Sitting of 21 June 1915

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

PRIVATE BUSINESS.
Bristol Tramways Bill [Lords],
Halifax Corporation Bill [Lords],
West Gloucestershire Water Bill [Lords],
Read the third time, and passed, with Amendments.
London County Council (General Powers) Bill (by Order),
Consideration, as amended, deferred till Wednesday.
Local Government Provisional Orders (No. 6) Bill,
Read the third time, and passed.
Electric Lighting Provisional Order (No. 5) Bill, Gas and Water Provisional Orders (No. 3) Bill, Land Drainage (Ouse) Provisional Order Bill, Land Drainage Provisional Order Bill, Local Government (Ireland) Provisional Orders (No. 1) Bill,
As amended, considered; to be read the third time To-morrow.

INTOXICATING LIQUORS (RESTRICTIONS IN FOREIGN COUNTRIES DURING WAR).
Copy presented of Correspondence relative to the measures taken in certain Foreign Countries for the Restriction of the Sale of Intoxicating Liquors since the outbreak of the War [by Command]; to lie upon the Table.
PENAL SERVITUDE ACTS (CONDITIONAL LICENCE).
Copy presented of a Licence granted to a Convict discharging her from Aylesbury Convict Prison on condition that she enters a home [by Act]; to lie upon the Table.

SHOPS ACT, 1912.
Copies presented of Orders made by the under-mentioned local authorities, and confirmed by the Secretary of State for the Home Department:—
County of the West Riding of Yorkshire (urban districts of Sowerby Bridge (two) and Luddendenfoot)
[by Act]; to lie upon the Table.

PRISONERS OF WAR (MISCELLANEOUS, No. 13, 1915).
Copy presented of Report received from the United States Ambassador at Berlin, dated 8th June, 1915, on the Conditions at present existing at the Internment Camp at Ruhleben [by Command]; to lie upon the Table.
NATIONAL EDUCATION (IRELAND).
Copy presented of Eightieth Annual Report for the year 1913–14. Appendix, Section I. [by Command]; to lie upon the Table.
LIGHT RAILWAYS ACTS, 1896 AND 1912.
Copy presented of Order made by the Light Railway Commissioners, and confirmed by the Board of Trade, entitled The North Lindsey Light Railways (Amendment) Order, 1915 [by Command]; to lie upon the Table.
TRADE (FOREIGN COUNTRIES AND BRITISH POSSESSIONS).
Copy presented of Annual Statement of the Trade of the United Kingdom with Foreign Countries and British Possessions for 1914 compared with the four preceding years. Volume I. [by Command]; to lie upon the Table.
COLONIAL STOCK ACT, 1900.
Copy ordered "of Treasury List of Colonial Stocks in respect of which the provisions of the Act are for the time being complied with."—[Mr. Montagu.]
ORAL ANSWERS TO QUESTIONS.
  WAR.

    BRITISH VICE-CONSUL, WILMINGTON, U.S.A.
    Mr. PENNEFATHERasked the Secretary of State for Foreign Affairs if the British Vice-Consul at Wilmington, United States of America, is still, as formerly, also the Imperial German Consul; if not, on what date he ceased to act in this dual capacity and by whom the arrangement was terminated; and why, if any, other British Vice-Consul now hold or have recently held Consular appointments from Germany or any other country?
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Lord Robert Cecil): I understand that Mr. James Sprunt, British Vice-Consul at Wilmington, held a German Consular appointment from 1908 to 1911, when he resigned. The reasons for his resignation of this appointment are not known. Before the 31st of May, 1912, unpaid Consular officers were not debarred from accepting foreign Consular appointments, but on the above date instructions were issued to the effect that no British Consular officer would be permitted to accept a Consular appointment under a foreign Government without the express permission of the Secretary of State. Since the outbreak of War no British Consular officer may hold an appointment under an enemy Government.
    Mr. PENNEFATHER: Is the British Vice-Consul at Wilmington still the same person?
    Lord ROBERT CECIL: Yes, as far as I know he is.

    SAFE CONDUCTS (GERMANS RETURNING FROM AMERICA).
    Mr. FELLasked why safe conducts are being given to German envoys, emissaries, and spies who have been working in the United States and who now desire to return to Germany?
    Lord ROBERT CECIL: It is not the fact that safe conducts are being given generally speaking to German envoys or others who have been working in the
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    United States, and who now desire to return to Germany. In one or two instances such safe conducts have been granted, because, on a review of all the circumstances, that course seemed to be most in the interests of this country.

    STEEL OUTPUT (UNITED KINGDOM AND GERMANY).
    Sir LEO CHIOZZA MONEYasked the President of the Board of Trade if he can state, for each of the months of January, February, March, and April of this year, the respective quantities of steel produced by the United Kingdom and the German Empire, respectively?
    The PRESIDENT of the BOARD of TRADE (Mr. Runciman): Statistical figures as to the production of steel in the United Kingdom are only made up half-yearly, so that the comparison desired by my hon. Friend cannot be made. The quantities of steel produced in the German Empire in the first four months of this year have been reported as follows:—

    Production of Steel in Germany (including Luxemburg).

    Metric tons.

    January, 1915

    …

    …

    962,736

    February, 1915

    …

    …

    946,015

    March, 1915

    …

    …

    1,098,273

    April, 1915

    …

    …

    1,012,334

    Sir CHIOZZA MONEY: Does that show that the German Empire possesses twice as much steel in war as it did in peace?
    Mr. SPEAKER: That does not arise out of the answer.

    LABOUR SUPPLY.
    Mr. NIELDasked the President of the Board of Trade whether he is aware that under Regulation 8 B, Sub-section (b), of the Order in Council it is an offence for an employer to attempt by any other means than a Labour Exchange to obtain a workman from a distance who is not engaged on Government work; and whether this Regulation governs the practice of the Board of Trade at the present time?
    Mr. RUNCIMAN: It is an offence under the Regulation for certain specified classes of employers to take any steps to induce a person resident more than 10 miles

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    away to enter their employment otherwise than by notifying vacancies to a Labour Exchange. The answer to the second part of the question is in the affirmative. I should add that the Board are prepared under certain conditions to approve advertisements, which the employer may then insert in the Press without infringing the Regulation.

    INDIAN ARMY (PROMOTION).
    Colonel YATEasked the Secretary of State for India whether, in the event of the responsible authorities in India persisting in their refusal to promote second in commands of Infantry regiments of the Indian Army, now serving at the front, to the post of commandant should they attain the age of fifty, and considering the fact that such second in commands, being unable while on service to leave their regiments, have to suffer real hardship by being compelled to serve on under junior officers, he will make arrangements with the War Office by which these well-trained and efficient Regular officers may be permitted to come home to take command of service battalions in the New Army, where their services will be of so much value?
    The SECRETARY of STATE for INDIA (Mr. Chamberlain): The rule to which my hon. and gallant Friend refers was found to be required by the conditions of modern warfare, and the experience of the present War has conclusively demonstrated its necessity. His suggestion for alleviating individual cases of exceptional hardship will, I have no doubt, be present to the mind of the Commander-in-Chief in the field and to the Secretary of State for War, though its practicability must naturally depend on a variety of circumstances.
    Colonel YATE: Cannot the right hon. Gentleman have these second in commands sent home and given appointments with the service battalions at home?
    Mr. CHAMBERLAIN: I do not think that is a matter for me. I must leave that to my Noble Friend the Secretary of State for War on any representations which are made to him by the Commander-in-Chief in the field.

    INDIGO INDUSTRY.
    Sir J. D. REESasked whether any steps are being taken in the United Kingdom to manufacture synthetic indigo; and whether the Government of India is taking any and, if so, what measures to assist the indigo industry and take advantage of the cessation of the export of indigotine from Germany?
    Mr. CHAMBERLAIN: The first part of the question is primarily a matter for the Board of Trade, but I am informed that steps are being taken. As regards the second part of the question, the Government of India, through its Agricultural Department, is in close touch with the Bihar Planters' Association and is doing all it can to assist the indigo industry by establishing an adequate supply of Java seed, improving the methods of production and manufacture, and carrying out research and experimental work at the Pusa Agricultural Research Institute.

    LIEUTENANT VON TIRPITZ.
    Mr. RONALD McNEILLasked the First Lord of the Admiralty whether he is aware of the indignation excited by the published statement that the German prisoner of war, Lieutenant von Tirpitz, son of the German admiral responsible for the submarine piracy, has been released on parole and is permitted to enjoy the hospitality of friends, while British prisoners of war in Germany are subjected to rigorous confinement; and whether, with a view to reassuring the public, he will make known where Lieutenant von Tirpitz is now interned?
    The UNDER-SECRETARY Of STATE for WAR (Mr Tennant): But for the hon. Gentleman's question I should not have been aware that there has been any indignation. As Lieutenant von Tirpitz has never been released from Dyffryn Aled, Denbighshire, on parole or otherwise since he was interned there last autumn, the hon. Gentleman will agree with me that the emotion has been wasted.

    AIR RAID (NORTH-EAST COAST).
    Mr. KINGasked the Secretary to the Admiralty whether he will explain the discrepancies in the official accounts of

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    the air raid on the North-East Coast on the night of 6th June, and especially state why the first notice issued on 7th June gave five deaths and it was only on 16th June that twenty-four deaths were announced?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): Immediately after the air raid five were the number of deaths reported and included in the official communiqué. As the result of further and more complete inquiries, it was ascertained that the number of deaths was twenty-four, including those who subsequently died of injuries or shock.
    Mr. KING: Is my right hon. Friend aware that it took ten days to find out what people were talking about in this lobby one or two days after; and why was there this reticence about stating facts which could be of no material assistance to the enemy?
    Dr. MACNAMARA: I will say generally that we issue a full statement of casualties so far as they are known at the time. We get them from the reports of the police. Perhaps I might be allowed to say my right hon. Friend the Home Secretary will issue the lists altogether.

    PRO-GERMAN ARTICLES AND SPEECHES.
    Mr. RONALD MCNEILLasked the Secretary of State for the Home Department whether his attention has been called to the fact that a man called Walter Newbold, said to be a graduate of an English university, has recently sent contributions from this country to an American pro-German newspaper, the "New York Call," appealing to American workers to put a stop to the manufacture of munitions of war for the Allies and to compel the Government of the United States to place an embargo on the export of war materials, including raw cotton and copper; if he can say whether these communications came to the notice of the Censor in this country; whether he is aware that Newbold has recently made speeches in South Wales of a character similar to his contributions to the American Press; and whether it is proposed to take proceedings against him under the Defence of the Realm Act?
    The SECRETARY for STATE for the HOME DEPARTMENT (Sir John Simon): I understand that this matter is now under the consideration of the Director of Public Prosecutions.
    Sir CHIOZZA MONEY: Has my right hon. Friend also under consideration the case of a well-known English newspaper, to which the same gentleman makes contributions?
    Sir J. SIMON: I will make inquiries about that. Of course, it is the Attorney-General who advises.

    ALIENS IN UNITED KINGDOM.
    Sir JOHN LONSDALEasked, in view of the fact that many alien enemies have registered themselves as alien friends or neutrals, whether all aliens on registration are required to produce proof of their nationality; and if any language or other test is applied in cases where fraudulent registration is suspected?
    Sir J. SIMON: I shall be glad if the hon. Baronet will let me see the information on which he bases his question. The information at the command of the Home Office is to a different effect. The burden of proving his nationality rests with the alien. The police have been specially instructed that they should insist on definite evidence of nationality being produced in any case where there is ground to doubt the bona fides of an alien who has registered as of friendly or neutral nationality; and in April last they were told carefully to review the registers and make sure that no such case had escaped notice.
    Sir J. LONSDALEasked how many alien enemies are now residing in the Brighton area; and how many have been interned or repatriated since the 13th May last?
    Sir J. SIMON: In the Brighton area, there are four male enemy aliens and 141 female enemy aliens. Of the four male enemy aliens, three are over eighty years of age; the fourth is a blind invalid. The hon. Baronet will therefore see that the question of internment does not arise. Of the 141 females, ninety-nine are British born; the remainder will in due course be repatriated unless any of them apply for and obtain exemption from the Advisory Committee.
    Sir J. LONSDALEasked the Home Secretary if his attention had been directed to the case of a German waiter named Helmuth Ahlgrion, who was fined £25 at the Thames Police Court on Tuesday for failing to notify his change of business address and unlawfully having in his possession 598 military maps or plans of places on the East Coast, Aldershot, and the docks; and if he will state why this person has not been interned and if he is to be allowed to remain at liberty upon payment of the fine?
    Sir J. SIMON: The alien mentioned was fined £25 for not notifying a change of residence. He was not charged with having maps in his possession, as those found in his room were old maps not belonging to him and of no military use or significance. He has now been interned.
    Mr. WATTasked the Home Secretary how many days the Advisory Committee dealing with the questions of internment and repatriation of aliens resident in England have sat, and with how many cases they have dealt; and how many days the similar Committee dealing with aliens resident in Scotland have sat, and with how many cases they have dealt?
    Sir J. SIMON: The Committee which deals with these questions in England and Wales has already sat on fifteen days, exclusive of a preliminary meeting, and has dealt with 2,496 cases. Exemption has been refused in 1,496 cases and granted in 340 cases. In the remaining 660 cases further reports have been called for. The latter part of the question should be addressed to the Secretary for Scotland.

    MUNITIONS.

      CANADIAN CONTRACTS.
      Sir J. D. REESasked the Minister of Munitions whether Canadian manufacturers of munitions of war cannot secure further contracts for supplying the British Government without employing middlemen in New York; whether such manufacturers are bound to secure contracts with the French and Russian Governments through the same agency; and, if so, whether steps can and will be taken to deal with this situation?
      The PARLIAMENTARY SECRETARY to the MUNITIONS DEPARTMENT (Dr. Addison): I would refer the hon. Member to the reply given on this subject to the question asked on 17th June by the hon. Member for the St. Augustine's Division of Kent.

      ADVISORY COMMITTEE.
      Sir EDWIN CORNWALLasked the Minister of Munitions whether he has considered the desirability of appointing a Committee of independent business men, preferably Members of Parliament, to advise him as to the prices being paid from time to time for war munitions and equipment?
      Dr. ADDISON: My right hon. Friend hopes almost immediately to be in a position to appoint a general Advisory Committee, including, among others, leading business men, to advise him generally on the work of the Ministry of Munitions.

      FACTORIES AVAILABLE.
      Mr. BOOTHasked the Parliamentary Secretary of the Ministry of Munitions if particulars of fifty factories fully equipped to make munitions have been sent to him; if so, if the offer has been acknowledged; and, if not, what explanation can be given?
      Dr. ADDISON: No document giving particulars of fifty factories fully equipped to make munitions has been sent to me. I received on Friday, 18th June, from Mr. Blumenfeld, of the "Daily Express," a letter enclosing the names and addresses of firms requiring work. No other particulars of their capacity or equipment were given. The letter was acknowledged on 19th June. All other offers of factories which I have received have been acknowledged.

      CENTRAL CONTROL BOARD.
      Mr. HOGGEasked whether the Minister of Munitions is to be responsible for the Board of Control; and what steps are being taken to utilise local citizen committees, apart from the Army, Navy, and local licensing authorities, to carry out the powers set up by Parliament?
      Dr. ADDISON: The Minister of Munitions appoints the Central Control Board (Liquor Traffic), which is responsible for carrying into effect the provisions of the Defence of the Realm (Liquor Control)

      925
      Regulations, 1915. The question of the proper constitution of local committees is a matter for that Board, and is receiving their careful consideration.
      Mr. HOGGE: Is my right hon. Friend aware that the only applications made in the localities have been made and are made to the Army, Navy, and local licensing authorities, and will he take steps to impress on our hon. Friend that the local authorities ought to be used for the purpose of administering the Act?

      SHELLS (MACHINERY FOR MANUFACTURE).
      Mr. HOUSTONasked the Under-Secretary of State for War whether he is aware that there is only a limited quantity of machinery in the country which can turn out steel shells for Artillery; whether this machinery is practically confined to Government arsenals and armament firms regularly engaged in the manufacture of steel shells; whether he is aware that there is an abundance of machinery in the country which could easily be used or converted for the manufacture of cast-iron shells; and whether the War Office has now ascertained that the Germans are using cast-iron shells?
      Dr. ADDISON: The question of the existing supply and distribution of machinery for making shells is being considered by the Ministry of Munitions of War, which is anxious to take full advantage of all suitable machinery. The War Office inform me that it has been stated that the Germans are using cast-iron or cast-steel shells, but no special inquiry has been made.

      CONTRACTS PROFIT-SHARING BY WORKMEN).
      Colonel YATEasked whether, in the consideration of the question of profits on Government contracts, consideration will be given to the formulation of some scheme by which the workman will be enabled to have a share in the extra profits that may be earned by any firm on Government contracts?
      Dr. ADDISON: My right hon. Friend is not at present in a position to say more than that the whole question of the limitation of profits is receiving consideration.
      Colonel YATE: Is it not most important to try and establish identity of interest between employer and employés in Government contracts, and cannot this be done
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      by some system of co-operation and allotment of profits to workers?
      Dr. ADDISON: The whole matter is under close consideration.

    BRITISH PRISONERS AT RUHLEBEN.
    Mr. SAMUEL ROBERTS: Can the Secretary of State for Foreign Affairs give the House any further report as to the treatment of British prisoners at Ruhleben?
    Lord ROBERT CECIL: We have received through the good offices of the United States Embassy at Berlin a further report on the conditions of internment of prisoners at Ruhleben. I am glad to say that the report is of a favourable character and shows a considerable improvement in the conditions of internment of British prisoners. For this improvement we have to thank the untiring efforts of the Ambassador of the United States at Berlin and his staff, to whom the country and the Government are deeply indebted. We have been asked to publish the Report forthwith, and with the permission of the House my right hon. Friend proposes to lay on the Table the Report in dummy to-day, in order that it may be available for the Press to-morrow. Of course, it will be printed for the use of the House at an early date.

    WAR TRADE DEPARTMENT.
    Mr. R. McNEILLasked the Secretary to the Treasury what are the constitution, and duties of the War Trade Department; and what are the names, ages, and business qualifications of the persons responsible for discharging the duties of the Department?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): I am sending the hon. Member a copy of a notice issued to the Press on the formation of the Department.

    NATURALISED BRITISH SUBJECTS IN POST OFFICES.
    Sir J. LONSDALEasked the Postmaster-General if any persons of alien birth or nationality are employed in post offices at Portslade, near Brighton; and if it is intended to remove from the service of the Post Office all persons who are not British-born subjects of His Majesty?
    The ASSISTANT POSTMASTER-GENERAL (Mr. Pike Pease): There is no person of alien birth or nationality employed at Portslade post office. The rule has been laid down that alien enemies shall not be employed in the Post Office, and where there is ground for suspicion a naturalised alien is promptly removed from office. But it is not proposed to dismiss indiscriminately all employés of alien birth who are naturalised British subjects.

    PARCELS FOR TROOPS (POSTAL CHARGES).
    Colonel YATEasked the Postmaster-General whether, in view of the general complaints on the part of the wives and mothers of soldiers throughout the country that in sending small comforts to their husbands and sons at the front the postage in most cases is more that the value of the goods, he can now reconsider the question of reducing the postage on small parcels so that the poorer classes may be able to supply such small comforts to their relations at the front through this channel?
    Mr. PIKE PEASE: As has been stated in answer to previous questions, a reduction of postage charges on parcels for the Army is not practicable on account of the large increase in the number and weight of the parcels which might be expected to follow, and the excessive burden that would be thrown upon the military authorities to provide the additional transport required. As it is, the number of parcels sent daily to the Expeditionary Force in France has increased from 12,000 in November and 18,000 in February, when previous answers on the subject were given in the House, to between 60,000 and 70,000 at the present time, and has on more than one occasion risen to above 80,000. In addition, about half a million letters and newspapers are sent daily, and the total weight of mail matter is nearly 120 tons a day. My right hon. Friend greatly regrets that in these circumstances he cannot adopt the suggestions in the question.
    Colonel YATE: Instead of charging 1s. for 3 lbs., would it not be possible to charge, say, 4d. for 1 lb. and 8d. for 2 lbs., in order to give the poorer classes a chance of sending small parcels?
    Mr. PIKE PEASE: There would be no difficulty so far as the Post Office is concerned in decreasing the rate, but it is the question of transport in France.

    OPERATIONS IN CENTRAL AND EAST AFRICA.
    Sir J. D. REESasked the Secretary of State for the Colonies whether he can give the House any information regarding warlike operations in British Central and East Africa other than such as has already appeared in the Press?
    The SECRETARY of STATE for the COLONIES (Mr. Bonar Law): I am carefully considering, in consultation with the Secretary of State for War, whether it is possible to add anything to the information on this subject which has already been made public.
    Mr. HOGGE: Does the right hon. Gentleman remember that when he sat on the other side of the House he said he hoped to get fuller information?
    Mr. BONAR LAW: I did, and I still hope.

    COLONIAL CHAMBERS OF COMMERCE.
    Sir WILLIAM BULLasked the Secretary for the Colonies whether he is aware that in some British Colonies there are general chambers of commerce instead of purely British chambers of commerce; and whether information intended only for British traders and communicated from official sources has, in cases where mixed bodies exist, to be disclosed to representatives of other nationalities also?
    Mr. BONAR LAW: It is probable that the situation as suggested in my hon. Friend's question does present itself in some Colonies, as indeed it does in this country. The matter appears to be primarily one for the Chambers themselves, who are directly interested in preventing any necessity for restricting the supply of official information. I think that Colonial Chambers may be trusted to take every care to prevent official information intended only for British traders being disclosed to foreigners.

    CAPITAL ISSUES.
    Sir J. D. REESasked the Chancellor of the Exchequer whether the Treasury possesses any and, if so, what power to render effectual its expressed disapproval of the issue of new capital during time of war; and, if not, whether steps will be taken to obtain such power?
    Mr. MONTAGU: I would refer the hon. Member to the answer given by my right hon. Friend the late Chancellor of the Exchequer on the 18th May last to my hon. Friend the Member for the Bridgeton Division.
    Sir J. D. REES: Can the right hon. Gentleman say what that was?
    Mr. MONTAGU: I will send the hon. Member a copy of it.

    POST OFFICE SAVINGS BANK (DEPOSITORS' INTEREST).
    Mr. GODFREY COLLINSasked the Chancellor of the Exchequer what rate of interest is now given to depositors who lodge money in the Post Office Savings Bank; can he say if the amount of money lodged on deposit with the Post Office Savings Bank has increased during the last six months; and, if so, by how much?
    Mr. PIKE PEASE: There has been no alteration in the rate of interest allowed on deposits in the Post Office Savings Bank: it remains at 2½ per cent. as fixed by Statute. As regards the amount of money recently lodged, the figures immediately available cover five months, from the 1st January this year to the 31st of May. During this period the balance due to depositors increased by over £6,500,000 as compared with an increase of £1,700,000 during the corresponding period of last year.
    Mr. GODFREY COLLINS: Can the hon. Gentleman say whether, in view of the present value of money, he can see his way to increase the sum allowed to men who deposit money in the Post Office Savings Bank?
    Mr. SPEAKER: That question must be put to the Chancellor of the Exchequer.

    RECRUITING.

      ARREST OF MR. SHEEHY SKEFFINGTON.
      Mr. LYNCHasked the Chief Secretary for Ireland whether Mr. Sheehy Skeffington, who was recently sentenced under the Defence of the Realm Act, had applied to be tried by a jury; and, if so, why this right was denied him?
      The CHIEF SECRETARY for IRELAND (Mr. Birrell): The provisions of the Defence of the Realm Consolidation Regulations, enabling an offender to elect to be tried by a Civil Court with a jury, in lieu of by court-martial, apply only to such cases as the competent military or naval authority, to whom they are referred under Regulation 56 (3), determines cannot adequately be dealt with by a Court of Summary Jurisdiction. Sheehy Skeffington's case was not determined to be such, and it was accordingly tried by a Summary Court, which alone had jurisdiction in view of that determination.
      Mr. LYNCHasked the Chief Secretary for Ireland whether he can state at whose instance the recent prosecutions of various journalists, Messrs. Milroy, Mac-Dermott, and others, have been undertaken; and whether he will consider the advisability of not instituting further prosecutions of this character?
      Mr. BIRRELL: These cases were reported, under Regulation 55 (3) of the Defence of the Realm Consolidation Regulations, to the competent military authority, who, in the exercise of the discretion conferred on him by that Regulation, determined that they should be proceeded with. With regard to the last part of the question, I would refer the hon. Member to my reply of the 17th instant to a similar question put by the hon. Member for North Westmeath.
      Mr. LYNCH: Is the right hon. Gentleman consulted beforehand in regard to these matters?
      Mr. BIRRELL: Yes, in almost every case, I am.
      Mr. KELLAWAYasked the Chief Secretary for Ireland how many persons have been prosecuted in Ireland for making statements calculated to prejudice recruiting?
      Mr. BIRRELL: The answer is twenty-seven.
      Mr. KELLAWAY: Can the right hon. Gentleman say whether in these twenty-seven cases it was alleged against the prisoners that they had been successful in prejudicing recruiting, or was the charge merely that their language was calculated to prejudice recruiting?
      Mr. BIRRELL: I cannot say that they have been successful in their object.
      Mr. LYNCHasked the Under-Secretary of State for War whether the recent prosecutions in Dublin of Mr. Sheehy Skeffington, Milroy, MacDermott, and others have had the effect of encouraging recruiting in Ireland or have had the contrary effect; and, if the contrary effect, whether he will, in the public interest, direct that such prosecutions may be discontinued?
      Mr. TENNANT: There is room for considerable difference of opinion as to what will or will not affect recruiting adversely or favourably; and however important it is to do nothing to check the steady flow of recruits to the Colours, all policy cannot be determined with sole reference to this consideration.
      Sir J. D. REES: Is a Member of this House who discourages recruiting immune from prosecution?
      Mr. TENNANT: I do not know that my opinion would be worth very much, and I would recommend the hon. Gentleman to ask the Law Officers of the Crown.
      Mr. KELLAWAY: If these statements did not succeed in prejudicing recruiting—
      Mr. SPEAKER: These hypothetical matters cannot be debated by questions in the House.

    MEDICAL STUDENTS AND MILITARY SERVICE.
    Sir PHILIP MAGNUSasked the Under-Secretary of State for War whether, having regard to the fact that many of the younger university medical students of military age have been reproached for not having joined the forces of the Crown, he will state whether it is considered preferable that such students in their first or second year should accept some military position or should continue their medical studies with a view to qualification?
    Mr. TENNANT: I am not aware of the reproaches to which the hon. Member refers. It is clear that, if students in their first or second years join the combatant ranks in very large numbers there will probably be for some years after the War a serious scarcity of doctors. Any expression therefore of official opinion which might seem to place on them the obligation of taking up immediate military duty would hardly be in the interests either of the Army or of the community as a whole.

    OPTICAL INSTRUMENTS (EXPERIMENTS).
    Sir W. BULLasked whether any application has been made to the Royal Institution for the temporary use of a laboratory in the institution for conducting certain scientific experiments in connection with the supply of optical instruments for the forces of the Crown,, such experiments to be carried on under the direction of a member of the staff of the Northampton Polytechnic Institute, whose services the governors of that institute had agreed to place at the disposal of the War Office; and, if so, whether the managers of the Royal Institution have expressed their willingness to afford facilities for such experiments to be conducted in the laboratories of the institution, as suggested by the War Office?
    Mr. TENNANT: The facts are substantially as stated in the first part of the question. The communications received from the Royal Institution did not, I understand, amount to an offer of help or an expression of readiness to lend assistance. Arrangements for the experiments which the War Office had desired to carry out by means of the good offices of the Royal Institution were subsequently made with Dr. Grant Ogilvie, of the Science Museum, South Kensington.
    Sir P. MAGNUS: Why has it become necessary to seek some other place for the performance of these experiments than an institution where all the apparatus and equipment existed?
    Mr. TENNANT: I am afraid that I do not know that. I should have to inquire.

    PARLIAMENTARY AND MUNICIPAL ELECTIONS.

      REGISTRATION OF ELECTORS.
      Mr. LOUGHasked the Prime Minister if he is now in a position to announce whether the usual Courts for the registration of electors will sit this year or new registers be prepared; and, if not, what arrangements the Government propose to make with regard to this matter and the postponement of elections?
      Mr. TOUCHEasked the Prime Minister if, to avoid the waste of public money and effort he will announce the intentions of the Government on the subject of registration of voters on the earliest

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      possible day, and take into consideration the following facts: that the preparation of the usual registers of Parliamentary and parochial electors imposes labour and heavy cost on local authorities; that the work comes this year at a time when new duties in connection with recruiting, the administration of relief funds, and other matters arising out of the War, devolves on staffs already depleted by enlistment; that interest in the ordinary divisions of party and municipal politics is suspended; that elections cannot be representative owing to the absence of many voters on active service; that the postponement of elections until after the War would give expression to the unity of the nation; and, amongst other solutions, will he consider the introduction of legislation to reduce to a minimum expenditure on the compilation of the usual voting registers for the present year or, preferably, to render it unnecessary by providing that where lists have to be used, as in the case of by-elections, the existing register is to apply?
      The PRIME MINISTER (Mr. Asquith): A good deal of the work in compiling the registers of electors in the present year has already been done, and I do not think that it is desirable that the ordinary procedure should be suspended. I anticipate, however, that the activities of the political parties will be in general stayed.
      A Bill to postpone elections for a year, and to provide for a register for the future, will be introduced forthwith.
      Mr. LOUGH: Has the right hon. Gentleman noticed an announcement which appeared on this subject in the "Times" on Saturday, and is it not in the public interest that the House should be first informed?
      The PRIME MINISTER: I read no such announcement.

    SINKING OF STEAMSHIP "FALABA" (CLAIMS OF FAMILIES).
    Mr. ANDERSONasked the Prime Minister whether, seeing that the claims of persons injured by hostile aircraft are now to be considered, he will also consider the claims of families who lose breadwinners through the sinking of vessels like the "Falaba"; whether any action taken on their behalf will be retrospective; and,
    934
    if no public money is available for this purpose, whether he would be prepared to have specially hard cases investigated with a view to recommending a grant from the large funds subscribed for the relief of distress arising out of the War?
    The PRIME MINISTER: As at present advised the Government are unable to accept responsibility for relief in the cases referred to. I understand that such cases may be eligible for grants from the relief funds.

    ARMY AND NAVY (OFFICIAL RECORD OF PERSONS SERVING).
    Sir J. D. REESasked whether an official roll is to be prepared of members of the families of Members of the House of Lords who have served and are serving their country by land and sea in the present crisis; and, if so, whether the preparation of such a record will be extended to members of the families of Members of the House of Commons, of other bodies, and of the public in general?
    The PRIME MINISTER: The answer to the first part of the question is, I understand, in the affirmative. The Government do not contemplate any action in the matter.

    RE-EMPLOYMENT (COMPULSION).
    Colonel YATEasked the Prime Minister whether, in view of the anxiety amongst men desirous of enlisting as to whether their situations will be vacant for them on the conclusion of the War, and the cases in which men are actually frightened to join the Colours for fear of losing their jobs, he will consider the question of introducing legislation whereby it shall be made compulsory for all employers of labour to reinstate in their former positions after the War all men who leave their service with permission to join His Majesty's Forces for the duration of the War?
    The PRIME MINISTER: There appear to be considerable difficulties in the way of such legislation. As I stated in answer to the hon. Member's question on Monday last, employers as a whole have shown themselves very ready to give this assurance.
    Colonel YATE: Is the right hon. Gentleman aware that it was publicly stated on Saturday last, I think by the hon. Member for Derby, that we have had a guarantee from one of the heads of the Government that at the end of hostilities all rail-way—
    Mr. SPEAKER: The Prime Minister is not responsible for statements made by private Members.

    DAMAGE BY ENEMY AIR RAIDS.

      CLAIMS FOE STATE COMPENSATION.
      Sir J. D. REESasked whether the Government intends to compensate in full persons suffering damage to their premises from aerial raids?
      The PRIME MINISTER: As I have stated before, each case will be considered on its merits.
      Mr. FERENS: Can the Prime Minister state to whom claims for relief in regard to damage sustained in the recent air raids should be sent, and whether any particular form of claim is required?
      The PRIME MINISTER: The investigation of damage to persons or property sustained in the recent air raids has been referred to Lord Parmoor's Committee. Claims should be sent to the Secretary, East Coast Raid Committee, Board of Education, Whitehall, S.W., before the end of June. They need not be in any particular form, but should specify accurately the person or property injured. No further notification on the subject of claims in respect of the above raids will be given.

    NATIONAL REGISTRATION.
    Sir HENRY CRAIKasked the Prime Minister whether he is now prepared to proceed with the work of national registration which must be preliminary to any organisation of national resources, seeing that the saving of time by prompt action in regard to this would be of essential importance, whatever further steps may hereafter be taken?
    The PRIME MINISTER: I must refer to the answer which I gave to the hon. and gallant Member for South Monmouthshire on 15th June.

    BRITISH EXPEDITIONARY FORCES (HEALTH).
    Mr. KINGasked the Under-Secretary of State for War whether he will give some information or figures to show the prevalence of sickness in the Armies at home and on active service during the War, and particularly state whether the health of the Forces compares favourably with health conditions in previous wars?
    Mr. TENNANT: I will give information, not figures. As far as the important preventible diseases are concerned the health of the Expeditionary Forces compares not only favourably with the health conditions of any previous campaign but nothing approaching it has ever been known in the past.

    MILITARY CLERICAL WORK.
    Mr. HOUSTONasked the Under-Secretary of State for War whether he can state the total number of men in the British Army employed in clerical work; how many men are at present so employed in the United Kingdom; and whether he can state the number of men of military age employed in clerical work by the War Office?
    Mr. TENNANT: I recognise the importance of the considerations the hon. Member has in mind. Every endeavour is made to restrict clerical work as much as possible, but I am afraid I cannot bring the matter to the exact test which is suggested.

    INFANTRY BATTALIONS (BRITISH AND GERMAN).
    Mr. HOUSTONasked the Under-Secretary of State for War whether he can state the number of officers and men in a British battalion of Infantry and the number of officers and men in a German battalion of Infantry, the number of maxim or other quick-firing guns the British battalions fighting at the front are actually armed with, and the number of similar guns the German battalions are armed with; and whether he can state the average number of officers and men in a British Cavalry regiment dismounted and fighting in the trenches and the average number of maxim or other quick-firing guns they are provided with?
    Mr. TENNANT: Comparisons such as that suggested can only be intended to

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    bring out some fancied inferiority in the quality or quantity of British equipment or establishments. Such suggestions serve no purpose but to undermine the confidence of troops, and I would therefore ask the hon. Gentleman to excuse me from giving the information. In regard to the last part of the question the numbers could only be obtained by asking the Field-Marshal Commanding-in-Chief, and I do not know whether the ban. Member would desire to do this himself or would wish me to undertake it.
    Mr. HOUSTON: The right hon. Gentleman's answers to my inquiries are so unsatisfactory that I propose to deal with the question in debate at the earliest opportunity.

    CANADIAN ARTILLERY.
    Mr. HOUSTONasked the Under-Secretary of State for War whether the first contingent of Canadians, which has for some time past been fighting at the front, brought over from Canada a number of 18-pounder quick-firing guns and several 60-pounder guns; if so, whether these guns were transferred to British units; whether he can state why the Royal Canadian Horse Artillery, which has been in England since October last year, were not armed with 18-pounder or heavier guns in place of their 13-pounders, and sent to the front with the other dismounted Cavalry regiments with which they were brigaded; and, in view of the efficiency of the officers and men of this Artillery brigade, and their capability of handling heavy guns efficiently, he will arrange that they are forthwith armed with the necessary guns and sent out to join their comrades at the front?
    Mr. TENNANT: The answer to the first part of the question is in the affirmative and to the second part in the negative. The retention of the Royal Canadian Horse Artillery in this country was decided on after full consideration, and the question of the employment at the front of this particular body of troops—as well as of many others similarly situated—is one which is constantly under the consideration of the military authorities.

    VOLUNTEER TRAINING CORPS.
    Sir H. CRAIKasked whether it is proposed to nominate any military authority to be responsible for the organisation
    938
    of the volunteer training corps which have now been affiliated to the War Office through the central association, and for the co-ordination of these corps as part of the defensive forces of the country?
    Mr. TENNANT: This question is under consideration

    PROTECTION OF BUILDINGS.
    Sir EDWIN CORNWALLasked whether any arrangements, and, if so, of what nature, have been made between the British and German Governments for the protection of specified buildings?
    Mr. TENNANT: Article 27 of the Annex to The Hague Convention lays down that in sieges and bombardments all necessary steps must be taken to spare, as far as possible, buildings dedicated to public worship, art, science, or charitable purposes, historic monuments, hospitals, and places where the sick and wounded are collected, provided they are not being used at the time for military purposes, and states that it is the duty of the besieged to indicate such buildings or places by distinctive and visible signs, which shall be notified to the enemy beforehand. In accordance with this Article His Majesty's Government notified their intention to use for this purpose a sign consisting of a large, stiff, rectangular panel divided diagonally into two painted triangular portions, the upper portion black and the lower portion white. No other arrangements have been made between the British and German Governments for the protection of such buildings. How far the enemy are likely to observe the provisions of this or any other Convention I must leave to the judgment of the hon. Member.

    TERRITORIAL FORCE (NEW PROVISIONAL BATTALIONS).
    Sir RYLAND ADKINSasked whether the new provisional battalions of the Territorial Force which are now in course of formation are in fact new corps; and, if so, by what authority the transference of such formations of Home-service officers, non-commissioned officers, and men from existing units without their consent is ordered, in view of the provision of the Territorial and Reserve Forces Act, 1907, enacting Section 7, Subsection (4) (b), which enacts that no order or regulations shall authorise a man of

    939
    the Territorial Force when belonging to one corps to be transferred without his consent to another corps?
    Mr. TENNANT: No, Sir. These battalions constitute a grouping of men for case of administration and there is no intention of doing anything which will involve the separation of Home-service men belonging to the same unit or the loss by any soldier of his identity as a member of the unit into which he enlisted.

    CRUELTY TO HORSES (LEAMINGTON).
    Mr. O'GRADYasked the Under-Secretary of State for War whether he is aware of the persistent cruelty to the wounded and injured horses drafted into the park at Leamington for treatment; whether such cruelty is due to negligent oversight on the part of the responsible veterinary officials; and whether he will see that disciplinary measures are taken to protect these animals from unnecessary suffering and cruelty?
    Mr. TENNANT: This allegation has been investigated and I am sure my hon. Friend will be as glad as I am to find that it is quite unfounded. Perhaps he will furnish me with the source of his information.

    NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
    Mr. HOGGEasked the Financial Secretary to the War Office if he will say why a new Army Order has been issued making it imperative that applications for separation allowances must be made within one calendar month of enlistment; whether, in view of this new Order, recruits are asked to fill in Form O. 1838 when they are being attested; whether it is in the interests of economy that this new proposal is being made; and whether this new Order will deprive men who are serving their country of the opportunity of applying for a separation allowance at any period of their service when they consider that their dependants then require the same?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): The Army Order to which the hon. Member refers relates to separation allowances of soldiers' dependants. The intention of the scheme of
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    these allowances is to continue to the dependants the support which the soldier was giving before enlistment. The object of the Order was to shorten the delay in beginning payment and to enable the claims to be investigated while the facts relating to the period before enlistment can be verified promptly. Economy was not the object aimed at except in so far as it would be attained by facilitating investigation. Recruits are invited to make claims immediately on enlistment. The question of dependants who defer claiming because their present means are sufficient is, however, one which deserves and is receiving consideration.
    Mr. HOGGE: I beg to give notice that I shall raise this question on the Consolidated Fund Bill.

    RECRUITS (DISCHARGE FROM PHYSICAL DISABILITY).
    Mr. PARTINGTONasked the Financial Secretary to the War Office if he can state the number of recruits discharged within two months of enlisting owing to physical disability?
    Mr. TENNANT: This information is not available and I do not think it is desirable to have it specially taken out, as this would throw considerable labour on the Record Offices. The importance of the point raised is fully recognised by the military authorities, and the matter receives their constant attention.

    ENEMY INCENDIARY FIRES.
    Sir WILLIAM PEARCEasked the Chancellor of the Exchequer if, as the ordinary fire insurance policy does not appear to cover incendiary fires proved to have been the work of enemy agents, the Government will take steps to meet this kind of liability?
    Mr. RUNCIMAN: My right hon. Friend the Chancellor of the Exchequer has asked me to answer this question. I am at present considering whether a scheme can be devised to cover loss and damage by bombardment and aircraft in so far as such damage and loss are not covered by the terms of the ordinary fire insurance policy. The payment of adequate premiums by the persons insuring their property will, of course, form an essential feature of any scheme. I hope to be able to make an announcement shortly.
    Mr. WATT: Will the right hon. Gentleman take care that those insurance companies which do not take any risk do not benefit?
    An HON. MEMBER: Will the right hon. Gentleman, before he comes definitely to a conclusion on the scheme, receive representations from responsible commercial and banking bodies?
    Mr. RUNCIMAN: We have had a great many representations from commercial and banking bodies of various natures, and we have also been in communication with insurance companies, with Lloyd's as well as others. If there is any fresh information conveyed to us we shall welcome it.

    SERVICE BATTALIONS (STRENGTH).
    Mr. HENRY TERRELLasked the Prime Minister whether he is aware that there are a number and, if so, how many service battalions which have not during at least six months past and have not now more than 500 men and who have at least twice the establishment number of officers; whether it has been found impossible to get recruits to fill the ranks of such battalions; and whether the Government intend to take any and, if so, what steps to fill the ranks of such regiments?
    Mr. TENNANT: There are at present twenty second reserve battalions with under 500 of all ranks. Men are being posted to them when the reserve battalion of their regiment is full, and I am informed that about 4,000 have been so posted in the last month. The posting of officers in excess of establishment is intentional; these battalions are being used as training schools for officers.

    EX-ARMY MARES.
    Sir JOHN SPEARasked the Parliamentary Secretary to the Board of Agriculture if his attention has been called to the fact that nine ex-Army mares, sold by Messrs. Hall, Wateridge, and Owen, at Shrewsbury last week, averaged between £43 and £44 each; that the auctioneers said that they could sell 150 such animals; and, in view of this demand, will he promote the further sale of such animals, when available, in different parts of this country?
    The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Mr. Acland): The facts are as stated in the first part of the question, but the Board have no knowledge of the auctioneers' statement to which the hon. Member refers. In reply to the last part of the question, I would point out that the number of suitable mares that are available for return is small, but arrangements will be made to bring back further consignments as opportunities occur, and to distribute them as suggested.

    HIRED WRITERS (ROYAL DOCKYARDS).
    Sir C. KINLOCH-COOKEasked the First Lord of the Admiralty whether he is aware that the limitation of 5s. weekly in crement after six months' service to 25 per cent. of the additional hired writers employed in His Majesty's dockyards is not working satisfactorily; that men are being selected whilst others of at least equal ability and, in some cases, longer service and whose work is more severe have been left; and whether he can see his way to give the increment to all additional hired writers after six months' satisfactory service?
    Dr. MACNAMARA: I am not aware that the present arrangement is working unsatisfactorily. I regret that I cannot see my way to recommend an increment of 5s. a week to all temporary writers in the dockyards.
    Sir C. KINLOCH-COOKE: Will the right hon. Gentleman make inquiries at the dockyards?
    Dr. MACNAMARA: No, I do not think it is necessary.
    Sir C. KINLOCH-COOKEasked the First Lord of the Admiralty whether he can see his way to date back the rise to 27s. a week of the additional hired writers to the 1st March; and whether he will extend to all yards overtime rate for Sunday duty at time and a-half and so place all the dockyards on an equality in this respect?
    Dr. MACNAMARA: With regard to the first part of the question, I regret that I cannot see my way to recommend the ante-dating of the rise of pay to the 1st March. As regards the second part of the question, I think the hon. Gentleman must be under some misapprehension. The

    943
    Admiralty Order approving payment for Sunday attendance of the clerical staff at the outports in all cases where it is not possible for a day's leave in lieu to be granted, is applicable to all the dockyards.

    CHATHAM BRICKLAYERS FOR INVERGORDON.
    Mr. ANDERSONasked the Secretary to the Admiralty whether he is aware that a notice was posted recently in the boilermakers' shop, His Majesty's Dockyard, Chatham, inviting labourers who had any idea of bricklaying to hand in their names with a view to proceeding to Invergordon, Scotland, to take up work as bricklayers; whether this was done without first trying to obtain skilled bricklayers either through the Labour Exchange or the Operative Bricklayers' Society: whether the action was taken with the knowledge and consent of the Admiralty: and whether, in regard to future action of this sort, he will consult with the responsible and recognised trade union, which has no desire to infringe service regulations or to hamper Government work?
    Dr. MACNAMARA: The Admiral-Superintendent, Chatham, was requested by the Admiralty to select a skilled labourer experienced in bricklaying work for service at Invergordon in place of another skilled labourer similarly experienced who was returning to his home at Chatham. The particular work for which he was required did not necessitate the services or degree of skill of a fully qualified bricklayer, it being customary in the dockyard service to employ both skilled labourers and bricklayers in connection with the class of work concerned.

ORDERS OF THE DAY.
  BILLS PRESENTED.
    MAINTENANCE OF LIVE STOCK BILL.
    "To make provision for securing the maintenance of a sufficient stock of cattle, sheep, and swine; and for purposes connected therewith." Presented by Mr. ACLAND; supported by Mr. McKinnon Wood and Mr. T. W. Russell; to be read a second time To-morrow, and to be printed. [Bill 103.]
    CUSTOMS (EXPORTATION RESTRICTION) BILL.
    "To amend the law relating to the exportation of articles during the present War." Presented by Mr. PKETYMAN; supported by Mr. Montagu and Lord Robert Cecil; to be read a second time To-morrow, and to be printed. [Bill 104.]
WAR LOAN.
Ordered, "That any Resolution of the Committee of Ways and Means may be considered this day as soon as it is reported from the Committee, notwithstanding the practice of the House relating to the interval between the Report and Consideration of any such Resolution."
WAR LOAN.

  WAYS AND MEANS.
  Considered in Committee.
  [Mr. WHITLEY in the Chair.]

  STATEMENT BY MR. McKENNA.
  The CHANCELLOR of the EXCHEQUER (Mr. McKenna): I beg to move, "That the Treasury may borrow, in such manner as they think fit, on the security of the Consolidated Fund—

  (a) any sums required for raising the supply granted to His Majesty for the service of the year ending the thirty-first day of March, one thousand nine hundred and sixteen; and

  (b) a sum not exceeding two hundred and fifty million pounds in addition; and

  (c) any sums required for cancelling any securities issued under the War Loan
  950
  Act, 1914, or any Treasury Bills issued under any Act relating to ways and means, which the Treasury may, for the time being, be authorised to cancel;

  and, in connection therewith, the Treasury may—

  (a) arrange for giving an option subject to such conditions and on such terms as the Treasury determine, to any holders of consolidated two-and-a-half per cent. annuities, or two-and-three-quarters per cent. annuities, or two-and-a-half per cent. annuities, or three-and-a-half per cent. War stock and War bonds issued under the War Loan Act, 1914, to take new securities in lieu of those annuities, stock, or bonds, and may create securities for the purpose; and

  (b) charge on the Consolidated Fund the principal and interest of any securities so created and any expenses incurred in respect of any such borrowing or exchange of securities; and

  (c) charge on the Consolidated Fund any additional remuneration to the Bank of England in respect of any sums raised or securities issued either under the War Loan Act, 1914, or in pursuance of this Resolution."

  I rise to move this Resolution enabling me to introduce a Loan Bill. On the 17th of November last my right hon. Friend the Minister of Munitions (Mr. Lloyd George) introduced a Loan Bill for £350,000,000. Large as that sum was, and notwithstanding other methods of borrowing which have been adopted, the time arrived when the necessity for a further loan became apparent. As soon as that necessity was established, the Committee will agree, I am sure, that it was in the public interest to come to a prompt decision. It is most undesirable to have a big Loan hanging over the market. It is far better, even at the risk of some inconvenience, to take an immediate decision to bring out the Loan forthwith. The House has already given leave to take both stages of the Resolution to-day, so that the Bill may be introduced at once. By adopting this course, if the House sanction the Resolution, the Bank of England will be able to issue the prospectus for the Loan to-night, and applications can be received to-morrow. In introducing this proposal, I shall have to

  951
  use the language of commerce, the language of business. I shall have to talk of rates per cent., and of detailed matters of business of that kind, which may leave upon the minds of those who listen to it the idea that the greater political considerations behind have been overlooked. I hope, however, that the Committee will read into every sentence I use that there is behind all these business arrangements an urgent appeal to the patriotism of the country to make use of its gigantic financial resources in enabling us and our Allies to carry on the War to a successful issue. What is the ground for an immediate issue of a Loan? Let me give the Committee very briefly two or three figures. Up to the end of March last—that is to say, at the close of the last financial year—the realised deficit, which means, of course, the amount by which our expenditure exceeded our revenue, had reached a total of £334,000,000. Since the 31st of March down to Saturday last, the 19th of June, there has been a further realised deficit of £184,000,000. The two deficits together give us a total of £518,000,000, which is the amount which has to be made good by receipts, other than revenue. We have made provision so far to meet this deficit by various borrowings. The first War Loan, in November last, was for £331,000,000. We have issued Exchequer Bonds to an amount of £48,000,000, and we have further sold Treasury Bills to a total of £235,000,000. Those three items together give us a total of borrowing amounting to £614,000,000. From this total, however, an item, in these days a comparatively small item, of £16,500,000 has to be deducted for Exchequer Bonds, raised to meet part of a loan for the South African War, which have been paid off. There is, therefore, a balance of receipts from borrowings amounting to £597,448,000.
  The Committee will remember that the total realised deficit up to last Saturday was £518,000,000. There would seem to be a surplus of £80,000,000 still in hand. There are, however, two facts which we have to take into account before we can properly regard this surplus of £80,000,000 as money which we can freely spend for the purposes of the War. In the first place, the State has now very considerable liability to the Bank of England. Supported by a Government guarantee, the Bank of England has made advances to accepting houses and others,
  952
  to enable them to meet bills and other liabilities, in the manner prescribed by my predecessor last November. The Minister of Munitions stated the liability at that time as £120,000,000, and he estimated that before the end of the War the liability would be reduced, by payment of bills and debts and otherwise, to £50,000,000. As a matter of fact, I am in the fortunate position of being able to say that the liability is already well under £50,000,000, and in that fact we have the strongest testimony to the measures adopted by my predecessor at the time of the crisis last August. We propose to take over this liability by repaying to the Bank the amount lent against those bills. The policy of the Government ought to be to reduce those debts, direct and indirect, to the Bank of England, so as to leave the Bank as free as possible to carry out its time-honoured duty of watching over the Exchanges and protecting the country's gold reserve. When this and other liabilities to the Bank have been paid off, the large apparent surplus will be, to a great extent, extinguished.
  The second factor which we have to bear in mind as a justification for an immediate Loan is in the daily excess of expenditure over revenue. If we assume that the revenue came in at an equal rate day after day during the year the daily revenue would be £732,000. The expenditure today is very nearly £3,000,000 per day, and the expenditure is rising. We have, therefore, to make provision for a deficiency which now is already upwards of £2,250,000 per day, and which, as the-months go by, must approach, if not surpass, £2,500,000. With these facts confronting us, unless we issue a Loan, the only method we could adopt to pay our way would be by the continued and indefinite issue of Treasury Bills. We have already adopted that method to the extent of borrowing £235,000,000. There are objections to any indefinite issue of that kind of security. In the first place, Treasury Bills have a habit of falling due, and they are most likely to fall due, not to be renewed, at the very time when, owing to the financial conditions of the moment, it might be most inconvenient to buy them out. In the second place, by means of Treasury Bills, we borrow bankers' money and not public money. I know that the distinction between bankers' money and public money is a distinction which may be somewhat fine. After all, bankers' money is public money

  953
  with one remove, but there is a very real difference between the fact of borrowing from the public and borrowing from the banks. If the public bought Treasury Bills, and would be certain to renew them when they became due, we should be willing to go on borrowing on Treasury Bills throughout the War. But neither of these conditions exists. We want the public to lend the money, and we want the money lent in a way which will not oblige us to repay during the course of the War. Those are the advantages which a Loan offers. In the first place, a Loan does not fall due, at any rate, at a very early date; in the second place, if you borrow public money by means of a Loan there is a tendency—I will not go higher—to reduce expenditure and consumption, because of the effort of the investor to pay for his holding by saving; in the third place, largely due to that reason, but also for other and more technical reasons, the issue of a large Loan has the effect of assisting our foreign exchanges. For these reasons the Government decided upon the issue of a new Loan.
  What are the terms proposed? We propose that the loan shall be issued at par, and shall carry interest at 4½ per cent. We propose that the State shall have the right to repay the Loan at par in 1925, or at any subsequent date. But we propose, also, that the lender shall be entitled to have his money back in 1945. The Loan is, therefore, repayable in ten years, and must be repaid in thirty years. The instalments for the Loan will cover a period from application up to the 26th October, and the first full half-year's dividend will be paid on the 1st December. These are the main simple features of the Loan, which, I hope, will recommend themselves to the Committee. The first question which may be asked is: why issue at so high a rate of interest as 4½ per cent.? Those who put themselves back nearly twenty years, and remember Consols standing at 114, at that time would have looked forward to an issue at 4½ per cent. as an impossible dream. Those who, twenty years hence, look back at this Loan at this price will, according to whether they have subscribed or not, regard it as a golden or a lost opportunity. But the Government has to face the situation of to-day, and there are two great facts which we cannot ignore. Those who think that 4½ per cent. is too high or extravagant a rate of interest must first of all remember that the old War Loan at
  954
  its present price, allowing for interest and the value of redemption, pays the investor no less than 4¼ per cent., and that Loan is standing at a discount. The second great fact we have to remember is that we require not five, ten, fifteen, fifty, or a hundred millions, but many hundreds of millions. [An HON. MEMBER: "How many?"] It becomes obvious—I think it must become obvious—that if, on the old War Loan, the investor can already get rather better than 4¼ per cent., you could not expect that a new issue by which it is hoped to raise many hundreds of millions could be floated at less than 4½ per cent. Needless to say the Treasury cannot like issuing a Loan at a high rate of interest, and we are fully aware of all the objections, not only on the ground of the liability to meet the interest, but also on the ground of the effect upon other securities, of issuing a new Loan at a high rate. But the overwhelming and cardinal fact is that the State has to raise the money, and it is no good putting forward terms which would leave in doubt the successful issue of the Loan.
  Those are the first features, but there are several other factors of very great importance which I wish to bring to the notice of the Committee. As I have just said, the effect of the issue of a 4½ per cent. Loan is to depreciate the price of other fixed interest bearing securities, and foremost in our minds amongst those securities must be the old War Loan. [An HON. MEMBER: "And Consols!"] I will come to everything in turn. Foremost, at any rate, I think in most people's minds, will be the old War Loan. Five or six months ago the public were appealed to to subscribe their money to the State. The effect of this issue at 4½ per cent., when the old War Loan was issued to pay only 4 per cent. interest, enhancement of price included, and now at its depreciated price pays only 4¼ per cent.—the influence of this issue on the old War Loan must be to send it down further in price unless something is done to help the holders. I hope it will stand for ever as a maximum of all British Governments that this country will never leave its creditors in the lurch, and that those who lend their money on the faith of British securities may rely on it that every effort will be made to see them through. We propose to give new rights to the holders of the old War Loan. I will state what those rights are in a moment. Before I do so, I want

  955
  to mention another security—Consols. The case for Consols is not quite the same as the case for the old War Loan—we speak of the Loan of November last as the old War Loan—but the case of the Consol holder is nevertheless very strong. Most of us forget that upwards of £90,000,000 of Consols were issued to pay for the South African War. Another factor we must not overlook is that the depreciation, almost to the point of unsaleability, of Consols, is not in the interest of the commercial community as a whole. I do not speak only of the holders, but the ruin and bankruptcy which a heavy sudden drop of Consols entails are evils which it is the interest of the State to avert so far as possible. We propose, therefore, to give to the Consol holder a similar opportunity of retrieving his position as we are giving to the old War Loan holders. I should add, in order to make the circle complete, that we do the same for the holders of 2½ per cent. and 2¾ per cent. annuities: thus all the creditors of the United Kingdom are remembered and something is done to help them.
  Mr. LOUGH: Does that apply to Irish Land Stock?
  Mr. McKENNA: No. That is not our debt; it is guaranteed debt. Irish Land Stock is held under entirely different conditions. What are the terms that we have to offer to the ordinary investor? We say: If you bring £100 we will give you £100 of new War Loan, at par, carrying interest at 4½ per cent. To the holder of the old War Loan we say: If you bring £100 and invest in this new War Loan we will take your old War Loan at par and convert it into new War Loan of a like amount. We will take it at par—that is at £95, the price of issue—and convert it from a 4 per cent. Loan into a 4½ per cent. Loan. Note how that works out. Let it be understood that when I speak of £100 I am only taking £100 as a unit. What is true of £100 is true of £5, and it is true of £5,000,000, but for the sake of calculation and readily to understand the proposition I take £100 in each case as the unit. The holder of £100 of stock of old War Loan subscribed for the stock at £95. We say to him: If you bring your £100 of the old War Loan, for which you paid £95, and £5 more, making £100, with that £5 you shall convert you £100 of old War Loan into £100 of stock in the new War Loan. It requires, perhaps, a little calculation
  956
  upon a piece of paper for anyone to work out what it means, but anyone who does so will find that this is an offer which gives saleable rights to the old War Loan holder, so that any holder who has not an amount of money to subscribe to the new War Loan will be able to sell part of his old War Loan, and with the money so acquired convert the balance of the old War Loan.
  Consols to-day stand at what is called the minimum price—that is 66½. If the restriction upon dealing at any price below the minimum price were removed, I am afraid Consols would not stand at that figure. They would be many points below 66½ But, after the issue of this Loan, which gives 4½ per cent. interest, Consols, if left to themselves, must inevitably fall still lower. We say, then, to Consol holders: If you apply for £100 of the new Loan—here, again, I take the same unit of £100—we will allow you to convert £75 of Consols into £50 of new War Loan. I must make that a little clearer. Anyone who desires to convert his £75 of Consols will be able to exchange it for £50 of new War Loan. Those who make the calculation will readily appreciate what that means.
  Mr. JOYNSON-HICKS: It means 66⅔.
  4.0 P.M.
  Mr. McKENNA: The hon. Member is right. It means that we make Consols exchangeable at the price of 66⅔. The condition of the Consol holder getting this advantage is that he should apply for the new War Loan. Just as in the case of the old War Loan, we relieve the Consol holder of the stock which he would inevitably have to write down, and which would probably be almost unsaleable, and we give him in exchange a new and highly marketable security, the price of his Consols for the purpose of exchange being reckoned at 66 and two-thirds. To the 2½ per cent. annuitants the price is £78 for £50 of the new War Loan, and to 2¾ per cent. annuitants £67 for £50 of the new War Loan. There is one other condition which I must mention in connection with this conversion, and that is that application must be made before 30th October of this year. What will be the effect of this conversion? There are now held, otherwise than by Public Departments, Consols amounting to between £300,000,000 and £400,000,000. If the Consols were all converted it would mean an application for at least £400,000,000 of the new War Loan, because Consols can only be converted if the holder applies for the new

  957
  War Loan in a proportionate amount. In the same way, if the conversion is made of the old War Loan into the New, an application for some hundreds of millions of the new stock would be made. We do not expect—we cannot anticipate—that all the holders of Consols and all the holders of old War Loans will convert. Many will not think it worth while. A good many, in spite of every facility, will think it is a transaction too difficult to undertake, and some persons may not be able to find the necessary money. There is an element of uncertainty as to how many holders of old War Loan and Consols will convert. That element of uncertainty makes it unwise, imprudent, to fix a limit to the amount of the Loan.
  We are not asking for any definite amount. The only limit will be the limit in the Resolution to meet the expenditure of the year. We could not say we wish to raise £300,000,000 or £400,000,000, because either of those sums might prove to be insufficient to meet the demands of those who desire to convert. Consequently, novel as this feature is of raising a Loan without a definite limit, in the circumstances it is far more prudent to adopt that method. In this conversion we are giving to old stock holders what is technically known as an uncovenanted benefit. In this new issue we propose to give to subscribers a covenanted benefit. We undertake that in any new issue made in this country for loan for purposes of this War, other than, of course, for Treasury Bills or short-dated Loans, we will take the stock of this War Loan for cash at par. That means that in any future Loan, owing to the protraction of the War, should it become necessary to pay a higher rate of interest than 4½ per cent., the holder of this stock should be entitled to the higher rate. He shall be put in the position as if he were subscribing for the new Loan for the first time.
  I think the Committee will agree that these terms are generous, and that, if a proper appeal is made to the country, they ought to be effective in raising the money we require. I have no doubt that when considering whether they should or should not invest in the last Loan many persons, in whom the business faculty was perhaps over developed, hesitated, with the idea that if they waited a little there would be another issue at a higher rate of interest, and that they could do just as much service to their country by lending the money
  958
  when it was next wanted as they could do at the moment. Those prudent people on the last occasion made a mistake, because they have been watching their money for the last six months and not getting anything like the rate of interest on it that they could have got on the Loan, and when the new issue comes we put the old subscriber back in the favourable position of new subscribers. But, as regards future Loans, the argument for waiting is absolutely gone. Now is the moment! Who can say that ever any Minister will stand at this box again and offer the public a chance of subscribing at 4½ per cent. on the credit of the United Kingdom. If our requirements become greater and we have to borrow at a higher rate, subscribers will get the advantage. If things go favourably with us—pray God they may—and another Loan should be required it would not be at this rate, and, therefore, I appeal with some confidence to the investor to take advantage of the opportunities afforded to him and to subscribe freely and liberally to the needs of his country. This is a great national appeal for a great national purpose.
  I have spoken so far of the terms and conditions of the issue of the Loan through the Bank of England. The minimum subscription will, as usual, be £100. [HON. MEMBERS: "Too high!"] I have spoken of the issue through the Bank of England. The minimum subscription will, as usual, be £100, but in our present proposal we do not confine ourselves to that issue. We propose three methods of issue to meet every class and every person: first of all, through the Bank of England, in the way that everybody already understands; secondly, in order to meet the needs of the small investor, we propose to provide for the sale of £5 bonds or £25 bonds through the Post Office. The bonds will carry precisely the same rate of interest, precisely the same advantages as to conversion which attach to the issues through the Bank of England.
  Thirdly, there is another issue which we propose. A Committee presided over by my right hon. Friend the Financial Secretary has devised what I venture to term a very ingenious and practical scheme for giving everybody, however poor, an opportunity of taking a share in the Loan on at least as good terms as are given to the millionaire. It is proposed that War Loan vouchers for 5s., or any multiple of 5s., shall be on sale at Post Offices, or, if

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  they will help us, through trade unions, friendly societies, and works offices. These 5s. vouchers will carry interest at the rate of 5 per cent. per annum for every complete calendar month. Broken days will not be taken into account, but the rate of interest, instead of being 4½ per cent., will be 5 per cent., which will more than make good the loss on the broken months. The vouchers, when they have been accumulated to the amount of £5, may be exchanged at the Post Office for a £5 bond, which will then carry all the rights of any other stockholder. We propose, however, an additional condition. We propose to give the holder of a voucher who finds a difficulty in saving up to an amount of £5, or who, for some other reason, requires his money, the right to pay in his voucher to the Post Office as a deposit on Post Office account. He can thus convert it immediately into cash. But, if the voucher is so treated, it will not carry interest. It will be used only as money, and as money no interest will be paid upon it. By these arrangements we give to the working classes, if they invest in the War Loan, every advantage which is offered to any other class, and we hope by these means to induce the public on every scale of living to retrench its expenditure, to save its money, and to subscribe to the War Loan for a period of four or five months, either by the purchase of vouchers or by the payment of instalments.
  Mr. LOUGH: How will the interest on the voucher be credited?
  Mr. McKENNA: They will be credited, on the exchange of the voucher for the bond, with the amount of interest. The allotment lists for application will be closed on or before 10th July; that is to say, the public will have, unless we close the lists earlier, just upon three weeks in which to make up its mind whether or not it will subscribe. Allotment will be made on application, and the lists will not be closed unless the applications have reached a point which we consider sufficient to meet our requirements. But our requirements are great. I have already given to the Committee figures to show the vast number of millions which will be required to finance the War up to the end of this financial year, and nothing but a great appeal through our financial resources, stimulated by the most earnest sense of patriotism, will enable us to obtain the money. I would urge upon those who
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  have the means of subscribing, and those who can obtain the means of subscribing by curtailing part of their customary expenditure, that every effort that they make now is an effort which is not only necessary to enable us to carry on the War, but will bear very great fruit in enabling us to maintain our financial pre-eminence after the War is over. That is an aspect of the question which we must not overlook. As long as the War may last there is a future. We do not want to see ourselves crippled in that future by our own neglect of the rules of prudence and economy whilst the War is being carried on. Now, Sir, he who subscribes to the country's need at the present time is, in truth, doing an act of mercy, and his act benefits both him and the country to whom he gives. He who subscribes now, and saves in order to subscribe, will be able to bear the strain when the War is over, and he will be thankful for the efforts he has made in this struggle to help himself. But still dearer to him must be the knowledge that every aid that he gives to himself he is multiplying for his country, and that his country will bless him for his prudence and his generosity.
  Sir F. BANBURY: I am not quite sure whether I understood the Chancellor of the Exchequer correctly. Does he say that the amount of the Loan is unlimited?
  Mr. McKENNA: Yes.
  Sir F. BANBURY: That is rather a strong order to those of us who have been brought up in the old financial school. I am not surprised that the right hon. Gentleman's terms are very generous if the public are to be asked to subscribe to an unlimited amount. The result of the amount being unlimited will be that the market will never know what amount will be issued, and it will be quite impossible for this stock to go to a premium, and it must at once be at a discount, because with an unlimited Loan on the market we shall not know where we are. I will not now go into the question whether any Government has the right to ask for an unlimited amount.
  Mr. McKENNA: I stated that we are not asking for any specific amount, but, of course, the amount is limited by the terms of the Resolution to £250,000,000. I think the total is £910,000,000, but I was not asking for that amount.
  Sir F. BANBURY: Then I withdraw what I have stated. As long as the amount is limited then we know where we are,

  961
  and everybody will know what is before him. My hon. Friends near me thought that the amount was unlimited, but now I understand it is limited to something like £900,000,000, Of course, the terms are very generous, and there is not any question about that. One point the right hon. Gentleman left out was what is the cost to the taxpayer going to be of the conversion of Consols and the conversion of the old War Loan. It is going to cost a very considerable amount, and I should put it, roughly speaking, at about £3,500,000 per annum in extra interest. It all depends upon how many people convert, but I think the amount would be something of that sort. I do not want to criticise the proposals of the right hon. Gentleman when he is going to borrow an enormous sum like this at a high rate of interest, but when he is doing that I think he should give the whole of the Consols some opportunity of making their stock saleable. I am sorry that he does not think he has been sufficiently generous, and I regret that he went so far as he did when he said that, in the event of a further Loan being required, all this sort of thing will be gone over again. Supposing, for instance, as I hope will be the case, that this Loan turns out a great success and there is a great demand for it abroad—I should think there would be, especially in America, where a 4½ per cent. English Loan should be worth subscribing to. If successful, the people who subscribe gain the advantage. But supposing it is a failure, it is not fair to say to the taxpayer, "You must recompense these people because it has been a failure." You are giving those people an option for nothing, which is not business. It is a new principle to say that if a thing is a success you must reap the advantage, but if it is a failure somebody else must bear the loss. I recognise the difficulty of the right hon. Gentleman's position, but I am sorry that my advice was not taken in the case of the last Loan, when I did all I could to have it issued at 4 per cent. at par, instead of 3 per cent. at 95. It would have cost the country no more, and it would have made the Loan a success instead of a failure. However, my advice was not taken. I am inclined to think that the right hon. gentleman has been sufficiently generous, and, if he could do it, I should say that all these advantages should be confined to the holders of Consols and the old War Loan; but should we unfortunately have
  962
  to borrow any more, because £900,000,000 is a large amount, then more people must take the times as they are, and, if the Government have to borrow at a lower rate, it cannot be helped. I do not think it is advisable to say that should there be a necessity to borrow further at 5 per cent. all those people are to receive an additional ½ per cent. I do not know whether it is too late to alter that, but I think it would be well to make that alteration. We have really to consider the taxpayer. The right hon. Gentleman has been so generous that I do not think it is necessary to give this option to the people who are going to subscribe.
  Mr. JAMES MASON: I am very much impressed by the generosity which is put forward in this scheme, but I should like to have one or two points cleared up which the right hon. Gentleman did not explain quite clearly in his speech. The right hon. Gentleman told us that applications for the Loan must be made by July 10th. I presume that the issue of the vouchers does not cease on the 10th July, but goes on indefinitely?
  Mr. McKENNA: Yes.
  Mr. J. MASON: In that case I presume that the amount of the Loan will in the future be constantly increasing by the issue of further bonds and vouchers from week to week. That seems to me to be a position which will require further consideration. May I ask one question with regard to the Consols? The right hon. Gentleman told us that with regard to the old War Loan, in the case of people who could not afford to take up the new War Loan, and get the benefits put forward, they would have rights which would be saleable, but he did not tell us whether similar rights were saleable in the case of Consols. Do the Consols carry similar rights to the old War Loan which has saleable rights?
  Mr. McKENNA: Yes, obviously.
  Mr. J. MASON: I would like to know whether it would not be advisable that Treasury Bills now current should be made convertible into the new Loan. Take, for instance, Treasury Bills at six or nine months. If they want to use that money for the purposes of the loan they have to borrow money in other quarters, whilst receiving a less rate of interest. Treasury Bills at six months have been issued at 3⅝ per cent., but during their currency the

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  person who wishes to apply for the War Loan would be receiving a less rate than if he were able to get the War Loan at once. Would it be possible to consider some arrangement by which those Treasury Bills could be converted into War Loan Stock immediately? I hope that on the whole question of this Loan the right hon. Gentleman has thoroughly considered whether the time has not come when we ought to find a larger proportion of this special expenditure than we have done up to the present time by means of taxation rather than by Loan. I feel extremely strongly myself, and I am quite sure that many others in this House do, that the proportion we are paying out of taxation for this War is not sufficient compared with that which we are paying out of Loan.
  If we realise the enormous amount of artificial income there is in this country at the present time, income which is partly due to the War, which is to a larger extent due to a certain activity in trade, and which we all anticipate will to a considerable extent collapse at the end of the War, I think we shall admit that there are very large numbers of people in this country who are at this moment receiving incomes far in excess of those they are likely to receive when the War is over. If that is so, is it wise to encourage people to spend incomes which they may think are as low as they are likely to get and to encourage them in the view that those incomes are not likely to be further reduced, when we most of us know that they are to a great extent artificial, and are likely to be a good deal lower when the War is over? The taxpayers of this country as a whole are much more able now to bear increased taxation than they are likely to be at the end of the War, when we probably shall be in much greater financial difficulty, and when we shall require all the resources we shall have to encourage industries and to put them on a sound basis. At that time increased taxation will be much more serious than it is to-day.
  There is one other reason why I advocate increased taxation. It is all very fine to talk about reducing the consumption of imported articles and the like, but it is extremely difficult to get a great many people to reduce the consumption of articles, so long as they have got the money to pay for them. I believe that the only way in which you can bring about that saving and thrift which the right hon. Gentleman advocated just now is by
  964
  enforcing a certain amount of that saving in the form of increased taxation at once. It is, of course, most desirable that everything should be done that can be done to prevent any waste in consumption. We are all agreed upon that. There is a special difficulty in the case of imported articles, which have got to be paid for either by exports visible or invisible or by gold. That being the case, is it not desirable that a considerable number of the articles which we import now should be themselves taxed? I am not going into the old question of who pays the tax. I will only take one example as an illustration of my point. Petrol has not gone up to the price which a great many people anticipated. Petrol is absolutely necessary for the conduct of the War, and so long as private people are able for the purposes of their private cars to go on consuming large quantities of petrol there ought to be some check on their consumption by some increase in the tax on that article. At the same time a certain amount of revenue would be brought in to the Treasury. I hope that in the whole of this question of financing the War the right hon. Gentleman will really give ample consideration to the question whether or not we should increase the proportion of the cost of the War which should be met by taxation as compared with that which should be met by Loan.
  Mr. GOLDSTONE: I followed the speech of the hon. Gentleman who has just sat down with very considerable interest, and especially that part of it in which he suggested the raising of additional revenue at the present moment by means of taxation instead of by Loan. Perhaps, from another point of view, but certainly with the same principle in mind, I heartily agree with him. I have in mind the difficulty which will ensue after the War is over in promoting schemes of social betterment. If we are then saddled with Loans carrying interest to something like the extent of £40,000,000 a year, it will be extremely difficult to attend to such necessary things as housing, education, and the like. It does seem to me that the suggestions of the hon. Gentleman in one or two particulars are entirely practicable, particularly his suggestion for taxing those who have at present considerable means which are available for the purpose. In this connection I hope that the Government will take the opportunity of taxing the excessive war profits which are known to have

  965
  been made and which are being made as a result of this War. I think that the hon. Member cordially agrees with that suggestion.
  I fail to follow him, however, when he suggests that at this time of truce we should begin to introduce Tariff Reform by a side wind. He suggested, for example, the taxation of petrol without stating definitely what was his policy. I think that his point would be met just as well if he placed a high tax on the users of expensive motor cars. He could get the money in that way without departing from the principle of Free Trade. There are other possibilities entirely in the same connection which the Government ought to consider. There is the possibility of heavy taxation in respect to persons who keep men servants. This would indirectly be of very excellent service from the national point of view. There are other means along the lines suggested by the hon. Member, apart altogether from the application of a policy to which many take great exception, which it would be well that the Government should consider.
  I have risen, however, to draw attention to the new proposal of the Chancellor of the Exchequer of allowing the working classes to take some part in this Loan, and, though I cannot pose as a financial expert, so clear was the statement of the right hon. Gentleman, that, in the main, I was able to follow every detail of it. I believe, from what I know of active workers in the trade union movement, that the proposal to give opportunities to working men to subscribe to this Loan will be approved, and that a considerable amount will be taken up—considerable in the aggregate, though the individual sums may be low. There are, no doubt, at the present time certain trades which are extremely busy. The men engaged in them are doing better now than they have done for years. High wages are undoubtedly being earned by men in engineering and steel works and the like. It seems to me the right hon. Gentleman will find that a considerable number of working men will be prepared to take these vouchers. He does well to give the opportunity to approved societies and to trade unions—I think he might extend it to the co-operative societies—to be the channels for the distribution of these 5s., 10s., and £1 vouchers, but I would suggest that if 10th July is the last date for working men to come in under this scheme—
  The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): No, up to 31st October.
  Mr. GOLDSTONE: I am glad to hear that. One of my queries had reference to the final date for the receipt of contributions from the working-class section of the community, and this postponement is all to the good. There will be men who will be stimulated by this opportunity of entering into a War Loan on equal terms with the millionaire; to contribute their 10s., and possibly in some cases their £1, with a view to the accumulation of a unit of £5. To attempt to get that £5 before 10th July would be obviously absurd for the vast proportion of the men whom I have in mind. The postponement of the date will give them the opportunity of steadily accumulating £5, and possibly more. This, is seems to me, will give to the War Loan an element of success, and may possibly provide more considerable sums than the right hon. Gentleman contemplates. I venture on behalf of a considerable number of my colleagues to give, that part of the right hon. Gentleman's speech approval and commendation, and to thank him for the clear statement which he has made and for giving the class for which I particularly speak the opportunity of entering into this War Loan.
  Mr. CHAPLIN: I have no claim whatever to speak as a financial expert, but, standing where I do, I should just like to be permitted to say how the speech and the proposal of the right hon. Gentleman struck me. It struck me as an able, clear, undoubtedly most generous, and, above all, a great patriotic appeal for a great public patriotic motive, to the whole of the nation at large, and I heartily wish him success in his undertaking.
  Sir THOMAS WHITTAKER: One would like to have longer time before expressing a final opinion on these very important proposals, but I wish to press one point which was put by the hon. Member for Windsor (Mr. James Mason) with regard to the Treasury Bills which have recently been issued. They have, no doubt, been largely taken by bankers, but they have not by any means been solely taken by bankers. Very considerable sums have been taken by other people. These Loans are repayable six, nine, and twelve months after the time the Bills were issued. If those people can be induced to put that money

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  into this new War Loan the Government would then have the advantage of having their money locked up.
  A very important point in connection with this very generous offer which the Government is making is the effect it will have upon the value of all other securities. It is all right to lift the interest on Government securities, but doing so and creating such an enormous quantity of them means that other securities far more numerous and valuable will go down. You will probably, before you have done with this business, have this year something like £1,000,000,000 of 4½ per cent. Stock under the security of the British Government. A good many other securities will have to find a much lower level than they have done to-day. It is going to be a very serious thing for the country. It may be unavoidable, but it does bring home to us what this expenditure really means. No doubt, in so far as the smaller investor can be successfully and prudently brought in, it is extremely desirable, but I am not quite clear what effect it may have upon our savings banks. If the money is going to be drawn out of the savings bank to be put into this War Loan it means that the savings banks of this country will have to raise the money. I do not know how they will get it, but if they are compelled to sell their present seurities in order to find money in any large amount for their depositors to take up this Loan, the results may be very serious to the savings bank. I have not looked into the accounts recently of the Post Office Savings Bank, but I have my doubts as to whether the Government could realise enough from the securities held on behalf of the Post Office Savings Bank to pay all the deposits they hold; I am not sure that the Post Office Savings Bank is solvent from that point of view. If there were large demands on the Post Office Savings Bank for money to put into this Loan, and the Government had to provide that money by sales, there might be a big deficiency to make up. This is a very important matter.
  With regard to raising more taxation, I heartily agree with the hon. Gentleman the Member for Windsor. We have had a great deal of talk about economy, but nothing would promote it so much amongst the general public as further taxation, because that would mean enforced economy, and the money would be taken. I do not think, however, we are going to get much out of petrol, theatre tickets, or
  968
  motor taxes, or things of that kind. In war time you want money in lumps, and it is no use tinkering about with odd hundreds of thousands here and there; you want it by the million, and it will have to be got on a very different basis from anything suggested in that way. First of all, you will have to get more from those who have got a good deal; they pay pretty stoutly now. And then you will have to raise a great amount from the masses of the people. You cannot raise substantial sums by taxing in any other way, and I agree that the time has come when we ought to bring home the necessity for thrift in every direction by more taxation.
  Sir WILLIAM PEARCE: I should like to ask the Chancellor of the Exchequer as to the preference in allotment to the holders of Consols and of the old War Loan. I understand he proposes that the holder of 95 per cent. old War Loan Stock is to be able to apply for £100 of this new stock, and that when the conversion is made he is obliged to take up £100 worth of the new stock besides, so that in each transaction there will be £195 applied for. This means that a very large portion of the limited amount—for the amount is limited—of the new Loan must be kept back for the holders of Consols and of the old War Loan Stock, and they are to have an opportunity to apply for this until the 30th October. Therefore, right up to the 30th October, you are going to limit the amount of new stock available for new subscribers, because that amount cannot be ascertained until then. And if the holders of Consols and old War Loan Stock apply to the full extent of their rights, there may not be more than 200 or 300 millions left for outside applications, and the amount of these outside applications to be granted cannot be known for certainty until the 30th October, when the rights of the two prior Loans will no longer exist. If I am correct in that it seems to me the Treasury must be in a state of uncertainty right up to the 30th October as to the amount they can give to outside applications.
  Mr. SAMUEL ROBERTS: I should like, with my Friends on these benches, to congratulate the Chancellor of the Exchequer on his very clear statement. The announcement he has made this afternoon will be a surprise to the Money Market, as I do not think it was expected that the Loan would be anything more than a little over 4 per cent. Still, in my opinion, the right hon. Gentleman has done right. He

  969
  has made a certainty of it. No doubt the terms are very tempting, but he is doing without what is called a forced loan. There has been a good deal of talk about forced loans, and no doubt if we cannot get the money voluntarily force will have to be exerted. We should regret that. The right hon. Gentleman at the same time has done justice to the holders of Consols and of the first War Loan Stock. It would be manifestly unfair to holders of Consols, and those who invested in the first War Loan, that they should have their security depreciated on account of the better terms of the issue of stock when money is required by the State more than it was at that time. The right hon. Gentleman the hon. Member for Spen Valley (Sir T. Whittaker) has referred to the question of gilt-edged securities, and no doubt the effect of these proposals of the Government on those securities will be that they must fall further. I should say myself that the rate of interest on gilt-edged securities will approach now 5 per cent. or over. The right hon. Gentleman will no doubt say he is not the custodian of the holders of these securities and that they must look after themselves. I am very glad the right hon. Gentleman has opened this Loan to small holders—to the working classes. I am quite sure that if the matter is fairly put before them they will be only too willing to invest their money in it. I should like to suggest to the right hon. Gentleman a method in which that could be done. Vouchers, I understand, are to be obtainable at the post office for 5s. up to £5. Might I suggest to the right hon. Gentleman that the opportunity to get money from the working man is at the point when he receives his wages, and if when his weekly wages are paid to him he is asked if he will take 5s. of the Loan he might willingly do it at the moment, whereas after the money has passed into his pocket the chance of his investing it in this manner would become very uncertain. Could not some arrangement be made by which the suggestion to invest should be conveyed to the man at the moment his wages are paid to him?
  With regard to Consols, I think the Government proposal will be a very great advantage to the holders of this stock. The Committee are aware that Consols are unredeemable; they are perpetual annuities going on for ever without a chance of being redeemed. The scheme of the right hon. Gentleman affords an opportunity for converting these Consols into a War Loan
  970
  which will be redeemable, and that will be a tremendous advantage to the holders of Consols. I do not think the right hon. Gentleman in his statement mentioned at what period the instalments were to be called up.
  Mr. McKENNA: There will be fortnightly instalments of 15 per cent. and 10 per cent. until the 26th October.
  Mr. S. ROBERTS: I am obliged to the right hon. Gentleman. There is one other point on which I should like information. On the occasion of a previous statement it was intimated that a promise had been obtained from the bankers to take up £100,000,000 of the stock. I suppose I cannot ask if the Government have been able to do this on that occasion, but, as a banker, I should like to say we are prepared to do our duty in this matter. I am quite sure the country is prepared to do its duty, and if the right hon. Gentleman will act upon my suggestion with regard to working people he will find that they too are quite ready to come forward and do their little bit of service to the country.
  Mr. LOUGH: There was a very interesting point put by the hon. Member for the City of London (Sir F. Banbury) to which I should like to call the attention of the Chancellor of the Exchequer, and I am in a better position to do that than was my hon. Friend, because I have now the Resolution before me. The question is whether this House is justified in sanctioning a Loan for an unlimited amount? My right hon. Friend opposite stated that the amount was really limited to the amount asked by the House for the service of the year ending the 31st March, 1916, and he mentioned an approximate sum of £900,000,000. I want to put a question to the right hon. Gentleman on the Resolution which is now before me. In his statement the Chancellor of the Exchequer was only referring to point "A" of the Resolution, but point "B" says in addition, "a sum not exceeding £250,000,000." Then there is point "C," which refers to "any sum required for cancelling securities issued under the War Loan, 1914, or any Treasury Bills." It looks to me, from the second part of the Resolution, that that includes Consols, and my hon. Friend the Member for the City of London, I think, made a good point when he asked whether constitutionally we could sanction the Loan for an amount which was not limited in some way—which

  971
  might amount to 1,000, 1,500, or even 2,000 millions—under the Resolution. There appears to me to be no kind of limit whatever embodied in the Resolution.
  5.0 P.M.
  It is a very serious thing for the House of Commons in one afternoon, coming down here without any idea of the nature of the proposals that are to be made, to agree to such a large proposal as this. I am not suggesting any note of hostility to the scheme of the Government. I am sure they have thought the matter out well. The emergency is a great one, and fully justifies them in calling on every citizen to do all he can to help. But the speech of the right hon. Gentleman seemed to be conceived in a spirit of some despondency. [HON. MEMBERS: "No, no!"] Well, so it seemed to me, and I thought there was no reason whatever for it. I wish to cheer him up by the few remarks I am making. He spoke of this as an act of mercy which would meet its final reward when the investor got his security at 4½ per cent. But surely there was no need to use such an expression as that! This is a good business proposition, and I venture to say that any amount of money that may be required can easily be raised on such excellent terms as those now offered. There is, however, one point I would like to make regarding the Resolution. I need hardly say I do not want to press the Government upon it now. The very fact that the terms of the Loan are more liberal and more costly to the nation than the terms offered a few months before tends to show that the Government is not, perhaps, taking the wisest course in financing the War. It has been financed almost altogether on the German method of borrowing. I think it was Trietsche who said you might borrow all the money for the War, and he went on further to say that England had borrowed all the money for her great wars. That was a most astounding remark for a man like that to make. He was supposed to be a responsible man, but he did not know anything of the facts of which he was speaking. The great feature with regard to the finance of our previous wars was that a large proportion of the expenditure was obtained from taxation. Without pressing the Government in any unfriendly way this afternoon, I think hon. Members in all parts of the Committee will agree with me that the Government have not risen to the feeling of the House of
  972
  Commons with regard to raising money by taxation. From all parts the suggestion is made that they should put on taxes. Some are futile suggestions and would be absolutely unremunerative. I know the Government will not adopt them, therefore I do not take any notice of them. I cannot help feeling that from the beginning of the War we should have had much larger proposals for taxation than we have had. This year £40,000,000 or £50,000,000 will be raised, but it will be a very small share of the w-hole of the expenditure. The right hon. Gentleman gave me rather a fright at the commencement of the proceedings, because I thought the Resolution he moved was intended to sanction some Resolution with regard to taxation, but I understand that it only refers to this Loan.
  I should be glad if in his speech in reply the right hon. Gentleman would indicate whether during the present Session of Parliament he will make any proposal with regard to taxation. I believe it would be very satisfactory to the House, and I would strongly recommend him to look at the matter in the bold spirit shown by the right hon. Gentleman the Member for the Spen Valley (Sir T. Whittaker). Take the case of sugar. Instead of fiddling with sugar, as the Government seem to be doing, open your ports, let sugar in free, and put 1d. a 1b. duty on it. You will then raise £14,000,000. You could also level up the duties on coffee and cocoa to the level of the duty on tea, and you will get a considerable amount of money there. Say you get from £30,000,000 to £40,000,000 by taxation, that will be spread over all the population of the country. There is no doubt that resort will have to be had to every sort of taxation, and that that is the best source from which the Government can get this money to carry on the War. The right hon. Gentleman told us that the revenue of the country is £700,000 a day. Make it up to £1,000,000 a day quickly by taxation and not by borrowing. You will easily get the extra £300,000 or £400,000. It is a great thing to have ready money steadily coming in. It would be the best way of getting the money from the people and it would be the best way of financing the War.
  The Government will not think that their proposals have received anything but a sympathetic reception at the hands of the Committee. They are of a most extravagant kind. This is a great appeal for an unlimited amount at this huge rate of interest. There are many good points about

  973
  it, particularly that affecting the Savings Banks. At Question Time the inquiry was put to the Government as to whether they would not increase the rate of interest paid by the Savings Banks, and they refused to give any answer to the inquiry. Now it is quite clear that the Government is putting down machinery that will enable everybody to get 4½ per cent. for the money they have in the Savings Banks. They may take the money out and invest it in the War Loan. I think consideration ought to be given to these investors and to the working classes. I feel that the Resolution imposes a great and immense responsibility on the House of Commons. The one feeling I have with regard to the War is that we are not getting enough money by taxation from day to day. The Government would commend their general proposals more by imposing larger taxation, and I believe that would carry everybody in the House with them.
  Sir COURTENAY WARNER: I desire to congratulate my right hon Friend the Chancellor of the Exchequer not only upon his statement, but upon his boldness in taking the right course and in being liberal enough to the lenders so as to ensure not only getting what he wants for the present, but also for some time to come. By far the most important thing, and it compares favourably with the borrowing of the first War Loan, is that the Chancellor has had the pluck to go at it in the proper way. It might have been well to have had some fixed nominal limit to the Loan, however large, rather than the sort of indefinite description of the limit we have under the present circumstances. I mainly rose to ask a question about the vouchers. The system is most reasonable and workable, and will be of very great advantage. Are the vouchers, which are to carry 5 per cent. interest, to go on indefinitely? That point was not made clear. My right hon. Friend said that the vouchers were to be taken to the post office and converted into bonds, but it was not stated how long they would carry the 5 per cent. interest without the necessity of being converted into bonds. It is a small point but rather an important one to the small investor. It ought to be made clear that these vouchers are to have some limit. I should like to add my congratulations to those already expressed to my right hon. Friend on the whole scheme. I am pleased that it is a large scheme and not a small one.
  Sir EDWARD COATES: I listened, like all other hon. Members, with great interest to the admirable and clear exposition which the Chancellor of the Exchequer gave of this great War Loan. There are one or two questions I should like to ask in order to get certain points clearer in my own mind. I understand that the list of subscribers to the new War Loan will close on 10th July. I take it that by the 11th July the Government will know exactly the amount of new money they will receive from the applications by the public and that the House may possibly be told then the amount of stock that has been subscribed. With regard to the money subscribed to the old War Loan, as it is now called, and the holders of Consols, I understand that the holders will have until the 30th October in which to exchange for the new War Loam. There will be two classes of securities up to the 30th October, and I take it that after the 30th October there will still be two classes, because I understood from the Chancellor of the Exchequer that subscribers to a new War Loan, if any further War Loan were issued, would have the opportunity of bringing in their present War Loan holding at the price of the day in order to exchange into the new War Loan.
  Mr. McKENNA: At par.
  Sir E. COATES: Quite so! I want to know whether the present holders of Consols and the present holders of War Loan Stock will also have the opportunity of making that exchange into any further new War Loan that may come out.
  Mr. McKENNA: As it is rather an intricate point I had better reply at once. The Consols holder and the old War Loan holder who converts will get on his converted stock all the privileges of an original subscriber.
  Sir E. COATES: Thank you very much. If you take the £400,000,000 of Consols which the Chancellor of the Exchequer mentioned in his speech, with the £350,000,000 of the War Loan you get £750,000,000 altogether, and if you have another Loan of £300,000,000 or £400,000,000 you will have a total of £1,000,000,000. Do I understand that if you have another new Loan after the 30th of October the whole of the holders of that £1,000,000,000 will have an opportunity of exchanging into the new War Loan? With regard to the proposals relating to the Post Office Savings Bank, the scheme of the right hon. Gentleman is an admirable one in order to

  975
  obtain the savings of the working classes. There is, however, one point of danger which I see and which has, perhaps, already been seen by those in authority: that is, that at present the tens of thousands of subscribers to the Post Office Savings Bank have some little difficulty in getting money out. When they want money they have to take their book to the Post Office and go through a certain amount of red tape in order to get it. I understand that now they can draw their money out if they like, and can have either the money or, when they have £5, can get a £5 Bond. The Bond is handed to them, I suppose, by the post-master or post-mistress. I can see a danger in a poor woman who has all her savings in the Savings Bank drawing £5 out and getting a "Bearer" security. It would be preferable that when she arranged to get her £5, instead of getting a £5 Bond she should get £5 in inscribed stock.
  Mr. McKENNA: It can be inscribed stock.
  Sir E. COATES: May I suggest that you should insist upon its being inscribed. Those of us who know something about business know how easily you can have a £5 Bond stolen or how easily it can be lost. I only throw out that as a suggestion to the Chancellor of the Exchequer. The right hon. Gentleman in his speech suggested that it was possible that this Loan might assist the exchanges abroad. From the experience we had in connection with the South African War Loan when part of it was issued in America, we found that within a very few months the investors in this country had purchased the Consols back from America and that they were held over here. I should like to have seen it possible for the Chancellor of the Exchequer to have done the same thing with regard to, at any rate, a portion of this Loan, and that, say, £100,000,000 or more should have been offered in America free of Income Tax. We should, no doubt, have seen that the security would have been very popular on that side. We know over here the difficulty of guessing and prophesying what the Income Tax will be. With regard to the effect of the 4½ per cent. new Loan upon other securities, there is no doubt that in regard to what we call gilt-edged securities, such as English Railway Debenture stock, Municipal stocks, and other sorts of stocks, the effect will be a very bad one, and that it will reduce them considerably in price.
  976
  It might be wise if in the offer they are making now of a 4½ per cent. Stock at par, payment between 1925 and 1945, he had taken the option between now and 1925 of paying off this 4½ per cent. at 1 per cent. premium. Provided he got the option of paying off the whole or any part of the Loan, any holder of the Loan would realise that at any moment he might be paid off, and in that way it might induce him, instead of selling his junior securities or gilt-edged securities, which had fallen considerably in value to hold them, and in that way the fall of those securities would not be so great.
  Mr. GODFREY COLLINS: I very much regret that when the Government have taken power to borrow this large sum of money they are not advising the House as to the increased taxation which will be necessary to pay the interest which this debt raises. At the end of this financial year, if my figures are correct, the interest of the National Debt alone will be £90,000,000, and in the annual statement of the Chancellor of the Exchequer he only allows £51,000,000 for the interest on the National Debt; therefore to the extent of £40,000,000 a year the revenue is insufficient to meet the interest on the debt which will be owed by this country at the end of the financial year. I listened as closely as I could to the statement, in connection more especially with the transfer of Consols into this new stock. If I understand my right hon. Friend correctly, if owners of Consols hand the Government £75 worth the Government will hand back £50 of stock in the new War Loan. In other words, they will give to the present owner of Consols a direct cash bonus of some 15 per cent. to 20 per cent. in interest. I am taking the owner of Consols to-day who holds stock to the extent of £75. He receives in interest £1 17s. 6d. In the future he will receive interest of £2 5s. per year. In other words, the investment this morning was worth £1 17s. 6d. a year and this afternoon it is worth £2 5s., which is an increase in his income of some 20 per cent.
  Mr. McKENNAmade an observation which was not heard in the Reporters' Gallery.
  Mr. COLLINS: That is if he enters into an undertaking to take up new stock. But to-day there are some £400,000,000 of Consols in the hands of the public. I understand that Consols amount to about £810,000,000.
  Mr. McKENNA: Rather less.
  Mr. COLLINS: And half of that is in the hands of the public. Therefore the stock which is in the hands of the public this morning is increased to this large extent without the present owners of Consols giving a sufficient return to the Government. Why should the Government to-day give this sop to the owners of Consols? During the past ten months the owners of all raw material—iron, steel, coal, land, whatever they may own—have looked upon the War as a cake out of which they must take a big slice, and here the financial interests, no doubt correctly, have urged the Chancellor of the Exchequer to issue this Loan at 4½ per cent. Naturally I cannot say whether the terms are too generous or not, but surely the time has arrived when the owners of these securities, the owners of raw material, and the owners of various commodities should pay back by taxation some share of the increased price which has accrued to them as the result of this War. My right hon. Friend in the closing part of his speech urged the country to save money and to reduce expenditure. Opportunity will require to be taken by the Government to instil this idea into the minds of the people. Any offer, as we had this afternoon, to borrow money at 4½ per cent. will be judged by the people as a good business proposition. But something further than that is needed if the nation as a whole is to curtail its expenditure. During the last ten months there has been an effective campaign of voluntary recruiting, and I would urge the Government to start a thorough campaign to urge the people of this country to save their money daily and cut down their expenditure and by that means help this country in its hour of need.
  Mr. HOBHOUSE: Amidst the general approval which the Chancellor of the Exchequer's proposal has met with there has been one note of criticism. It is that he has put no limit to the sum which he proposes to borrow under his Bill. I think he has an absolutely clear case on this point. Under the War Loan Bill of August last, power was taken to raise an unlimited sum of money. No methods or conditions by which the Loan was to be raised were inserted in that Bill and the then Chancellor of the Exchequer had a perfectly free hand both as to amount and as to method. I understand that the present Chancellor of the Exchequer proposes only to limit the borrowing to the amount of money required
  978
  to make up the deficiency of taxation—the difference between expenditure and revenue for the present year and that amount of money which will be required to meet conversion. I think the House should understand that these two amounts taken together will be very serious. Under the estimate of expenditure for the present year which was made by the late Chancellor of the Exchequer in May last, there will be a deficiency of revenue by the end of the financial year of £860,000,000. But inasmuch as expenditure is growing very fast—from £2,225,000 a day to £2,500,000—that amount will not be really £860,000,000, but something over £900,000,000. In addition to that there will be sums needed not to meet the conversion, but in order to make an issue to meet conversion. I understand there are £235,000,000 of Treasury Bills. Some portion, if not the whole of these are to be converted, are they not, into permanent loan?
  Mr. McKENNA: That is not part of the scheme.
  Mr. HOBHOUSE: I am glad to have cleared that up. But there will have to be met, for the purpose of this conversion, Consols and the £350,000,000 of past War Loan. There will also have to be met any sum which people choose to apply out of their present deposits in the Savings Bank which they choose to convert into the 5s. voucher, and this may amount to some hundreds of millions. I do not know whether this is part of the right hon. Gentleman's scheme, but if it is he may have to meet a very large demand for this conversion, and it may cost him a very large sum in interest in order to pay for the increased dividends payable to the new War Loan holders as against what they receive under their Savings Bank deposits.
  That brings me to the question of these vouchers. It is a most ingenious and admirable idea, but I think the amount of the voucher which any one person may be permitted to buy must be limited; otherwise it will be open to a person to buy 5s. vouchers by the sack, to convert them into £25 bonds, and to obtain 5 per cent. interest upon them. I can conceive an ingenious person receiving 5 per cent. instead of 4½ per cent. by the War Loan, and I suggest to the Financial Secretary that he should put some limit on the amount of these vouchers which any one person may buy. There is a limit to the amount that any person may deposit in the Savings Bank in any one year or on

  979
  the whole. Surely the same argument should be applied to these vouchers which, as I understand, are to provide an opportunity of thrift for the class of persons who usually deposit in the Savings Bank! On the other hand, I think the amount of money which may be raised by means of these vouchers may easily be overestimated. Unless you are going to permit the taxpayer in the Savings Bank to convert his deposits into vouchers and thus receive 5 per cent. instead of 2½ per cent., the amount of money which will be available for the purpose of fresh drawing on the savings of the nation will not exceed much more than £8,000,000 to £10,000,000. When I had to do with the affairs of the Post Office we went into this question very carefully six or eight months ago to see whether we could not anticipate the present proposal. I was then advised that the amount of money which it was to be expected might be drawn for national purposes from the pockets of those who deposited in the Savings Bank would not exceed £8,000,000 to £10,000,000. There may be some frosh estimate and some fresh figures which I have not had an opportunity of seeing, but unless I was then misinformed, my right hon. Friend could not expect to receive a larger sum than that which I have mentioned.
  There is only one other point. The proposed date of conversion of this Loan is 1925. The Loan for £350,000,000 which preceded it is, if my memory serves me aright, to be converted either in 1925 or in 192S. Let us suppose that it is converted in 1925. There will be from £1,000,000,000 to £1,500,000,000 of money raised under this Act, and there will be £350,000,000 or thereabouts raised under the previous Act—probably £300,000,000. There will therefore be £1,800,000,000 falling in to be dealt with in 1925.
  Mr. McKENNAmade an observation which was not heard in the Reporters' Gallery.
  Mr. HOBHOUSE: I understood it would either be converted compulsorily by the investor in 1945 or optionally by the Government in 1935. Is not that the proposal?
  Mr. McKENNA: Yes.
  Mr. HOBHOUSE: The previous Loan of £350,000,000 must be dealt with in 1928 and may be dealt with in 1925. Supposing the market is fairly easy in 1925, the Government will attempt, probably, to take
  980
  advantage of it. It may have therefore to deal with something like £1,500,000,000. I recollect when I was the Secretary to the Treasury that it was thought to be exceedingly difficult to deal with £70,000,000 or £80,000,000 on a given date. When you multiply that twenty fold, the duties which the Chancellor of the Exchequer of that date will have to discharge, and the difficulties which will be presented to him, will be almost overwhelming. I would venture to suggest to the right hon. Gentleman, with all respect—because, of course, he has sources of information which are so much better than any we can possess—whether it would not be better to put off the possible date of conversion from 1925 to, say, another ten years. I would like to congratulate the right hon. Gentleman upon his scheme, which bears some relation to that which has already been adopted in Germany. It is, however, much more ingenious and it is much sounder. It rests, not upon an imaginary basis such as the scheme in Germany rests upon, where you go on pledging your credit in successive layers until you have sucked all that is available; but, in this case, without really increasing the burden of the nation, I think the Chancellor of the Exchequer will be in a fair way to realise far greater sums than ever this House will expect he will be able to do, and far greater sums than any that this House at one time thought it would be necessary to raise.
  Mr. MONTAGU: I do not propose to reply to all the criticisms of the scheme, but I want merely to answer some of the questions which have been asked about the voucher scheme. Every effort has been made to give to the subscriber through the voucher scheme the same advantages, and no greater advantages, than the man who subscribes through the Bank of England. Therefore, I do not anticipate the dangers that my right hon. Friend suggested just now from buying these vouchers in bags full from the Post Office. Really, there is no incentive to do that. It is true that these vouchers bear interest at 5 per cent., not from the date on which they are purchased, but from the first day of the first complete month after the day on which they are purchased. It may turn out to be a little bit more going on throughout the month than 4½ per cent.; but, even if it is, the owner of the voucher is not allowed to convert his voucher into War Loan stock, except between the 1st December and the 15th December of this

  981
  year. When he converts he gets one shilling bonus, as well as 5 per cent. interest on the months that have elapsed. That shilling is a little less than the bonus dividend earned by a subscriber of £100. I think the right hon. Gentleman will find that he gets almost exactly the 4½ per cent. which the larger subscriber gets within a fraction of a penny. Therefore there will not be any incentive to subscribe in the way the right hon. Gentleman suggested in large amounts. If there is, we propose in the prospectus to take power to limit the subscriptions through these vouchers to not less than £100.
  HON. MEMBERSindicated dissent.
  Mr. MONTAGU: I mean that if we do fix a limit as to the holding of any one man, it will not be a smaller holding than £100. We might fix the limit at £200, but it will not be smaller than £100. If I may give an example how this will work, I think it would be easier to understand if there are any difficulties. I agree with the right hon. Gentleman that there will not be any great subscription except by the co-operation of all those who have any influence with people who are earning a weekly wage. We rely not only upon the co-operation of the employers, but also on the co-operation of trade union officials, friendly society officials, co-operative officials, and industrial society officials.
  Mr. BOOTH: Does the right hon. Gentleman mean industrial insurance societies?
  Mr. MONTAGU: Yes. Of course it may be possible to arrange that a society buying these vouchers for sale to their members can buy them to sell or return, returning them at the end of the month. The vouchers will be printed partly in different colours for each month so that they would be easily identified. That can only be done by societies which we have some means of knowing. I hope a suggestion put forward by one hon. Member will be adopted, namely, that a man on receiving his wage can if he likes go to another department in the same works, possibly the canteen, and purchase War Loan vouchers. It may even be possible for a workman to ask his employer by written authority, voluntarily given, as they do in some railway companies I think, to deduct pay in excess of a certain sum earned in any week, such sum to be invested in War Loan vouchers. When he has got these vouchers he collects them, and keeps them until the 1st December.
  982
  If he gets tired of them, and does not want any interest on them, all he has got to do is to go to the Post Office Savings Bank and open an account with them, just as if they were cash. He is not like a subscriber to the War Loan, who has paid an instalment.
  Mr. HOBHOUSE: He may either open an account or pay them into his own account.
  Mr. MONTAGU: Yes, and he has a right to withdraw at any moment up to the time of 1st December, when he converts them, into War Loan. I would remind all those hon. Members who anticipate large withdrawals from the Post Office Savings Bank that there is a great difference between money on call and money locked up in a thirty years' War Loan, which cannot be taken out as the subscriber would wish. I do not, therefore, think that there will be as much danger of those large withdrawals as some hon. Members think.
  Mr. HOBHOUSE: He may sell them?
  Mr. MONTAGU: He may sell at the market price. Let me now give the example I mentioned. When he takes his voucher to the post office on the 1st December, or any time between the 1st December and the 15th December, he converts them into War Loan in multiples of £5. Supposing he has purchased £1 10s. worth of these vouchers in June. There are five complete months until the 1st December, and his interest is 7½d. He purchases another £1 15s. worth in July, and there are four complete months, which give him 7d. interest. In August he purchases another £2 10s. worth, and three complete months give him 7½d. interest. In September he purchases another £2 10s. worth, and two complete months give him 5d. interest. In October he purchases £1 worth, and one complete month gives him 1d. interest. In November he purchases £1 15s. worth, but there is no complete month and he gets no interest. That represents a total of £11, and he takes it to the post office, and he gets in exchange two £5 War Loan certificates. He can get the extra £1, which is over, back in cash. He can put it into the Post Office Savings Bank, or he can reserve it for future investment on terms which we hope to be able to announce in the future, but we have only gone to the 1st December at present. He will receive, as interest, 2s. 4d. in cash, and he will receive a bonus of 2s., which is 1s. on every £5 invested, making a total

  983
  of 4s. 4d., and he will receive a dividend of 4s. 6d. on the 1st June, and the 1st December in every year until the War Loan is redeemed. That is one concrete example of how the thing works. The 5 per cent. difficulty is not a real one, because, as I have said, the whole scheme is based on the 1st December of this year.
  Mr. HORNE: The Chancellor of the Exchequer was very clear in the way in which he outlined his scheme, but there are one or two points upon which I should like to be still more clear. If an individual proposes to take up this Loan, and pays the full amount on application, I should like to know what discount will be allowed to him for taking it up at once?
  Mr. McKENNA: Four and a half per cent.
  Mr. HORNE: Then in that case, if any investor comes with the old War Loan, and with Consols, and brings an additional sum in cash, he will receive a discount on the War Loan, and the Consols at 4½ per cent. He will convert them at once into new War Loan at 4½ per cent. He will get a dividend of 4½ per cent. on the 1st December on Consols which he converts on the 10th July. The existing interest on Consols will be turned into 4½ per cent., and the old War Stock of 4 per cent. will be turned into 4½ per cent. From the date on which they are brought in they will carry the extra amount. The other point I want to call attention to is that it has been stated that these terms are very liberal. I think they are very liberal, and I feel sure that all the anticipations of the Chancellor of the Exchequer as to the prosperity of this Loan will be carried out. If the former War Loan was only a qualified success part of that was due to the uncertainty that was set up, merely to save time, by the increased taxes, and especially the increased Income Tax. That is a particular point which I think the present Chancellor of the Exchequer has had to consider in connection with this Loan. Although he has offered 4½ per cent. interest on the money he knows that actually the Treasury will only pay back net, in consequence of the Income Tax of 2s. 6d. in the £1, just over 4 per cent. I have heard it stated in this House that the Income Tax ought to be 15s. in the £1. In that case the net return to any investor in this War Loan would be a very small one indeed. A very large amount is, I am sure, anticipated by the
  984
  Chancellor of the Exchequer to be derived from various institutions which have large sums to invest, but it must be remembered that these funds do not belong to the institutions themselves; they are really held in trust for the large number of people who contribute them. It is of very great importance to all those who have the management of these funds that they should be absolutely certain that they can yield a certain fixed rate of interest during the years to come in the investments they make. At present, with the Income Tax at 2s. 6d. in the £1, this 4½ per cent. Loan is, I think, fair and generous, and I am sure will be accepted readily unless there is uncertainty as to what the Income Tax is to be raised to in the future. That is, I think, the only fear which those who have to finance these funds will have to experience. Though I did not think it at all likely that any loan would be issued free of Income Tax, yet it would be of very great assistance, to those who have these funds to invest, if the Chancellor of the Exchequer could possibly tell us that the Income Tax charge upon this Loan would not exceed the charge at the present time. If such persons could only feel that, they might rest assured that they would get a return of 4 per cent. on their money. I think that that would meet every apprehension on their part. I also congratulate the Chancellor on his scheme of vouchers, which I hope everyone who has anything to do with the small investor will try to foster in every way in his power. I wish that the time during which these investments may be made in the War Loan could be extended beyond December. It seems a pity that it should have to stop them. I should be very glad to know that the time could be extended, and that, for at least a year, contributions could be made to the War Loan by small investors out of the surplus earnings which many of them have to invest.
  Mr. DAVID MASON: I listened with great interest to the hon. Member who has just sat down When I heard the proposal to place our Loans at this high rate of interest free of Income Tax, I began to wonder whether we were here representing the taxpayers' interest or some other interest. The speech of the right hon. Gentleman the Chancellor of the Exchequer, on which I congratulate him because of its lucidity, seemed to lend itself to the same suspicion. I do feel that we are here surely on behalf of the taxpayers, and I would ask, as many speakers have

  985
  already asked, where is the proposal for taxation as against the proposal to borrow these large amounts? One listened to the Chancellor of the Exchequer with great interest on the proposal generally, but I share with other speakers the feeling of disappointment that, so far, the proposals of the Government with regard to the increased taxation which is necessary are in the air. Look for a moment at the financial position, which has already been referred to by my right hon. Friend the Member for Islington (Mr. Lough) and others, and by my hon. Friend the Member for Windsor (Mr. James Mason), who was, I think, the first to refer to it, when he asked that more attention should be given to this question of the necessity for increased taxation. Examine for a moment the financial position. Assuming that this War runs for a year, we should have an expenditure of £1,136,000,000, as estimated by the late Chancellor of the Exchequer. To meet that we are only raising by taxation something like £267,000,000. We are asked now, not to consider any further taxation with regard to taxation, but practically, we are asked, to give a blank cheque to the Government for an unlimited Loan, or for unlimited powers of borrowing. The hon. Baronet the Member for the City of London drew attention to that point, and I think that it is due to the House of Commons that the Chancellor of the Exchequer in his reply should make the matter a little clearer than he has already done.
  When one considers the conversion, the giving of this addition to the existing Consol holders, the existing Crown annuity holders, the holders of the old Loan, and the raising of this fresh money at 4½ per cent., one is appalled at the proposal. Why should it be necessary to give any such rights to the existing Consol holder, or the holder of old Loans, when he came into the contract with his eyes open? The right hon. Gentlemen the Chancellor of the Exchequer says that we have a duty to perform to our creditors, but have we not also a duty to perform to the taxpayer? Does not the taxpayer look to the Government of the day to finance this Loan to the best of their ability—that is to say, with as small a charge as possible on the taxpayer, having regard to the exigencies of the situation, and the state of the money market at the time? The right hon. Gentleman's proposal, that we are to give them these powers, and that these powers are all to be extended
  986
  to further Loans that may be raised after this, is the most astounding proposal from a responsible Government that the mind of man can conceive. Talk of Germany! Germany in her most fatuous moments never made such a proposition. We, the House of Commons, are to be asked to give power to this Government to place these Loans, and to give all these rights to previous holders of securities, and we are also to give powers by which, if they again come before the House for further money, the existing holders of securities will also be benefited in the same way. It seems the most monstrous proposal that was ever put before any assembly of sensible men.
  I hope that I shall not be accused of using exaggerated language, but let us conceive for a moment, as serious men, the effect which this will have on all securities owned by the great insurance companies and banks of this country. If you play ducks and drakes with British credit, give unlimited power to issue securities on a 4½ per cent. basis, and allow everybody to convert existing Consols and the old Loans, does not the right hon. Gentleman think, and does not the Government know that if you depreciate in this manner the vast mass of securities, by this high rate of interest, you will depreciate all other securities. The hon. Baronet the Member for the City of London nods his head. He understands finance; he understands what that means, not only for the City of Lon-do, but for the whole country. It seems to me quite unnecessary. If there is fresh capital available, the capital would be available at a rate of interest. Why, then, disturb the existing contracts which have already been placed, and which you maintain, by continuing to pay the existing rate of interest? Why, then, bring in these people and give them this rate of interest, and thereby, as I submit, tend to depreciate all the existing resources of our banks and joint stock companies, from which eventually we have to pay for this War? There seems to me to be no justification for this. The right hon. Gentleman has made out no case for it, and for the life of me I cannot see why we should be asked to agree to any such proposal.
  May I, in confirmation of the argument that a far greater amount of this demand for capital cost should come from taxation, just read a short extract from an illustrious predecessor of the right hon. Gentleman, Mr. Gladstone. He held, I think, and rightly held, that in finance it was

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  better, as he said, to call upon the taxpayer, rather than upon the provider of Loans. Writing of the Crimean war, he said:—
  "The system of raising funds necessary for wars, practises wholesale, systematic and continual deception upon the people. The people do not really know what they are doing. The consequences are adjourned into a far future."
  On 11th August, 1862, he goes a little more deeply into the subject and says:—
  "The general question of loans versus taxes for war purposes is one of the utmost interest, but one that I have never seen worked out in print; but assuming as data the established principles of our financial system, and by no means denying the necessity of Loans, I have not the least doubt that it is for the interest of labour, as opposed to capital, that as large a share as possible of war expenditure should be defrayed from taxes. When war breaks out, the wages of labour on the whole have a tendency to rise and the labour of the country is well able to bear some augmentation of taxes. The sums added to public expenditure are likely at the outset, and for some time, to be larger than the sums which are drawn from commerce. When war ends, on the contrary, a great mass of persons are dismissed from public employment, and, flooding the labour market, reduce the rate of wages. But again, when war comes, it is quite certain that a large share of the war taxes will be laid upon property, and that in war property will bear a larger share of our total taxation than in peace. From this it seems to follow at once, that up to the point at which endurance is practicable, payment by war taxes rather than by taxes in peace, is for the interest of the people at large."
  I think that that is a very interesting statement, coming from such an illustrious quarter, and I do hope that our Friends on the Labour Benches will appreciate what the Government are doing in coming forward with a proposal, after having one Loan of £350,000,000, that we should add something like another £1,000,000,000, while at the same time making no proposals for additional taxation. We had some intimation that they are considering taxation proposals, but we have not got them before us. We are now committing ourselves to an addition to the public debt of this country of something like £1,000,000,000. We are also committing ourselves to an addition to the fixed charges on the revenue of this country, which it is impossible at the present moment to calculate, because we do not know how much will be converted, yet we know that there are something like £800,000,000 of Consols and £350,000,000 of the old Loan. The Consols bear something less than 2¾ per cent. interest and the old Loan 3½ per cent. It is very easy for hon. Members to calculate the addition to the fixed charge of the country which weighs upon the taxpayer, and principally upon labour, because if you have this enormous funding operation, as Mr. Gladstone well pointed out, and place that charge
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  upon the country now, the position is not altogether appreciated. We do not feel it at the moment We think that by putting it on the posterity we have created for the time being a position of affluence, a position of apparent prosperity, but, in my opinion, we shall be laying up for the future a terrible position of misery, particularly for the working classes of this country.
  I would like to refer to one answer which the right hon. Gentleman made to a question which was asked him in reference to Treasury Bills, as to whether it forms part of the scheme to fund the existing Treasury Bills. I think that he stated that the existing amount of Treasury Bills was £235,000,000. After the very apt, lucid, and convincing way in which he told us that to go on increasing the floating debt, which now amounts to £235,000,000, is unsound, while pointing out Very properly that the conditions might not be so favourable as they are to-day, and that therefore it would be unwise to continue borrowing by keeping on the system of issuing Treasury Bills to all who come and ask for them, I was surprised, when someone on the opposite Benches asked the right hon. Gentleman whether he proposed to fund this floating debt, to hear him say that the funding of this £235,000,000 was not part of the scheme.
  Mr. McKENNA: Treasury Bills may or may not be funded out of the money which is raised by this Loan. It is not part of this scheme, but it is quite open to the Government to fund them.
  6.0 P.M.
  Mr. MASON: I am very glad to have that interruption, because I do hope, after the very convincing way in which the Chancellor showed us how unsound it was to go on increasing this floating debt, that this will form part of the scheme. It is not very definite that it will do so, but it does not close the door, and certainly it might form part. To have this operation of leaving the floating debt lying on the market appears to me most unsound. Another point is why the rate of interest should have been increased to 4½ per cent. Of course the Chancellor of the Exchequer will say that he did not think that he could obtain the money unless he increased the rate of interest. Reference has been made to the possibility of America taking part in this Loan, and the suggestion is made that the Loan should be offered in America free of Income Tax.

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  It was suggested on the former occasion by the hon. Member for Greenock that it would be good to issue British Government securities in the United States. The hon. Gentleman forgot that the United States is a neutral country, and that they have already definitely stated that they will not issue a Loan or allow a Loan to be issued over there; but they will allow credits to be established in the United States provided you purchase certain things—munitions and so on. I understand that as a neutral Power they have refused to offer facilities to any belligerents to place Loans within the United States. One of the main reasons for raising the rate of interest so high as 4½ per cent. is to attract, quite legitimately, American capital over here; so that, while they will not allow a Loan to be issued in the United States, there is no reason why American capitalists should not come to this country and invest in a British Loan. I doubt whether there will be a great in-investment, but the reason for putting the rate of interest so high is with a view to getting American capital.
  But there a very grave situation is caused with regard to the position of exchange, particularly in the United States of America. If this particular Loan is taken up to any considerable extent in the United States that, of course, will tend to bring about a more favourable exchange in this country. But there are other reasons why this unfavourable rate of exchange continues to be a cause of very great uneasiness in the City and in commercial circles. The excess of our imports over exports for ten months amounts to something like £267,000,000, and that is one of the problems which the Government have to face, and probably has entered into their mind in making the rate of interest so high as they have for this Loan. But, as I have said, there is another cause which is not touched upon, and which is undoubtedly affecting our credit, and which I believe, in spite of considerable applications by America, will continue to operate, and that is the action of the Treasury in continuing to issue Treasury Currency Notes. The late Chancellor of the Exchequer has never met this point; I do hope the present Chancellor of the Exchequer, who I believe deservedly has a reputation for financial ability and courage, will do so. Within the last two weeks there has been some drop, but I believe the previous issues have been half a million a week, and that the issues amount to something like 45½
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  millions. I would point out that if you have some agency of the Government which is continually adding to the currency by the amount of half a million a week it must have some effect. On the previous occasion I suggested, and I hope I was able to prove my point, that it had the serious affect of affecting the price of commodities. It is, of course, well known to anyone who has given any study to this question, that if you continually add to your currency, if you dilute the regular amount of the currency, existing commodities, as has been seen in the last eight or nine months, will continually rise in price.
  It has been often argued that this action of the Treasury in issuing currency notes is not a bad thing, because they are easily convertible. I do not doubt their convertibility, and I know that the Treasury to-day holds something like 28½ millions in gold and other securities against the issue, but the continuous issue of these notes has an effect upon the position of exchange. While the Government may think that the Loan, if taken up in America, will tend to bring about a more favourable exchange, this action of the Treasury in continually issuing these Treasury Notes, will, I submit, more than offset any advantages which they may temporarily receive through applications for the Loan from America. Because the Bank of England are anxious to turn the exchange in our favour they pursue the policy, as they have done in the past, of trying to raise the rate of discount and trying to increase the value of money. But how can you increase the value of money by the continuous issue of Treasury Notes? On a previous occasion, when I raised the question, I quoted the statements of eminent authorities in support of what I say—the statement of a great French economist, and the statement of a distinguished Member of this House, Mr. Goschen—afterwards Lord Goschen—and I would ask the Chancellor of the Exchequer, if my humble words or my feeble arguments have no effect upon him, to refer to those well-known authorities—
  Sir J. D. REES: They did not make those statements in war time; they did not speak in time of hostilities.
  Mr. MASON: On the contrary, Lord Goschen, in his book on "Foreign Exchanges," alluded to the question of war. War does not change economic principles, which prevail in war time as in peace,

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  and if you defy economic laws in war time you double the danger and double the disadvantage. You cannot make millions grow on trees simply because it is war time, yet that is what we are endeavouring to do. We are endeavouring to carry on external trade, we are endeavouring to maintain London as the centre of Money Markets of the world, and we have to pay for our imports in gold. I submit that in war time, as in any other times, we should be most careful of the delicate mechanism of foreign exchange. I speak in no spirit of hostility to the Government proposals; I am anxious to maintain British credit, but I believe this action of the Treasury is undermining it. I believe that this policy of the continuous issue of paper money, if persisted in, will, in spite of American subscriptions to the Loan, affect our credit, and the last condition will be worse than the first. I trust that the Chancellor of the Exchequer will give this point, to which I have alluded, his consideration. I hope that the Government will reconsider some of those powers with regard to conversion. At this time I do not think criticism will be of much avail, as the right hon. Gentleman says the prospectus will be out this evening. All we can suggest, therefore, if it is not too late, is that those powers with regard to conversion, whereby a subscriber to this Loan would be again able as time went on to reconvert at 5 or 6 per cent., should be carefully considered. That seems to me quite unnecessary.
  It does not appear that the subscriber demands it. The subscriber would subscribe partly from patriotic motives and partly because it was really good business. He would be content with his 3½ or 4½ per cent., and to give guarantees to subscribers of a high rate of interest at the expense of the taxpayer is really most unsound. We are here to do what we can for the taxpayers of the country rather than for great financiers and the banking interest. I do not believe the banking interest itself or other great financial interests have brought pressure to bear upon the Government, but, if they have, surely the Government are here to represent the financial interests of the taxpayers, and do the best they can. I suggest to the right hon. Gentleman that he should, at the risk of perhaps being unpopular in the City, take a strong line with the City bankers and financiers. Let him take his courage in both hands, and let him found his proposals
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  on the broad ground of patriotism and a proper and regular rate of interest, having regard to the state of the Money Market as it is to-day, rather than—as it would be impossible for him to do—to accommodate those financial interests in the City. I believe that the Loan will as a monetary transaction be a success, but I do hope that the right hon. Gentleman will be clearer as to the amount. No one likes to go into any proposal without knowing definitely the limit of what the Loan is going to be I welcome the proposal which has been made to make the Loan possible for the small investor. I believe you will get far more interest taken in the proposal and a great deal more money from the people rather than from financial interests which frequently take it up with the object of again unloading it and reselling it at a profit to the people. If the right hon. Gentleman devotes an amount of attention to making the Loan popular and bringing home to small investors the more likely it is to make it an assured success.
  Mr. SANDERSON: I do not think the Committee would tolerate me if I endeavoured to follow the hon Member through all the matters he has discussed even if I were able to do so. Over and over again the hon. Member said that we were here to consider the interest of the taxpayers. I suppose we are to a certain extent, but I would remind the hon. Member that we are faced with one of the greatest emergencies which the State has ever had to face, and it seems to me the matter we have chiefly to consider at the present time is the question of the State and the emergency which faces the State. The Chancellor of the Exchequer had a task to perform this afternoon which was a very great task, and the occasion, I think, will be regarded as a memorable one, and, if I may say so, I agree with my right hon. Friend that he showed himself very worthy of the occasion from his point of view, and made a statement which was exceedingly clear and concise. Further than that, he and his advisers have put before the country a scheme which is ingenious and which is certainly attractive. I think it is open to one or two criticisms. I want to join issue with my hon. Friend the Member for Windsor (Mr. James Mason), who complained that the Chancellor of the Exchequer did not put on more taxation instead of raising more money by Loan. I suppose every patriotic man is only too glad to give everything he can of his

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  substance in the present emergency, and, more than that, every patriotic man of my acquaintance either has given or is giving that which is dearer to him than any material possession, namely, those who are nearest and dearet, who are risking those lives for their country. But, after all, we must remember that this War—or, rather, the benefit of this War, if there can be any benefit from such a War—will be reaped by posterity, and not by anyone who is sitting in this Committee, because I do not suppose that this country will ever recover from the effects of this War during the lifetime of any person here. We are largely fighting, apart from the great principles of liberty and justice, for the lives and freedom of those who are to come after us, and, therefore, it seems to me to be right that the Chancellor of the Exchequer is getting a large amount of money by way of Loan. He has got to get the money and to make the scheme attractive, which I think he has done.
  May I make one suggestion? I speak only from the point of view of the very small investor, as I do not represent any great insurance company like some other hon. Members. Take the man who is anxious to subscribe, perhaps, £500 or £1,000. I think what he wants to know is what is to be the limit of the Income Tax—at all events for the current year. If he is a careful, prudent man he puts a sum aside to meet the Income Tax which will be due next January, but if he thinks that in the new Budget which the Chancellor of the Exchequer is going to introduce towards the end of the year there will be an increase in the Income Tax, then he will say, "I must put aside an additional amount for that Income Tax and, therefore, I should not be able to subscribe to this new Loan as much as I would like." That is a point which might affect the success of the Loan. Whether the Loan is sound finance or not I am not able to say, but there cannot be any doubt as to its attractiveness. Just look at one part of it. Here am I, say, who invested a small amount in the last War Loan last November, for which I paid £95. It is now worth £93 10s., or something of that kind. If I can only scrape together another £5 then I shall have £100 in the new War Loan for which I shall be getting 4½ per cent. interest instead of something like 4¼ per cent. I cannot imagine anybody refusing to convert the old War Loan into the new War Loan.
  Mr. McKENNA: If the holder of £100 old War Loan lays down £105 in cash, being £100 for subscription in the new War Loan and an additional £5, and delivers up the £100 old War Loan, then he gets £200 in the new War Loan.
  Mr. SANDERSON: That does not really affect the point I was making. I am personally rather glad of the terms, as the right hon. Gentleman is going to get the money more easily, but I am not quite sure why it has been done. The people who invested in the War Loan in November last took their risk. They knew perfectly well, or at least they ought to have known, that in all probability there would have to be another War Loan, and that in all probability the rate of interest would be higher. I do not think a person so situated has any right when he subscribed upon a basis of 3½ per cent., or actually rather more than 4 per cent., at the expense of the State, for that is really what it comes to, to be put in the position of the man who subscribed to the new Loan. Neither, again, do I think it is quite right for the Government with regard to any future Loan to mortgage its liberty as the right hon. Gentleman has done this afternoon. If I understood him aright, when a man who has subscribed for this Loan comes to subscribe for a future Loan, if such is required, he may hand in the scrip of this Loan for cash. I do not think the Chancellor of the Exchequer need have done that. Then let me refer to the question of these 5s. vouchers. I am bound to say, after the later explanation of the Financial Secretary, I did not feel sanguine about the matter. I thought I understood him before, but after his explanation I am sorry to say I did not quite understand it. It seems to me it really is too elaborate. I have great doubt whether the Chancellor of the Exchequer will get much money in respect of those 5s. vouchers and I will tell you why. I do not myself think that the small investor will take up the Loan on these 5s. vouchers and I think, and I have the authority of an expert on finance for this proposition, namely, the hon. Member for the City (Sir F. Banbury), that such a matter as this will work itself down to the small investor if you only give it time, but if you are going to limit it to next December I doubt whether you are giving sufficient time. The Chancellor of the Exchequer shakes his head. I understand

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  that the subscriptions in respect of the 5s. vouchers have to be made by next December?
  Mr. McKENNA: My right hon. Friend made that quite clear.
  Mr. SANDERSON: He did not to my limited intelligence. I certainly understood him to say that after December none of these 5s. vouchers would be issued, and other hon. Members understood him to say that also.
  Mr. MONTAGU: The draft prospectus provides that if you hold at the beginning of 1915 a total number of scrip vouchers exceeding an even £5, or a multiple of £5, the Post Office will repurchase the excess from you without interest, or you may retain them for further investment in stock on conditions to be announced later. I thought I made it quite clear that we proposed to go on with the system of vouchers but that the conditions would not be the same conditions after the 1st of December. We have reserved the task of considering the conditions for after the 1st of December until a later date.
  Mr. SANDERSON: I did not understand the right hon. Gentleman to say that previously, but even then the point I am endeavouring to make remains. It is suggested that these 5s. vouchers under present conditions are to be an attraction to working men. I do not believe you are giving enough time if you expect them to subscribe in anything like a large amount to this Loan. I would like to know what hon. Members opposite below the Gangway have to say on the point. Am I right in supposing that these 5s. vouchers will not carry interest until the holder has got a sum of £5? The Chancellor of the Exchequer, in answer to a question, said that the interest would be paid by way of credit on the sum of £5. Suppose the man subscribes £1 or £4, or something less than £5, and then ceases to do so, how is he to get interest? That may be only a small matter but let us remember in this connection we are dealing with small matters and with the investments of working men who have got perhaps 10s. to invest in a couple of weeks. He wants to know, "When am I going to get my interest?" If he is not to get his interest until he has subscribed £5, I do not think the proposal will hold out very much attraction to him.
  Mr. McKENNA: We have had a most interesting Debate, and I think the whole
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  Resolution has been fairly well covered. I am exceedingly grateful to right hon. and hon. Members on both sides of the House for the kindness with which they have received the proposals. I will do my best to reply in detail to some of the criticisms which have been made. The strongest criticism has been upon the line that the terms offered are too generous, particularly that part which gives financial advantages to the holders of old War Loan and Consols. I confess that that criticism in the mouth of the hon. Baronet opposite and my hon. Friend the Member for Coventry (Mr. D. Mason) a little disappointed me. My hon. Friend is an authority on financial matters, and I should have thought he would have been a little cautious about expressing any positive opinion as to the conditions upon which £500,000,000 could be raised. I am quite sure that the hon. Baronet could tell me within half-a-crown what terms I should offer if I wanted to raise £50,000,000, and I am sure he would be right. But I think he will agree with me that he would hesitate to be didactic about the terms to be offered when you want to raise £500,000,000. He would be cautious, and he was cautious; but I am a little disappointed that my hon. Friend was so absolutely positive that he knew the precise terms upon which we could raise £500,000,000. I confess that I do not, and all the most experienced financial advisers whom I have consulted are of one mind upon that subject—that they cannot tell, in a transaction of such magnitude that we have no experience to guide us, on what terms you can raise this gigantic sum. All that we know is that it must be on some better terms than 4¼ per cent., because the investor can get 4¼ per cent. on the old War Loan and get his money back at par in thirteen years. The ordinary investor therefore will not be tempted to take the new stock at less than or even at 4¼ per cent., if he can only get his money back in thirteen years. We must offer something better.
  As to the terms of conversion, which are considered to be so excessively favourable, it is not for me to look at the other side of the picture. It is not for me to emphasise what we gain by conversion. But I would remind critics that there is something to be said for the conversion of Consols in the wiping off of one-third of the capital amount of liabilities. It is true we are under no liability ever to repay the capital; but, sooner or later, we should

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  have to make a Sinking Fund to buy these Consols in the open market. We should have in the long run to pay for them quite as much as 66⅔, and it may not be a disadvantageous thing, while being generous to the Consols holder, to wipe out two-thirds of the capital indebtedness. As to the old War Loan, it is true that we convert a 4¼ per cent. into a 4½ per cent. stock, but we take a longer time for repayment, and that, again, is an advantage to the State. But I think it is right to offer conversion terms, in spite of what the hon. Baronet said as to a bargain being a bargain and as to the investors' having taken the risk. I remember that when the man made his bargain he made it with the State when the State wanted him to make the bargain; and I remember that if we treat that man fairly now we are much more likely to get more money from the new investor than if we left him in the lurch to lament his loss.
  The hon. Baronet says that our covenant to accept this new War Loan at par for cash in any new application for later loans is an unprofitable one. We want to raise money. We do not want people to sit looking at their money and saying, "We will wait for better terms later." That is one of the most difficult obstacles we have to face in getting money. However patriotic a man may intend to be he will feel, "I would rather come to my country's aid at a higher rate of interest if I can get it." I do not want to lay too much stress on that. I want to say nothing which seems to impute to anybody any ungenerous frame of mind. At the same time, I have to take into calculation all frames of mind, and I have to be sure, if I can, that I shall get the money. There is no motive or inducement to any investor to wait any longer. For that reason, amongst others, I hope that upon this occasion we shall get a sufficient sum of money to enable us to pay for the War for the rest of this financial year. On the subject of the technical form of the limit, I really think that the Debate has disclosed the necessity of not putting in any definite sum. I quite appreciate the point of the hon. Baronet, speaking as an old Member of the House and as a guardian of our traditional claims for the financial control of this House. I quite agree with him that there are general advantages in favour of putting in a fixed amount. But on this occasion it is impossible to do so. We have undertaken responsibilities towards the holders of Consols and of the old War
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  Loan, and we must leave ourselves at liberty to issue a sufficient amount of this new War Loan to cover the whole of the conversion rights of the holders of the old War Loan and of Consols. That is the minimum. If they are all converted that comes to many hundred millions.
  Mr. D. MASONmade an observation which was inaudible in the Reporters' Gallery.
  Mr. McKENNA: It is impossible to convert unless the stock is issued; therefore we must have liberty to issue stock to enable the holders of the old War Loan and of Consols to convert.
  Mr. MASON: There is no limit of time within which this option should expire.
  Mr. McKENNA: There is a limit of time—the 31st October.
  Mr. MASON: But not as to the amount at the time.
  Mr. McKENNA: I have to issue the Loan now. What amount am I to put?
  Mr. MASON: You could strike an average.
  Mr. McKENNA: When you give a man rights, what is the use of striking an average? I give him a right; therefore he is entitled to come forward and convert. The only figure we could put in would be the maximum figure, which might be taken by the public in order to effect the conversion of all the Consols, of all the old War Loan, and of the old annuities; and I should have to allow something for subscription through the Post Office, and something for subscription through vouchers. If you take all these figures together you get an amount not far short of £1,000,000,000. [HON MEMBERS: "More!"] If you allow for a reasonable amount through the Post Office. I cannot say that I am issuing this Loan for £1,000,000,000, and that if I do not get that sum it is a failure. I do not expect to get £1,000,000,000. At this moment I do not really want as much as £1,000,000,000. [An HON. MEMBER: "You are taking the power!"] I am taking it, but I am not issuing a Loan for that amount. If I put in any fixed amount and say that the Loan is issued for that amount, I am confronted with one of two alternatives: either the Loan will be declared a failure if I do not reach the total, or I put in a total which I know I shall get, but which may not be enough to meet the responsibilities we

  999
  have taken upon ourselves. For that reason we put in no amount. But we do put in the Resolution a limit. The Resolution covers all the Supply granted for the year, a sum not exceeding £250,000,000 in addition, and any sums required for cancelling any securities issued under the War Loan Act, 1914, or any Treasury Bills which the Treasury may from time to time be authorised to cancel. That is a further amount, which is not excessively large, covering a kind of transaction which we have to provide for. For instance, we may not think it desirable that the Bank of England—
  Sir F. BANBURY: The matter is quite satisfactory to me on that point. Unfortunately I had not had an opportunity of seeing the Resolution. Now that I know there is a limit to the actual cash I, personally, am quite satisfied.
  Mr. McKENNA: I am very much obliged for the frankness of the hon. Baronet.
  Sir W. PEARCE: Is the conversion pure and simple, or is it a reward for a previous subscription?
  Mr. McKENNA: No conversion is possible except to a holder of the new War Loan. A person must first of all apply for some of the new War Loan before he can convert any of the old War Loan.
  Sir W. PEARCE: How much?
  Mr. McKENNA: In proportion; £ per £ in regard to the old War Loan, and £100 per £70 in respect of Consols.
  Sir W. PEARCE: He cannot exchange his old War Loan without making another subscription to the new Loan?
  Mr. McKENNA: He must subscribe to the new Loan before he can convert his old Loan.
  Sir T. WHITTAKER: He has to double his holding?
  Mr. McKENNA: Practically as regards War Loan, and rather more in regard to Consols. I was pressed at the same time to make proposals for additional taxation—though not by one hon. Member who preferred that I should give assurances that there should be no taxation of a particular kind. My hon. Friends will, I am sure, agree that it is far better for us to take one step at a time. At this moment we have to issue a Loan. We
  1000
  want to do everything we can to ensure the success of that Loan, not for the gratification of the Treasury, nor even for the gratification of the Government, but for the sake of the country. For the sake of the national interest we shall take every precaution we can to ensure the success of the Loan. It must not be supposed that we are unmindful of the maxim enunciated by Mr. Gladstone as to the desirability of paying for the War as far as possible out of revenue. Does my hon. Friend forget that we are doing something to pay for it out of revenue? Does he forget that Mr. Gladstone would have regarded the 2s. 6d. Income Tax, supplemented by a Super-tax of 2s. 6d., as something far beyond what he would ever have dreamt of imposing upon the propertied classes in the wars in which he was concerned?
  Mr. D. MASON: He would have kept his Income Tax in peace time at a much lower rate of payment.
  Mr. McKENNA: How can we say that? We do not assent to the proposition that this generation is not doing its duty in this matter. I think it is doing a very great deal. We all know, if the War goes on, we will be confronted with further taxation. I shall do my best to make the burdens as easy as possible, but we shall have to find further money, and it is perfectly open to anybody to calculate what. They have only to reckon the time when the Loans, at the present rate of expenditure, will become so great that the mere interest on them will have exhausted all our surplus revenue, then it will be obvious to anybody how the matter will stand. There is nobody who would suggest that we should borrow in order to pay the interest. We must raise fresh taxes. That time has not come yet, and at the present moment I would rather not complicate the Loan by suggesting new taxes.
  Mr. GERSHOM STEWART: Is the right hon. Gentleman advertising this Loan in India and other places, so as to bring in the whole of the British Empire?
  Mr. McKENNA: I am not sure. I should be very glad indeed to bring in the whole Empire, and to get what subscriptions we can both from India and the Dominions. We shall certainly consider that point. I am not sure, however, whether we can look to very much money from them. I rather fear that in those quarters they will be borrowers instead of lenders, but

  1001
  I shall certainly bear the matter in mind. One factor I think must not be overlooked. In the very able speech of my right hon. Friend the Member for Spen Valley (Sir Thomas Whittaker), which was followed by one by the hon. Member for Lewisham (Sir E. Coates), reference was made to the decline in the capital value of securities caused by the issue of Government securities at 4½ per cent. That is true, and it is unavoidable. But there is another side to the picture. It must not be forgotten that this Loan is repayable in ten years. During the War, while we are demanding these great sums, it is a fact that securities are unavoidably affected. That fact will be borne in mind by holders who look forward to the time when the War Loan will be relatively depressed by the fact of the ten years' repayment, whilst the others, having a longer limit, will reach a higher point. My hon. Friend appreciates the fact that repayment in ten years will be a very strong factor in strengthening the prices of other securities which have a longer run. I think I have dealt with most points.
  Mr. J. MASON: Is it possible to do anything with the conversion of Treasury Bills?
  Mr. MCKENNA: I am just coming to that point. I have dealt with most of the other points. I think it would be safe now to move an Amendment in the War Loan Resolution. I do not want to commit myself at this moment, but I want to take power to cancel the Treasury Bills that are now issuable. If I am in order, I should like to move, in the first paragraph (c), to leave out the words "issued under any Act relating to Ways and Means."
  The effect of that will be that we shall take power to borrow any sums required for cancelling any securities issued under the War Loan Act, 1914, or any Treasury Bills. I have another Amendment to move. I do not know whether it is a printer's error or a copyist's error, but I desire in the second paragraph (c), after the word "England" ["Bank of England"], to insert the words "and the Bank of Ireland."
  Amendments made: In the first paragraph (c) leave out the words, "issued under any Act relating to Ways and Means." In the second paragraph (c), after the word "England" ["Bank of England"] insert the words "and the Bank of Ireland."—[Mr. McKenna.]
  Mr. WATT: What about Scotland?
  Mr. HOBHOUSE: On a point of Order. Can you insert words as to the Treasury Bills?
  Mr. McKENNA: It is done in another way.
  Motion made, and Question proposed, "That the Resolution, as amended, be the Resolution of the Committee."
  Sir T. WHITTAKER: The right hon. Gentleman is taking power by this Amendment to repay these Treasury Bills. Does that give power to the holders of these bills to demand the repayment, or the conversion of them, into the War Loan? This Resolution now, as I understand it, only gives the Treasury power to pay off these bills. That is not quite the point we are discussing.
  Mr. McKENNA: I would ask my right hon. Friend not to ask me to commit myself now to any definite decision. What we are doing is to leave ourselves perfectly free to pay these off. We are as anxious as anyone for the success of the Loan, but there may be other considerations where it would be undesirable to repay the Loan.
  Sir J. D. REES: Do I rightly understand the right hon. Gentleman to say that out of the proceeds of the Loan all the liabilities of the Bank of England, in respect of pre-moratorium bills, will be discharged?
  Mr. McKENNA: Yes.
  Mr. WING: Do I understand aright that the investment of small amounts can be continuous and into the next year?
  Mr. McKENNA: That is right. On 1st December the present terms will come to an end. They are founded upon the conditions of the Loan which we are proposing. After 1st December the issue of the 5s. amounts will have to be on new terms, which will be considered before then.
  Mr. HORNE: May I ask whether on application for this new Loan Treasury Bills may be sent in in payment, discount being allowed for the time the Treasury Bills have to run?
  Mr. McKENNA: That is a proceeding that at first sight we may be very glad to adopt, but I do not want to commit myself at the present time. I have taken powers to enable us to do it. To-morrow we have the Second Reading of the Resolution, and I shall be very glad then to answer these various points.
  Mr. D. MASON: Would the right hon. Gentleman be kind enough to give me an answer as to the action of the Treasury in regard to the current Treasury notes?
  Mr. McKENNA: My hon. Friend will excuse me, but that is nothing to do with this Loan. I cannot go into that question now.
  Mr. R. McNEILL: I would like to put a question before the Second Reading to-morrow. The right hon. Gentleman has told us of the effect which this transaction must necessarily have upon other securities at the present time. He has also held out the hope to holders of the securities, for what it may be worth—I do not think it will be much—as to the redeemability of this Loan. I want to ask whether he has considered what the effect will be upon the holders of Irish Land Stock, who stand in a rather peculiar position? The right hon. Gentleman knows that although the stocks are not Government securities in the strict sense of the word, they are guaranteed by the British Government. The holders, therefore, certainly have a right to look to the right hon. Gentleman to protect their interests, quite as much as those of the holders of old War Loan or Consols. If that stock is depressed by the action of the Government now, it will not only have an unjust effect upon the holders of the stock, but it will have a very serious effect upon the whole process of land purchase in Ireland, which is regarded as a very important thing from the national point of view.
  Mr. HOGGE: Do I understand my right hon. Friend that he is not going to levy any further taxation during this financial year?
  Mr. MCKENNA: No!
  Sir E. COATES: Will the right hon. Gentleman take into consideration the suggestion that the 5s. bonds should be inscribed? Will he also say whether the Bank of England is going to lend money to applicants for the new War Loan, as they did in the old War Loan? I have been asked to put those questions.
  Mr. McKENNA: The bonds will be inscribed. In regard to the second question I would like to take counsel before I answer it. I think it possible that the answer will be favourable.
  Resolution, as amended, put, and agreed to.
  Resolved,
  "That the Treasury may borrow, in such mariner as they think fit, on the security of the Consolidated Fund—

  (a) any sum required for raising the supply granted to His Majesty for the service of the year ending the thirty-first day of March one thousand nine hundred and sixteen; and

  (b) a sum not exceeding two hundred and fifty million pounds in addition; and

  (c) any sums required for cancelling any securities issued under the War Loan Act, 1914, or any Treasury Bills which the Treasury may, for the time being, be authorised to cancel;

  and, in connection therewith, the Treasury may—

  (a) arrange for giving an option subject to such conditions and on such terms as the Treasury determine, to any holders of consolidated two-and-a-half per cent. annuities, or two-and three-quarters per cent. annuities, or two-and-a-half per cent. annuities, or three-and-a-half per cent. War Stock and War Bonds issued under the War Loan Act, 1914, to take new securities in lieu of those annuities, stock, or bonds, and may create securities for the purpose; and

  (b) charge on the Consolidated Fund the principal and interest of any securities so created and any expenses incurred in respect of any such borrowing or exchange of securities; and

  (c) charge on the Consolidated Fund any additional remuneration to the Bank of England and the Bank of Ireland in respect of any sums raised or securities issued either under the War Loan Act, 1914, or in pursuance of this Resolution."

  Resolution to be reported; Committee to sit again to-morrow (Tuesday).
  Resolution reported.
  Resolution considered, pursuant to the Order of the House this day.

  STATEMENT BY MR. McKENNA.

    WAR LOAN BILL.
    7.0 P.M.
    Bill ordered to be brought in upon the said Resolution by the Chancellor of the Exchequer, the Attorney-General, and Mr. Montagu; to be read a second time to-morrow, and to be printed. [Bill 105.]

  CONSOLIDATED FUND (No. 3) BILL.
  Order for Second Reading read.
  Motion made, and Question proposed, "That the Bill be now read a second time."
  Mr. JAMES MASON: I desire to take advantage of this opportunity to call attention to a subject which I believe to be of the utmost importance, and one which is really gradually becoming a danger, and that is the proportion of married men who are being enlisted in the Army. I raised this question a few days ago, but I desire to raise it again from a somewhat different point of view. I have intimated to the Under-Secretary of State for War that I intended to raise it to-day. Those of us who have steadily advocated a form of National Service, by which we mean the employment of all able-bodied men in some way useful to the State, whether in a civil or military capacity, are invariably met by the argument that recruiting is quite satisfactory as it is, and is doing very well. Recruiting may be satisfactory, and may be all that you desire, but the whole point is: what men are you recruiting; which are the men you are taking, and which are the men you are leaving behind? The second question is: how far are you using compulsion now, or a sort of compulsion, to take the wrong men?
  Some time ago a Parliamentary canvass was taken of men throughout the country who were willing in a case of emergency to serve their country in a military capacity. A good many men who were between the ages of thirty-eight and forty, and were, therefore, at that time not of military age, probably accepted that liability, and we believe that they would serve their country in a military capacity in case of emergency. I have not the slightest doubt that those men patriotically desired to put themselves in a position to meet considerable changes which might arise from the existing circumstances of their time. But those men—many of them now of military age—who have signed that order, are now being called upon to join the ranks of the Army, and I venture to submit that no sufficient emergency can have arisen which would entitle you to call up these married men between thirty-eight and forty with families, so long as you have so many millions of men kicking their heels in the great towns of this country who have not so far come forward to do their share of duty. And I say, these older married men
  1006
  are being called up, on the strength of having signed that Parliamentary canvass, to offer themselves for enlistment in a sort of way which makes them think they are compelled to do so. I am sure a good many of them feel that, having signed that paper, they are compelled to do so, and I agree that morally there is a compulsion on a man who signed an undertaking of that sort, provided the emergency really has arisen. But I venture to repeat that, so long as there are large numbers of single young men who have not offered themselves to the country, it cannot be said that a sufficient emergency has arisen to put compulsion on men between the ages of thirty-eight and forty to join the Forces.
  The other day I pointed out from the financial side the extravagance of increasing the number of married men in the Army while you could possibly have got single men to take their places. The difference in the cost of the separation allowances I then said was probably as much as an average of a pound a man in the case of a married man, as compared with the case of a single man. It is true that many single men do get separation allowances for an aged mother and so on, but there is no disputing the fact that a large contingent of married men in the Army is extremely costly to the country and adds quite a material number of millions a year to the cost of the War. I cannot be specific either as to numbers in the Army, or married men, and it is obviously undesirable to use anything in the way of figures; but I think it will be readily admitted that the extra cost of the War will be quite material owing to the fact that we have such a large number of married men in the Army.
  There is another aspect of the case, and I think it is one which we really ought seriously to consider. This depletion of the married men from the country side, amounting to a very considerable fraction of the total married men in the country, is one which must have a serious economic and also moral effect on our national life. The census figures show that there are between 3,500,000 and 4,000,000 married men of military age. I think that hon. and right hon. Gentlemen opposite, who have all the figures at their disposal, will see we have already taken a very considerable number, to judge from the separation allowances only, of the total of married men of military age, whereas, of course, it is undeniable that we have very large numbers of single men of military

  1007
  age on whom we can draw. I believe that this indiscriminate taking of men who are the heads of families has already done irreparable harm—a harm which could have been avoided under a better system of recruiting for the Army. But my point is not to find fault with what has already been done—that is past—but I do appeal to the Government to reconsider the position and think whether it is not better that this system should be discontinued, and that in future some steps should be taken to get the unmarried men who still remain in the country.
  The first step, of course, towards this or any other scheme of the kind is to get a national inventory of our personnel. We want to know how many men there are, where they are, what they are doing, and what are their ages. The first thing, obviously, is to get facts as to the numbers of men who are in the country, classify them, and then, above all, get the right man in the right place, and not, as we have done up to now, put the round pegs in the square holes, and keep men most suitable to the Army at home, while many of the men now serving in the trenches would be much better in this country. If we once knew the numbers and the classification of the men we have in the country, it would of course be possible to put the stronger and younger men where they are most suitable fitted, in the Army, while many of the older and married men would be better fitted for doing the work of industry, munitions, and transport in this country. I suppose one of the most glaring instances of the incongruous employment of a man is the fact that the late Chief Whip of the Conservative party who, whatever the Members of this House may think as to his personality, will be generally admitted to have been a man of considerable organising power and mental force, who would be useful in dozens of different capacities in this country, and he is serving as a private in the R.A.M.C. It is true that Lord Balcarres took this work up from patriotic motives and went voluntarily to the front. I admire him for doing so, but because he went voluntarily I say you want compulsion to bring him back in order that he may do something more useful to his country.
  There are thousands of men, skilled workmen of various classes, who would be far more useful if they were brought back to the industries and the making of munitions of war in this country, and they would be far more useful here than doing
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  the work of soldiering. I admit that when the emergency does arise and becomes far more acoute, then, of course, you may have to take every man to fight for his country in the ranks. But before you can take every man—if ever that emergency arises—you will still require the machinery which I am advocating now. You still require the register or inventory of the men of the country. If any emergency arises you will require it. The getting up of that register must take time, and it should receive immediate attention. If this is done, it will be ready should the occasion arise.
  The success of war has been said to depend upon having two men working at home to one in the field. That may be a proper proportion, but the principal point is that the man who works in the field and at the front should be the right man of the three, and the two men left behind should be those who are best adapted for the work at home. I believe a good deal of harm has been done by not taking this step sooner; but I plead with the Government to seriously consider whether the time has not arrived when a step should be taken at once to provide an inventory of the men. I would also ask whether the whole question of the employment of more single men in the ranks cannot be carried a good deal further than it is now, and so relieve the older and married men who are heads of families of a form of moral compulsion to which they are now subjected, and which should not be continued. The whole of this subject does not allow of any further delay, and unless the matter is seriously considered we may increase an evil which already exists, we may augment damage which has already been done to our national and moral life, and we may, I will not say perpetuate, but enormously accentuate the evils which have already been brought about by this, as I think, mistaken policy.
  Mr. HOGGE: I can appreciate the interest which the hon. Gentleman who has just sat down takes in this particular question, but as it has already been discussed in the House, and this is only a partial phase of a much larger question, I hope he will understand that it is not discourtesy on my part if I raise quite another point. I put a question to the Financial Secretary to the War Office this afternoon which raises a point of great importance to a large number of our constituents, and the hon. Member kindly consented to borate his answer in the

  1009
  discussion on this particular Bill. A new Army Order has been issued from the War Office dealing with the separation allowances of the dependants of our soldiers, and the position taken up in that Order is that from now onwards any soldier joining the Army must make application for his separation allowance for any dependant inside of one month from the date of joining the forces. I wish those things could be made more plain to every hon. Member of the House when the War Office takes a fresh step. For instance, I only saw this Army Order referred to in the newspapers several days after it had become an accomplished fact. In this House we do not get the usual papers that are issued from the War Office, and perhaps hon. Members are glad that they do not. I should like to suggest to my hon. Friend that while he is in his present post he might arrange to send to hon. Members of this House those publications that deal with the rights of our constituents, and matters affecting them. It is very much easier to deal with correspondence about separation allowances if one has the information in one's own hands than to trouble unnecessarily my hon. Friend who presides over the financial section of the War Office.
  I should like to ask for my hon. Friend's sympathetic attention to some of the points raised by this new Order. I think he will admit that the average man who joins the ranks is not accustomed to filling up any elaborate forms, and the form he has now to fill up is, in all conscience, elaborate enough. I have a copy of it in my hand, and I dare say it is familiar enough to my hon. Friend. There are quite a large number of questions and details which must be filled up. It is the very man who joins the Army, whose dependants require a separation allowance most, who is the least accustomed to the filling up of those forms, and he therefore is the least likely to take care that the form is filled up in order that the separation allowance may be obtained. I think that ought to be borne in mind, and we should also remember the fact that the excitement of joining the Army, going down to the camp, and getting into the regimental uniform, takes up the mind of the man so much that he does not pay too much attention at the moment to accurately filling up these precise forms. The fact that the War Office has now limited the period within which he can fill up that form to one month makes it in every way likely that the single man who joins will
  1010
  be put in a worse position than the married man, whom we have just been hearing about in the previous speech. After all, the married man must make his allotment, and as a logical consequence must get his separation allowance for his wife and children. That goes through automatically; nobody can make any mistake about that. But in the case of the single soldier it is not necessary, unless he wishes it, to make an allotment in order to get a separation allowance for his dependants, and, therefore, unless his attention is called to it very particularly, as particularly, for example, as his attention is called to his attestation paper, it may be that inside that short period of time he does not fill up the form which is necessary to secure what is his right and due.
  This seems to me to be almost the most important point of the whole case which I am trying to make. A great many single men who join the Army are in a position which enable them to dispense with the necessity of making any separation allowance at the moment they join. Again, a great number of their dependants, or rather of their friends, who might ultimately become dependants, do not wish the soldier to make an allotment, and they prefer that he should have his pay at 1s. or at 1s. 2d. a day for his own particular purposes. Things alter during the months which a man is attached to the Army, and the people who are not dependants when he joined often become dependants later on. Perhaps the father dies, and that is one of the most glaring cases of all, and it is one which I know has the sympathy of the Financial Secretary to the War Office. The father dies, and the young single soldier, who has not previously made an allotment, and who, therefore, could not on that account have a separation allowance, is placed in a position of being the main support of his widowed mother, and perhaps his sister. Under present conditions that soldier is not entitled to make an allotment, or to get the separation allowance. I do think that that is an extraordinary position for the War Office to take up. As a matter of fact the nation is saving money at the moment because a single soldier does not make the allotment and does not take the separation allowance. He does not take it because he does not want it until his dependants need it, but when his dependants need it, owing to the death, say of his father, then the single soldier cannot get the allowance because he has not made

  1011
  the allotment at the moment that he joined. I know it is difficult to alter a large scheme of separation allowances to dependants, and I appreciate the point which the hon. Member made in answer to my question that it was better to have the circumstances looked into at the moment when the man joined. At the same time I hope he will take this view, that if I put it on the minimum request—and perhaps we shall be more likely to get it—he will try and persuade the War Office, if he cannot agree with me this afternoon, that in the case of a soldier whose mother becomes dependant upon him through the death of the father, he should be given the separation allowance. That would be an enormous advantage in that particular case.
  I hope the period of one month will be lengthened, because I do not think it is fair to limit it to that period. I would suggest to my hon. Friend that he might meet the case by saying that if the single soldier did not make the request inside the month that he would not be entitled to arrears when he did make the request. It ought to be open to him to get the allowance from the moment of his application. Of course, I prefer that he should get the arrears, but if my hon. Friend thinks that in that case he is entitled to lose those arrears because he has not made the application, then I do not think I should complain. I do hope he will not strictly limit that period to one month, but, if he feels he must do so, I hope that he will extend it further than 30th June. This Army Order was only made public at the beginning of this month. There are a great many Members of this House who do not even yet know of its existence. It is conceivable therefore that the men who are joining know less about its existence, and before it is put into force it ought to be more widely advertised. I would suggest that if he could not make any other extension he should at any rate agree to the extension of the time to the end of July, which would give two months for this new Order to become known. It has been disclosed at the end of ten months of recruiting and it does seem rather hard to introduce something entirely new which it is difficult to distribute among the men concerned at the beginning of the eleventh month. I do not raise this question except in the interest of the men concerned, who ought to know. It is brought before us every day by our constituents. I am free enough to admit that we get every help from the office over which my right hon. Friend presides, but if
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  this matter were cleared up it would help us enormously and do even-handed justice to men who are sacrificing a great deal in joining the Army.
  Colonel YATE: I would like to say a word in support of what has been said by my hon. Friend the Member for Windsor (Mr. James Mason) and to say how much I regret the extension of the age limit for recruiting from thirty-eight to forty and the extension of the large number of married men we have now in the ranks. The proper ages for men to serve at the front, as we all know, are the seven years from nineteen to twenty-five, extendable during the War to thirty in cases of necessity. Instead of extending the age I would very much prefer to see the height lowered, if we could get young men of suitable age by that means. There are an enormous number of young men in the country who cannot come up to the present standard of height. Personally, I am all in favour of the short soldier. We have seen the little Ghurkas of the Indian Army doing grand work during the winter. It takes much less time and trouble to dig the small soldier in, and he can fire a rifle as well as the tall soldier. I do hope, if any further extension is called for, that the age limit will not be increased but the standard of height reduced. I would also like to join my hon. Friend in urging on the Under-Secretary the necessity for a speedy register of all the men in the country who may be eligible in future to take their place in the ranks. I would just like to mention the question of the treatment of the Cavalry soldier under the late compulsory rules introduced by the last Army Act Amendment Act. The Under-Secretary will remember that when that Act was introduced I urged upon him how desirable it was the Act should be administered with great discrimination and care. I pointed out to him what terrible discontent would be roused in the Service if these compulsory powers were imposed on the men in the Cavalry regiments against their will.
  The UNDER-SECRETARY Of STATE for WAR (Mr. Tennant): Does the hon. and gallant Gentleman refer to transfers?
  Colonel YATE: To transfers from Cavalry to Infantry regiments. I have heard of Cavalry regiments being mustered and some 400 men being selected and told that they must go and at once join an Irish Infantry regiment. They asked if they might be allowed to join their own

  1013
  county Infantry regiment, and permission was refused. They were compulsorily sent to an Infantry regiment for which they had neither volunteered nor enlisted. If you would allow the Cavalry soldier to go as a dismounted Lancer or a dismounted Dragoon he would willingly give up his horse and sword and go as an Infantryman, but to call out a Cavalry soldier and say, "You must take off your spurs and give up your sword and go into an Infantry regiment," of which he knows nothing, gives cause for serious discontent. I would ask the right hon. Gentleman to seriously consider this question. You enlist the men under voluntary service but you no sooner get them than you use the strictest compulsion. If you are going to introduce compulsory service, let it be general. Do not use compulsion to the Cavalrymen alone. I would ask that Cavalrymen should not be taken against their will and sent to Infantry regiments of which they know nothing. You might form out of various Cavalry regiments dismounted Lancers, or dismounted Dragoons, regiments with names and traditions like their own; but to refuse them permission to join their own county regiment and to send them off to join Irish Infantry regiments must cause discontent and may cause serious trouble.
  Mr. TENNANT: Perhaps the hon. and gallant Gentleman will allow me to answer his last point first, the point relating to the transfer of men from one arm of the Service to another. I am sure that he will sympathise with the necessity for any such action. It is obvious that no military authority would wish to embark upon a policy such as this unless there were clear cause shown for its desirability and even for its necessity. To come to the other phase and to see how it has operated in the immediate past, I would call my hon. and gallant Friend's attention to the very splendid voluntary action of the three Cavalry regiments in the brigade of my right hon. and gallant Friend the late Secretary of State for War (Brigadier-General Seely) who volunteered for the Line, took off their spurs, and went into the trenches to fight as Infantry. There could not be a better example of the splendid spirit of our troops, whether they come from British Dominions across the seas or whether they are soldiers who have been born and brought up and trained in this country.
  The hon. and gallant Gentleman said that certain Cavalry regiments or certain men in Cavalry regiments have objected to
  1014
  go into Infantry regiments. While one appreciates the complaint, one cannot help rather deprecating it, because surely it is better that the Cavalry soldier, with all his special skill and knowledge, should have the advantage of a few weeks' or perhaps months' training as an Infantry soldier if he is going to be so employed. I am sure that the hon. and gallant Gentleman will appreciate it is desirable that they should have the advantage of Infantry training. We all know it is so. I can only say what I have said so often: I recognise that an emergency must be proved before you can transfer soldiers from one arm of the Service to another. I recognise that it may be rather an unpopular thing to make great Cavalry regiments with fine historic traditions behind them into Infantry regiments, but, then, I would remind the House that there has arisen a great emergency which requires extreme measures to be taken, and I would ask my hon. Friends in all quarters of the House not to emphasise this discontent, if one may use such a word, or the complaints of individuals, in this transaction, but rather to encourage them to believe that by their patriotic action they are rendering great assistance to the State and to their country in a time of difficulty and emergency. That is the attitude of mind which deserves encouragement rather than the attitude of saying what hardship it is. I am sure that the hon. and gallant Gentleman will agree with me in wishing to encourage that spirit.
  Colonel YATE: I would only ask, if I may, that the Cavalry regiments should be allowed to go as they are and that the men should not be transferred to Infantry regiments.
  Mr. TENNANT: The answer to that is that where it is possible no doubt the regiments will be used as units as a whole, and in no case will the Cavalry soldier or the soldier who is not an Infantryman, in the event of a casualty, be put down, because he happens to be attached to the Scots Guards, as a Scots Guard, or any other fanciful definition of that kind. I will leave that point and come to the point raised in a very interesting speech by my hon. Friend the Member for Windsor (Mr. James Mason). I am bound to admit at the outset that the matter which he has raised is one to which I can give no answer which, I am afraid, will be satisfactory to him. Our system of recruiting is the relic of peace time. It is the legacy which we found when mobilisation took

  1015
  place, and I am not aware, except for the purpose of filling up papers for separation allowance, that the recruiting officer ever stopped to ask whether a man was married or not. In the old days recruiting officers were only too glad to get any recruits who came along, and the question whether or not he was enjoying matrimony never entered the recruiting officer's mind at all. If the man was unfortunately a widower with children, I do not think that or any question of the kind ever occurred to the recruiting officer. Now my hon. Friend comes to us and asks us to use discrimination in the matter and to revolutionise our system. He asks us to use discrimination where no discrimination has ever existed in the past, and he asks us to say to certain classes of men, "No, we will not take you, however eager you may be to go to the front, until we have taken that man and that man who have no encumbrances." I think that my hon. Friend ought to consider that aspect of the question. I do not know whether it has occurred to him. It may be a deprivation to the married man who is anxious to serve his country.
  It is not really as if men were reluctant in this business. My hon. Friend adduced a case of an elderly man who put his name down from patriotic motives, because he was determined, when an emergency does arise, that he will not be lacking or backward in coming forward to serve his country, but who is rather presuming on the emergency not arising for a few months; yet, suddenly, the tyrant of a recruiting officer comes to him and says, "Come along with me," and drags him along. I need hardly point out that the recruiting officer would be somewhat exceeding the powers Parliament has conferred upon him if he did that. But I should like my hon. Friend to realise that the great bulk of recruits who now join the Army are not quite of the type of the man whom he has in his mind.
  The hon. Gentleman asks us to consider whether we cannot revolutionise our system of recruiting, and whether we have fairly considered the effect on the nation, from a sociological point of view, of the recruiting of married men. I admit very large questions do arise when we come to consider the exact effect or the precise result that may ensue from the indiscriminate method of recruiting hitherto adopted. It is, of course, almost impossible to say. But if my hon. Friend asks me whether I individually think it more
  1016
  desirable that the recruiting officer should make his first call on the unmarried young man, of course I answer in the affirmative. But this has never really be done, and, as a good Conservative, I know my hon. Friend will realise how difficult it is to get a thing done which never has been done. I was interested to hear him advocate a scheme—I do not know whether to call it compulsion or not—by which we could withdraw the service of our Noble and gallant Friend who used to Whip the Conservative party not long ago—a scheme of negative compulsion—and ask him to leave the ranks in order that he may come home and fill a more important part in the business of the nation.
  On this point there arises a large question, that of compulsion, or, perhaps, firstly registration, and secondly, compulsion. I quite agreed with the hon. Gentleman when he stated that registration does not necessarily involve compulsion, and I would not be one to say a word against any scheme of registration—in fact, I consider it a not undesirable policy at all, as it may perfectly well keep the door of voluntaryism open. I have never said a word here or anywhere by which the door of voluntaryism would be, I will not say slammed or barred, but even closed at all. Upon this question of compulsion I would refer the hon. Gentleman to some observations I made in this House not so very long ago when I asked hon. Members to consider a long time before they abandoned this system by which we have got a glorious Army, which we are never tired of being proud of, at the present day, in favour of a system which may produce a different Army of which we might not have so much just cause to be proud.
  Mr. TYSON WILSON: I was glad to hear the last words of the right hon. Gentleman with regard to the statement of the hon. Member for Windsor (Mr. J. Mason). It seems to me if we had registration on the lines he suggested it would mean separating the sheep from the goats. It would also mean of necessity some form of compulsion, because if single young men are separated from married men, and if they decline to enlist, of what good will the register be without some form of compulsion. It would be absolutely useless, and I was glad to hear that the right hon. Gentleman was not prepared to go so far as to admit even the suggestion of compulsion at the present time. With regard to

  1017
  married men, I am not quite certain whether the hon. Member for Windsor has thought this matter out. If he had visited a number of recruiting centres during the past three months he must have realised that a large number of the men joining now have the appearance of single men. They are very young, at any rate. The hon. Member has not perhaps taken into consideration the fact that a large number of men who are married now, married immediately before they enlisted, while others have married since they enlisted. Would the hon. Member prevent men getting married? I take it he is not prepared to do that. But the large percentage of married men enlisted in the Army may be accounted for on the grounds I have just suggested.
  I should like to say a word or two regarding the new Regulations issued to the Army which makes it compulsory on men who enlist to give certain particulars within a month of their enlistment. I think the hon. Gentleman made out a good case for some special treatment with regard to a man in the Army whose father may have died after his enlistment. I think the hon. Gentleman the Financial Secretary to the War Office might get out a special form which could be supplied to soldiers in which these particulars could be inserted, and the War Office could then, on the strength of that special form, make some allowance. Take the case of a son who joins the Army and gets an allowance paid to his mother of 12s. 6d. per week. Some three months afterwards the young man's father also joins the Army and makes a compulsory allowance to his wife. The Army authorities, when they hear of that, stop all the allowance made by the son excepting perhaps 6d. per day. It seems to me that, in a case of that kind, where it is acknowledged that the son has helped to keep the home together, the mother should be entitled, even after the father joins the Army, to retain the son's allowance. I trust that when such cases come before the hon. Gentleman he will give them most careful and generous consideration.
  I want to say a few words on a matter of rather ancient history—the huts for the Army. Trades unions have been supplying men direct to the contractors for this work. Months ago they came to a certain arrangement with the contractors, but now we find that the conditions then agreed upon are not being observed by the contractors. Take the firm of John Jackson
  1018
  and Son, Limited. They are responsible for the camps at Salisbury Plain, and I have in mind one camp—Heytesbury—where this firm is sub-letting the work not to another contractor but to an individual workman. They have sub-let, I am told, certain lining work inside the huts at what are really sweating prices. We cannot expect men to interest themselves in the Army or to join it if they find that the conditions of working agreed to by the contractors are not observed, and I hope the hon. Gentleman will use his influence to compel firms in the future to observe fair terms. The Government has made a strong appeal to trade unions throughout the country to practically suspend the operation of their working rules and conditions. Many of them are doing it, and we say that unscrupulous contractors should not be allowed to take advantage of this suspension of rule with the object of scooping more profit into their own pockets. I hope the hon. Gentleman will give attention to that fact.
  We find also that Royal Engineers are being utilised to do work which up to the present time has been done by civilian labour. It is absolutely impossible to keep our men in hand when they find the Government allow soldiers to be used for the purpose of doing work which has hitherto been done by civilians. In consequence of these things the Army gets an extremely bad name among working men, and some are ready to use their influence with their fellows to prevent them joining the Army by pointing out that, if the Government is not fair in its action towards civilian workpeople, it is not likely to be fair in its attitude towards men who join the Army, and therefore it is not worth supporting. Some of these men, indeed, confound the word "Government" with the word "Nation." They do not realise that it is not the Government that requires their services, but that it is the nation. I, as a trade unionist, have been doing my utmost during the last ten or eleven months to induce men to join the Army, believing that, as far as possible, the conditions that obtain in civil life will continue to obtain, and I hope that the hon. Gentleman will give careful consideration to the points I have raised, because, while I would like to pay a tribute to those contractors who are doing their utmost to conform to the conditions agreed upon, and I am extremely sorry that the Government did not make the condition which should obtain apply to the

  1019
  whole of these contracts. If they had done so we should not have had the trouble we have had with certain contractors. Among them there are firms of bad repute, and yet the War Office seem to go out of their way to defend the action of those firms. I hope that the Financial Secretary will use his influence with the object of compelling firms which, at the present time, are not observing the conditions agreed upon to observe them in the future, and I make a strong appeal to him to see to it that, so far as he is concerned, firms which are known to be bad firms shall conform to the conditions which the good firms are observing.
  8.0 P.M.
  Sir GEORGE TOULMIN: I wish to make a brief reference to the subject raised by the hon. Member for East Edinburgh (Mr. Hogg)—Army Order 126. I am afraid that Members of Parliament are frequently unacquainted with Army Orders of this kind, and only hear of them when cases are brought to their notice by their constituents. At the date when this Army Order came into force, I understand, there were a large number of cases in which payments had been made to dependants from the 1st October, but where Army Form 1838 had not been received from the soldier. That arises, I think, from the fact that the soldiers were serving with the Expeditionary Force when the allowance became payable to dependants, and applications would be made independently of the soldier. When the new Order of 11th March was issued, in very many cases, for instance in connection with the Territorial Force Associations, the treasurers were still awaiting the return of this Army form, and, as I understand the Order, if these forms are not received, although the case has been inquired into and payment has been made, say to a mother, that payment will be stopped after giving a month's notice unless this form is received. It appears to me that there will be very many cases of hardship if this course is pursued. I know it is suggested that dependants should apply to the local branch of the Soldiers' and Sailors' Families Association, but I should like some other course to be considered, so that where there is evidence of real dependency, and other evidence can be found, and the case is once put upon the books, the allowance should not be stopped. Take a case which has come under my notice, where a soldier went to
  1020
  Egypt in September. He is now serving in the Dardanelles. It is rather difficult to communicate with him and to get him to send this order before the end of June. This is a case similar to the one mentioned by the hon. Member for East Edinburgh, in which, apparently, the circumstances have changed, and it becomes more necessary than before that the payment of the allowance should be continued, because the father is entirely disabled, and no other member of the family is bringing in the income which he was bringing in. In that case the family was living in a condition of comparative comfort, but it is now in circumstances which require consideration. In his letter the soldier says that he has made the allowance, but the treasurer has not received it, and if this Order is carried out the allowance will be stopped. I hope consideration will be given to the suggestion that where the payment is now being made, other evidence should be accepted as to real dependency. If something of that kind is not done, cases of real hardship will arise.
  Mr. RAFFAN: I desire to support my hon. Friend the Member for East Edinburgh (Mr. Hogge), the hon. Member for Bury (Sir G. Toulmin) and others who have spoken in regard to this matter. Indeed, I would appeal to the Financial Secretary to not merely study hard cases, to which attention has rightly been directed, but to reconsider the whole matter of the issue of this Order. In practice this is an Order the strict enforcement of which cannot possibly permanently be maintained, and, if that be so, it is as well that it should be reconsidered now rather than that there should be cases of grievance arising throughout the country, and a stream of public opinion so strong should be started that the War Office would be compelled to give way. Like most hon. Members, I have taken great interest in the local administration of the Prince of Wales' Fund. The local committee which acts in the matter in my district acts with the Soldiers' and Sailors' Families Association. In those cases where the wives of soldiers desire to approach the paymaster, what is almost universally done is that they advance the separation allowance, where it has not come to hand, until it is paid by the War Office. Let me put this case to the Financial Secretary: Very often two or three weeks at least and nearly a month elapses before the wife of a soldier approaches anybody. She knows that her husband has enlisted, and expects

  1021
  that in due course an allowance will be made to her. She is ignorant of all the formalities that have to be gone through, but after the lapse of three weeks or a month, when no separation allowance has come to hand, she approaches somebody in the neighbourhood, either the Soldiers' and Sailors' Families Association or the local representative of the Prince of Wales' Fund. Before that body can take action the month has elapsed.
  If, in these circumstances, the wife of a soldier, probably with a large family depending upon her, is to be paid nothing during the whole period of the War, but is to rely entirely on her own resources, I am sure public opinion would not tolerate such a state of things for many weeks or months. On the other hand, if the Prince of Wales' Fund is called upon to pay to her, not only for a week or two but permanently during the whole period of the War, the amount of the separation allowance which ought to be paid by the War Office, I submit that is a drain upon the Prince of Wales' Fund for which there is no justification, and the subscribers to that fund would have every reason to express a strong sense of grievance. Either one or other of these courses must be adopted. I would respectfully point out to the Financial Secretary that while the negligence, in every case where there is negligence, is that of the soldier, the hardship is not upon the soldier, but upon his wife, children, and mother, or his other dependants. This cannot go on. The sentiment of the country will not allow these people to go on without any means of support merely because there has been some negligence. I welcome the indication given to the hon. Member for East Edinburgh this afternoon in reply to a question put by him that the War Office is willing to consider the hard cases which arise on change of circumstances. I hope we shall be able to get a definite promise with regard to that in reply to a question which I myself have put down for Thursday. At the same time, I hope the Financial Secretary to the War Office will be able to go further, and if the War Office can entirely repeal the Order it will be much the better way. If the hon. Gentleman is unable to do that, I suggest that the period should be extended to at least three months. That would give an opportunity to those interested in the case of a wife or mother or any particular dependant to communicate with the paymaster.
  I wish to refer to a case which has been brought under the notice of the Financial
  1022
  Secretary by my hon. Friend the Member for Houghton-le-Spring (Mr. Wing), which he assures me is a common case in the county of Durham, with which he is associated. He has informed the Financial Secretary that he has received some hundreds of complaints. It is the case of a man who makes an allotment, and concludes that the separation allowance will naturally follow. It is practically the same case as that referred to by the hon. Member for Bury, and is a very common case. It is indeed a case of hardship that when a man finds out his mistake, and signs the proper form, there is no payment of arrears. That is the point pressed by the hon. Member for Houghton-le-Spring. But the grievance is infinitely stronger if what it means is not only that there is no payment of arrears, but no payment of separation allowance of any kind, because it happens that it is only after the month has elapsed that the soldier realises that it is necessary to take other action besides merely making an allotment. For all these reasons I hope the matter will be carefully considered by the Financial Secretary, and if he is not able to give us an assurance to-night that this Order will be entirely withdrawn, I hope he will at least promise us that he will give the matter his sympathetic consideration and later in the week will be able to make a more definite announcement.
  Mr. DUNCAN MILLAR: I desire to associate myself with the remarks which have been made by the hon. Member who has just spoken and other hon. Members as to the hardship that may result under the new Order which has just been issued. I feel quite sure it was not in the contemplation of the authorities that there should be a serious hardship resulting from the Order, but, in point of fact, it must necessarily follow, because there are a great many cases in which full information as to the period which is attached to the Order will not be brought home to the parties making the allotment. I therefore hope that the Financial Secretary may be able to give us an undertaking that either the period will be extended for a very considerable time, or that the Order will be withdrawn.
  I rise chiefly, however, to draw attention to a question affecting recruiting, which perhaps the Under-Secretary may be good enough to consider. I have received information from my own Constituency which leads me to believe that at the present

  1023
  time many speakers who are sent down to address recruiting meetings are taking a line which is extremely detrimental. Some are sent down as representing the local depôts or the Army. I should like to ask the right hon. Gentleman whether he will be prepared to consider this suggestion: that no speaker should be allowed to go down to address recruiting meetings unless he is fully conversant with the facts regarding the particular constituency or the particular district in which he is addressing the meeting, and that he will also be careful to avoid anything which will create friction in that district. I should like to give my right hon. Friend an illustration. In the centre of my Constituency there have been recruiting meetings held recently at which speakers have made a serious attack upon men working in munition factories in the district, men who have obtained the use of a button to indicate that they are rendering the State very considerable service in other capacities. It is most objectionable that any recruiting speaker should come forward and suggest, as has been done recently, that these men are sheltering themselves behind this button, and that they were not rendering service to the country they ought to render by going to the front. There are many districts in which the men are doing far better service to their country by working on Admiralty and War Office contracts, therefore they should not be exposed to any slight on the part of recruiting speakers.
  Again, let me draw attention to this fact: that an unnecessary slur is being cast in many cases upon Irishmen in some of our Scottish constituencies. I want my right hon. Friend to realise that there are speakers going about at the present moment who are suggesting that young Irishmen are coming across to take the places of men who have gone to the Front to serve their country, and that this suggestion is entirely without foundation. Speaking for my own Constituency, I know the Irishmen there have made a magnificent response, as I believe they have elsewhere throughout the country, and it is very unfair indeed that any such suggestion should be made as has been made at some recent meetings in this particular district. I would also ask the right hon. Gentleman if he will take into serious consideration the recommendation made by the Committee recently appointed to deal with the coal industry at the present
  1024
  juncture. One of the recommendations which they made in regard to recruiting was that great care should be taken in avoiding districts where there has already been a phenomenal response on the part of miners, as there has been in Lanarkshire, to the call made for men for active service. There are many other districts of which the same can be said. I am not mentioning any particular district, because I know it has been characteristic of the action of miners throughout the whole of the United Kingdom. I think, therefore, it would be very desirable in future, when recruiting meetings are held in large industrial districts, that the greatest care should be exercised, not only in regard to the demand which is being made where there has already been such a large depletion of the ranks of the local industrial workers, but also where there is any important industry involved which is essential at present to the conduct of the War. I should like to thank the right hon. Gentleman for the extreme courtesy which he has always shown me, in common with other Members of the House, in regard to any matter which we have laid before him, and I feel assured that in regard to this particular point, which is one of substance, he will be anxious to do all he can to prevent the possibility of friction arising at recruiting meetings or anything occurring which will reduce the effect of the appeal made by those who speak for the country at this time in asking for more recruits.
  The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): My right hon. Friend asks me to assure the hon. Member that very careful consideration will be given to the points he has raised. The hon. Member (Mr. Tyson Wilson) raised the question of a son who enlists and allots, and subsequently the father enlists and allots, and he wants the War Office to consider whether or not it is possible for the combined separation allowance to be paid to the mother of the son. I do not think while I have been at my present office such a case has come before me, but I will give very careful attention to it. The hon. Member also raised the question of sub-letting. I think, at times like these especially, those who are responsible for the conduct of Government business ought to see that fair conditions of work as well as fair conditions of wages should apply in the case of all Government work. I will look into the point that

  1025
  he has raised. I was not aware of this practice, but I will look into it and ascertain the facts. The hon. Member's third point was the employment of Royal Engineers upon construction work to the exclusion of civilians. The employment of a certain number of Royal Engineers upon construction work has been tried only in one case, that of the factory being built by Messrs. Vickers at Erith. The Royal Engineers were there employed because it was absolutely essential that there should be no delay in the construction of the factory, and it was impossible to get civilian workmen at that time, so I was given to understand, and I thought I was assured that no civilians had been displaced. The Royal Engineers were employed for a limited time only, and as soon as they finish, if they have not already finished, the work upon which they are engaged they will return to their strictly military duties.
  Mr. T. WILSON: Only last week they were at work.
  Mr. FORSTER: I think they are rapidly approaching completion, if they have not already done it. What I think may have happened is that within the last few days or week or two there may have been applications for work made by a small number of civilian workmen, and it may have happened that those applications have not been entertained. I will look further into the question if the hon. Member desires me to do so.
  I now come to the other questions which have been raised, and which have found support from nearly every Member who has spoken, questions arising out of the issue of the Army Order. The hon. Member (Mr. Hogge) suggests that, while it would be undesirable to circulate all the Army Orders which are issued to Members of the House of Commons, I might, at any rate, attempt to circulate amongst Members those Orders which affect and raise questions interesting their constituents. It is not always easy to say what questions do interest one's constituents, but I have already begun to see what I can do in the way of supplying Members who desire to have copies of Army Orders, and I shall be quite prepared to do anything I can to meet the hon. Member or any Member who desires to have these Orders circulated. If he or any hon. Member who takes an interest in the matter will discuss it with me privately we will see what can be done. There is no desire at all to withhold any information.
  Mr. RAFFAN: Can the hon. Gentleman give us any information about separation allowances?
  Mr. FORSTER: I should think that might easily be done. I am quite willing to do anything I can to meet hon. Gentlemen in the matter. Then I have been asked, Cannot the limit for claims for separation allowances for dependants be extended beyond 30th June?
  Mr. HOGGE: It surely is not 30th June in all circumstances. I understood it to mean a month after the date of enlisting.
  Mr. FORSTER: There are two points, the point that all applications from a given date must be received by 30th June and also that in future all applications must be made by the soldier within a month of his enlistment. Let the House bear in mind the object for which this Order was made. I am very glad the question has been raised, because I want to be quite frank about the whole affair. This Order has not been issued with a view to withholding the separation allowance from anyone. It has not been issued with a view to a saving on the part of the State. It has not been issued with a view to preventing anyone from getting the separation allowance or allotment to which he is entitled. The object with which we have had to impose a limit within which these claims are made is simply and solely in order that investigation may be carried out promptly, if investigation is necessary, and that there shall be therefore less delay in the separation allowance reaching the dependants. Any hon. Member who has had anything to do with questions of this sort knows that the longer the period between which the man enlists and his application is made, the more difficult it is to investigate the actual facts. It is not a law of the Medes and Persians, but we insist, as far as we can secure it, that application should be made promptly. We are not going to administer this in any harsh or overbearing spirit. What we urge is that men should make their applications as quickly as they can by taking possible steps to have the need for this prompt application brought home to them. When my hon. Friend says a month is too short a time, I think, if he will throw himself into camp life, he will know that this question of allowances to dependants is very freely discussed. The commanding officers are specially instructed to see that the need for making these applications is fully brought home to the men, and I

  1027
  think, upon the whole, it is not unreasonable to ask that they should make their applications within a month. At the same time, if in the application of the Army Order we find that there are any hard cases, they will be dealt with. We are not going to freeze anybody out by means of this Order, but we do ask that applications should be made promptly.
  The other question which was raised was, I think, an extremely hard case, and one which must appeal to anybody with any sort of human sympathy about him. It was the question of the mother of a soldier who becomes a widow after the soldier has enlisted. In that case he is prevented by the rules from securing a separation allowance for his mother, who may have become dependent upon him. While one sympathises with the position of the mother and of the soldier, the House will recollect that the matter was carefully investigated by the Select Committee. The hon. Gentleman himself raised this very question when the Report of the Select Committee was adopted by the House.
  Mr. HOGGE: They did not give us an opportunity of raising that question while we were discussing it.
  Mr. FORSTER: At any rate the question was brought forward. These particular cases of a mother who becomes a widow after the son enlists, was specifically raised, and it was carefully considered, and the Committee came to the conclusion that whereas it is always difficult to assess the degree of dependence, even where the son has been contributing prior to the outbreak of war, it is practically impossible to assess the degree of dependence when you leave the realm of fact for the region of hypothesis. It is difficult to assess what the man has actually contributed, but it is almost impossible to assess what he would have contributed if the circumstances had been different. While I sympathise most strongly with the whole attitude of the hon. Gentleman towards this question, I am afraid that the War Office cannot depart from the present practice until the House decides to reverse that practice. The War Office cannot undo what the House itself has done. I am sure the hon. Gentleman would be one of the first, and he would be right in so doing, to attack me if I were to alter an arrangement which the House itself had adopted. I do not know if I shall be talking treason, but I say quite frankly that no one would
  1028
  be more pleased than myself if, when the opportunity arises to review the decision at which the House has arrived, the House comes to a new decision in this matter which every sympathetic man desires.
  Mr. RAFFAN: There is the case where the mother was dependent on the son and no claim was made by the son, notwithstanding that dependant. Will this new rule prevent the son making a claim in the event of his father's death, where there is real dependence on the son? No claim was made for separation allowance, because the father was alive.
  Mr. FORSTER: That is a case where the son was actually contributing. As I said this afternoon, that point is being considered now.
  Mr. HOGGE: Does not the War Office realise that if they persist in this course the men will make their applications now, and get separation allowances from the War Office when they do not need them? The man will argue to himself this way: "If I wait until the separation allowance is needed, then I shall not get it; therefore I will make out a claim now and get hold of money which I do not want." The War Office would save money if they would allow the option to these men to make the claim when they need it.
  Mr. FORSTER: That particular aspect of the question will be very carefully considered.
  Question put, and agreed to.
  Bill read a second time, and committed to a Committee of the Whole House for to-morrow.

  ARMY ACT AMENDMENT (No. 3) BILL.
  Read a second time, and committed to a Committee of the Whole House for to-morrow.
  The remaining Orders were read and postponed.
  Whereupon Mr. DEPUTY-SPEAKER (Mr. Whitley), pursuant to the Order of the House of the 3rd February, proposed the Question, "That this House do now adjourn."
  Question put, and agreed to.
  Adjourned accordingly at Twenty-eight-minutes before Nine o'clock.

  AGRICULTURAL LABOURERS (TRANSFER FROM IRELAND).
  AGRICULTURAL LABOURERS (TRANSFER FROM IRELAND).
  NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
  NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
MUNITIONS.
  OVERTIME RATES OF PAY.
  OVERTIME RATES OF PAY.
  SUPPLY OF LABOUR IN INDIA.
  SUPPLY OF LABOUR IN INDIA.
  DAMAGE BY ENEMY AIR RAIDS (STATE COMPENSATION).
  DAMAGE BY ENEMY AIR RAIDS (STATE COMPENSATION).
  WHEAT SUPPLY.
  WHEAT SUPPLY.
  AGRICULTURAL CREDIT.
  AGRICULTURAL CREDIT.
  HAY AND CORN HARVEST (MALE AND FEMALE LABOUR).
  HAY AND CORN HARVEST (MALE AND FEMALE LABOUR).
  ASPHYXIATING SHELLS (PUBLIC PRECAUTIONS).
  ASPHYXIATING SHELLS (PUBLIC PRECAUTIONS).
  NAVAL OFFICERS (PENSIONS).
  NAVAL OFFICERS (PENSIONS).
  ARREST OF MR. SHEEHY SKEFFINGTON.
  ARREST OF MR. SHEEHY SKEFFINGTON.

EARL OF COURTOWN.
Ordered, That the Report of the Lord Chancellor of the United Kingdom, made to the House of Lords on Friday last, that the right of Earl of Courtown to vote at the elections of Representative Peers for Ireland has been established to his satisfaction, be sent to the Clerk of the Crown in Ireland, together with a certificate stating that such report has been made, and that the House has ordered it to be sent to the said Clerk of the Crown in Ireland.
House adjourned till To-morrow, half-past Ten o'clock.