are quite satisfactory, because we have seen in the newspapers of late exhortations to Englishmen to enter upon a war with German trade. An hon. Member below me seems to think that if we do this we will do damage to the trade of our own country. I do not see, if we interfere with the working of a German firm in this country, that we need necessarily damage our own people. Because the work they at present do can be equally well done by Englishmen. We know that the Attorney-General's idea of what is hostile is a question of domicile and not personality, and though we hear objections to alterations to the common law in this Bill, I would like to ask the Attorney-General whether the Proclamation of the 9th September was not an alteration of the common law with regard to trading with the enemy.
    Sir J. SIMON: So far as the definition of an enemy is concerned, I believe it practically corresponds to the common law, and that is also, I think, the view formed by every learned judge.
    Mr. STEWART: I should like to give an instance as to the contention that domicile affects a man's hostility. The particular case I have in mind is the Proclamation in September which made a German resident in Hong Kong not an alien enemy. Since that Proclamation was issued the conduct of the Germans in that colony has been so unsatisfactory that the Governor, by the permission, no doubt, of some Government department, has interned every man of military age, and has deported everyone else. That proves that domicile does not turn an alien enemy into a friend. I myself listened to what the hon. Member for Brentford said with entire approval. I really do not see why we should be so tender-hearted towards Germans. I think if their companies come here, and there are profits, after the War is over these profits will go to Germany, and help Germany to build another navy that it will cost us large sums of money to defeat in years to come. I heartily support what the hon. Member for Mansfield has said. I think we ought to make our terms as strict as possible.
    Mr. HUME-WILLIAMS: I have listened with the deepest attention to what the Attorney-General has said. I am sure we all recognise so fully the hard work he has done and the care he has given to the preparation of this Bill that I hesitate to urge a view that is not in accord with his.

    1075
    I cannot, however, help thinking that there is more in this point than perhaps seems at the moment. The object of this Section is to prevent dividends, interest on share of profits going to Germany. The remarks which have fallen from some of those who have addressed the House have gone to show it would be inequitable to do that. If a German named Schmidt is carrying on trade here, and the profits are payable to him by those with whom he is trading, this Section says these profits ought to be paid to the public official. The Attorney-General shakes his head. Dividends, interest on shares of profits, which would be payable if a state of War did not exist shall not be payable for the benefit of an enemy.
    Sir J. SIMON: I do not think the hon. and learned Gentleman followed the earlier parts of this subject very closely. "Enemy" means somebody, of whatever nationality, who is resident or carrying on business in a hostile country. That is the first point to know before you discuss trading with the enemy. I do not think the illustration of Mr. Schmidt is very clear.
    Mr. HUME-WILLIAMS: I am much obliged to the Attorney-General, but if we get Mr. Schmidt abroad, where he ought to be, then the purview of this Section is to keep the profits that would be paid to him and they are to be paid to the public official. What is the difference between the profits going to Schmidt abroad and going to German shareholders through the conduit pipe of an English company carrying on trade here?
    Sir J. SIMON: But they do not.
    Mr. HUME-WILLIAMS: If it is wrong in one case, why is it not in another? This Section, as it stands at the present moment, does not prevent it. If there is an English company with German shareholders resident abroad they do not come under the definition of "enemy" in this Section.
    Sir J. SIMON: They come in exactly. If an English company has got a shareholder named Schmidt in Berlin, then under this Section moneys that would be paid for the benefit of Schmidt would not be paid when a state of war is existing. That is what the Section is about.
    Mr. HUME-WILLIAMS: I am sorry I do not make myself clear. The terms of the
    1076
    Section are as to the amounts payable to, or for the benefit of an enemy—that is, an enemy resident abroad. Supposing he keeps out of the way from this country. Supposing, instead of having an enemy abroad, you have a trading company, English in name and corporation, but consisting of German shareholders resident abroad, the amount payable to that company have got to be paid now. ["No!"] Of course if they were sent direct to the shareholders, then they would come under the purview of this Act, because they would be for German shareholders. But would an enemy, within the definition of the Clause, not get over the whole point if it were the case of an English company with premises and trade in England? That company would not be so foolish as to send the moneys direct to alien shareholders abroad, but the money would be credited to Mr. S. in England, who would credit it to Mr. S. in New York, and Mr. S. in New York would credit it to his firm in Frankfurt.
    Sir J. SIMON: When we come to Section 10, Sub-section (3), it will be found that that is provided for.
    Mr. HUME-WILLIAMS: It seems to me to be perfectly proper that if you adopt this system at all, the logical conclusion is that you should define "enemy" as something which it really is. I think there is more in this point than hon. Members seem to think, and I press the Attorney-General to accept the Amendment.
    Mr. DAVID MASON: It is quite clear that the difficulty raised by this Amendment is provided for in the Clause. Surely it is not suggested that when a minority holds the shares the same law should not apply. Why should a British company be ruled out because the majority of the shares are held by the enemy? Germans might hold the majority of the shares in the London and North-Western Railway Company, but it is still a British company. The Clause proposed preserves our British registrations and will encourage all people after the War to come here and trade—[HON. MEMBERS: "No!"]—and we do not wish to close the door to them. I fail to see what object there is in the Amendment. The Clause amply provides that no benefit can go to the enemy, and if you cripple or stop those companies you stop many people deriving benefit who are domiciled in this country. I am sure that is not the object of the mover of the Amendment, for he does not wish to

    1077
    do harm to people deriving benefits as tenants or landlords. If these people are prevented from doing any trade here you will be doing harm to many innocent persons who are British citizens. The Bill as it stands covers shareholders, even should they be Germans, and it provides for the object which the mover of the Amendment has at heart. I hope the hon. Member will be satisfied with the powers given to the Controller which will adequately prevent any help going to the enemy, and I trust that he will not press his Amendment, which would do a great injury to many British subjects and citizens without in any way doing any additional injury to the enemy.
    Mr. CAVE: I agree with much that has been said, and I think there is a real danger lest moneys which become vested in these wholly German companies should be transmitted to the hostile territory no doubt through the medium which my hon. and learned Friend suggested of a neutral country. We all feel the danger; the thing is to find the right remedy. I venture to think, with all respect to my hon. Friend, that his Amendment will not provide the remedy. The only effect of his Amendment would be to amend Clause 2, so that any interest or dividend or profits of other businesses coming to these companies would go to the Custodian. That is a very small matter. It is not the interest, dividends, and profits of other businesses coming to these companies that you want to put your hands upon; it is the profits of the companies themselves.
    Mr. JOYNSON-HICKS: I would remind the hon. and learned Member that his Amendment comes next.
    Mr. CAVE: That is the effect of the Amendment as it stands. We want to put the hand of the State upon the receipts and the moneys of these foreign-owned companies, and we want to find the right way to do it. These companies require more supervision than individual aliens trading here, because these companies which are entirely foreign-owned are really the enemy living in this country under a different name, and you have to treat them in a different way from the manner in which you treat foreigners living here in person and carrying on their business here. Let the Attorney-General say if he will extend radically the power to appoint a receiver. I know well that
    1078
    he has upon the Paper a new Clause to which he has not referred, but which would enable the Board of Trade to appoint a supervisor. I am not quite sure that is enough, and I should like to see the law as he rather for a moment thought it was in his speech—that in all cases where a third, or whatever the proportion of the capital may be, is owned by aliens there shall be a receiver appointed, not to interfere with the carrying on of the business or to appoint some manager to do the actual trading, but to keep his hand upon the moneys of the company and to see that it cannot and shall not go abroad. If the Attorney-General will consider that and deal with the matter in that spirit I think probably we should all be satisfied.
    Sir HENRY DALZIEL: I hope that, while we may not be doing injustice to any honest trader, we shall not be too squeamish with regard to our policy. We are employing our Fleet in the North Sea to do everything that we can in order to destroy German trade. The first thing we have to do is to hit them as often and as hard as we can, and we should not consider too sympathetically what may happen after the War, or during the War, so far as German trading is concerned. The hon. Gentleman gave an illustration. I will give one which shows how this has been very seriously thought out by the big German firms. There is a firm called Orenstein and Koppel, with a capital of £2,500,000, which, at the end of July, registered a dummy company here with a paid-up capital of £2. They must have had an idea the War was coming. It is called the Montania Engineering Company. On the 4th August, just after War was declared, they increased the capital of the £2 company to £2,000. I should say the manager of the Berlin company holds over 1,000 of the 2,000 shares and the rest are held by representatives of the parent company. A contract was made between the two companies to collect the debts of the former in this country, the smaller company undertaking to pay 25 per cent. of the debts collected to the parent company. The debts amounted to a very large sum indeed. It is clear that this large financial firm thought out well how they were going to avoid the law of this country and at this moment, while they are really an alien enemy, this small company, being registered in this country, will be regarded as a friendly firm. If an

    1079
    alien company like this, by a subterfuge of this kind, is going to be allowed to trade in this country I say it is totally wrong. I have no doubt that the Attorney-General will provide against something of that kind. This is not the only company doing this kind of thing and I say we should make it absolutely impossible for a limited company which is representative of a German company, controlled by German money with a majority of German shareholders, to do this. We should treat them as we would treat an individual. We want to destroy their trade and if possible to get that trade after the War is over. I hope that the Attorney-General, who I am sure will take a fair view of the matter, will see that such a subterfuge is not possible under the Bill he is now promoting.
    Mr. POLLOCK: I think the last speaker has made out an excellent case for the appointment, as soon as this Bill passes into law, of a supervisor and inspector to look after the Montania Company, and that can be done under a Clause which the right hon. and learned Gentleman is to propose later on. I look at this whole controversy from the same point of view as the hon. Member for the Mansfield Division. I take as another illustration the A. E. G., one of the largest and most important companies, with a large number of branches in this country. The A. E. G. supply a great deal of electrical work which is essential to other electrical firms throughout this country—large firms which at the present moment are employing British labour for the purpose of supplying munitions of war to our own naval and military authorities. The difficulty is this: that with every desire to put an end to the interference of what I may call the enemy parent, we do not wish to stop the business carried on by branches with English firms, which is undoubtedly important at the present moment.
    Sir A. MARKHAM: It is purely a selling business in this country.
    Mr. POLLOCK: It is important from this point of view, that if it is stopped other firms and companies will not be able to complete their contracts for electrical apparatus. What middle course is it possible to take? It is impossible immediately to declare that these foreign companies are outside our law. You would only put them out of connection with persons
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    who are at present relying on these supplies, and who would be unable to complete the contracts they have in hand.
    Sir A. MARKHAM: All these electrical goods of the A. E. G. are British manufactured, and the firms could buy them.
    Mr. POLLOCK: I accept that. Then it is an English business. That is the difficulty. What you really want to do, and what we are all seeking to do, is two things—one to prevent the remitting of money abroad, and the other to provide that business shall continue in this country, and that at the end of the War we shall be able to take up that business for the purposes of the English people. What are you going to do? Are you going to declare everybody an enemy? From my point of view that is going too far, but you should adopt the principle embodied in the Clause and appoint a receiver in almost every case, so far as may be necessary. I hope the Board of Trade will use their powers. I am not quite satisfied myself that the Board of Trade—and I am not saying this unpleasantly—will have sufficient knowledge to know where the companies are for which they ought to appoint supervisors. I should be glad if the hon. Member for the Mansfield Division and one or two other Members of this House could be appointed as a sort of advisory committee to help the Board of Trade to exercise their powers. You want to have the power to stop money going out of this country, and at the same time you want to keep up the English business. I believe the present Amendment goes too far. You want to stiffen up some of the other Clauses in the Bill. I hope we shall secure a real control by the Board of Trade in the matter of appointing a receiver. I hope my hon. Friend will withdraw this Amendment and seek in later Clauses to assist the Committee, because we are all on the same side, to stiffen up those Clauses which will have the effect that is desired. Above all, I hope the Government will say before the discussion is closed that they will give the Board of Trade some sort of assistance in order to ensure that these powers are exercised to the full, as the Committee intends them to be.
    The PRESIDENT of the BOARD of TRADE (Mr. Runciman): As the point of the administration by the Board of Trade of the powers we already have has been

    1081
    raised in this Debate, I may as well inform the House that we have appointed inspectors in 278 different cases—that is to say, affecting 278 different companies—that we have had reports on those, and in only three of those cases have we found any evidence or anything which might lead one to believe that there had been trading with the enemy, and in each one of those cases we have taken the necessary steps for instituting prosecutions; and that we have in nine of those cases, under the rather slower procedure of the original Act passed some weeks ago, had controllers appointed. We have used for the purposes of inspection seventy-five or seventy-six of the best chartered accountants in the United Kingdom, and they have inspected not only the books, cheque books, and bank books, but also the correspondence of the firms where they have carried on their inspection. It is clear from the experience we have had that these concerns are carefully avoiding any trading with the enemy.
    But it is necessary that the powers should go further. Indeed, that it is necessary that we should have further powers is evidenced by the fact that we are asking for them. We have found during the last few weeks that unless we could have our Controllers or supervisors appointed with greater speed, there is bound to be delay. It is also necessary that we should have powers to prevent any remittance, either directly or indirectly, finding its way into the enemy country. These are some of the objects which are sought in this Bill. I think the Committee will clearly understand that we are not only not neglecting our duties but are going ahead as rapidly as we possibly can in dealing with these companies, and we are not content with our inspection. We are carrying on inspections from time to time, and one of the proposals made in this Bill is that these inspections should be constant inspections. The companies did not know when we were likely to visit them, for we have done what we could to watch their operations with a very critical eye. I cannot pretend that we have covered every company which has a majority of German shareholders but we have gone a long way to examine the cases which are most prominent first, and I suggest to the Committee that it should now come to a decision on the point. I hope they will be unanimous upon it and will give us the extra powers which are necessary without
    1082
    going as far as has been suggested in some parts of the House, the wholesale confiscation of property owned by natives of enemy countries. If we did that and went in for wholesale confiscation of property owned by Germans, Austrians—
    Sir A. MARKHAM: No one suggested that.
    Mr. RUNCIMAN: Will my hon. Friend allow me to finish my sentence? If we went in for the wholesale confiscation of property owned by Germans, Austrians and Turks in this country, which I have no doubt the hon. Member did not suggest, we should be going a great deal further than any of the belligerents, as far as I know, except Turkey. I do not think it is in the least necessary for the protection of British interests that we should do that, but I think it is necessary that the executive authority should be given wider and prompter powers. Those powers will be given if this Bill is passed, but if we cannot get it through the Committee stage with greater rapidity, it is going to be a difficult matter for us to extend the powers as far as hon. Members themselves would wish and as is demanded by the necessities of the case.
    Mr. NIELD: I am sure that there is not a member of the Committee who does not desire to facilitate the passing of the Bill, but in facilitating it to take care that it is strengthened. There are a great many observations which have fallen from both sides to-night which lead one to suppose that the Committee is going to be oversensitive with regard to the way in which the proceedings are to be conducted. May I remind the right hon. Gentleman of the powers he took in September last by Section 2 of the principal Act? Before you can get anything like an inspectorate you have to satisfy the tribunal, which is presumably a stipendiary magistrate in London, that there is reasonable ground for suspecting that an offence under the Act has been or is about to be committed.
    Sir J. SIMON: I do not think so.
    Mr. NIELD: May I read it? "If a justice of the peace is satisfied on information on oath laid on behalf of the Secretary of State or the Board of Trade that there is reasonable ground for suspecting that an offence under this Act has been or is about to be committed by any person, firm, or company, he may issue a warrant authorising any person appointed

    1083
    by the Secretary of State or the Board of Trade named in the warrant to inspect all the books and documents."
    Sir J. SIMON: I still do not think it is so. If the hon. and learned Gentleman will read Sub-section (2) he will see it is not.
    Mr. NIELD: Sub-section (2) refers to another case. However, the time at my disposal is brief. When the hon. and learned Gentleman (Mr. Duke) talks about going behind the municipal law of this country, I wonder if he realises that in order to try and screw up Englishmen resident in Germany to the last possible pitch of endurance a claim has been levied by distress for ten years' rent in advance—the whole period of the term—at £1,000 a year, making £10,000, in order that British money shall flow into the coffers of Germany, and the unfortunate firm which is doing business in many cities on the Continent has been compelled to pay or secure that large sum. We only want to make this effective, and the instances which have been given us to-night have made it an imperative duty. Why should we be so susceptible about companies? Is it not a fact that the authorities have closed the doors of many personal firms which are purely German, and, if that is so, where is the argument about despoiling the landlord or dismissing employés? There is no difference between the companies which have been described to-night and the individual whose doors you have closed under this Act. If you are going to be just you should apply the same law and the same remedies to each.
    Committee report Progress; to sit again to-morrow (Wednesday).

  INJURIES IN WAR (COMPENSATION)— [MONEY].
  Considered in Committee.
  11.0 P.M.
  Resolved, "That it is expedient to make provision for the grant of Pensions and other Allowances to certain persons if disabled whilst employed abroad in connection with warlike operations, and to their dependants under any Act of the present Session relating to such provision."—[Mr. Gulland.]
  Resolution to be reported To-morrow.

  LOCAL AUTHORITIES (DISQUALIFICATION RELIEF) BILL.
  Considered in Committee.
  LOCAL AUTHORITIES (DISQUALIFICATION RELIEF) BILL.

    CLAUSE 1.—(Extension of 63 and 64 Vic, c. 46,. During the Present War.)
    The Members of Local Authorities Relief Act, 1900 (which relieves members of certain of His Majesty's Forces from disqualification for membership of county and other councils by reason of absence), shall, during the present War, extend to all members of His Majesty's Naval and Military Forces employed on any naval or military service, and that Act shall have effect accordingly.
    The PARLIAMENTARY SECRETARY to the LOCAL GOVERNMENT BOARD (Mr. Herbert Lewis): I beg to move, after the word "service" ["military service"], to insert the words "and to any person whose employment in connection with naval and military operations the Local Government Board consider may properly be treated for the purposes of this Act in the same manner as actual Naval or Military Services."
    The object of the Amendment is to exempt from the penalty of disqualification members of local authorities who may, in fact, be on active service, and not merely members of the Military and Naval Forces. I refer to persons like the members of the Red Cross Society, who are non-combatants. Although not actually soldiers, they may be absent on account of duties connected with the War.
    Question put, and agreed to.
    Clause, as amended, ordered to stand part of the Bill.
    Bill reported; as amended, to be considered To-morrow.
    The remaining Orders were read and postponed.

  BUSINESS OF THE HOUSE.
  Whereupon Mr. SPEAKER, pursuant to the Order of the House of the 12th November, proposed the Question, "That this House do now adjourn."
  Sir H. DALZIEL: In order to remove misunderstandings, I should like to know

  1085
  what the order of business is likely to be to-morrow. It would be for the general convenience of the House if the Parliamentary Secretary to the Treasury would give us some statement now as to what business we may expect to-morrow; and I should also be glad if he could say something about the Adjournment. The original intention was, I believe, that it should be on Thursday, but I see now, what I presume is an official announcement, that it is to be on Friday. With regard to the War Obligations Bill, which is really a far more important Bill than I think the House realised this afternoon, as it extends to millions of pounds, and establishes an absolutely new precedent, I would ask the right hon. Gentleman whether he can hold out any hope that we can discuss that Bill and have a useful debate upon it? We can only have it now on the Committee and Third Reading.
  Mr. BOOTH: I would like to support the appeal of the right hon. Gentleman the Member for Kirkcaldy, especially in reference to the War Obligations Bill. When the Bill was moved this afternoon there was no explanatory speech. I suggest that the House gave way with a great deal of reluctance, because it seemed as if we were trying to delay the discussion on the Finance Bill. But it was a matter of disappointment to all Parliamentarians that the House should be asked to give a Second Reading to a Bill of such vast importance without discussion. In view of that I suggest that it should be properly dealt with in its subsequent stages, and I hope that the House will be taken into the confidence of the Government.
  Mr. ILLINGWORTH (Parliamentary Secretary to the Treasury): I would suggest that the business for to-morrow is:—
  First Order: Committee stage of the Government War Obligations Bill.
  Second Order: Trading with the Enemy (Amendment) Bill (Committee stage continued).
  Third Order: Consolidated Fund (No. 1) Bill—Third Reading.
  Fourth Order: Finance Bill—Report.
  Mr. D. MASON: What will be the business on Friday? Shall we adjourn on that day?
  Mr. ILLINGWORTH: I can only say that we hope to be able to conclude our business on Friday, or at any rate this week.
  Sir WILLIAM BYLES: The hon. Member has not mentioned the case of the Defence of the Realm Bill, which, I believe, a great many Members desire to debate further. May I suggest that we should give some further time to it? It is a long time still to Christmas and we are in no particular hurry. Members are quite willing to stay here to do whatever business is necessary.
  Mr. ILLINGWORTH: It by no means follows that it is our intention to exclude any of the other Orders on the Paper, but I thought that the four Orders that I have mentioned would give the House something to think about to-morrow.
  Question put, and agreed to.
  Adjourned accordingly at Nine minutes after Eleven o'clock.

WAR IN EUROPE.
  VOLUNTEER TRAINING CORPS (CENTRAL ASSOCIATION).
  VOLUNTEER TRAINING CORPS (CENTRAL ASSOCIATION).
  COTTON EXPORTS.
  COTTON EXPORTS.
  WOUNDED HORSES.
  WOUNDED HORSES.
  ENTERIC FEVER (INOCULATION).
  ENTERIC FEVER (INOCULATION).
  INDUSTRIAL CO-OPERATIVE SOCIETIES.
  INDUSTRIAL CO-OPERATIVE SOCIETIES.
  FEMALE POST OFFICE CLERKS.
  FEMALE POST OFFICE CLERKS.
  HOUSING LOANS.
  HOUSING LOANS.
  Industrial Co-operative Societies.
  Industrial Co-operative Societies.
  Vizagapatam Harbour.
  Vizagapatam Harbour.
  Public Cemeteries (Allotments).
  Public Cemeteries (Allotments).
  Portugal.
  Portugal.

ANGLO-PORTUGUESE COMMERCIAL TREATY BILL. (No. 3.)
EXPORTATION OF ARMS ACT (1900) AMENDMENT BILL. (No. 4.)
Brought from the Commons; read 1a; to be printed; and to be read 2a To-morrow (The Lord Islington).

HOUSE OF COMMONS (COMMISSIONS IN HIS MAJESTY'S FORCES) BILL.
Brought from the Commons; read 1a; to be printed; and to be read 2a Tomorrow (The Lord Chancellor). (No. 5.)
LAND DRAINAGE BILL.
Brought from the Commons; read 1a; to be printed; and to be read 2a Tomorrow (The Lord Lucas). (No. 6.)
SHERIFF COURTS (SCOTLAND) BILL.
Brought from the Commons; read 1a; to be printed; and to be read 2a Tomorrow (The Lord Emmott). (No. 7.)

PACK-BERESEFORD DIVORCE BILL. [H.L.]
Returned from the Commons, agreed to.
Minutes of Evidence and Proceedings before this House on the Second Reading, together with the documents deposited in the case, returned from the Commons.

BUSINESS OF THE HOUSE.
Standing Order No. XXXIX to be considered To-morrow in order to its being suspended for the remainder of the week.
HOUSE OF LORDS OFFICES.
First Report of the Select Committee to be printed, and to be considered on Thursday next. (No. 8.)

THE STATUS OF THE ROYAL MARINES.
LORD LATYMER*LORD LATYMER rose to ask His Majesty's Government whether they will appoint a Committee to inquire into the status of the Royal Marines in His Majesty's Forces and to make such recommendations as may appear necessary.
The noble Lord said: I must apologise as a civilian for addressing your Lordships upon a naval or military matter—I am not quite sure in which category this question comes—but I am representing those who are not able to speak for themselves. I may be told that perhaps this is not an opportune moment at which to bring forward such a subject. With that suggestion I could not agree, because I think it is only at such times as these that the country takes an adequate interest in naval and military affairs. I venture to say that the position of the Royal Marines is almost an intolerable one. Many examples could be given of their subjection to rules and customs to which no other part of His Majesty's Service is subjected. As I am anxious not to detain the House unduly, I will bring forward only two examples, but they are typical ones. It may seem almost incredible but it is the fact that Royal Marine officers were once deprived of their right of discipline over their own men. This took place when they were fighting in Egypt, and all punishments were given by captains in the Navy who had to come all the way from Alexandria. It is equally incredible but also a fact that the Marines were, during the same period, deprived of their artillery. Their field guns and their mules were taken away from them and given to the Bluejackets, with the result that at General McNeil's Zareeba, at the most critical moment, the guns jammed, because the Bluejackets had not been used to working them. Surely a force that is liable to such indignities must suffer both in spirit and in efficiency. However, I do not wish to labour details.
I pass on to two great grievances which depress both the officers and men of the Marines. The first, relates to command over the men, and the second to rewards for good service. When in war time the Marines are landed they are liable to have a commodore or some such naval officer put over the heads of their own officers. This occurred also in Egypt. It will, I am sure, surprise many in this House to hear

111
that; and I am sure it will surprise a great many more outside. Then it is notorious that Royal Marine officers scarcely ever receive the highest rewards for good service, even those for which they have been recommended. I have been told on very good authority that there is a rule of the Admiralty that no Marine officer shall ever get the G.C.B. Whether that is correct or not, I do not venture to say; I was informed so. These matters ought not to be called stale history. Liability to be treated in this manner exists now exactly as before, and quite recently the Marines were subjected to what I may almost call an insult by having a naval officer put over them as their honorary colonel.
The Marines seem to be not only an amphibious body but also an amorphous body; you really cannot make out exactly what their shape is. When they are on board ship they are under the paramount control of the captain; when they are on land they are in connection with the Army without forming part of it. Their position is an exceedingly anomalous one. I cannot conceive any better means of interfering with their efficiency as a force than putting over them commanders who have had no opportunity of commanding them before. It is like changing the conductor of an orchestra at the last moment—always a disastrous matter. Has not the time come when the position of the Royal Marines should be readjusted? The days have gone by when they were required to keep discipline on board ship over unruly men impressed by the Press Gangs. Is it not possible for the Admiralty to find some other means of policing their forces and allow the Marines to take up a better position, either by entirely amalgamating them with the Army or in some other way? I have said all that I intend to say on the subject, although there is far more to be said. I beg to put the Question standing in my name.
LORD WIMBORNE: My Lords, I do not complain at all of the action of the noble Lord in raising the question of the status of the Royal Marines, more especially as I think, from what I shall be able to tell him and the House, there is really very little in the case which he laid before the House as far as I was able to understand it. But I am of opinion that it would be inopportune now to discuss the question of the appointment of a Committee such
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as the noble Lord suggests. The present time seems to me—I think it will so appear to your Lordships—to be very unsuitable for going into what, after all, is a Departmental question; for it is not a question of the fighting efficiency of the Marines that the noble Lord has in view, but their position in relation to the Army and to the Navy. Therefore I hope the noble Lord will not press, at present, for the appointment of a Committee.
If I may say so with respect, the noble Lord's knowledge of the status of the Marines goes back rather far. He talked about their position in the Egyptian campaign, and alluded, I think, to art incident which occurred in the year 1882 with reference to their status on land. Since that date material changes have been introduced into the status which the Marines occupy, and I do not think it would be the least bit informing for us to go back all that time, for the position has altered very much to the good since those days. I understand that the noble Lord is mainly concerned with the question of discipline. I suppose what he really has in mind is the question of Marine officers serving afloat sitting on Courts-Martial when a Marine is under trial. I am aware of that point. Prima facie there might appear to be something in it, but the whole question of naval discipline is involved, and if you were to make Marine officers responsible for naval discipline when Marines were on trial before a Court-Martial it would be difficult to refuse that right to other subordinate services in the Navy, such as the engineering service. I think the noble Lord will see that a much bigger question is raised by that point than appears at first sight.
Perhaps the House will allow me to specify briefly some of the changes that have been introduced, I think to the advantage of the Marine service, in recent years, and to state generally how the situation stands. The House is aware that the Corps of Royal Marines is in fact a military body; it is a branch of the Army, but is specially organised and trained for service in the Fleet as well as ashore. When a force of Marines is landed from ships for military operations, they may be under the Naval Discipline Act or under the Army Act, that will depend upon the discretion of the senior naval officer on the station. If a Marine force were landed to act for a

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considerable time with the Army, the probability is that they would be put under the Army Act, but when they are employed in conjunction with a naval party it is generally considered better to keep them under the Naval Discipline Act. That is the principle which governs them in that respect, and I do not think it is inconvenient. With regard to the question of pay, a considerable increase in the then existing rates of pay of Royal Marine officers was authorised in 1903, more especially in the cam of the senior ranks. Since then from time to time various additions have been made to their pay in consequence of the increased scope of employment afloat which they now fulfil. For instance, they now carry out certain duties in connection with wireless and the Intelligence Department. Only last year increased rates afloat were authorised, and this year a general increase has been sanctioned to approximate more closely to the rates authorised for Army officers. So that the position of Royal Marine officers has been taken into consideration and improved on several occasions in recent years.
With regard to non-commissioned officers and men, there has been since 1902 a steady improvement in their conditions—first, in connection with increased pay; secondly, awards for efficiency; and, indirectly, by the award of free rations of bread and meat. An additional grade of warrant officers was created in 1912, principally in connection with service afloat, and last year a higher rate was introduced for men serving afloat. Then as to relative rank. In 1913 Marine officers when embarking on His Majesty's ships were given a higher relative rank with respect to naval officers to make their seniority more closely allied to that of naval officers of corresponding age in the Service. That, I understand, has been much appreciated in the Royal Marines. Again, this year the Commandants of Royal Marine Divisions were granted the rank of Brigadier-Generals. With regard to the general scope of the employment of Royal Marine officers, of late years a great deal has been done to improve their position in this respect. Ashore every encouragement is given to Marine officers to qualify at the Staff College, the Royal Naval War College, and the Ordnance College, and other instructional courses are organised both for the Navy and the Army; and many Marine
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officers are now employed on the staff of the Army in the Ordnance Department and the War College and on the War Staff at the Admiralty. So that whatever grievance there may have been in the past with regard to the appointment of Marine officers on the same level as other officers of the Army and Navy, that grievance has to a great extent disappeared.
Then, with regard to their work afloat, the duties of Marine officers have been increasingly assimilated to those of executive officers on board ship; they are more and more taking their place in carrying out naval duties afloat, such as being on the bridge and so forth, and the whole tendency is to assimilate the two services to equal position when they are serving afloat. Marine officers are employed as Intelligence officers on various foreign stations and in wireless telegraphy duties in the Fleet itself. They are also employed as physical training officers in ships in conjunction with naval officers, and as musketry instructors. As regards the position of General officers in the Royal Marines, it was, I believe, felt to be somewhat of a grievance that General officers were not employed on Staff work, and last year the Admiralty approached the War Office on the subject with a view to concerting with them some scheme for the employment of Marine General officers in Staff appointments. The Army Council agreed to consider Marine officers for such appointments, and only recently one General officer of Marines was selected for, and is now in command at, Sierra Leone, and I understand that the claims of other officers will be considered as vacancies occur. Therefore there is every indication that the policy concerted between the Admiralty and the War Office on this subject has not only attained already a definite result in the appointment of this particular officer, but that other appointments will be considered as vacancies arise.
I hope I have said enough to show that the Corps of Royal Marines, of which, as the House will remember, His Majesty the King is Colonel-in-Chief, is not by any means, as perhaps the noble Lord would have led your Lordships to believe, left out in the cold or not considered. On the contrary, the Admiralty and the War Office are fully conscious of the great and valuable services which this distinguished corps has performed, and they are prepared, as they

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always have been, to consider any point of grievance which might arise with a view to remedying it. I really do not think the noble Lord has made out any case for the inquiry for which he asks, and I hope, especially in the present circumstances, he will see his way to withdraw his request.
LORD LATYMER: The noble Lord has not said anything about the question of honours or that of awards.
LORD WIMBORNE: I was not aware that the noble Lord was going to raise those points. I will consider them and communicate with him.
LORD LATYMER: I gladly accede to the noble Lord's request not to press for the appointment of a Committee.

RECRUITING IN IRELAND.
THE EARL OF DESART*THE EARL OF DESART rose to ask His Majesty's Government whether the Householders Return as to enlistment, which is being circulated in England with a letter signed by the Prime Minister, Mr. Bonar Law, and Mr. Henderson, will also be sent to householders in Ireland.
The noble and learned Earl said: My Lords, in putting the Question that stands in my name I hope I may be allowed to make a few observations to indicate the reasons why I have placed it on the Paper. I received last week the Householders Return which has been circulated in England. The recipient is asked to fill in the names of any members of his household who are between certain ages and eligible for military service. The filling up of the return is not obligatory, but the householder is invited to give the desired information. I think the idea an excellent one. With the Return was enclosed a circular-letter drawn up in the happiest terms and signed by the Prime Minister, by Mr. Bonar Law, and by Mr. Henderson, the leaders of three recognised Parties in the House of Commons, whose names, of course, would carry the greatest possible weight with the recipients of these papers. I noticed that the Irish Parties were excluded, in the sense that neither the name of Sir Edward Carson nor that of Mr. Redmond appeared at the foot of the circular-letter. I do not know whether that indicates that a Return and letter of a similar character
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are not going to be sent to householders in Ireland. I hope very Much that that is not the case, because it appears to me that the form of appeal signed by the Prime Minister and the other leaders to whom I have referred is one which is extremely likely to be effective. It has just the personal touch which calls people's attention to their position.
The head of a household having this Return in front of him would hesitate before consigning it to the waste paper basket. The accompanying appeal brings home to him personally the duty of himself and any members of his family eligible for service; and I think the wording of the circular-letter would tend to make parents, who, for reasons of affection one can understand, would perhaps dissuade their sons from offering their services, feel that they ought not to so advise them, and tend also to make sons who are eligible for service feel ashamed that the Return should be sent in without an indication that they are willing to volunteer. The document is a valuable incentive to recruiting, and every one who knows Ireland is aware that there is no country where that incentive is at present more required. Mr. Redmond and some of his lieutenants have carried on an active campaign very loyally and ably in support of recruiting, and I think we Unionists may all claim that we have given those efforts the most loyal and earnest support and done all we could in that direction; but the result in the South of Ireland has been somewhat disappointing and disheartening to us all. I understand that lately there has been a considerable improvement in Dublin. If that be so, I rejoice most heartily. But where incentive is most lacking is in the rural districts.
There are a great number of reasons, some acting indirectly and some directly, why more recruits have not been forthcoming. A man living in a peaceful rural district, seeing everything going on the same as usual, does not get his imagination stirred, and he cannot believe that he or his country or anything else is in peril. The newspapers do not take a pessimistic view of the proceedings abroad, and the people in the rural districts in Ireland do not grasp the urgency of the situation. They think that it is not much use joining a force for home defence. It is said, "Oh, the enemy will never come here; the British

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Navy will prevent them." It is necessary to get behind that lack of imagination and lack of appreciation of the situation. Then, of course, the remarkable prosperity of certain parts of Ireland has its effect upon recruiting. Things are not only going well but exceptionally well, and there is no lack of employment. Moreover, it is only fair to say that there are not in the rural districts of Ireland a large number of men capable of enlisting. Again, of men serving in the Army and in the Reserve, Ireland provides a proportion larger than that which comes from any other part of the United Kingdom. All these causes operate indirectly.
But there are causes which operate directly—I referred to them in the few words which I addressed to your Lordships last week—and one is the activity of disloyal people in Ireland. Many of these people are Sinn Feiners, but there are others. I quite believe, as Mr. Redmond has said over and over again, that the persons at the head of the Sinn Fein movement are not numerous and not personally important, and that ordinarily the society is small in resources; but I do not remember a time when the forces of disloyalty in Ireland were so active and so aggressive as they are at the present moment. And it does set one to think how, they come to be, or have the means of being, so active. There are two or three Irish newspapers whose weekly issues contain articles which are of the most violent character against England. A good many quotations from them were given in The Times this morning. These articles are not only circulated in the newspapers; similar literature is left at cottages everywhere, and the effect is considerable. You must remember that a great many of my countrymen from their youth tip have been told that England is the common enemy, and they begin to think that, whether that is so or not, they had better not get into trouble with the people who disseminate this doctrine. I am sure that this is an agency of considerable importance against recruiting.
In peace I can understand the argument that you ought not to advertise these people, but peace is peace and war is war. There was a case the other day where it was found necessary to execute a German spy. Surely, if you do that, and do it most properly,
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in a case of that kind, measures should be taken to suppress sedition in your midst by your own subjects. It is most important that something should be done, though I do not want to go into it now. My excuse for introducing the subject at all is that it has a direct bearing on the question of recruiting, and therefore I hope very earnestly that the circular-letter signed by the Prime Minister and any other method for recruiting which is adopted and thought effective in England should be extended also to Ireland. You do not get any better soldiers than the Irish; and I am anxious that at the end of the war it shall be impossible to say that in the hour of Britain's need Ireland did not play her part and make her proper contribution to the Empire's fighting Forces. I hope that the answer which I shall receive from His Majesty's Government will be that this circular-letter or something of a similar kind, containing names which will carry weight in Ireland, will be circulated there, and that anything that is done here which is likely to promote recruiting will also be done in Ireland. I beg to ask the Question standing in my name.
LORD WIMBORNE: My Lords, the noble Earl who has just addressed the House has spoken in a spirit which clearly indicates that his main concern is that the contribution of Ireland towards the defence of the Empire should not fall below the figure which he thinks, speaking as an Irishman, she ought to contribute. Speaking from this side of the House we cordially welcome the spirit which the noble Earl has evinced, and we wish to thank him and other Unionists for the support they have given to the Government in this national crisis in the task of bringing home to the people of the country the necessities of the Empire. I was glad to hear the noble Earl state some of the facts with regard to the problem of recruiting in Ireland. I do not think they are always quite appreciated, and Ireland is sometimes unfairly criticised for want of that appreciation.
Ireland occupies an exceptional position from a recruiting point of view in comparison with other parts of the United Kingdom. The number of men of military age in Ireland—men, that is to say, who are not in the Army—is for one reason or another very much smaller than is the case in any other part of the United Kingdom.

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In the first place there is the fact, to which the noble Earl alluded, that Ireland has always contributed to the Regular Army, and even now contributes, very much more than her share in comparison with population. Then there is the fact that many able-bodied men have left Ireland. Emigration has drained the country to a great extent of the young men who otherwise one might expect would join either the Army or in the special effort we are making now; and of those who remain in Ireland of military age a large percentage are engaged in agricultural pursuits. I refer to the small farmer—the man who depends upon his own efforts and those, perhaps, of his son or two sons. These people find it exceedingly difficult, without jeopardising the whole of the occupation in which they are engaged, to leave for the purpose of joining the Army. When you have deducted these three classes you find that the class from which you may hope to get recruits is really confined to those men of military age who reside in urban areas in Ireland. The largest urban area in Ireland for this purpose is Belfast, where certainly they have less difficulty to contend with than is the case in other parts. Then there is Dublin. Dublin, however, is not so favourably situated. But when you have done with Belfast and Dublin you have to fall hack on the small towns, where the number of males of military age is very limited.
THE EARL OF DESART: Does the noble Lord suggest that there are no men in the rural districts who are capable of serving? I think that is putting it too high.
LORD WIMBORNE: I did not say there were none. I say that of those of military age in rural districts a very large number, for the reasons I have given, find it impossible to join. Having stated that fact, I do not mean to infer that Ireland is incapable of giving us any recruits at this moment. That is not the view of the noble Earl or of his Party, or of the Nationalist Party in Ireland. It is quite clear, from the observations which have been made from time to time by my hon. friend Mr. Redmond, that he at any rate does not think that the possibilities of Irish recruiting have been exhausted; and I was glad to hear the noble Earl pay a tribute to Mr. Redmond and admit that he has done everything in his power to urge upon the Irish people their interest in our success
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and their duty to come forward in sufficient numbers.
Ireland has suffered in the matter of recruiting also, I think I may say, from another difficulty. There was a delay, as the House remembers, in putting the Home Rule Bill upon the Statute Book. I do not say that that delay was avoidable, but it a little damped the ardour of the Nationalists; they were kept in some uncertainty for several weeks, and the favourable moment for recruiting did, no doubt, to some extent slip away. Then there was another difficulty. I dare say your Lordships will remember that the Irish Nationalist Party expressed a desire that those Irishmen who joined at the present crisis should be known as the Irish Brigade or the Irish Corps. That appealed to national sentiment and would in everybody's opinion have been of very valuable assistance. That view was taken by the Government, and a promise was made that an Irish Corps should be created. But there again there was unavoidable delay, which has also been something in the nature of a difficulty towards recruiting. But at the present moment those hindrances have been removed, and I am given to understand—the noble Earl will correct me if I am wrong—that there has been a marked improvement in recruiting in Ireland in the course of the last two weeks.
THE EARL OF DESART: I stated that I had heard that it was so in Dublin. That was all that I committed myself to.
LORD WIMBORNE: I have heard the same, and I was further told that amongst the Nationalists in Belfast there has been a marked improvement too. There is no doubt whatever that there has been something in the nature of an improvement in recruiting in Ireland in the last two weeks. Anyhow I know this, that the leaders of the Nationalist Party in Ireland are doing their best to bring it about. Nobody can read the speeches that have been delivered by Mr. Redmond, Mr. Dillon, and Mr. Devlin during the course of the last month or two without appreciating that it is their sincere desire, both for Ireland and for England, to bring recruiting up to the highest possible standard.
The noble Earl alluded to the attitude which the Sinn Feiners are taking with regard to recruiting. We must all agree

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with him that the course which they have adopted recently is deplorable from every point of view. I do not wish to palliate for a moment the attitude they have taken up or the expression of opinion to which they have given utterance in the newspapers which represent their views. I understand that what the noble Earl asks us to do with regard to circularising householders in Ireland is something in the nature of a counterblast to the publications now being so freely circulated throughout rural Ireland. If that is his view, I think there is a great deal in it. Advantage might be gained by such a circular being distributed throughout Ireland putting to householders directly the position and the need for recruits.
THE EARL OF DESART: I said that it was desirable that the circular-letter should be distributed for other reasons than as a counterblast. The course to be taken with regard to the action of the Shin Feiners should be of a very different character in my view.
LORD WIMBORNE: I understood the noble Earl to infer that he would regard the distribution of a circular-letter of this kind as valuable—
THE EARL OF DESART: Yes, for recruiting purposes.
LORD WIMBORNE: Valuable as a counteraction to the attitude which he and I join in deploring. I presume that he refers to the attempt on the part of the Sinn Fein Press to discourage recruiting. A Government statement of the position might serve to counteract the result of any such literature, and I agree that there is a good deal in what the noble Earl says. But in England our action, in which the Opposition have joined, is still in the nature of an experiment. We have not yet been able to estimate what results we shall obtain from it. I think it would be wise to get a little more experience from the way in which it acts in England before we extend it to Ireland, where the circumstances are so very different. I welcome the noble Earl's suggestion and will convey it to those who are in a position to come to a decision on the point. I thank the noble Earl for the spirit in which he has drawn your Lordships' attention to this matter, and I can assure him that this and any
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other method of assisting recruiting in Ireland will always receive our best and most careful consideration.
LORD ORANMORE AND BROWNE: Has this appeal to householders, to which Lord Desart has referred, been sent round to householders in Scotland as well as in England?
LORD WIMBORNE: I understand that it is being worked by Commands. The Southern Command, I believe, was the first to start. I do not think all householders in England have yet received the form. I have not yet seen it myself.
THE EARL OF RANFURLY: My Lords, with regard to the suggested distribution of a circular throughout Ireland, I wish to point out that such cannot possibly have any great use as long as the Government allow the present pernicious publications—copies of which I have in my hand and shall be glad to hand to the noble Lord—to be circulated, and take no action against the persons who publish them. I have not the least doubt that the cost of these anti, recruiting publications is paid for with German gold, and the Irish Government should direct attention to the matter. The documents are being spread broadcast throughout the North of Ireland as well as the South, East, and West. Their object is to stop recruiting; they successfully do so in many places, because the people who read them are told not to believe what they see in the English-paid Press—that it is all lies, and that Germany is their friend. They believe this, with the result that they do not come forward. I ask, Why cannot the Irish Government do their duty and stop treason and spying?
VISCOUNT MIDLETON: My Lords, I think that the noble Lord opposite [Lord Wimborne], in the course of his interesting apology for the present position of recruiting in Ireland, must have realised that he had not really dealt with the kernel of the impeachment. None of us on this side of the House desire to magnify the difficulty; on the contrary, we want to remove the present impediment. When time noble Lord set up as a defence the fact that a larger number of Irishmen are in the ranks of the Regular Army as compared to the numbers who enlist ordinarily in England and Scotland he must have known that

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his parallel was not quite complete, for there has been in England and Scotland a Territorial Force of 300.000 men. That force has not existed in Ireland, and that fact makes a very great difference in any comparison. But what we are dealing with now is not the past but the present. Without trespassing beyond the boundaries which one likes to set up of non-Party argument on these occasions, I do not think I could very well deal with the noble Lord's apology for the state of recruiting in the month of November being due to the fact that a particular Act was not placed on the Statute Book before the month of September. Nor could I very well touch with any advantage upon what seemed to me to be the rather flimsy pretext that an Irish Brigade, which I think was intended to be an Irish Army Corps, had not been conceded before the speech of the Prime Minister in Dublin. The present stagnation of recruiting in Ireland is not due to any matters of that kind, but to the entirely different cause referred to by the noble Earl on the Cross Benches [Lord Desart] and by Lord Ranfurly. How can you expect the poorer classes in the South and West of Ireland to have any patriotic feelings when you allow, not one newspaper, but a series of newspapers to circulate the most pernicious libels with regard to the British Army and the British cause? I do not wish to make this debate a bitter one by citing any of the quotations from the four Irish newspapers whose seditious articles were brought to the notice of English readers by The Times this morning. Those of us who are connected with Ireland have been reading such articles for the past three months. I do not think anything could give greater offence both to our Army at the front and to the loyal men who are giving up good appointments in England to join the Colours than the fact that these gross libels are left untouched by His Majesty's Government. The noble Lord who replied for the Government said that the noble Earl on the Cross Benches wanted a counterblast to these seditious prints. That is not what we ask for. What we want to know is, Are the Government going to prosecute these seditious newspapers?
LORD WIMBORNE: The noble Earl on the Cross Benches did not ask that. The Question which he put concerned the circulation in Ireland of the document to which he referred.
THE EARL OF DESART: I had put on the Paper a Question about the Householders Return circulated in England, and therefore I limited my observations to the question as to how its distribution in Ireland would affect recruiting. But I incidentally referred to these vile publications by Sinn Feiners, and indicated as strongly as I could that I thought the matter ought to be dealt with by the Government in the most drastic manner.
VISCOUNT MIDLETON: What I want the noble Lord opposite to grapple with is the fact that the returns for the last three months show the effect of this anti-recruiting propaganda. Could there be a greater farce than that the Prime Minister should go to Dublin—supported by the leader of the Nationalist Party and with Unionists on the platform—and address an impassioned appeal to the Irish people, and then that the Government should allow the whole effect of that unequalled effort to be done away with by the promulgation every week of these outrageous and libellous statements with regard to the Army and the country? I hardly think the Government are fully aware of what the effect has been of the violent articles in these anti-British newspapers, or of the attempts that have been made to arouse the worst passions which could be aroused in a nationality—such, for instance, as the deliberate statement that Irish regiments had been placed in the forefront of the battle and left there in order that they should suffer greater loss as compared with English regiments. I will not make any allegation as to how these seditious newspapers in Ireland are kept up. There is, of course, a shrewd suspicion, which has been actually asserted, that the money is not found in this country or in Ireland. That being so, on what principle can His Majesty's Government shut their eyes to what is palpably ruining the position of Ireland in the recruiting world? When the war is over nothing, I believe, will be felt so acutely by all friends of Ireland, whatever their politics, as the fact that when the crisis came Ireland was not given the scope that she would have had to respond to the call of the Empire because she was subjected to an evil influence which it was in the power of His Majesty's Government, had they chosen to do so, to remove.
THE LORD PRIVY SEAL AND SECRETARY OF STATE FOR INDIA (THE MARQUESS OF CREWE): My Lords, the noble Viscount opposite is entirely within his right in raising this subject, but I would venture to ask him why he did not give us some notice that he was about to call attention to the particular question of seditious publications in Ireland and their possible suppression. The noble Viscount knows as well as we do that there is only one Irish Minister at this moment, and he sits in another place. For a long time when we sat opposite we had the pleasure of the presence in this House of the Lord Chancellor of Ireland, but now the only Irish Minister is my right hon. friend in another place. Therefore when the noble Viscount asks us a series of questions as to why certain action has not been taken in particular cases, he must know that it is not possible for us to answer offhand. The noble Earl on the Cross Benches put a specific question in extremely clear terms, if he will allow me to say so, and he touched quite incidentally on this further factor in the matter of Irish recruiting—that of the efforts which are being made by the Sinn Feiners to interfere with it; he mentioned this as one of the reasons which may have, and probably has, interfered with the flow of recruiting in the country. Then the noble Viscount opposite gets up and makes it the sole subject, of observations which I am far from saying are not absolutely pertinent to a discussion of the whole subject but which were not mentioned in the noble Earl's Question. It would have been so simple for the noble Viscount also to put down a Question on the Paper dealing with this side of the subject, and we then would have replied to the best of our ability. But as it is we are not furnished with the specific facts necessary for answering the noble Viscount's question, and consequently I do not think it would be profitable if I were to attempt to suggest possible reasons for the action that the Irish Government have or have not taken. Therefore if the noble Viscount wishes to pursue the subject I have no doubt he will take an opportunity of doing so on a future occasion.
EARL CURZON OF KEDLESTON: I only rise to say, without accepting the rebuke of the noble Marquess as quite fair, that we will follow his advice by putting down a Question on the Paper which will enable noble Lords opposite to give us the information for which we ask.

BUSINESS OF THE HOUSE.
EARL CURZON OF KEDLESTON: May I ask the noble Marquess whether he has any idea of the Bills that are likely to come up to us from another place either to-morrow or the next day.
THE MARQUESS OF CREWE: I have not a list of the Bills, but there are some the progress of which in the House of Commons I dare say the noble Earl has noted, including the Defence of the Realm Consolidation Bill which I think does not come up to us until Thursday. To-morrow (Wednesday), in addition to a Motion in the name of the noble Earl, Lord Crawford, dealing with the position of aliens, the following Bills which have reached this House will appear on the Paper for Second Reading—namely, Sheriff Courts (Scotland) Bill, Land Drainage Bill, House of Commons (Commissions in His Majesty's Forces) Bill, Exportation of Arms Act, (1900) Amendment Bill, and Anglo-Portuguese Commercial Treaty Bill. There will be others to come up from the other House, including, of course, the Finance Bill, which will arrive here, I think, on Thursday. On that day also I understand that my noble and gallant friend the Secretary of State for War will be able to make a general statement on matters concerning his Office. A number of Bills will pass the House of Commons on. Thursday, and as it is desirable that some of theta should become law before the end of the week I propose to ask your Lordships to sit on Friday afternoon in order to deal with those measures. The alternative, of course, would be to let them stand over until Monday, but I am informed that it would be undesirable to postpone the Royal Commission so long.
EARL CURZON OF KEDLESTON: In those circumstances, when would Parliament adjourn?
THE MARQUESS OF CREWE: I imagine that we should adjourn on Friday.
THE EARL OF CRAWFORD: I have a Question on the Paper for to-morrow to elicit information from the Lord Chancellor about aliens. Would it be more convenient to him and to the noble Marquess and the House generally if I were to put off my Question until Thursday. The Defence of the Realm Consolidation Bill largely covers

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ground on which I desire to offer your Lordships some observations, and if the noble Marquess thinks it desirable I will postpone my Notice and say what I have to say on the Defence of the Realm Consolidation Bill when it comes up, so that the discussion should not be duplicated.
THE MARQUESS OF CREWE: As there is no other business on the Paper for tomorrow except the few Bills which I have already announced, it probably would make a greater economy of time if the noble
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Earl would take his Question to-morrow and not wait for the Defence of the Realm Consolidation Bill. When that Bill comes up there may be something of a plethora of other business, and as the discussion on the noble Earl's Question may occupy sonic time I think it would be for the general convenience if he were willing to take it to-morrow.
House adjourned at twenty-five minutes before Six o'clock, till To-morrow, a quarter past Four o'clock.