Sitting of 22 June 1916

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

PRIVATE BUSINESS.
Private Bills [Lords](Standing Orders not previously inquired into complied with), —Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, that, in the case of the following Bill, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, and which are applicable thereto, have been complied with, namely:—
South Eastern and London, Chatham, and Dover Railways Bill [Lords].
Ordered that the Bill be read a second time.
Van Diemen's Land Company Bill [Lords]. Read the third time, and passed, with Amendments.

NATIONAL INSURANCE ACT.
Copy presented of Regulations, dated: 21st June, 1916, made by the Irish Insurance Commissioners, entitled the National Health Insurance (Deposit Contributors' Administration Expenses) Regulations (Ireland), 1916 [by Act]; to lie upon the Table.
Copy presented of Regulations, dated 9th June, 1916, made by the Insurance Commissioners, the Scottish, the Irish, and the Welsh Insurance Commissioners, entitled the National Health Insurance (Naval and Military Forces, Service during War) Regulations, 1916 [by Act]; to lie upon the Table.

DISEASES OF ANIMALS ACTS.
Copies presented of Orders 9,754, dated 30th May, 1910, postponing the operation of the two Orders described in the Schedule thereto until the 15th June, 1916; and 9,760, dated 14th June, 1916, further postponing the operation of the two Orders in question until the 29th June, 1916 [by Act]; to lie upon the Table.
ORAL ANSWERS TO QUESTIONS.
  WAR.

    GREECE.
    Mr. KINGasked the Secretary of State for Foreign Affairs (l) whether, without any prejudice to our national interests, he can give information concerning the present position in Greece; whether permission of a Bulgarian occupation of Greek territory was given by the Greek Government after, or before, any communications on the subject passed with the British Minister in Athens; and (2) can the right hon. Gentleman lay any Papers or make any statement with regard to recent events in Greece?
    The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Edward Grey): Pending communication with the Allied Governments on recent developments in Greece, which are in the newspapers to-day, I can make no statement.

  MILITARY SERVICE.

    ALLIED ALIENS (ENLISTMENT).
    Mr. KINGasked the Secretary of State for Foreign Affairs whether, in view of the public announcement that the consuls of our Allies are urging the British Government to compel allied aliens either to enlist in the British Army or to return to their own countries and take up military service there, he will state what Allied Governments have made requests or suggestions in this direction; and what action, if any, has been taken?
    Sir E. GREY: I am not aware that there has been any public announcement to the effect stated, on the subject of aliens and military service. I have nothing to add to the answers given by my right hon. Friend the Secretary of State for the Home Department, to the hon. Member for the Ludlow Division of Shropshire on the 1st instant, and to the answers given to the hon. Member himself on the 19th April and 16th March.

    CONSCIENTIOUS OBJECTORS.
    Mr. LLEWELYN WILLIAMSasked the Prime Minister whether he has received a protest from eleven Nonconformist ministers at Abercynon, Glamorganshire, in reference to the treatment accorded to conscientious objectors detained in the detention barracks at Devizes, four of whom are from that neighbourhood; whether several of these conscientious objectors at Devizes have had recourse to hunger strike; whether it is the intention of the military authorities to break the spirits of these men in order to force them into the Army notwithstanding their conscientious objection to bearing arms; and, if not, whether the Government will alter the system so as to give the genuine conscientious objector fair play and freedom from petty tyranny?
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): My right hon. Friend the Prime Minister has asked me to answer this question. I have no information at present on these matters, but I can see no ground for inquiry, as there appears to have been no departure from prison rules. I should like to say clearly that there can be no question of the military authorities forcing men into the Army. These men are handed over to them as soldiers.
    Mr. LLEWELYN WILLIAMSasked the Prime Minister whether he will cause inquiry to be made into the treatment received by Ithel Davies, of the 4th Battalion Royal Welsh Fusiliers, at the Military Detention Barracks, Mold, while serving his sentence for refusing for conscientious reasons to obey military orders; whether, on the first day of his detention, he was knocked and dragged about for ten or fifteen minutes by two or three officials so that he was bruised and sore all over; that he was then handcuffed for hours; whether he was given any dinner; whether the same treatment was meted out to him the second day with the addition that shovel fuls of mud and stones were thrown over him, and that he was placed in irons and a straight-jacket until bed-time; that on the third day one of the officials brutally ill-treated him and hit him in the face and broke his nose; whether, while in that condition a sergeant tried to drill him by himself and on his refusal dealt him many blows; whether Ithel Davies was released on 7th June and returned to the camp at Whittington, near Oswestry; whether he
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    has been court-martialled again for disobedience to military orders; what sentence has been passed upon him; and what is proposed to be done to him after such sentence has been served?
    Mr. TENNANT: I will make inquiries into these allegations.
    Mr. OUTHWAITE: Is the right hon. Gentleman aware that similar instances are reported from many of the military prisons?
    Mr. SPEAKER: The hon. Member should give notice, as that does not arise out of the question.

    ELIGIBLE MEN IN GOVERNMENT DEPARTMENTS.
    Mr. JOYNSON-HICKSasked the Prime Minister whether he will consent to the appointment of a small Committee of this House to inquire into the necessity for further combing out of men of military age in Government Departments?
    The PRIME MINISTER (Mr. Asquith): No, Sir, I do not think it would be desirable to adopt this proposal, and I would refer the hon. Member to the speech of my right hon. Friend the Financial Secretary to the Treasury on the Motion for the Adjournment on the 1st instant (OFFICIAL REPORT, Col. 3029), with which I am in entire agreement.
    Mr. JOYNSON-HICKS: Will the right hon. Gentleman see that the House has an opportunity of considering and debating the very important return which has been issued showing the number of men still in Government employ?
    The PRIME MINISTER: I think there will be many opportunities for doing that.

    ELIGIBLE PERSONS LIVING ABROAD.
    Colonel YATEasked the Prime Minister whether he will say what measures he proposes to adopt to ensure that all eligible persons domiciled in this country but who are living abroad shall be brought within the scope of the Military Service Act; and what steps he proposes to take to deprive of their rights to British citizenship all such persons who, being of military age, are deliberately avoiding their military obligations by remaining abroad?
    The PRIME MINISTER: With regard to the first part of the question, I would refer my hon. Friend to the answer I gave to the hon. Member for the Mansfield

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    Division on the 25th May. I doubt if the suggestion contained in the last part of the question is either practicable or necessary.
    Colonel YATE: May I ask the right hon. Gentleman why?
    The PRIME MINISTER: That is a matter for argument.

    INLAND REVENUE (TAX-SURVEYING OFFICERS).
    Colonel ALAN SYKESasked the Secretary to the Treasury whether the Board of Inland Revenue have intimated that officers of the tax-surveying branch are at once to relinquish their membership of Volunteer Training Corps on the ground that mobilisation of the Volunteers would interfere with the work of collecting war revenue; and, if so, will he try and come to some arrangement with the War Office of a nature to ensure that his men would be exempted and only be liable to be called out in the case of the most absolute necessity for every man in the country standing to arms?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): The answer to the first part of the question is in the affirmative. As regards the suggestion contained in the second part, I have asked the Board of Inland Revenue to communicate with the Army Council.
    Colonel SYKES: Will the right hon. Gentleman suspend this instruction pending negotiations with the Army Council?
    Mr. MONTAGU: The first duty of the tax-surveying branch is to see that the taxes are collected.
    Colonel SYKES: Will the right hon. Gentleman suspend the instruction in the meantime?
    Mr. MONTAGU: I cannot suspend the collection of the taxes.

    TRIBUNALS AND AGRICULTURE.
    Sir JOHN SPEARasked the President of the Local Government Board if he is aware that some military representatives on tribunals refuse to respect the agreement come to between the War Office and the agricultural authorities as to the men who are to be left on the land; and will he take steps to have the agreement carried out by all tribunals in their decisions?
    The PARLIAMENTARY SECRETARY to the LOCAL GOVERNMENT BOARD (Mr. Hayes Fisher): My right hon. Friend is about to issue a circular letter to tribunals with regard to the scale which has been agreed upon by the Army Council and the Board of Agriculture.
    Sir J. SPEAR: Does the right hon. Gentleman realise the importance of that being done speedily? The agreement was come to months since, and—
    Mr. HAYES FISHER: My right hon. Friend does appreciate the importance of it being done speedily, and he is about to issue a circular letter, as I have just said.

    ABSENTEE (TOTTENHAM).
    Mr. SNOWDENasked the Home Secretary what action he has taken upon the conduct of the Tottenham Police Court magistrates, who on 15th June fined a young man named Eric Fox 60s. or twenty-eight days' imprisonment as an absentee under the Military Service Act, seeing that the officiating magistrates were the chairman of the local tribunal and the military representative on the tribunal who had refused and opposed Mr. Fox's claim for exemption, and why he was not allowed to undergo the punishment of twenty-eight days' imprisonment imposed by the Court, but was handed over to the military at once; if his attention has been called to the statement of Mr. Paul Taylor, a London police magistrate, that the legal course in such cases 'is to allow the prisoner to serve his imprisonment before handing him over to the military; and why in practically every one of the 1,167 cases of this nature the legal course has not been followed?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Herbert Samuel): I have not had time to obtain a report on this case, but on the facts stated in the question there appears to be no reason why the chairman of the local tribunal should not act as a justice in a case where the justices had no power to question or review the decision of the local tribunal. The punishment imposed was a fine, with imprisonment only in default of payment, and it would have been, in my opinion, wrong for the justices to send the defendant at once to prison instead of allowing the fine to be recovered from his pay in

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    the manner provided by law. I have not seen the statement attributed to Mr. Paul Taylor.

    LOCAL TBIBTUNALS.
    Mr. MORTONasked whether the tribunals have been informed that men enrolled under the naval group system of deferred entry into the Navy are not so enrolled unless actually available for active service within the next four months; and, if not, will he see that they are so informed?
    Mr. TENNANT: The issue of instructions to tribunals is a matter for the Local Government Board, but I am informed that the subject referred to by the hon. Member is not one which would come before the tribunals. Perhaps he would be good enough to address his question to my right hon. Friend the Secretary to the Admiralty.

    EGYPT.
    Mr. KINGasked the Secretary of State for Foreign Affairs whether a Zionist battalion has been recruited in Egypt from Jews who came from Zionist colonies in Palestine or elsewhere; if so, whether this battalion took an honourable part in hostilities on the eastern front of Egypt; what numbers were enlisted in this battalion; by what officers was it commanded; what casualties it has suffered; and whether it is still fighting as a distinct unit?
    Sir E. GREY: I have no information at present, but will ascertain whether it can be obtained.
    Mr. GINNELLasked the Secretary of State for Foreign Affairs, in view of his repeated assertions of the loyalty and quietness of the Egyptians and the fact that, even before the War, they had all been disarmed, what the reason is for the continuance of martial law in Egypt and when it will be withdrawn?
    Sir E. GREY: Martial law will cease to be in force in Egypt as soon as the authorities in Egypt consider that the circumstances connected with that country justify its discontinuance.

    BRITISH PRISONERS IN GERMANY.
    Mr. EVELYN CECILasked the Secretary of State for Foreign Affairs whether, in the case of the 2,000 British
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    prisoners of war recently transferred from Germany to the parts of Russian territory in the occupation of German troops, as a reciprocal measure for the transfer of German prisoners from England to France, the German Government has yet afforded facilities to the staff of the American Embassy in Berlin to visit the working camps for inspection or given information as to the districts to which the prisoners have been sent and the work on which they are employed; whether such inspections have actually taken place; and whether he is satisfied that the conditions prevailing are as good as those for the German prisoners transferred from England to France?
    Sir E. GREY: We have no official information beyond that contained in White Paper, Miscellaneous, No. 19 (1916). We have recently asked the United States Ambassador to obtain further information and to endeavour to arrange for an inspection of the prisoners at the earliest possible date; with regard to the last part of the question, a number of letters and postcards from prisoners have been communicated to us in which the writers complain of the severity of their treatment, and we are communicating the substance of these complaints to the American Embassy for inquiry, and asking for the same facilities of inspection and conditions of treatment as are given to the German prisoners by us.

    BLOCKADE OF ENEMY PORTS.
    Commander BELLAIRSasked the Secretary of State for Foreign Affairs, whether he can state the changes which it is intended to make, or which are being made, to strengthen our blockade as the result of agreements reached on his recent visit to Paris?
    Sir E. GREY: The discussions were concerned with questions which are still the subject of negotiations between the Allied Governments, and as to which it is not in the public interest to make a statement at the present moment. But it is hoped that a statement may be made on the subject very shortly.

    SERBIA.
    Mr. ANNAN BRYCEasked the Secretary of State for Foreign Affairs whether

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    any arrangements have now been made by him for the relief of the starving population in Serbia?
    Sir E. GREY: I regret that I can add nothing to my previous statements on this subject.

    PERSIA.
    Colonel YATEasked the Secretary of State for Foreign Affairs whether there is any probability of a speedy release of the British Consul and other British subjects of Shiraz now held prisoners by German emissaries in Persia?
    Sir E. GREY: Everything possible is being done to secure the release of these captives, but I regret that I cannot at present give any more definite information on the subject.

    ss. "SUSSEX" (PUNISHMENT OF SUBMARINE COMMANDER).
    Mr. STUART-WORTLEYasked the Secretary of State for Foreign Affairs whether he can give the House information of any punitive or disciplinary measure taken by the German Government in accordance with their promise to the United States Government in the case of the submarine commander responsible for the torpedoing of the "Sussex"?
    Sir E. GREY: I have not received any information on the subject.

  GOVERNMENT OF IRELAND.

    FINANCIAL PROVISIONS.
    Major NEWMANasked the Chief Secretary to the Lord Lieutenant of Ireland whether, having regard to the fact that the figures given in the Official Memorandum, Cd. 6154, of the Financial Provisions of the Home Rule Act, 1914, were estimates only, and that the Act did not rest on them, he will, before the Act is brought into operation, furnish estimates brought up to date and showing any extra cost to the British taxpayer that a partition of Ireland would entail?
    Mr. SAMUEL: I will not fail to bear in mind the hon. Member's suggestion.

    DEFENCE OF THE REALM.
    Major HUNTasked the Prime Minister whether, in the event of Home
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    Rule being granted to Ireland during the War, steps will be taken to prevent members of the Sinn Fein organisation from providing bases and signal stations for German submarines on the Irish coast?
    The PRIME MINISTER: All necessary steps for the defence of the realm will, of course, be taken at all times.

    PEOPOSED SETTLEMENT.
    Mr. BYRNEasked the Minister of Munitions if he can state what steps, if any, he has taken, or intends to take, to hear the views of the Irish labour representatives and the Irish Women's Franchise League on the proposed settlement of the Irish question; and if the settlement is to be of a temporary or permanent nature?
    The PARLIAMENTARY SECRETARY to the MUNITIONS DEPARTMENT (Dr. Addison): My right hon. Friend has received no communication from the Irish labour representatives or from the Irish Women's Franchise League. As regards the last part of the question, I would refer my hon. Friend to the reply given yesterday by the Prime Minister in answer to a question by the hon. Member for Chertsey.

    SCHOOL HOLIDAYS.
    Mr. KINGasked the President of the Board of Education whether he will communicate with local education authorities with a view to school holidays being so dated and arranged as to allow the use of the holidays by teachers and scholars in haymaking, harvesting, fruit-gathering, and other suitable work?
    The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Herbert Lewis): The local education authorities are, I am sure, fully alive to the desirability of making arrangements such as are suggested by my hon. Friend, and I do not think any action on my part is called for. A circular on the subject was issued in July last year.

    PUBLIC ELEMENTARY SCHOOLS.
    Sir WALTER ESSEXasked the President of the Board of Education how many public elementary schools in the county of Gloucester have been closed

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    since 1st January, 1915, and how many are in contemplation of being closed within the next six months?
    Mr. LEWIS: From the information in the Board's possession it appears that eight public elementary schools in Gloucestershire, with a total average attendance of 134, have been closed since the 1st January, 1915. The Board have no information as to the second part of the question.
    Mr. KING: Is the same policy of closing these small schools being pursued in other counties?
    Mr. LEWIS: I should like to have notice of that question.

    STEEL EXPORT CERTIFICATES.
    Mr. MacCALLUM SCOTTasked the President of the Board of Trade (1) in regard to the new regulation that steel certificates for the export of steel or articles manufactured therefrom must be signed by the manufacturer and not by the consignor of the goods as formerly, whether he has considered that this will compel British merchants to divulge to customers abroad their sources of supply, with the result that their customers may in future trade direct with the sources of supply; whether he has considered the fact that this knowledge of markets and sources of supply is one of the most valuable assets of British merchants; whether, in view of these considerations, he will revert to the former practice of permitting consignors to sign the certificates or devise some means whereby the sources of supply need not be divulged to customers; (2) in regard to his instructions that steel certificates for American steel and articles manufactured therefrom in the United States and being exported ex the United Kingdom to British Dominions and India, can only be signed by the actual manufacturers in America, whether he has considered that in fulfilling these conditions British merchants will be compelled to divulge to American manufacturers the ultimate destination of the goods, with the result that the direct market may be captured by American manufacturers; whether he has also considered that such goods may be shipped from America to the Dominions and India direct without any such declaration, and that such consignments are invariably transhipped at Liverpool; whether he has also considered that this regulation
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    imposes a disability upon home merchants selling from existing stocks as compared with merchants carrying no stocks whatever and shipping direct from America; whether he has also considered the fact that a consignor who makes a false declaration may be prosecuted under the Defence of the Realm Act, whereas an American manufacturer who makes a false declaration is outside the jurisdiction of British Courts; whether, in view of these considerations, he will permit certificates to be signed by the consignor; (3) in regard to the new Regulation that steel certificates for the export of steel or articles manufactured therefrom must be signed by the manufacturer and not by the consignor of the goods, whether he has considered the case of a British general merchant receiving a general order from a Colonial buyer for tools of various makers and manufacturers, English and American, say a set of carpenter's tools; whether this merchant would be required to obtain, perhaps, twenty certificates, English and American, for a shipment the total value of which might not exceed £5; and what procedure is to be adopted in such cases?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Pretyman): Representations have been made to the Board of Trade on the points referred to by my hon. Friend, and I am in communication with the War Trade Department with regard to them.

    BRITISH FIRMS IN JAPAN.
    Sir J. D. REESasked the President of the Board of Trade whether His Majesty's Government propose to allow the import of goods for the supply of which from Japan contracts have been concluded before the import of such goods is prohibited; if the answer be in the negative, whether it is intended that British firms in Japan shall only accept orders for goods to be exported to England on the conditions that the buyers undertake to pay the Japanese manufacturers when the goods are ready for shipment, and to meet all charges for storage and insurance until the prohibition is removed; and, if the answer be in the affirmative, whether the serious results to British firms in Japan can by some expedient be to some extent mitigated?
    Mr. PRETYMAN: The question of granting some concession to meet existing difficulties in regard to goods from Japan of which the importation into this country is prohibited is receiving careful consideration, and I hope shortly to be in a position to make some announcement on the subject.

    BRITISH TONNAGE REGISTERED IN CROWN COLONIES.
    Major ASTORasked the President of the Board of Trade if he can state either exactly or approximately the number of British vessels and the total tonnage of such vessels registered in Crown Colonies?
    Mr. PRETYMAN: The total number of vessels registered in British Possessions other than the self-governing Dominions and India at the end of 1914 was 2,973, with a net tonnage of 267,507 tons

    BELFAST STEAMER SERVICE (HEYSHAM AND FLEETWOOD).
    Sir JOHN LONSDALEasked the President of the Board of Trade if he has received a memorial signed by nearly 250 leading traders in Ulster and Lancashire calling attention to the loss occasioned by the suspension of the steamship services between Belfast and Heysham and Belfast and Fleetwood, and pointing out that for fourteen weeks the trade of Ulster with England has been practically held up, and that in consequence quantities of perishable goods have been damaged at a time when the supply of agricultural products is of extreme importance to the public; if either party to the dispute which is responsible for this dislocation of traffic is willing to submit to arbitration by the industrial section of the Board of Trade; and if he will bring pressure to bear upon the other parties so that a settlement may be arrived at?
    Mr. MacCAWasked the President of the Board of Trade whether he is aware that the lines of steamers trading between Belfast and Heysham and Belfast and Fleetwood have vessels laid up and unemployed; and whether he will represent to the owners of these steamers the necessity of utilising them to their fullest extent so as to relieve the present congestion of traffic between Ireland and England?
    Mr. PRETYMAN: I have received the memorial referred to. I understand that in both the Belfast and Heysham and the Belfast and Fleetwood services a boat now runs each way every alternate night. I am assured by the Lancashire and Yorkshire Railway Company that, so far as the Belfast and Fleetwood route is concerned, all the traffic that has been offered is being carried, and none is being refused on account of absence of steamer room. I cannot say whether the position is the same on the other route, but I am making inquiry.
    Sir J. LONSDALE: Does the right hon. Gentleman say that the steamers between Fleetwood and Belfast, and between Belfast, Liverpool and Heysham, are running?
    Mr. PRETYMAN: Yes; they each run daily one way—that is to say, they take one day to go and one to return, so that they sail on each alternate day.
    Mr. MacCAW: Are there any steamers laid up?
    Mr. PRETYMAN: I think some may be out of work.

    SHORTAGE OF MERCHANT TONNAGE.
    Colonel NORTON GRIFFITHSasked the President of the Board of Trade whether the question of maintaining the ship-carrying capacity of the nation comes under his Department; and, if so, what steps he is taking to ensure that all insurance moneys which are paid to owners in connection with lost ships are used for the replacement of such ships?
    Mr. PRETYMAN: The answer to the first part of the question is in the affirmative. The Board of Trade have no power to compel owners to invest insurance money in new ships, and as at present advised they have no evidence that any such compulsory measure is required.
    Colonel GRIFFITHS: Are the Government satisfied that the carrying capacity of the nation is being maintained under the existing Regulations?
    Mr. PRETYMAN: I believe that any shortage of shipbuilding does not arise from shortage of capital available, but rather from shortage of constructive power in labour and materials.

    FOOD SUPPLIES.
    Mr. WILLIAM THORNEasked the President of the Board of Trade how many tons of American bacon there are in the London docks; if he is aware that the American Meat Trust will not allow tons of bacon to leave the docks, and, in consequence, tons of it are going rotten; and whether he intends taking any action in the matter?
    Mr. PRETYMAN: Inquiry is being made with reference to this matter, and the result of that inquiry will be communicated to my hon. Friend.
    Mr. THORNEasked the President of the Board of Trade whether the Departmental Committee appointed to investigate the causes of the rise in food prices will issue a series of interim reports covering individual commodities or groups of commodities?
    Mr. PRETYMAN: It will rest with the Committee to determine its own procedure. I will communicate my hon. Friend's suggestion to them.
    Mr. THORNEasked the President of the Board of Trade if he can state how much more bacon was imported to the United Kingdom for the first five months of this year than in the corresponding period of 1914; and if he can state how much more bacon was imported to the United Kingdom from America for the first five months of this year than the corresponding period of 1914?
    Mr. PRETYMAN: The imports of bacon in the first five months of the present year amounted to 3,500,000 cwts., as compared with 2,200,000 cwts. in the corresponding period of 1914. The import is likely to be increased in the immediate future. Of these quantities, 2,200,000 cwts. in 1916 and 700,000 cwts. in 1914 were consigned from the United States of America.
    Mr. THORNE: Can the hon. Gentleman give any reason why, although more of this was imported in 1916 than in 1914, it has reached such a tremendous price?
    Mr. PRETYMAN: This is one of many foodstuffs whose prices vary in sympathy with one another.
    Mr. THORNE: Is it not because the Yankees have almost entire control of the trade?
    Mr. PRETYMAN: It may be.
    Mr. GEORGE TERRELLasked the Prime Minister if he can state on what principle the Members of Parliament were selected to serve on the Prices of Food Committee recently appointed by the President of the Board of Trade; whether such selection was made with his consent; and whether he is aw7are that this Commitee is generally regarded as being onesided and unrepresentative of important public interests?
    The PRIME MINISTER: The members of the Committee were selected with reference to their capacity and suitability to take part in the inquiry indicated in the terms of reference, and their names have been received with very general approval.
    Mr. G. TERRELL: Is the right hon. Gentleman aware that one important daily paper has referred to this Committee as a packed Committee?
    Mr. HOGGE: Is the right hon. Gentleman aware that very great dissatisfaction exists because there is no member of the Kitchen Committee on this Committee?

    FROZEN MEAT.
    Mr. THORNEasked the President of the Board of Trade how many tons of the Government frozen meat about two weeks ago were seized as unfit for human food; and if it had been in the cold stores about twelve months at a cost of over 30s. per ton per twenty-eight days for storage?
    Mr. PRETYMAN: About 15 tons of meat were condemned. To a large extent this represents the defective portions of quarters otherwise sound. The meat was not twelve months in store, and the rate paid for storage was much below 30s. per ton per month. This meat formed part of a large consignment which was in course of issue to the Army during the period when it was in store, and there was no neglect in supervision or inspection. Relatively to the total quantities of meat handled only a trifling proportion has been condemned, but in the ordinary course of business it is impossible to prevent some meat from going bad.
    Mr. J. D. FABER: How long was it in store?
    Mr PRETYMAN: About seven months.
    Mr. THORNE: Is it the custom to periodically examine this meat in cold storage and not allow it to go rotten in the way in which it did in this case?
    Mr. PRETYMAN: I referred to that in my answer. There has been inspection.

  MUNITIONS.

    SUPPLY FROM AMERICA.
    Mr. BYRNEasked the Minister of Munitions whether the supply of munitions from America has diminished since the rising in Ireland; and if he has any information showing that the immediate release of the Irish prisoners of war would v increase the supply of munitions from that country?
    Dr. ADDISON: The answer to both parts of the question is in the negative.

    WOOLWICH ARSENAL WORKERS.
    Mr. BRYCEasked the Minister of Munitions whether, in the Ordnance Factory at Woolwich the out-turn of the women workers exceeds that of men doing similar work; and, if so, to what extent; whether the average wages of the women are, not withstanding, considerably less; and, if so, whether he will give instructions that the women shall be paid in proportion to their out-turn on the same scale as the men?
    Dr. ADDISON: The output of groups of women workers at Woolwich occasionally exceeds that of equal groups of men for an equal period. The piecework prices paid to men and women are the same, but the hours of work and the time ratings are different.
    Mr. BRYCEasked the Minister of Munitions whether, in connection with the existence at the cordite cannon cartridge factory at Woolwich, of seven night and six day shifts for women workers, he has yet had any Report of the result of the investigation which was made into the question of the hours and conditions of work at Woolwich as affecting the health of the workers; and if he has received such Report whether he will publish it?
    Dr. ADDISON: The whole matter of the hours and conditions of work at Woolwich is receiving detailed consideration, and adjustments are being made as rapidly as possible.
    Mr. RENDALL: When will the right hon. Gentleman be in a position to make a general statement on this question of work at Woolwich which has been asked for a long time?
    Dr. ADDISON: We are dealing with each shop as quickly as we can. A great many difficult considerations are involved.

    CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).
    Sir J. D. REESasked whether the Commissioners forming the Central Control Board (Liquor Traffic) are paid; and, if so, at what rates?
    The CHANCELLOR of the EXCHEQUER (Mr. McKenna): No salaries are paid to the members of the Board.

    INTERNMENT OF ALIENS.
    Mr. R. McNEILLasked the Secretary of State for the Home Department whether Von Bissing has been released from internment, and, if so, for what reason?
    Mr. SAMUEL: Von Bissing has not been released and the statements which have appeared in the Press to the effect that he has been seen at liberty are entirely without foundation.
    Mr. G. TERRELLasked the Prime Minister whether he will give an early date for a Debate on the Motion by the hon. Member for Brentford in regard to the internment of aliens?
    The PRIME MINISTER: It is intended to take the Home Office Estimates at a very early date when an opportunity for discussing this question will be given.

    DRUG TAKING.
    Colonel GRIFFITHSasked the Home Secretary what steps the Government are taking to control the sale of cocaine throughout the country; and whether the sale of this drug can be restricted under the Acts governing the sale of poisons?
    Mr. SAMUEL: The sale of cocaine to members of His Majesty's Forces has been made an offence by order of the Army Council under Regulation 40 of the Defence of the Realm Regulations.

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    Under the Acts governing the sale of poisons cocaine can only be sold by registered chemists to persons known or introduced to them, and after entering in the Poisons Book the particulars required by the Schedule to the Act of 1868. I am considering what further action should be taken.
    Sir J. D. REES: May I ask whether the sale of cocaine has become dangerous since the suppression of opium, and whether that point of view will be taken into account?
    Mr. SAMUEL: I do not know that this matter is related to the question of opium, but I am informed that there has been increased use of cocaine among certain classes.
    Sir J. D. REES: Will the right hon. Gentleman inquire whether it is not a matter of common public knowledge that this has resulted from the suppression of the less dangerous opium?
    Mr. SAMUEL: The class which is addicted to cocaine at the present time is not a class which has ever been addicted to opium.
    Colonel GRIFFITHS: Do I understand that it is the intention of the Government to take very definite steps to stop the growth of this habit?
    Mr. SAMUEL: We are considering in what way the present law needs strengthening.
    Sir R. COOPERasked the Home Secretary whether his attention has been drawn to the widespread sale of pick-me-ups containing ether and cocaine in West End shops; whether he is aware that the new Regulations preventing the sale of cocaine do not affect these draughts which contain coca liquidum, and that these doses are generally responsible for creating the drug craving; and what steps he proposes to take to prevent the spread of this evil?
    Mr. SAMUEL: I would refer the hon. Member to the reply I have already given to the hon. and gallant Member for Wednesbury. The hon. Member appears to have been misinformed as to coca liquidum, which, being a preparation of coca, is covered by the recent Order of the Army Council. This substance is, moreover, in Part II. of the Schedule to the Poisons and Pharmacy Act, 1908, and is therefore subject to the restrictions as
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    to sale laid down in the Poisons and Pharmacy Acts. Ether is not a poison within the meaning of those Acts.

    JUTLAND NAVAL BATTLE.
    Mr. R. McNEILLasked the Prime Minister whether his attention has been called to an article published in the "Daily News," on the 3rd June, in which the naval battle of Jutland was described as the greatest disaster to the British arms; whether this article was submitted to and passed by the Censor; and, if not, having regard to the discouragement and depression which such an estimate of the results of the action would be likely to create in the public mind, why the paper guilty of publishing it has not been suspended, as was done in the case of the "Globe" newspaper for a less serious offence?
    Mr. SAMUEL: The Prime Minister has asked me to reply to this question. The article was not submitted to the Press Bureau. It was based on the first information relating to the naval battle that came to hand, and in addition to the opinion quoted, not quite accurately, in the question, expressed the view that the facts as then known were unwelcome but afforded no ground for pessimism or depression. There was no case for proceedings against the newspaper.
    Mr. McNEILL: Is the right hon. Gentleman not aware that the expression used in the question was actually in the article, and does he not think this hasty step on the part of the newspaper ought to be dealt with very severely?
    Mr. SAMUEL: The hon. Member has not quite correctly quoted the article, but very nearly, and there is no point of substance in the difference. I am afraid a great many people when they received the first news of the naval battle took a somewhat depressed view of the facts, but I do not think the Government would be justified in prosecuting or suppressing this newspaper for the article in question.
    Mr. McNEILL: Does the right hon. Gentleman not appreciate the fact that this opinion was quoted all over Europe?
    Mr. PRINGLE: Is any action being taken with regard to the author of the original Official Report?
    Mr. BIGLANDasked the First Lord of the Admiralty if he is yet in a position to give the names of the German battleships, battle cruisers, and light cruisers, and the number of their smaller war vessels sunk during the action of 31st May and 1st June in the North Sea, or in the course of their attempt to reach harbour; and, if so, whether he will now state the names and numbers accordingly?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): It is not possible to define the full extent of the German losses in the naval action off the coast of Jutland, but the Admiralty have no reason to modify the estimate contained in the official communiqué published on the 5th June.

    ECONOMIC CONFERENCE IN PARIS.
    Mr. MACMASTERasked the Prime Minister what general or special instruetions were given to our representatives at the Conference now sitting in Paris; and, if these instructions were limited to discussion only, what subjects were our representatives instructed to raise and discuss?
    The PRIME MINISTER: No special instructions were given to the British delegation at the Conference, but they quite understood that they should act in accordance with the general statement of policy made by me in this House on the 9th March. They took a full and active part in the Conference, and a number of the resolutions adopted were proposed by them.
    Mr. HOGGE: We are to understand, of course, that the resolutions of the Conference are not binding on this House?
    The PRIME MINISTER: I have said so, and I repeat it.

  DISTURBANCES IN IRELAND.

    PEESONS SHOT BY MILITARY.
    Mr. GINNELLasked the Prime Minister whether the officer who gave the order to shoot any person entering a certain corridor of the South Dublin Union, or the soldier who in obedience to that order shot Nurse Kehoe through the heart, has yet been tried by any Court, civil or military; whether any notice was given to the nursing staff to avoid the corridor in
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    question; whether Nurse Kehoe was when shot wearing her nursing uniform; whether there was any reason for thinking she was acting in any other capacity than that of a nurse; whether the King's Regulations empower any officer to order the shooting of, or any soldier to shoot through the heart, a nurse wearing her uniform and practising her profession; and what the intention of the Government is with regard to this case?
    Mr. TENNANT: The circumstances connected with this case have been very carefully and exhaustively inquired into, the evidence of military and also civilian witnesses having been taken. It has been definitely ascertained that this most regrettable incident was a pure accident. The remaining portions of the question do not therefore arise.
    Mr. GINNELLasked the Prime Minister if he will state why no independent inquiry has yet been held into the cases of Councillor Carroll and Patrick Nolan, dragged by the military out of a house in Camden Street, Dublin, into a yard, shot there, taken wounded to Portobello Barracks Hospital, where the former died of his wounds within a week, the latter still living and able to identify the sergeant of the Royal Irish Rifles who shot him; whether Mr. Nolan will be afforded an opportunity of doing this; whether Mr. Michael Gibson will be allowed to give evidence of it in a public inquiry; and what the intention of the Government is with regard to these two cases?
    Mr. TENNANTI am obtaining information from Ireland, but in the meantime I must not be taken as accepting the allegations contained in the question as being accurate.

    ARRESTS.
    Mr. BYRNEasked the Prime Minister whether he is aware of the indignation in Ireland and America caused by the delay in releasing the Irish prisoners of war; if he will state the number of arrests made and the numbers released since the rising; if he can state when those remaining are likely to be released; if he will state the cause of the delay in releasing Arthur Griffith, W. L. Cole, Councillor P. T. Daly. Mr. J. O'Connor, William O'Brien, and Thomas Foran, all of whom are well-known advocates of the Labour movement in Ireland; and if he will cause an inspection to be made into the complaints of the treatment of the Irish prisoners?
    Mr. GINNELLasked the Prime Minister if he will state what is the intention of the Government with regard to the Irish prisoners of war against whom the military authorities have no evidence, and who are kept in prison because of police reports that their release would cause local trouble, as those from Bal-laghaderreen, for example, have been informed; how many Irishmen are now in prison in such circumstances; whether he is aware that their continued imprisonment is the only cause of trouble in their native places, and that the police reports are due to the connection of police officers with local business rivals; and whether, having regard to the character of secret reports of the Irish police, he will institute an independent investigation of all such reports and the immediate release and examination of all imprisoned in pursuance of them on mere unsupported suspicion?
    Mr. SAMUEL: Is it not possible to give exact figures, but approximately 3,000 prisoners passed through the hands of the military authorities in Ireland, of whom about 1,200 have been released after inquiry. As has already been stated, those not released are being interned under Regulation 14 B of the Defence of the Realm Regulations. An independent investigation will be made by the Advisory Committee appointed under that Regulation into any reasons for release that may be advanced by any of the prisoners. If complaints were made as to the treatment of the prisoners they would certainly be inquired into.
    Mr. BYRNE: Are the gentlemen named in the question in solitary confinement?
    Mr. SAMUEL: None of these prisoners are kept in solitary confinement.
    Mr. BYRNE: Two of these gentlemen are in solitary confinement.
    Mr. SPEAKER: The hon. Gentleman is not answering questions.
    Mr. BYRNEasked the Prime Minister if he can state the cause of the delay in releasing the lady prisoners of war now detained at Mountjoy Gaol, Dublin?
    Mr. GINNELLasked the Under-Secretary of State for War, having regard to his promise that no more lady prisoners would be deported, will he explain the deportation last night of five young ladies who have spent seven weeks in prison in
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    Dublin without charge or trial; why they have not been tried; what is the charge against them; and when they will be released?
    Mr. SAMUEL: The women who were detained in Mountjoy prison in connection with the recent outbreak and not convicted by court martial have been released with the exception of jive who were removed on the 20th instant to Lewes prison to be interned under Regulation 14B of the Defence of the Realm Regulations.
    Mr. BYRNE: Will the right hon. Gentleman give these ladies the same facilities as he has already given other lady prisoners?
    Mr. SAMUEL: No.
    Major NEWMAN: Are these women prisoners of war rebels?
    Mr. SAMUEL: Yes; they were arrested in connection with the rebellion, and they have been interned on the recommendation of the military authorities in Ireland.
    Major NEWMAN: Are they prisoners of war then?
    Mr. SAMUEL: I am not sure that they come technically under that designation.
    Mr. P. MEEHAN: Have these ladies appealed to the Advisory Committee? If so, at the hearing of their appeals will they be allowed to be legally represented?
    Mr. SAMUEL: There is a question to that effect on the Paper.
    Mr. LYNCH: In the handling of this whole question will the Government once more have regard to the manner in which in South Africa a question of even greater magnitude was disposed of?
    Mr. SPEAKER: That does not arise out of the question.
    Mr. BYRNEasked the Home Secretary if he is aware that a number of Red Cross workers, boys and girls, are still in gaol; if he is aware that the Red Cross badges on the arms of the Irish Volunteers were cut off with bayonets by British soldiers when the volunteers were arrested; and if he will have an inquiry made as to the reason of this insult to the Red Cross?
    Mr. TENNANT: No prisoners, male or female, are still in detention on account of their having rendered medical services during the recent rebellion. I am not

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    aware that any insult of the kind alleged by the hon. Member took place. It is quite possible that Red Cross badges were removed from those who had no right to wear them.
    Mr. BYRNE: If I can produce one declaration to the effect stated, will the right hon. Gentleman look into it? May I add that I desire to give notice, not being satisfied with the answers given, that I will raise the matter on the Adjournment tonight?
    Mr. BYRNEasked the Home Secretary whether he can state the names and number of untried Irish prisoners in solitary confinement in English gaols; and if he will cause all Irish prisoners to be treated as prisoners of war?
    Mr. SAMUEL: None of the Irish prisoners referred to are being kept in solitary confinement. A small number are for special reasons kept separate from the general body of the prisoners, but these are allowed to associate with one another. It is proposed to give all Irish prisoners interned under Regulation 14B treatment similar to that of prisoners of war.

    COMPENSATION.
    Mr. BYRNEasked the Prime Minister whether he has received any resolutions from Dublin requesting the Government to compensate the dependants of non-combatants who were killed or injured in the recent rising in Ireland; if he will consider the advisability of granting compensation for loss of life as well as property; and if he will receive a deputation in reference to the question of compensation for loss of life?
    Mr. SAMUEL: My right hon. Friend has received representations in the sense indicated by the hon. Member. The obligations to be undertaken by the State in respect of the recent outbreak in Ireland have been carefully considered, and I am unable to hold out any hope of an extension of the terms already made public.

    CIVIL LAW (RESTORATION).
    Mr. LOUGHasked the Prime Minister whether he can now see his way to indicate when the administration of civil law will be restored in Ireland; and whether he can give the House an undertaking that it will have an opportunity of
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    fully discussing the Irish situation before the Cabinet commits itself to any definite plans for the future government of that country?
    The PRIME MINISTER: The civil law is at present being administered in Ireland, and I would point out to my right hon. Friend that the cases arising out of the disturbance in Dublin last Sunday were tried by Civil Courts. With regard to the last part of the question, the House will, of course, have an opportunity of discussing any proposals which may be submitted to them by the Government, but I cannot undertake to adopt the suggestion of my right hon. Friend.
    Mr. M. HEALY: Is the Prime Minister aware that meetings called to consider the proposals of the Minister of Munitions are being suppressed? A meeting called in Belfast to consider these proposals has, I understand, been suppressed by the military authorities. Is the right hon. Gentleman aware of that, and does he approve of it?
    The PRIME MINISTER: No, I have no knowledge whatever of it. If my hon. Friend will give me particulars, I will inquire into the matter.

    LORD LIEUTENANT (RESIGNATION).
    Major NEWMANasked the Prime Minister whether the Lord Lieutenant of Ireland has resigned his office; and if he is aware whether or no the resignation has been accepted by the Government?
    The PRIME MINISTER: The answer to both parts of the question is in the affirmative.

    EMPLOYERS AND EMPLOYED.
    Mr. BYRNEasked the Prime Minister, whether the Government have issued any instructions to Irish employers to dismiss the relations of those who took part in the rising in Ireland; whether he is aware that a number of employers have given this as a reason for victimising their employés; if he is aware that such dismissals have caused a revulsion of feeling against the Government; and if he will take the necessary steps to prevent the employers connecting the Government with such proceedings?
    Mr. SAMUEL: The Government have issued no such instructions, nor am I aware of any employers having acted in the manner suggested.
    Mr. BYRNE: If I submit proof to the right hon. Gentleman will he give the matter his consideration?
    Mr. SAMUEL: I shall be much obliged to the hon. Member if he can afford me any information.

    GAELIC LEAGUE, GLASGOW.
    Mr. GINNELLasked the Secretary for Scotland whether it is with his concurrence a meeting organised by the Gaelic League in Glasgow, to provide relief for starving and ill-treated Irish prisoners of war in Barlinnie prison, has been prevented and the hall seized by the police there; whether immediate instructions will be issued for the supply of a sufficiency of wholesome food for the maintenance of the health of those men; and whether all restrictions on the holding of meetings or other action for the provision of comforts for them will be immediately removed?
    The SECRETARY for SCOTLAND (Mr. McKinnon Wood): I am informed that no action of the nature mentioned in the first part of the question has been taken by the police in Glasgow. Prisoners of war in detention barracks at Barlinnie are under military control, and not under my jurisdiction, but I am satisfied that the suggestion contained in the second part of the question is quite unfounded. The last part of the question does not arise.
    Mr. BYRNE: Is the right hon. Gentleman aware that innumerable complaints have been received from Scotland as regards the treatment and the feeding of the Irish prisoners there?
    Mr. McKlNNON WOOD: I am not aware of it, but they would not be addressed to me in any case as I am not responsible.

    PBISONERS (INTERNMENT).
    Mr. DORISasked whether the time may be extended during which after receiving notice of internment an Irish prisoner may make representation against the order to intern him, seven days being insufficient for the purposes in the cases of many young and inexperienced prisoners away from home and friends; whether such prisoners may be allowed to have private consultations with their solicitors as to the preparation of such representations; if
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    prisoners may on application by themselves or their solicitors be furnished with copies of any definite charges made against them; and whether, on the application of prisoners or their solicitors, evidence will be taken within reasonable distances of their residences of witnesses named by prisoners?
    Mr. SAMUEL: I do not think any; prisoner can have any difficulty in making a plain statement of his own case in his own words in the time allowed, but if he wishes to make any supplementary statement or to submit written evidence, he may do so later; and where good reason for delay can be shown, representations will be admitted after the expiration of the seven days. Every prisoner, when the order for his internment is made, receives a notice in which the specific grounds for making the order are stated. It will be for the Advisory Committee to decide its own procedure, and to say where and how it will take evidence, but I understand that the Committee propose to hold sittings in Ireland for the purpose of hearing evidence.

    WANDSWORTH DETENTION BARRACKS.
    Mr. SNOWDENasked the Prime Minister if Lieutenant-Colonel Reginald Brooke is still commandant of Wandsworth Detention Barracks, or if he has been dismissed from this position; and, if so, on what grounds, and to what post, has he been appointed, if any?
    Mr. TENNANT: Lieutenant-Colonel R. Brooke has ceased to be commandant of Wandsworth Detention Barracks. As regards the last part of the question, the Army Council must reserve their right to accept resignations of or to remove officers from this or any other appointment without making any public statement as to the grounds upon which they act.
    Mr. MORRELL: Will the treatment to which some men in these barracks were subjected now be modified?
    Mr. TENNANT: I do not think that that arises.
    Mr. SNOWDEN: Will the right hon. Gentleman answer that part of the question which asks whether this man has been appointed to any other post?
    Mr. TENNANT: I cannot answer that without notice.
    Mr. SNOWDEN: Did I not give the right hon. Gentleman notice of the question?
    Mr. TENNANT: Yes, but I have not got the information.

    ROYAL GIFT.
    Mr. HOGGEasked the Prime Minister whether he is now in a position to announce to what purpose the Government are devoting the Royal gift of £100,000?
    The PRIME MINISTER: So far no specially appropriate use for His Majesty's generous gift has presented itself, but the Government have the matter under constant attention.
    Mr. W. THORNE: Will the right hon. Gentleman consider the advisability of handing over this money to the institution dealing with disabled and blind soldiers and sailors?
    The PRIME MINISTER: I am willing to consider any suggestion.
    Mr. HOGGE: Did not the right hon. Gentleman tell me that the Government had submitted a scheme to the King and were awaiting His Majesty's approval?
    The PRIME MINISTER: That does not affect the answer I have given.

    WOMEN OFFICE-CLEANERS.
    Mr. CROOKSasked the Secretary to the Treasury whether he is aware that, although the women office-cleaners at the War Office, the Admiralty, and the India Office have received an increase in wages to meet the cost of living, the women in the other offices have received no increase, their wages being 13s. 9d. a week for two attendances a day; and whether he will make an inquiry into the matter with a view to some concession being granted?
    Mr. MONTAGU: I believe that the Departments named have increased the wages of their charwomen, but I am not aware of the grounds on which the increase was given, and I am not prepared to take any action as regards other Departments.

    ROYAL PATRIOTIC FUND CORPORATION.
    Major NEWMANasked the President of the Local Government Board what
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    progress has been made by the Statutory Committee of the Royal Patriotic Fund Corporation in fulfilling to widows and orphans of soldiers and sailors and of men discharged from the Services the duties hitherto discharged by the Soldiers' and Sailors' Families Association and similar bodies; and whether the financial assistance to the above-mentioned bodies from the National Relief Fund has now ceased?
    Mr. JACOBSENasked how many of the local committees of the Statutory Committees, appointed under the Naval and Military Pensions Act, which are now being formed will be unable to commence their public duties under the Act on 1st July; if in all such cases arrangements have been made for the Soldiers' and Sailors' Families Association to act in place of the local committees temporarily; and if this association where so acting will be invested with all the powers of the local committees?
    Mr. HAYES FISHER: In about 100 out of some 300 areas local committees will be in a position to undertake their duties under the Act of 1915 by the 1st July, and powers have been delegated to them by the Statutory Committee. In all areas for which local committees will not be in this position, arrangements are being made with the Soldiers' and Sailors' Families Association and other voluntary organisations to fulfil the duties hitherto discharged by those bodies. The National Relief Fund will continue financial assistance until 30th June. As from 1st July the funds required by local committees and by the voluntary organisations for the purpose of the Act will be provided by the Statutory Committee.
    Mr. J. SAMUEL: Are we to understand that the Soldiers' and Sailors' Families Association are to distribute State money?
    Mr. HAYES FISHER: Certainly. I do not know who else are to distribute this State money until the local committees are formed. I am sure my hon. Friend does not desire that the money should not be distributed and that the soldiers' and sailors' families should go without?
    Mr. SAMUEL: Will the right hon. Gentleman advise the Statutory Committee to withdraw their ban with regard to the appointment of district committees so that they can get on with the work?
    Mr. HAYES FISHER: They have put no ban—
    Mr. SAMUEL: Oh, yes, they have!
    Mr. HAYES FISHER: They have put no ban on the formation of district committees; they have given certain advice on the matter.
    Major NEWMAN: Can the right hon. Gentleman assure the House that no soldiers' and sailors' widows will suffer by reason of this transference of duties?
    Mr. HAYES FISHER: I think I can safely say that no soldiers' or sailors' wives or families ought to suffer from the transference. We have every reason to believe that we have made all adequate preparations for the transfer stage.

    NON-POISONOUS DOPE.
    Mr. ROWLANDSasked the Home Secretary whether he is aware that an inquest was held on 13th May on Annie E. Baron, who died on 7th May, at Bridlington, when the doctor said the illness was due to urœnic poison caused by working in an atmosphere of dope which contained a poison known as tetra-chlorethane; whether he is aware that on 17th May an inquest was held at Southampton on Annie Metcalf, who worked at the Belvedere works on dope varnishing; will he say whether the doctor who made the post-mortem examination stated that he thought that the continued breathing of the fumes of the varnish which the deceased used at her work had circulated into the system and had set up jaundice, which was the cause of death; and, if so, can he state what further steps are being taken to secure the use of non-poisonous dope?
    The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Brace): I regret that the facts are as stated. As I explained in answer to a question by the hon. Member for Dept-ford on the 11th May, the arrangements for securing an adequate supply of an approved non-poisonous dope were maturing and will be completed, I hope, very shortly. Meanwhile, much is being done to minimise the danger by the use of such other non-poisonous dopes as are available and are found suitable by the Admiralty and War Office, and by an increasing observance of the detailed precautions in regard to ventilation, periodic medical examination, and other matters, which have been laid down in the instructions issued by the Factory Department.
    Mr. ROWLANDS: Are all non-poisonous dopes in the market being utilised at the present time, or are we to have more of these deaths before we arrive at a non-poisonous dope?
    Mr. BRACE: All non-poisonous dopes which the Admiralty and the War Office consider suitable for the purpose are used by them. The Admiralty and War Office are developing as fast as they can a non-poisonous dope for all purposes.
    Mr. ROWLANDS: Can they not really expedite the provision of these non-poisonous dopes in view of the number of lives being continually lost from the poisonous dopes?
    Mr. BRACE: I will note what the hon. Gentleman says, but the War Office and the Admiralty are doing their best.

    "SERMON ON THE MOUNT" (SEIZURE OF BOOK).
    Mr. ROCHasked the Home Secretary if his attention has been called to the fact that "The Sermon on the Mount," by the present Bishop of Oxford, has been seized by the police at Penarth, in South Wales; whether any person in possession of this work is subject to the penalty of having his premises searched and the book seized; and whether he can issue a list of works of a similar nature which are placed on the index by the Home Office?
    Mr. SAMUEL: Inquiry is being made into the subject of this question. When the police make a seizure of publications it necessarily takes some time to examine them and to decide which of them may properly be returned. The publication in question was not on any list issued from the Home Office.
    Mr. PRINGLE: Are we to understand, then, that this book will be returned to the owner?
    Mr. SAMUEL: I cannot say without inquiry.
    Mr. PRINGLE: Are we to understand, then, that an exposition of the Sermon on the Mount requires to be diligently read by the officials of the Home Office before it can be returned to the owner?
    Mr. SAMUEL: No official of the Home Office has anything to do with the matter. The local police act on their own responsibility.
    Mr. PRINGLE: Are we to understand, then, that an exposition of the New Testament has to be subject to the censorship of the local police?
    Mr. SAMUEL: No, Sir, the police constables—or rather a superior officer of the police—has the duty /of examining any matter seized, to say whether any prosecution should be taken. I should imagine that if the particular publication is of the kind mentioned that there is not the slightest doubt that it will be promptly returned—if that has not already been done.
    Sir STEPHEN COLLINS: Will the police visit every place of worship to take a note of the sermons preached?
    Mr. WHITEHOUSE: Can the right hon. Gentleman give an undertaking, pending his further statement to this House, that the "Sermon on the Mount" will not be destroyed?
    Mr. HOGGE: Will the police constables of the House of Commons remove the copies of the Bible out of the Library?

    CINEMA FILMS (CENSORSHIP).
    Mr. HOGGEasked the Home Secretary whether he has now made final arrangements for a uniform censorship of cinema films?
    Mr. SAMUEL: I am not yet in a position to make a definite statement on this subject.

    OLD AGE PENSIONS.
    Mr. W. THORNEasked the President of the Local Government Board whether his attention has been called to the inquest on the body of an old age pensioner, Edward Heath, aged eighty-five, held at the Southwark Coroner's Court on 10th June, 1916, and the comments of the coroner thereon; if he is aware that the widow stated in her evidence that it was quite impossible to obtain proper food on any sum near 5s. a week; and whether he will consider the advisability of taking steps to increase the amount now given to old age pensioners?
    Mr. HAYES FISHER: My right hon. Friend's attention has been called to the case in question. He understands, however, that the deceased died from the effects of a fall, and that at the time of his death he was not in receipt of an old
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    age pension. The question of increasing the amount of old age pensions is one for the Treasury.
    Mr. THORNE: Is the right hon. Gentleman not aware that many Members in this House are daily receiving the most pathetic letters from old age pensioners, men and women?
    Mr. HAYES FISHER: I have received some myself.
    Mr. THORNE: Then why do not the Government deal with the question?

    LOSS OF H.M.S. "HAMPSHIRE."
    Sir R. COOPERasked the First Lord of the Admiralty on what evidence the Lords of the Admiralty formed the conclusion that the "Hampshire" struck a mine?
    Dr. MACNAMARA: The evidence is the considered conclusion of the Commander-in-Chief of the Grand Fleet after a full investigation into all the circumstances.
    Mr. G. FABER: Will there be an inquiry?
    Dr. MACNAMARA: There has been a Court of Inquiry.
    Sir R. COOPER: Is the right hon. Gentleman not aware that the survivors of the "Hampshire" are not unanimous in the belief that the boat did strike a mine?
    Sir R. COOPERasked what precautions were taken by the Admiralty to safe guard the passage of the "Hampshire" off the West Coast of the Orkneys; and why such precautions failed in their purpose?
    Dr. MACNAMARA: I have nothing to add to the official statement published by the Admiralty on Saturday, the 10th of June. My hon. Friend will remember that that statement contained the following information: "It has now been established that the 'Hampshire' struck a mine at about eight p.m. on Monday last. The 'Hampshire' was accompanied on her voyage by two destroyers until the captain of the 'Hampshire' was compelled to detach them, at about seven p.m., on account of the very heavy seas."
    Sir R. COOPER: Can the right hon. Gentleman give the House and public some information as to whether the seas were swept previous to the passing of the vessel?
    Sir H. DALZIEL: Can the right hon. Gentleman say whether there is any information to the effect that a vessel flying the Dutch flag was discerned immediately before the "Hampshire" reached that particular spot, and is there any suspicion that she' was a mine-layer?
    Dr. MACNAMARA: I have seen that in the newspapers, but I have no information.
    Sir H. DALZIEL: Has any inquiry been made?
    Dr. MACNAMARA: I cannot say.
    Sir H. DALZIEL: I will give notice of the question.
    Mr. G. FABER: Can the right hon. Gentleman say what became of the destroyers immediately after they left the "Hampshire"?
    Dr. MACNAMARA: I presume they -went back to their station.
    Commander BELLAIRS: Can the right hon. Gentleman clear up one point on which there is some public anxiety, that the destroyers went back at seven p.m. and the weather moderated subsequently? We are told that the destroyers and patrol boats went out and searched the spot at eight p.m.
    Dr. MACNAMARA: I believe that is the fact, but I cannot say anything as to the weather.
    Commander BELLAIRSasked the First Lord of the Admiralty whether the court-martial has yet taken place on the loss of His Majesty's ship "Hampshire"; if not, in view of the public interest in the matter, whether the Board will in this case revert to the former practice of holding a public court-martial; and whether he is in a position to state the wording of the order concerning the court-martial so far as it indicates the nature of the inquiry?
    Dr. MACNAMARA: All the facts having been elicited at an inquiry held by order of the Commander-in-Chief immediately the survivors could be got together, it is not considered necessary in this case to hold a court-martial.
    Commander BELLAIRS: Can the right hon. Gentleman say, in view of the assurance given by the First Lord of the Admiralty that courts-martial would be held if ships were lost, why no court-martial
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    was held in this case? Is he aware that at a Court of Inquiry evidence is not taken on oath?
    Dr. MACNAMARA: I think my hon. and gallant Friend is wrong as to the First Lord having given an assurance that a court-martial in all cases would be held, but I will look into that point.
    Commander BELLAIRS: I will take the first opportunity I can to call attention to the neglect to hold a court-martial.

    DARDANELLES OPERATIONS (DISPATCHES).
    Commander BELLAIRSasked the First Lord of the Admiralty when the Board intend to publish the naval dispatches dealing with the bombardments in the Dardanelles, and particularly with events on 18th March, 1915, when important units of the British and French Navy were mined?
    Dr. MACNAMARA: This point is being considered in connection with the statement made to the House by the Secretary of State for the Colonies on the 1st June about the publication of Papers dealing with the Dardanelles operations.
    Commander BELLAIRS: What is the military objection to publishing dispatches fifteen months' old?
    Dr. MACNAMARA: I can inform my hon. and gallant Friend, without giving any assurance, that the point is being considered fully by the Secretary of State.

    MOTOR OMNIBUSES (ADMIRALTY SERVICE).
    Mr. ASHLEYasked the Secretary to the Admiralty what sum has already been paid by the Admiralty to the London General Omnibus Company since the outbreak of war; what portion of that sum represents payment for motor omnibuses and motor chassis; and what sum is still owing?
    Dr. MACNAMARA: The answer to the first part of the question is £46,460 12s. 6d. As regards the second, thirty omnibuses were purchased at a price which is estimated at £27,270, this amount being included in a larger sum which covered hire and so on for a certain period before purchase, but no chassis have been purchased

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    separately. As regards the third part of the question, the outstanding liabilities are estimated at about £3,000, but claims have not been yet received for the greater part of the items.

    POST OFFICE STATIONERY (SELLING PRICE).
    Mr. JACOBSENasked the Postmaster-General whether he is aware that sub-postmasters who are also stationers are obliged to sell envelopes on behalf of the Government at prices much below their current market value, thereby seriously prejudicing their own legitimate business; if this is brought about largely through the Government being able to command supplies which are denied to the paper trade of this country through the Regulations restricting the import of paper-making materials; if he is aware that this state of things is taken advantage of by purchasers of large quantities for the purpose of resale at a profit; if there is any reason why the Post Office should not obtain this profit for the benefit of the taxpayers of this country, or at least restrict the sale of Government-owned envelopes to a limited quantity to and for the convenience of the public?
    The ASSISTANT POSTMASTER-GENERAL (Mr. Pike Pease): The question whether the prices of stamped stationery sold by the Post Office should be readjusted in view of the restricted supply of paper has been engaging the attention of my right hon. Friend for some time past, and he hopes soon to arrive at a decision. But he does not understand how resale at a profit is possible. It means that some one is willing to pay to a private seller of Post Office stationery a price greater than that for which he can procure it at any post office.

    EXCESS PROFITS DUTY.
    Mr. TICKLERasked the Chancellor of the Exchequer whether any estimate has been formed of the extent to which the intention of levying Excess Profits Duty upon co-operative societies will be defeated by the practice of giving special discounts specifically recommended by the directors of such societies as the best means of escaping from liability for the tax?
    Mr. McKENNA: The practice referred to by the hon. Member is receiving the careful attention of the Commissioners of Inland Revenue. To the best of my knowledge it is not widespread, and I do not anticipate that the revenue will suffer.
    Mr. MacCALLUM SCOTTasked the Chancellor of the Exchequer whether his attention has been called to the combined effect of the Munitions of War Act, 1915, and the Finance Bill, 1916, in the matter of excess profits in controlled and uncontrolled firms, respectively; and whether it is the intention of the Government to discriminate between such firms, so that while both retain the same proportion of excess profits up to 50 per cent. excess uncontrolled firms are permitted to retain a much larger proportion than controlled firms of excess profits over 50 percent, excess?
    Mr. McKENNA: I would refer my hon. Friend to the answer I gave to the hon. and gallant Member for Wednesbury on the 30th May, of which I am sending him a copy.
    Major ASTORasked whether British owners of shipping registered in the Crown Colonies and in the Chinese treaty port of Shanghai are liable to Excess Profits Tax on such vessels?
    Mr. McKENNA: If the business is owned or carried on by a person ordinarily resident in the United Kingdom, liability to Excess Profits Duty arises.
    Sir D. GODDARDasked the Chancellor of the Exchequer whether he will consider the granting special depreciation in the case of ships purchased by a gas company during the period since the commencement of the War, at a greatly enhanced price due to the War, such ships being used solely for the purpose of bringing coals necessary for the manufacture of gas and returning empty in each case?
    Mr. McKENNA: I am in possession of the facts of a case which comes within the terms of my hon. Friend's question. I cannot see any sufficient reason for making such an exception as he suggests to a provision which is designed to protect the revenue from loss of Excess Profits Duty where vessels have changed hands since the War began.

    ENTERTAINMENTS DUTY.
    Mr. MOOREasked the Chancellor of the Exchequer if he is aware that a demand for Amusements Tax on gate money has been made on the Portadown Agricultural Association in respect of their annual show held on 1st June; if he is aware that this association has no subscribed capital or other funds, but is supported by voluntary subscriptions, that any profits go entirely for prizes and encouragement of new classes, and that the association is carried on solely for agricultural development and education; and if, under the circumstances, he will advise that such claims should not be pressed?
    Mr. McKENNA: The question whether any entertainment is entitled to exemption from the tax is, under Section 1 (5) of the Finance (New Duties) Act, 1916, one which has to be decided on the facts by the Board of Customs and Excise. I understand that the Board are now considering the case of the particular entertainment referred to in the question.

    AMERICAN SECURITIES.
    Sir J. D. REESasked the Chancellor of the Exchequer whether the dollar deposit scheme is to be extended to sums below £1,000; if so, when; and, if not, why small holders are subjected to the new tax without being allowed the option accorded to large holders of lending securities they wish to retain?
    Mr. FELLasked the Chancellor of of the Exchequer if he has decided to reduce the amounts of American dollar securities which the Treasury are prepared to accept on deposit below £1,000; and, if so, what is the minimum amount which may be deposited?
    Mr. McKENNA: It is hoped that arrangements for accepting on deposit securities of nominal value of less than 5,000 dollars (or £1,000) will shortly be completed.
    Mr. BRYCE: As there are only five days before the time is up, how soon may we expect this arrangement will be completed?
    Mr. McKENNA: I do not think I can agree with my hon. Friend that there are only five days before the time is up.
    Mr. BRYCE: 30th June, is it not?
    Mr. McKENNA: I shall have something to say on the subject later.
    Mr. BRYCEasked the Chancellor of the Exchequer whether any, and, if so, what, arrangements have been made enabling holders of American securities entitled to claim exemption from the additional 2s. Income Tax to produce documentary evidence to bankers of their right to exemption?
    Mr. McKENNA: The detailed arrangements in connection with the collection of the additional 2s. Income Tax will be announced shortly. In making these arrangements the point referred to by my hon. Friend will be borne in mind.

    CHANGES IN TAXATION.
    Mr. LOUGHasked the Chancellor of the Exchequer whether, having regard to the late period of the Session, and the loss and inconvenience which will be caused by further changes in rates of taxation, he can see his way to introduce into the present Finance Bill Clauses providing for the continuation of the tea and other existing duties so that no further Budgets may be required for some time?
    Mr. McKENNA: I propose to move Resolutions with this object to-day.

    WAR EXPENDITURE AND WAR SAVINGS CERTIFICATES.
    112.Mr. BRYCE asked whether war certificates are exempt from Income Tax?
    Mr. McKENNA: It is not clear whether my hon. Friend refers to Two-Year War Expenditure Certificates or to the 15s. 6d. War Savings Certificates. The income received by way of discount on War Expenditure Certificates is liable to Income Tax exactly as in the case of Treasury Bills. As regards War Savings Certificates, subject to the approval by Parliament of Clause 27 of the Finance (No. 2) Bill as amended in Committee yesterday, any income received in respect of these certificates is entirely exempt from Income Tax.
    Mr. SNOWDEN: Does that apply to people whose income is above the Income Tax limit?
    Mr. McKENNA: Yes; the Bill was amended yesterday. There is no limit of income, but there is a limit to the amount of these certificates which may be held by one person.
    Mr. BRYCE: In regard to the War Expenditure Certificates, is the Income Tax exacted from private people?
    Mr. McKENNA: The War Expenditure Certificates are, exactly in the same position as Treasury Bills. As I have more than once stated in this House, they are subject to Income Tax.

    16TH BATTALION ROYAL FUSILIEBS (COURT-MARTIAL).
    Mr. KINGasked the Under-Secretary of State for War whether Private Sexton, of the 16th Battalion Royal Fusiliers, has undergone court-martial at Shoreham, Sussex; if so, on what charge and with what result; and "where this man now is?
    Mr. TENNANT: This man was sentenced to 112 days' hard labour on the 31st May, 1916, at Shoreham, the charge being one of wilful disobedience to a lawful command.

    ARMY CHAPLAINS (APPOINTMENTS).
    Mr. MacCALLUM SCOTTasked what is the system by which appointments of chaplains to the Army are made, on whose recommendations they are made, and whether appointments are made out side these recommendations?
    Mr. TENNANT: Chaplains to the. Forces are appointed by the Secretary of State for War, to whom recommendations are made, in the case of the Church of England by the Chaplain-General, and in the case of other churches by their accredited representatives. In the cases of the Church of Scotland and the United Free Church, to which it is presumed that the question specially refers, the accredited representatives are the members appointed by those churches to serve on the War Office Committee on Presbyterian chaplains.
    Mr. MacCALLUM SCOTTasked how many chaplains have been appointed
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    from churches in Glasgow east of the High Street, and how many from churches west of the High Street; and whether there is any reason why, when the majority of the soldiers come from the east end of the city, the chaplains should come from the west end?
    Mr. TENNANT: The somewhat original basis for the compilation of statistics which my hon. Friend's question suggests has not been adopted in any information which is in the hands of the War Office. In reply to the latter part of this question, I would refer to the answer I have just given. If the facts are as stated, I can only assume that the Committee mentioned have found that there are a larger number of ministers suitable for and willing to undertake the duties of an Army chaplain in the west end than in the east end of the City of Glasgow.

    TRENCH MORTARS.
    Mr. MacCALLUM SCOTTasked the Under-Secretary of State for War whether he has called for a report as to how many trench mortars there are for the purpose of instruction in Scotland and how many qualified officers are giving instructions in their use; and whether he is satisfied that the facilities in Scotland for instruction in the use of trench mortars are adequate?
    Mr. TENNANT: No training in the use of trench mortars is authorised to be given in Scotland, and the answer to the second part of the question is in the negative. My military advisers are satisfied with the facilities for instruction in the use of trench mortars.

    MILITARY HOSPITALS (SURGICAL APPLIANCES).
    Major ASTORasked whether the War Office provide for men undergoing treatment in military hospitals all splints and other surgical appliances which may be ordered by the surgeons in charge of the cases?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): All splints and other surgical appliances considered necessary by the officer in charge of the hospital are provided by the War Office.

    ROYAL GARRISON ARTILLERY (PROMOTIONS).
    Mr. JOYNSON-HICKSasked whether, on vacancies occurring in the rank of major in heavy artillery batteries, temporary captains are being appointed instead of promoting the Regular captains of the Royal Garrison Artillery; and whether there are, in fact, about 200 captains of eleven years' service in the Royal Garrison Artillery over whose heads junior officers have been promoted majors?
    Mr. TENNANT: When vacancies occur for majors in heavy batteries, the best available officer is promoted, whether temporary or Regular. There are about 200 Royal Garrison Artillery Regular captains with eleven years' service, and at the present time the promotion to major takes about fourteen and a half years.
    Mr. JOYNSON-HICKS: Does the right hon. Gentleman mean that none of those 200 captains of eleven years' service are fit for promotion?
    Mr. TENNANT: I do not make any suggestion. I only say that when you have a large pool from which to draw it is quite possible that there may be 200 who are not so fit as the others.

    NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
    Mr. JOYNSON-HICKSasked whether, in the event of the enlistment of a son in the Army at a period when his parents were not dependent upon him, and in the further event of the father being killed, the son can then claim and obtain a dependant's allowance for his mother, provided she then becomes, by her husband's death, dependent upon him; and, if not, whether he will cause the regulations to be amended in this direction?
    Mr. FORSTER: The answer to the first part of the question is in the negative. The War Office was not empowered to take into consideration changes in the dependants circumstances, whether for good or' bad, which have occurred since the soldier's enlistment. My hon. Friend will remember that this question was fully considered by the Select Committee of this House. I think that these exceptional cases come within the province of the Statutory Committee.
    Mr. JOYNSON-HICKSasked the Under-Secretary of State for War whether he is aware that men who have fought through the whole of the War, from Mons to Gallipoli, and been promoted sergeant for gallantry on the field, have, when subsequently invalided home, been compelled to revert to the position of lance-corporal; whether he is aware that some of these men have been made acting-sergeant at home with only lance-corporal's pay and separation allowance; and whether he will look into and cause this injustice to be remedied?
    Mr. TENNANT: If this has been done it is not in accordance with the instructions of the Army Council, and the cases will be inquired into if the names and regiments of the men concerned are furnished.

    WHEAT SUPPLY.
    Sir W. HOWELL DAVIESasked the Secretary of State for the Colonies whether, without sacrificing national interests, more accurate information can be given to brokers who are entrusted with Government business than was given in the case of Messrs. Webb and Kenward, brokers, Baltic, London, who offered and sold in the early part of May, to a firm of Bristol corn merchants, 5,000 tons of Australian wheat on the steamship "Ceramic," on the statement that this steamer would berth at Avonimouth about 24th May; whether he is aware that the merchants paid £48,391 9s. 3d. for this wheat in exchange for the documents on 20th May; that the steamer, subsequently to the sale of the wheat, was sent to Liverpool and arrived about 24th May; and that the Bristol merchants can get no information about when they may receive their wheat as the managers of the White Star Line state that, as the steamship "Ceramic" is under requisition to the Australian Government, they are not permitted to give any information regarding her movements; and whether, seeing that a transaction of this kind arising on inaccurate information, and which has already involved a loss of over £10,000, does not encourage British corn merchants to buy Government wheat, be proposes to take any action in the matter?
    The UNDER-SECRETARY of STATE for the COLONIES (Mr. Steel-Maitland): I have no information as to the details of the transaction in question, which was arranged by the Commonwealth Govern-

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    ment and its representatives in this country, but I understand that every effort has already been made to expedite the arrival of the steamship "Ceramic" at Avon-mouth.

  EARL KITCHENER'S CONFERENCE WITH MEMBERS.

    PUBLICATION OF SPEECH.
    Sir RYLAND ADKINSasked the Prime Minister whether the notes of the speech made by Lord Kitchener to the Members of the House of Commons on 2nd June are in existence; and, if so, whether the question of publishing the speech, with necessary excisions, will be favourably considered?
    Mr. LLEWELYN WILLIAMSasked the Prime Minister whether he can see his way, without detriment to the public service, to publish the speech which was delivered by the late Lord Kitchener to the Members of this House in Committee Room No. 14, on Friday, 2nd June; and, if not, whether he will publish such parts of it as will tend to justify Lord Kitchener's administration of the War Office without betraying national secrets to the enemy?
    The PRIME MINISTER: I have not yet had an opportunity of reading the speech made by Lord Kitchener, but I will consider whether it cannot be published, with any necessary omissions.
    Mr. S. ROBERTS: I wish to ask the Prime Minister whether, considering that a great many hon. Members were not able to attend the meeting and did not hear Lord Kitchener's statement, he could arrange that any one of us who wish to read it could do so by calling at the War Office?
    The PRIME MINISTER: I will consider that.

  NATIONAL INSURANCE ACT.

    DEFICIENCY ON VALUATION.
    Mr. CURRIEasked the Comptroller of the Household, as representing the National Health Insurance Commissioners, whether he can say what kind or form of bankruptcy was considered by the Investigation Committee which led it to report that bankruptcy in the strict sense of the term cannot overtake approved societies;
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    and whether his attention has been drawn to the Commissioners' statement that it is clear that a number of societies will, under the existing law, inevitably find themselves in deficiency on a valuation probably in some instances to a serious extent; and whether he is prepared to advise intending contributors, anxious to make a wise selection of a society, which societies should be avoided as so characterised?
    The COMPTROLLER of the HOUSE-HOLD (Mr. C. Roberts): As regards the first part of the question I would refer the hon. Member to the explanation contained in paragraph 17 of the Interim Report of the Committee. The answer to the second part of the question is in the affirmative, but I would refer to the remedies recommended by the Committee to meet the consequences of divergencies of experience which are unavoidable under the present system of free choice of society. The answer to the last part of the question is in the negative.

    GKANTS OUTSIDE THE ACT.
    Mr. CURRIEasked the Comptroller of the Household, as representing the National Health Insurance Commissioners, whether his attention has been drawn to the strictures contained in Clauses 11 and 12 of the first Report just issued by the Committee of Public Accounts upon the Grant of nearly £9,000,000 of public money for objects described by the Committee as outside the main framework of the Act of 1911, and for which, in the opinion of the Committee, no proper Parliamentary sanction had been obtained until after the money had been parted with; whether, in view of the Committee's opinion that, notwithstanding the subsequent regularisation of these payments, they regard such proceedings with anxiety, an assurance can be given to the House that they will not be repeated; whether the particular Grants of money objected to by the Committee represented an unauthorised increase of about 40 per cent. upon the expenditure properly authorised; and whether these payments were made without the knowledge of the Chancellor of the Exchequer for the time being?
    Mr. ROBERTS: I am aware of the-terms of the Report referred to, which states that the position as it existed before the Act of 1913 is now regularised; but I would remind the hon. Member that the Grants in question, both before and

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    after the passage of the Act of 1913, were duly voted after full discussion by this House, within whose authority the matter rests, and that any Grant included in future Estimates in virtue of Section 1 of the Act of 1913 will necessarily be subject to that authority.

    Parliamentary Elections (Returning Officers' Expenses).
    Mr. W. THORNEasked the Prime Minister whether he is aware that the Parliamentary Election Expenses (Returning Officers) Acts, 1875 and 1885, provide no real security to returning officers that their expenses will be met; that after nomination they must arithmetically divide the deposit demanded between the number of persons nominated; that in any constituency, by the device of nominating several candidates who after nomination will make no effort to provide their allotted portion of the deposit demanded, tout will permit themselves to be retired, any returning officer may be left in such a position that he has not funds sufficient to conduct the election; and what steps he proposes to take to safeguard the position of returning officers?
    The SOLICITOR-GENERAL (Sir George Cave): My right hon. Friend has asked me to reply to this question. I am aware of the provisions contained in the Acts referred to, but it does not appear that any returning officer has yet complained that his position is not sufficiently safeguarded. The matter will no doubt be considered in connection with the wider question of incidence of the returning officers' expenses.
    Mr. THORNEasked the Prime Minister whether he is aware that previous to 1875 no returning officer at a Parliamentary election was entitled to demand a deposit on account of official election expenses from any candidate nominated at a Parliamentary election; that the Returning Officers' Election Expenses Act, 1875, was passed for six years only on the understanding that these expenses should become a public charge, but was afterwards made permanent; and whether he can state if this grievance is to be remedied before the next General Election?
    Sir G. CAVE: The statement in the first part of the question is believed to be correct. The Parliamentary Elections (Returning Officers) Act, 1875, was limited to expire on the 31st December, 1880, but on reference to the Debates which took
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    place on the passing of the Act of 1875 it does not appear that there was any such understanding as is referred to in the question. The Act has not been made permanent, but has been continued from year to year under the Expiring Laws Continuance Acts. The whole question will, no doubt, receive consideration at an early date.

    Pensions Authority.
    Mr. J. SAMUELasked the Prime Minister whether it is the intention of the Government during this Session to carry out the promise of the Chancellor of the Exchequer made last year that the Government would introduce a measure to create one authority to deal with the questions of all pensions and kindred subjects?
    The PRIME MINISTER: My hon. Friend probably refers to my right hon. Friend's statement that the Naval and Military Pensions Act would obviously require reconsideration after the War. That occasion has, unhappily, not arisen.
    Mr. SAMUEL: Is the right hon. Gentleman aware that the Chancellor of the Exchequer made a definite promise that one comprehensive scheme would be brought in this Session, or at least as early as possible?
    The PRIME MINISTER: I think my right hon. Friend said after the War.

    Supply (Allotted Days).
    Mr. KINGasked the Prime Minister whether he intends to reduce the number of days which, under the Standing Orders of the House, would be allotted to the days of Supply during this Session; and whether, in the case of such a proposal arising, he will take into consideration the views of hon. Members expressed through the ordinary channels?
    The PRIME MINISTER: It is probable that later on we may submit a Motion reducing the number of allotted days. In fixing Votes for the days that remain I shall be glad to consider the views of hon. Members expressed through the usual channels.
    Mr. KING: Is the Prime Minister aware that there are about ten heads of important Departments that have had no opportunity yet of defending their action or the advantage of being criticised in this House?
    The PRIME MINISTER: I hope there is no ground for attack.

    Registration Bill.
    Mr. R. McNEILLasked the Prime Minister whether the Government have yet decided to pass a Registration Bill this Session; and, if so, when it will be introduced?
    The PRIME MINISTER: This matter is under consideration by a Committee of the Cabinet, and it is hoped to make a statement soon.

    MESSAGE FEOM THE LORDS.
    Irvine's Divorce Bill [Lords],—That they communicate the Minutes of Evidence taken before this House together with the proceedings and documents deposited in the case of Irvine's Divorce Bill [Lords], as desired by the Commons, and request that the same may be returned.

    DIVORCE BILLS.
    The Lord Advocate reported from the Select. Committee on Divorce Bills, that it was essential that they should hear the evidence of Dr. Robert James Harvey, of 9, Upper Mount Street, Dublin; and, it having been proved that his attendance could not be procured without the intervention of the House, he had been instructed to move that the said Robert James Harvey do attend the said Committee on Thursday next, at Four of the clock.
    Ordered, That Dr. Robert James Harvey do attend the Select Committee on Divorce Bills on Thursday next, at Four of the clock.

ORDERS OF THE DAY.

  BUSINESS OF THE HOUSE.
  Mr. HOBHOUSE: Will the Prime Minister make a statement about the business for next week.
  The PRIME MINISTER: On Monday and Tuesday we shall continue the Committee stage of the Finance Bill.
  On Wednesday, if that is finished, we shall take the Third Reading of the Anglo-Portuguese Commercial Treaty Bill, the Committee stage of the Output of Beer (Restriction) Bill, and, if time permits, the Second Reading of the Police, etc. (Miscellaneous Provisions) Bill, and the Second Reading of the Acquisition of Land Bill.
  On Thursday, Supply—the Home Office Vote.
  Ordered, "That the other Government Business have precedence this day of the Business of Supply."—[The Prime Minister.]

  MEMORIAL TO EARL KITCHENER.
  Considered in Committee.
  [Mr. WHITLEY in the Chair.]
  Resolved, That an humble Address be presented to His Majesty, praying that His Majesty will give directions that a monument be erected at the public charge to the memory of the late Field-Marshal Earl Kitchener, with an inscription expressing the admiration of this House for his illustrious military career and its gratitude for his devoted services to the State, and to assure His Majesty that this House will make good the expenses attending the same.—[The Prime Minister.]
  Resolution to be reported upon Monday next.

WAYS AND MEANS (29th MAY).

  ADDITIONAL INCOME TAX ox INCOME FROM CERTAIN SECURITIES.
  Resolution reported, "That there shall be charged for the year beginning the sixth day of April, nineteen hundred and sixteen, and for any subsequent year for which Income Tax is charged, on the income derived from any stocks, shares, or
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  other securities which the Treasury have declared that they are willing to purchase in connection with any arrangements for the regulation and maintenance of the Foreign exchanges, an additional duty of Income Tax at the rate of two shillings in the pound, and that no person shall be entitled to any exemption, abatement, or relief under the Income Tax Acts in respect of such additional Income Tax.
  And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
  Resolution read a second time.
  Sir F. BANBURY: I beg to move to leave out the words "and for any subsequent year for which Income Tax is charged."
  The effect of this Amendment would be to limit the Resolution to this year, and I think, in all probability, it will be agreed to.
  The CHANCELLOR of the EXCHEQUER (Mr. McKenna)indicated assent.
  Question, "That the words 'and for any subsequent year for which Income Tax is charged stand part of the Resolution," put, and negatived.
  Sir F. BANBURY: I beg to move, after the word "any" ["from any stocks, shares, or other securities"], to insert the word "American."
  The object of the Resolution is to allow the Government to obtain securities in the American market in order that they may regulate the American exchange, but as the Resolution is drawn any securities of any description might be taken. I feel sure that was not the intention of the Government, and in order to make that quite clear I propose to put in the word "American." I do not know whether the right hon. Gentleman will accept the Amendment.
  Mr. McKENNA Mr. McKENNA indicated dissent.
  Sir F. BANBURY: If the right hon. Gentleman desires. I will also put in "Canadian."
  Mr. McKENNA Mr. McKENNA again indicated dissent.
  Sir F. BANBURY: Then I shall have to move the Amendment to put in the word "American." I should be quite content

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  to accept the word "Canadian," or, if the Sir F right hon. Gentleman wishes it, "South American," but I should have thought that America almost included Canadian and South American States which are in the continent of America. I am quite willing to make that clear, but I think it ought to be limited to a certain defined class of securities, and that the Government should not have the right to hold over the holders of securities undefined powers of this sort.
  Mr. McKENNA: My right hon. Friend has given no reason for the limitation which he has moved, except the general one that the Government ought not to have the power to hold this rod over the holders of securities other than American securities.
  Sir F. BANBURY: The object of this Resolution is to regulate the American exchange. Securities other than those which are dealt with in America are useless, and therefore there can be no objection as far as I can see to limiting it to those securities which are necessary for the purpose which the right hon. Gentleman has in view.
  Mr. McKENNA: As I understand my right hon. Friend's argument, it depends upon the question whether other securities are or are not useless. If he finds on investigation that they are useful, he would agree to the general words as they stand. I can assure him that they are useful. We are advised from America that not only American securities, but a great many other securities in America would be accepted for sale or for deposit as security for a loan, and it is quite impossible at the present time to say which securities would not be accepted. I could not recommend the House to limit the Resolution in the manner my right hon. Friend has suggested, because the effect of it would be to limit our power to obtain credit in the United States, and that is the sole object of this Motion. The right hon. Gentleman agrees that it is desirable we should have I would not say almost unlimited but very large powers of raising credit in the United States for our own needs and the needs of our Allies. One of the main sources of our credit in the United States arises from our power to sell or to pledge Securities, and therefore we require the larger words of the Resolution.
  Sir F. BANBURY: I do not propose to press the Amendment, though I do not agree with the statement of the right hon. Gentleman.
  Amendment, by leave, withdrawn.
  Sir F. BANBURY: I beg to move, after the word "purchase," to insert the words "or borrow."
  This is more or less a drafting Amendment, and the right hon. Gentleman, I think, has forgotten to insert these words in drawing up the Resolution. Unless they are inserted, I am rather afraid that it might be open to the Treasury, not only to borrow the securities, but to charge the people the Income Tax too. I wish to insert the words so as to make it quite certain that in the event of any person lending a security to the Treasury he will be free from the liability of paying the additional 2s. Income Tax.
  Mr. McKENNA: I am surprised that the right hon. Gentleman who does not like this proposal should now suggest to the House that it should be extended. We only propose that the subject should become liable to this tax in cases in which we offer to buy. He wants the person to be liable not merely when we offer to buy, but when we offer to borrow. He really wishes to extend the scope of the Income Tax. I do not know that I should very much object to it, but there is one difficulty, it might increase the charge.
  Mr. SPEAKER: I have to raise an objection. The right hon. Gentleman will be imposing a fresh charge.
  4.0 P.M.
  Sir F. BANBURY: May I point out that the Treasury have given notice that they are prepared to purchase certain securities, and that they are also prepared to borrow securities. Would not a case arise such as this? Suppose I was to pledge with the right hon. Gentleman some of the certificates which he has given notice he is prepared to purchase. Could he not say, "I have given notice to purchase this particular security, and, therefore, it is liable to be taxed." That is the reason why I want to put in these words. I venture to suggest I am not imposing an additional charge if my reading of the effect of the Resolution is correct.
  Mr. McKENNA: I do not disagree with the arguments of the right hon. Gentleman. It might happen that one set of

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  securities were subject to purchase and another set subject to lending. In the case where it is only subject to lending it would be an increase of the charge.
  Mr. SPEAKER: The right hon. Baronet will not be precluded raising this question in Committee.
  Sir F. BANBURY: May I put another point of order? Suppose the Chairman of the Committee rules I am imposing a charge; what is going to happen then? I shall not be able to raise it.
  Mr. McKENNA: There are only a limited number of cases where the same security is on both lists, and we propose to deal with them in the Clause.
  Sir F. BANBURY: Then I ask leave to withdraw my Amendment.
  Amendment, by leave, withdrawn.
  Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution, as amended."
  Sir F. BANBURY: When the Resolution was before the Committee I ventured to strongly object to it, and the opinions I then gave have not, to my mind, been dealt with satisfactorily by the Government. I had hoped that the Government to-day would have announced that they did not intend to proceed with the Resolution. It is quite evident that they have in the last month or two received a large number of securities, and I am not at all sure it is necessary that they should continue to press this Resolution, as they can get all the securities they want without it. If that is not so, then I think the Chancellor of the Exchequer ought to give us some assurance that he cannot get the requisite amount of securities before we do agree to the Resolution. If it is the fact that he can get the requisite amount without it, would it not be very much wiser, before proposing what is undoubtedly a penal tax, to drop the Resolution for the time being. The right hon. Gentleman later on could bring it in again, if necessary, although slightly differently worded. There is no question that the idea of going to certain persons and saying to them, "Because you have by some chance got your money in a certain form you are to be penalised in the interests of the State." That, to my mind, is perfectly unjustifiable, and I believe it would have a very bad effect on the investment of money in
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  securities of this sort. The right hon. Gentleman, I am sure, at the present moment, in view of the financial situation existing between this country and America, does not want to establish any sort of feeling in America that American securities are to be tabooed. But this is certain to be the effect, and people are not likely to invest in securities which may be taken away from them or which they may be compelled to sell at a lower price than they gave for them, merely because it is said that the British and American Exchanges should be equalised.
  I was able to sell the right hon. Gentleman some securities at a profit, therefore I was not penalised or hurt in any way. But there are cases in which securities have depreciated considerably since the War broke out. I know of one case where they have depreciated 10 per cent., and the person to whom they belong is to be made to cut his loss, whereas, if he held on for a certain period, he would recover his money, because it is a security redeemable at par, and he has only to hold on for a short time and then he would be morally certain, as far as anything can be certain in this world, to obtain his money back. But he is now to be compelled to sell to the right hon. Gentleman at a loss of 10 per cent. It does seem very hard that people should be penalised in that way, when, as I think, there is no justification whatever shown for our agreeing to a tax of this description. Of course, there are many difficulties with regard to borrowing securities. The better plan for the Government to pursue is to borrow; they are then free from liability to loss. If they purchase they may have to sell at a considerable loss because of the fall in prices between the time of purchase and the period of resale, and that considerable loss will have to be made up by the taxpayer. If, however, the Government borrow the securities there can be no loss to be made good. If the Resolution had been limited to borrowing with the understanding that the securities should be given back to the lender at the expiration of a certain period I should have had nothing to say against it; but I have not been able to get the right hon. Gentleman to agree to that proposal. I can only repeat that the Resolution will place people who lend securities in a very difficult position, and this applies especially to trustees. In a case I know of, one trustee is at the other end of the world, the second is wounded and a prisoner in

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  Germany, and the third is fighting in Mesopotamia. It is, therefore, quite impossible to get these people together in order to enable them to deposit the securities. That is only one case with which I happen to be acquainted, but probably there are a good many others. Bearing in mind all these facts, I say it is a great mistake on the part of the right hon. Gentleman to insist upon proceeding with this Resolution. Would it not be possible for the right hon. Gentleman to give us some undertaking on this matter? Does he propose to move a new Clause to the Finance Bill, or will the matter be dealt with in a separate Bill?
  Mr. McKENNA: A new Clause.
  Sir F. BANBURY: Will the right hon. Gentleman in the meantime consider the possibility of abandoning this proposal or making some alteration such as I have described in the terms of the Resolution?
  Mr. D. MASON: I hope the right hon. Gentleman will consider the very proper suggestion made by the right hon. Baronet (Sir F. Banbury). I was very pleased to hear that the right hon. Baronet disapproved of the Resolution on the ground of its injustice. Anyone who takes the trouble to read the speeches delivered when the Resolution was originally introduced will find that the universal opinion is embodied in the speech we have just had from the right hon. Baronet. To penalise one section of the community who have invested in these particular securities is most unjust. I go further than the right hon. Baronet. I say that the Resolution will do the exact opposite of what the Chancellor of the Exchequer expects from it. As I understand the proposal its object is to do something to check American imports and to correct the Exchange. This method of procedure will do exactly the reverse. What takes place when there is an enormous export from America to this country? The American exporter goes to New York and endeavours to sell his draft, and the British Treasury—instead of allowing the Exchange to more or less follow its normal course by which the American exporter would be penalised to the extent that he would not be able to sell his draft as well as he will be able to under this method—practically say to every exporter, "We will guarantee you that you will be able to sell your draft at 4.76½." I saw it stated in the "Statist" a fortnight ago that the excess of exports over imports this year will total
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  something like £500,000.000, so what the right hon. Gentleman proposes to do cannot possibly permanently cure the situation. So long as the supply of securities continues you can artificially hold up the Exchange, but my point is that that does not get rid of the difficulty, on the contrary it exaggerates the trouble and it plays into the hands of the exporter, as anyone who understands the rudiments of business will admit. I have endeavoured to put that point to the right hon. Gentleman, but I have never been able to induce him to meet it. I am inclined to think he does not understand the position. I notice he laughs at that, but he can be condemned out of his own words, because he told the House on a recent occasion that the object of the Government was to prevent the Exchange going higher than 4.76½, because they did not wish to encourage and stimulate American imports into this country. That is a condemnation of his scheme out of his own mouth. If the Government are averse to allowing the Exchange to go higher than 4.76½ surely it follows if the Exchange falls imports will be still further retarded.
  I feel very strongly on this point. The right hon. Gentleman apparently agrees with me, yet he still persists in his policy. He will perhaps tell us that his object is to prevent the export of gold. He has not prevented the export of gold. A considerable amount of gold has already gone. Hon. Members here will endorse what I say when I say that gold has almost disappeared from circulation. It has either been exported or has disappeared from circulation. That disappearance has been accentuated largely by his own policy. He went out of his way to issue these Currency Notes. By issuing all these Treasury Notes and by the diminution of the currency he practically drove gold out of circulation, yet now he asks us to support this scheme because it possibly may prevent the export of gold. My contention is that if he had allowed a certain amount of gold to go out, perhaps that would have corrected the Exchange. It would have tended immediately to raise rates in London. It is impossible to raise rates for money in England now. The Bank of England tried in London the other day to get up the rate of discount, but failed. How can you do that? These Currency Notes now amount to something like £115,000,000. I would beg hon. Members to give some attention to this problem. I submit that the unsound system which

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  we are pursuing, this profligate finance, this extravagant borrowing, although I know the strength of the British finance—
  Mr. SPEAKER: I think the hon. Member is getting rather far from the terms of the Resolution now before us.
  Mr. MASON: I am very sorry. This is part of a general policy. I will, however, endeavour to confine myself to the particular point before us. I have tried to show, and apparently the right hon. Gentleman agreed with me, that this policy of penalising holders of American securities, instead of relieving the position and retarding the import of American exports, tends rather to stimulate it. It provides a ready market for the American exporter where he can always sell, and it retards our export trade. We are very anxious to increase our export trade. We have not an unlimited supply of American securities. We do not know how long this War may last, and eventually we may be thrown back upon our own resources. By artificially raising the rate of exchange we are penalising our own exporters. If the exchange were allowed to pursue its regular course, it would be in favour of our exporters. This measure plays into the hands of the American exporter, instead of doing what we wish to do, namely, stimulate British exports. If the right hon. Gentleman will show me any flaw in my argument I shall be the first to admit I am wrong, but I have given a great deal of study to this problem and have had a considerable amount of experience in connection with this particular question, and I utterly fail to see what reason there is for this measure. I am told that we have to pay for munitions, but if anyone would take the trouble to study the figures and details of these American exports he will find they include motors, accessories, drills, tools, all description of Manchester goods, while hosiery goods, formerly purchased from Germany, are now coming from America, and also boots and shoes. Enormous quantities are being poured into this country because of the policy of the right hon. Gentleman in creating here one of the best markets in the world for America.
  It may be asked what remedy have I to propose in order to correct the exchange? I have endeavoured to suggest one or two remedies. I admit the position we are now in. It is one of artificial prosperity and of extravagance, which has been
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  stimulated by this policy, because the working classes and others have been entirely deluded by the position, which it has created. They have been paid very high wages and very naturally they are spending those wages. All this still further goes to increase the demand for these American exports. If you had considerable taxation imposed upon all classes it would be far better, even if the working classes had a graduated tax on their wages rather than taxes on their food. If we were to stop the policy of playing into the hands of the American exporter, and retarded the supply of goods coming into the country, that would go a long way towards meeting the position which the right hon. Gentleman is now endeavouring to correct. I agree that at this stage, when we have created this position, we cannot suddenly reverse it, but to proceed as the right hon. Gentleman obviously intends to proceed, by bringing out new issues of securities and still further exhausting the resources of this country, means that we shall be using up our resources and still further placing debts upon the backs of the people in this country in a most extravagant form. One knows what takes place after the securities have been sold and the insurance companies and others have obtained the money for them. They invest it, purchase Exchequer Bonds, and help the right hon. Gentleman to place large loans. While we wish the right hon. Gentleman to finance the War to the best of our ability, we do not wish him to extend the loans. This policy stimulates that most unsound method of financing the War, of issuing an excessive amount of loans, instead of financing it by taxation. I fail to see what justice there is in penalising one section of the community. If there is anything wrong we all ought to bear our share in the rectification. I oppose this Resolution because I believe it will be calculated to do the exact opposite to that it is intended to do.
  Mr. G. FABER: I did not expect I should live to see the day when I should support a Resolution of this kind, but I do. Sometimes, when I have listened to my right hon. Friend (Sir F. Banbury), I have thought he has forgotten the kind of War which is going on and that we are fighting for our very existence. He talks about the hardships incurred by some people in having to part with their American securities. We all have to put up with hardships nowadays. Those of us who are too old to go into the trenches have to do

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  their duty at home, whatever be the hardship. You may say there is inequality of sacrifice, that the person who has American securities will suffer, and that the person who has some other securities which are not wanted for the moment will not suffer. Of course, there is inequality of sacrifice in this War. Do not hon. Members know that? If I may introduce the personal element, what does my right hon. Friend imagine that the profession to which I belong has had to suffer in this War? Do we squeal? No! It is our country first and last and all the time.
  Mr. MASON: This will not help the country.
  Mr. FABER: I appreciate the point the hon. Gentleman made just now, and I say this to the Chancellor of the Exchequer: You must not play the spendthrift with the American securities you are taking from private owners, either by way of loan or buying outright. If you play the spendthrift, it is the wickedest thing you can do. We are riot at the end of this War. We have to get to the long last. We have got to win. The late Chancellor of the Exchequer talked earlier in the War about the silver bullets. The American securities, when held by the Government, are a form of silver bullet. Take care you do not waste it. What do I mean by that? I mean this: Do not allow American imports to come here unless they are vital to this country. If you do, you are accepting what is not vital and you are paying out what is vital—in fact, you are paying out your very vitals. It is the same as gold, and something which the Americans will accept in return for what they send. They will accept gold, but you cannot send gold. My hon. Friend (Mr. D. Mason) said you do not wish gold sent out. Of course you do not. The Government have got to keep it and hoard it to a certain extent for that reason and many other reasons which we all know and I need not enumerate.
  Do not suppose that an American will accept our home securities? The hon. Member knows that he will not look at them. What will an American take? He will, of course, take his own securities. He can borrow upon them, or, having bought them outright, he can sell them, and America will have them. No doubt an American will take other securities, such as Japanese. The Government must not limit their power to American securities only in correcting the exchange. They must have in their breeches pocket
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  not only American securities, but any other securities Americans will take for the goods they send us. I do not like this procedure, because I hate interfering with private property, but we are not in the piping times, of peace. The world is upside down now, and is never going to be the same again. The sooner everybody, including some old Tories, in this House, recognise that, the better it will be. In Heaven's name do not imagine that these American securities which you are either borrowing or buying are going to last for ever! You should treat them as something like rubies—above price. Discourage America by every means in your power from sending out what we do not want for the conduct of this War. If you treat American securities which have hitherto been in the hands of private citizens as if there were no end to them, as if you could go on merrily buying, buying, buying from America, then there will come a day, a terrible day, when you no longer have anything with which to pay Americans. The goods perhaps will be vital to us then. What will happen to the exchange then? Therefore there should be thrift, thrift, thrift all the time in this matter. I support the Resolution because it is vitally necessary.
  Mr. ANNAN BRYCE: I suppose that everybody, except the hon. Member for Coventry (Mr. D. Mason), will agree that it is absolutely necessary for the Government to take these powers. At the same time, I think the Government would do well to listen to the suggestion made by the right hon. Baronet (Sir F. Banbury) that they should either withdraw or postpone the operation of this Resolution until they have made up their minds on the exact details as to how it is going to operate. At the present moment the City and England generally is in a state of absolute confusion of mind with regard to how the provisions of the Resolution are going to operate. We do not know, for instance, how the holder of a sum less than £l,000 in any particular security is going to lend it. He cannot lend it under the terms of the Resolution, and there must be some arrangement made by which that person shall either escape the penal 2s. or be able to lend his securities. We heard for the first time to-day that the Chancellor of the Exchequer wishes to impound any security of any amount, whether American, Canadian, South American, British, Japanese, or Chinese, or anything else. Is everyone going

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  to be liable, without notice, to pay the extra penal 2s. after the 30th June? We have only eight days to find out which of our securities are going to escape this penal exaction. Further, no arrangements are being made by which anyone can prove that he has offered the Treasury securities. The Chancellor of the Exchequer has promised several times to state the arrangements which have been made to that effect, but they have not yet been formulated, and the consequence is that you see in the financial columns of the newspapers every day questions with regard to this particular point. I put down a question today which was not reached. Perhaps the right hon. Gentleman will be able to tell us how the holder of any particular security is to prove from coupons payable after 30th June whether this penal tax is or is not to be deducted. We do not know that at present, nor do we know how the holders of less than £l,000 of any particular securities are to know whether they are going to be penalised or not, how they are going to lend it, what the regulations are for lending it, or whether they are to be allowed to lend it or not. Until these points of detail, which are exceedingly important, are cleared up, it is quite impossible for anyone to imagine that a far-reaching Resolution of this kind can possibly be put into effect in eight days from this time. The right hon. Gentleman said to-day that a number of these matters were still under consideration. How long a time is he going to allow for people to know before 30th June whether they are going to have to pay or what they have to do? I do not think in other respects the scheme has been well thought out. We are continually having fresh lists issued of what the Chancellor of the Exchequer will and will not take. Can there not be a final and definite list for the information of the public with regard to which particular securities this penal exaction will or will not apply?
  Mr. BROUGHTON: As the Resolution probably affects me more than any single individual in England, I feel that I ought to say a few words. In 1912, after twenty-five strenuous years in the United States, I returned home. Everything material I possess is American. I am perfectly willing to give it up. There is no hardship in this matter at all. Before this Resolution was proposed I trans-
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  ferred what—I hope I may say modestly—was, I believe, the largest sum of American securities in the hands of any private individual. Have I lost anything by it? Nothing at all. I have gained in interest and I have gained in capital. Take any first-class American bond, like the C. B. and Q. What happens when you exchange those? I will tell you what happened to me last week. I exchanged New York City bonds maturing in 1963, for which I gave par, and which pay me 4½ per cent., into Exchequer bonds at 113½ paying me 5 per cent. I did the same with C. B. and Q. bonds, and you may take it from me that anyone that owns American securities paying 5 per cent. or less makes by this exchange. If, on the other hand, he is the holder of good preferred stocks, like the U.S. Steel preferred, or the preferred stock of the Great Northern Railway, and taking the present rate of exchange into consideration, he loses on that transaction, but by and large he makes, and there will be no loss at all, and I believe that the Chancellor of the Exchequer will be well advised to stick to this Resolution. We have all got to give up a great deal in these terrible times. Is it as much to ask me to give up my securities as to ask someone to give up his life? There can be no such thing as equality of service. There can only be equality of service among certain groups of people similarly situated, and if the Government says to the holders of American securities, "We want these," they must give them up cheerfully, and there is no hardship in it. I do not wish to elaborate the point. I can only say I am very familiar probably with every American security. My whole life has been spent there. I had, until I exchanged these, no English possessions at all, and I am very glad to have this opportunity of exchanging them. There is no time in the last ten years that if I had wished to sell my securities I could have sold them under more favourable conditions than to-day.
  Sir J. WALTON: I rise to suggest to my right hon. Friend that it might be wise to defer this matter till the further Finance Bill which is to be introduced at the end of July.
  Mr. LOUGH: No, that is done away with.
  Sir J. WALTON: I was not aware of that. The threat of this penal tax has certainly brought forward a perfect

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  avalanche of American dollar securities to be placed at the disposal of the Government. So great has been the avalanche that it seems to me it will be a long time before the officials dealing with the matter in that particular Department will be able to get through the huge accumulation of work that they have before them. I feel in regard to this penal tax that there is no justification for it on the ground that the holders of American dollar securities have not been most willing and ready to part with the whole of them for the national service. I offered him American common stock in the very best railways more than six months ago. I have repeated that offer over and over again during the six months, and have not been able to get it entertained or taken up, and if my case is a sample of what other holders of American securities have done, there is no justification whatever for this penal taxation. I view it with alarm, because it is a differentiation of taxation as applied to American securities against other securities, and I cannot be certain that the people of America will not resent this very strongly indeed. We have already had placed upon the dividends coming to us from America a tax of 1 per cent. May they not retaliate if this differentiation of 2s. is placed on American securities by levying a much higher tax than 1 per cent. on all the dividends which are sent from America to this country? I feel that there are important matters of that nature in connection with this proposal which deserve more consideration and closer examination than they have yet had. I am only speaking of what has been said to us in this House, of a certain difficulty of getting to know exactly what the Government wants and what they do not want, and especially hard do I consider this proposal to be upon the small holders of dollar securities. Why cannot the right hon. Gentleman tell us at once whether the limit of $5,000 is to be reduced or not reduced? I endeavoured to arrange for a friend $3,000 of one of the very best securities, and the reply I got was that the Government would not buy them, and they could not be lent to the Government because they were not of the amount of $5,000. Can he not to-day clear up that little matter arid let us know exactly where the small holders of these American dollar securities stand, because it is a great hardship to them, especially if, not knowing how to deal
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  with the matter by reason of it not being made clear what powers or rights they enjoy, they will, be subjected to hardship which I am sure he would not willingly impose upon them. I hope he will also be able to show that this penal tax of 2s. on American securities is not regarded by the American Government as a differentiation against their interests, and that they will not retaliate by imposing a higher duty on dividends on American securities sent to this country.
  Mr. J. MASON: In the critical position in which this country finds itself, I am sure nothing ought to stand in-the way of the State getting money in the way that is necessary to it, and I do not believe that the holders of securities which are available for the purpose the right hon. Gentleman has in view are in the least reluctant to lend those securities. If he finds it necessary to take steps, as he now proposes, to remind them of the necessity in which he finds himself, I certainly have nothing to say. The hon. Gentleman (Sir J, Walton) has talked about the special taxation of American securities. He has probably overlooked the terms of the Resolution, because it includes all securities of every kind and of every country. I think we ought to take into consideration the far-reaching effect that this may have in two directions. As respects the question of securities of the United States and foreign countries, I have absolutely no objection whatever to including all those, because possibly the securities of other countries may be useful for the purpose we have in view, but when we come to the securities of our Dominions and of this country you have to take into consideration the possibility of very important enterprises falling under American direction, and there is nothing, I believe, that some of our compatriots in the Dominions are more frightened of than that their great enterprises should fall into American ownership. I believe the right hon. Gentleman recognises that fact, because in the case of certain Colonial securities he has refused to purchase and has only offered to borrow. But he must not lose sight of the fact that borrowing means possible purchase under certain circumstances. He has been obliged in all cases where these securities are to be borrowed to take powers to sell them if it becomes necessary. We all admit that the necessity is not likely to arise, but still there is the possibility, and I should have

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  been very much more pleased if it were possible that all securities of the great Dominions should be left out of this scheme as long as possible. I had much rather that other foreign securities were included. That same argument of the question of America getting possession of large interests in the Dominions would apply equally to British securities if they were likely to be used for this purpose, and there is not the slightest doubt that bonds and other first-class securities of British enterprise would be very acceptable to Americans, and might, if they were taken in large quantities, lead to a very considerable number of bonds, both in this country and the Dominions, falling into the hands of Americans. But I am not really afraid for a moment that the danger is a really acute one. It is suggested that Canadian securities are going to be used on a large scale for the purpose of being pledged in America. If that is so, it is perfectly obvious that pledge may result in a forced sale that will arouse a considerable amount of dissatisfaction among our fellow subjects which we are very loath that they should feel.
  Mr. MACMASTER: I have listened with considerable interest to the Debate, and especially to the statement of one hon. Member (Mr. Broughton) that there had been no more favourable time in the last ten years for the disposal of American securities than the present. If that is the hon. Member's experience, it is the experience of very few others. I happen to know of the great decline that has taken place in the value of American securities. With respect to the individual transaction that he refers to, namely, that in the case of shares bought at par he was able to dispose of them at 113 in the purchase of Government securities, so as to make an investment which yielded 5 per cent., he must have omitted the material fact that the security bought at par must have enhanced very considerably in order for him to be able to sell them and obtain securities at such a price. I object to this tax because I think it is unfair. One must look at the result of the tax. The Government are attempting to obtain these American securities in order to overcome their own necessities. They simply make a convenience of those who may hold American securities, and they say to these people, in effect, "You must either lend or sell or submit to a tax of 2s. in the
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  £." If the necessities of the country are great, and I admit they are, for we are fighting for our existence, then that argument, if it is applicable at all, must be applicable to all who own property, whether it is in the form of securities or in any other form. Why should the Government go to the holders of this particular set of securities and say, because it is particularly convenient to them, "You possess this property, therefore you must be subject to a special tax of 2s. in the £ unless you part with this property." The Chancellor of the Exchequer not only said that, but he went a stage further in the main consideration of this Resolution some time ago. He said, "If 2s. in the £ will not do, we will make it 5s.; if 5s; will not do we will make the tax 10s.; and if 10s. will not do we will make it 20s. in the £. In other words, the Government holds a bludgeon over the heads of every person who holds our American securities.
  I am entirely in sympathy with the observation of the last speaker (Mr. J. Mason) that this tax is calculated very materially to affect investments in our great Dominions. In addition to that, there is a substantial fear—I have very good reason to know it—in the Dominion of Canada, which I know well, of our securities there getting into American hands. That apprehension is not without foundation, because in the case of two of the great railways in that country we are aware of what, apparently, were raids to secure the stock in the past, which would have given the holders a clear monopoly of the shares of these great enterprises and the right to subordinate the operations of the Canadian railways to the operations of the American railways. That is a real apprehension which prevails there. It is said that the Government require these securities in order to steady the exchange. If that is so, equally so might the Government acquire any other securities to steady the exchange. As has been pointed out, there are many Americans who would be quite pleased to get some of the securities of our great British railway companies, and of other corporations in this country. In fact, many of them already hold them, and if they hold them why are not the holders of these shares to be subject to a like obligation to contribute in the way that is indicated by this Resolution? When you ask for these shares, in what position do you put the holders? Suppose a holder lends his shares to the

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  Government. The Government takes the shares to the New York financial market, and they have to pledge them with a banker there for the advances of money which is required in order to provide funds there to pay for purchases of munitions and other things required for the purposes of the War. Suppose that these are not redeemed. Suppose a great calamity overcame this country. I do not wish to anticipate such a thing, but when you are looking at business you must look at it from every point of view. Suppose we are not successful in the War, what would be the result? These securities would be thrown upon the market, because the Americans would sell them to the best advantage at the time. If you leave them for two years on the American market you deprive the owner, from whom you have taken these shares, of many uses that he might make of them. He might want them for security in his own business. If he had them he might be able to take advantage of any rise and fall, and trade with them, by which he could realise a profit. But he is deprived of that in the meantime. In consideration of that you offer him at the end of the time 2½ per cent. above the price of the ordinary market of the day.
  The very fact that this tax is imposed or held over the heads of investors in good Colonial and American securities has a tendency to depress them. It has that immediate effect. It is said that this is going to steady the rate of exchange. I very gravely doubt that. I have had some, talk with certain people on this matter as to whether this operation of the Government is going to have any very material effect on the rate of exchange. It is true that, for the time, they will provide a certain amount of ready money, but I very much doubt whether it is going materially to affect the rate of exchange. Let us suppose that it does, what is the effect of that? It may benefit the country to a small extent, but what is the effect on the private individual, the holder of these securities? Everybody who knows anything about finance and markets in finance in this country and the United States and Canada knows that the effect of this operation will be that the holder of dollar securities is going to get, so far as he is concerned, less value for his security than if the securities are given up to the Government. Therefore, he suffers a disadvantage in this operation. If the Government are going to reap an
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  advantage from the operation, if it is going to sustain the exchange and the public chest is to benefit by that, I think it would be much more reputable for the Chancellor of the Exchequer, seeing that the country is going to benefit by the taking of this property, to provide that there is going to be a profit to the lender. Personally, I have no very great apprehensions about the situation. I believe we are going to win the War, and I do not think that these securities will be lost. But from a basic point of view I maintain that this is not proper and legitimate taxation. It is discriminatory taxation. It is taxation against particular stocks and against a particular class of our own people in order to provide the money to carry on the burdens of the War, and it is of a character likely to deter investment in our own Dominions and, perhaps, to have more serious consequences.
  Mr. McKENNA: To listen to the speech of the hon. and learned Gentleman (Mr. Macmaster) one would, imagine that he had never heard of the Defence of the Realm Act and the operations that have taken place under that Act for nearly two years. He speaks of it as a novelty, to take property at the market price, and' paid for by the Government for the service of the War. Every kind of property has been taken. Every kind of property has been commandeered, and we have found occasion to take it at prices far below the prices which we are paying for the securities which we now ask the public to let us have.
  Mr. MACMASTER: Why do not you take all shares?
  Mr. McKENNA: We do not take all property. The Government take things as they need them. The Government have taken horses as they need them. The Government have taken land as they need it. The Government have taken men as they need them. There is no sacrosanct division between the ages of nineteen and forty-one and other ages, yet all men between those ages, who are physically fit, are taken. We do not take all men, and we do not take all property. Nobody has ever disputed the right of the Government to take such property as it needs for the service of the War. Then why, forsooth, are we suddenly to turn round and to have these extraordinary feelings about certain shares or securities?

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  Why are we, when we have given up other property, when we have given up the lives of our relatives, and we are willing to give them, for the service of the country—why are these shares suddenly to have a mark put round them, with the warning, "Advance so far but no further. You may not, in the interests of the State, touch a single share which belongs to us"?
  Mr. MACMASTER: Enlarge your circle.
  Mr. McKENNA: We will enlarge our circle as the need requires it, and we will set no limits to the circle as need requires it during the War. I listened with admiration to the speech of my hon. Friend (Mr. Broughton). I agree with every word he said. We need to be economical in the expenditure of our capital, and it is our capital that we are expending. We will expend it, and we are willing to expend it, in the service of the War and for the service of ourselves and our Allies. The hon. Member for Coventry (Mr. D. Mason) told us that he had studied this subject, and that he had had considerable personal knowledge of it for a considerable time. When? In war? The whole of his argument was directed to the conditions of peace, and had not the slightest relation to anything that is taking place to-day, in time of war. I can tell the hon. Member and the hon. Gentleman (Mr. Macmaster) that we need this money in the United States in order to create a dollar balance. It is not used merely for the purpose of maintaining the exchange. It is not used for the purpose of paying for our ordinary commercial imports. It is quite true that it affects the exchange, because by means of our dollar balances we pay in dollars for the direct purchases of the Government in munitions and other commodities which we require, and we pay the advances which we make for our Allies. The result is that the gigantic purchases which the Government makes for ourselves and our Allies do not come upon the exchange market at all, but we leave the exchange market in the main to be dealt with in the ordinary operations of commerce. The hon. Gentleman says, "Let the exchange drop, and you stimulate exports in this country." That is a peace doctrine. We do not need to stimulate exports now; we are exporting to the utmost of our ability. We have got orders, if we could only fulfil them, and
  380
  there is no stimulation needed. What we lack is labour and capital, particularly labour for exports. It is not stimulation that we need. We are in the condition now that we have got a demand for our goods far beyond our capacity to supply. What we have got to do is to pay for all these vast masses of imports on Government account, and we must do that, unless this Government is to default, which I do not think we shall do.
  Thanks to this House, which will always provide the Government of the day with the necessary means; thanks to this House, whether by taxation or by obtaining these securities, we shall always be able to maintain our credit, and to have dollar balances in the United States. Then, with these dollar balances, week by week, we can pay the gigantic bills which become due. If that is not a process which this House thinks desirable I am bound to say this House will not be taking up the attitude which I have known it to take up ever since the beginning of this war. We are not asking for more than we need. One hon. Member asks for a definite statement, once for all, what it is that we require? We do not know what we want. How can I tell how long the War is going to last? Hon. Members may be assured that we shall not take, at any given moment, more securities than we need for the immediate future. Of course, if the War goes on for an indefinite period we shall have to issue more and more new lists of securities we require in order to create the dollar balance which is our absolutely first and necessary requirement.
  5.0 P.M.
  Mr. LOUGH: Can the right hon. Gentleman arrange that they should be dealt with at a certain rate?
  Mr. McKENNA: How can I? How can I tell at what rate the goods are going to be delivered from the United States? I have to pay the bills when they become due. I must keep a considerable balance in the United States in order that I may never be caught short. The right hon. Gentleman would weigh our liability in scales which are unsuited to the occasion, which is not a commercial transaction of the ordinary kind. We are dealing with figures of a magnitude which in the whole history of the world has never been known before. You cannot treat these questions in the way in which the right hon. Gentleman proposes to treat them. We have

  381
  to ask the House for confidence. The House has given the Government full confidence in the past. I plead for a continuance of that confidence. This Resolution has had the effect, I am thankful to say—not from fear of the tax itself, but because the existence of the tax has brought home to the minds of owners the need which we have—of causing a very large amount to come in to us, but not more than we need. I do hope that the incoming and inpouring will continue at the unreduced rate for some weeks to come. We certainly need all we can get. Now the hon. Gentleman asks for information in certain details as to the operation of the tax. The Resolution in itself effects nothing. The operative part of this business is to be effected by the Clause. As soon as this Resolution is passed, if the House is good enough to pass it, we shall introduce a Clause which will be on the Paper to-morrow. Then my hon. Friend will see precisely what it is we propose to do. But it would not be in accordance with ordinary practice, and I doubt if it would be in order, to enter into details of the Resolution itself, or with regard to the matters which are contained in the Clause which will be on the Paper to-morrow.
  Mr. BRYCE: May I put it to the Chancellor that if this Resolution is on the Paper to-morrow, and is discussed for the first time on Tuesday, then there would be only three days before this tax will become effective? Surely the poor holders of these securities ought to have more than three days' notice of what is going to be done?
  Mr. McKENNA: I think that when the hon. Gentleman sees the Clause he will appreciate that the point which he now raises is not a substantial one.
  Mr. HOBHOUSE: I think it quite natural that my right hon. Friend should have taken exception to some of the remarks which were made and have spoken with some little warmth, but, if I may say so, I think that he mistook the temper of the House, because the House will give the Chancellor of the Exchequer now or at any time any powers which the House thinks necessary, or which he recommends to the House, for carrying on the War. But there is a point which I do not think the Chancellor of the Exchequer quite appreciates. He knew himself what was the form in which this Resolution was going to be presented to the House. I think
  382
  that Members came down here this afternoon thinking that the Resolution was going to apply to American securities and American securities only. I am sure that the hon. Gentleman will agree with this. This Resolution was not available to every Member of the House. It is not on the Paper.
  Mr. SPEAKER: This is the Report stage. The Resolution is taken in Committee.
  Mr. HOBHOUSE: I am quite aware of that. I do not wish to labour the point, but I do not think that the terms of the Resolution were generally available to the House. For that reason I do not think that Members of the House were fully aware of it. I am going to ask my right hon. Friend's attention to three short points. In the first place, since this will apply to all securities, American, Foreign, or British, and especially to British securities, it follows that upon all British securities which are required by the Exchequer automatically a charge of 2s. in the £ is placed, and this may amount, if the right hon. Gentleman so pleases, to an increased Income Tax of 2s. in the £ upon all British securities. That is in the mind of the Chancellor of the Exchequer, but it is possible, as is clear from reading this Resolution, to place upon all British securities which are not offered by their owners an addition of 2s. in the £ to the Income Tax. Surely that is not the intention. I have heard that opinion expressed behind me. I think that it will relieve a certain amount of apprehension if the right hon. Gentleman at some time or another would make it clear that that was not his intention.
  Mr. McKENNA: I will make it clear at once. British securities certainly might be affected in that way.
  Mr. HOBHOUSE: But it is not the intention of the Chancellor of the Exchequer, as I understand, to include British securities in this list, and so get 2s. extra Income Tax upon those securities.
  Mr. McKENNA: No, certainly not to get the 2s. tax, but only such securities would be included in the list as would be useful for raising money in the United States. The Resolution says so.
  Mr. HOBHOUSE: It only says such securities as the Treasury may place upon the list, and not that they are going to be

  383
  useful or not. What happens in the case of British securities? The securities which will be offered for sale in the States will be the good securities and not the bad securities. The United States will not look at the bad securities. You would therefore take from off the British market all the good securities you want, in addition to American securities, and you would sell or pledge in the United States all the good British securities and leave the Home market nothing but the worst securities. That is the second consequence of including British securities in this Resolution.
  Mr. McKENNA: Why not?
  Mr. HOBHOUSE: I can conceive that it would be a very bad thing for British trade if we sold in the United States all the good securities in the market here and left to the investor in London nothing but the worst securities. I cannot conceive anything worse for British traders. I do not think for a moment that that ridiculous position will arise, but it certainly may arise under the present Resolution if passed.
  Mr. McKENNA: I may read the middle part of the Resolution—"which the Treasury have declared that they are willing to purchase in connection with any arrangements for the regulations and maintenance of the foreign exchanges." It is quite impossible to say what securities are required.
  Mr. HOBHOUSE: What is quite certain is that they will require nothing but good securities. They will only take the pick of the market. They are not going to take anything else because they cannot pledge it. A third point which arises, and which has already arisen, is this: You have already forced the sale of certain American securities. The persons who have received payment for those have to find some investment for the proceeds of the sale of those American securities. They have sought it in various industrial enterprises of the best class in this country, and there has already been quite a sharp rise in the shares of those concerns. You take for the purpose of American Exchange the best class of English securities in the Home market. You force the owners of these securities to realise, and they will always have to find another investment in this country. They cannot find an investment abroad. A
  384
  man may say, "I will invest half in Exchequer Bonds and the other half in something else." The result will be that you will unduly depress the value of those securities which you take for the purpose of your exchange and unduly increase the market value of those securities which you leave behind. Those are three results which I do not think were anticipated. One I know has happened already. The other two I know, further, will happen, though such has not been the intention, I believe, of the Chancellor of the Exchequer. I think that some declaration on this point should be made by him later on when he comes to the Clause in the Finance Bill.
  Question, "That the House doth agree with the Committee in the said Resolution, as amended," put, and agreed to.
  Ordered, that it be an Instruction to the Committee on the Finance Bill that they have power to make provision therein pursuant to the said Resolution.

  FINANCE (EXCHANGE OF SECURITIES).
  Order read for resuming adjourned Debate on Question [30th May],
  That it is expedient to authorise the Treasury to provide, during the continuance of the present War and six months thereafter, for the issue of new securities for the purpose of the exchange of securities issued under any War Loan Act passed during the continuance of the War, and for the cancellation of the securities received in exchange, in pursuance of any Act of the present Session dealing with Finance.
  Question again proposed. Debate resumed.
  "That this House doth agree with the Committee in the said Resolution."
  Question put, and agreed to.

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

WAYS AND MEANS.
  CONTINUANCE OF DUTIES.

    1.—CUSTOMS DUTIES.
    Motion made, and Question proposed,
    "That the following duties of Customs imposed by Part I. of the Finance (No. 2)

    385
    Act, 1915, until the first day of August, nineteen hundred and sixteen, shall continue to be charged until the first day of August, nineteen hundred and Seventeen, "that is to say:

    Duty

    …

    Section of Act.

    Increased Duty on Tea

    …

    1

    Additional Duties on Dried Fruit

    …

    8

    Additional Duties on Tobacco

    …

    9 (1)

    Additional Duty on Motor Spirit

    …

    10(1)

    New Import Duties

    …

    12"

    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): My right hon. Friend the Chancellor of the Exchequer announced this afternoon, in answer to my right hon. Friend who sits on the Front Bench opposite that he proposed this afternoon to move a Resolution which would enable him to incorporate in this Budget certain of the duties which expire on the 1st of August this year, which were imposed or included in the Finance Bill of last year. The Committee will remember that when the Chancellor of the Exchequer made his Budget Statement this year he proposed to put those into a separate Bill, but we have now got late into June. It will be at least another week, I fear, before we get this Bill. It would be a pity to start on another Finance Bill, and we can avoid it by including those duties on tea, dried fruits, tobacco, and motor spirit, and new Import Duties, in a new Clause in the present Bill.
    Mr. LOUGH: I may congratulate my right hon. Friend, and thank him also for the steps which he has taken. When I mentioned the desirability of avoiding another Budget my suggestion was rather coldly received by my right hon. Friend the Chancellor of the Exchequer, but I can assure the Committee that a great deal of harm is done in commercial circles by the uncertainty created by bringing in these Bills constantly. I assume now that we are done with Budgets, at any rate for this Session, and a very simple Resolution, which I do not think will require much Debate, will cover the whole of these points. The relief that will be felt in the City will be very great. I said some time ago that forestalling would be avoided by the Chancellor of the Exchequer if he did not make such frequent changes and if, when he desired to make changes, he made them at once without creating a feeling of uncertainty. I am very glad that the Government have seen their way to adopt this
    386
    course, which is sure to be satisfactory to commercial classes, for whom it is a large measure of relief.
    Sir J. D. REES: I thoroughly agree with the right hon. Gentleman, and I am very glad indeed, as, I think, will be everybody concerned, that this question is settled. I expressed regret that the right hon. Gentleman had fallen from his virtuous attitude in taking the line he did as between tea and cocoa, but I will say nothing more about that, and I have only to express satisfaction that, at any rate, a certain duty has been fixed.
    Mr. KING: I should like to be sure on one point, not as a commercial man, but as an ordinary citizen, who is entitled to know whether we are now to breathe freely, and with the idea that there will be no more additions to the Income Tax until next year. Is the meaning of this change, or development of policy, that there will be no more turning of the screw, that great engine of torture which is contained in the Chancellor of the Exchequer's whole system for screwing money out of the Income Tax payers, for another nine months?
    Resolution agreed to.

    2.—EXCISE DUTIES.
    Resolved, "That the following duties of Excise imposed by Part I. of the Finance Act (No. 2) Act, 1915, until the first day of August, nineteen hundred and sixteen, shall continue to be charged until the first day of August, nineteen hundred and seventeen; that is to say:

    Duty.

    …

    Section, of Act

    Additional Duties on Tobacco

    …

    9(2)

    Additional Duty on Motor Spirit

    …

    10 (2)

    Additional Medicine Duties

    …

    11"

    MOTOR SPIRIT LICENCE DUTY.
    Motion made, and Question proposed,
    3. "That there shall be charged on a licence to be taken out by any person who desires to be supplied with motor spirit, a duty at the rate of sixpence for every gallon with which he is authorised to be supplied by the licence."
    Mr. MONTAGU: It is upon this Resolution that we propose to found a Clause which will deal with the matter of a licence for the supply of motor spirit. The Resolution, according to practice, does not appear upon the Paper, but it

    387
    has been drawn up in the shortest and widest form, and the Clause will appear upon the Paper in due course.
    Mr. JOYNSON-HICKS: I should like to again make a protest against these Resolutions being handed to the Clerk at the Table. This is a simple Resolution, as it happens, but I submit that the sooner we have a Standing Order on the subject of these Resolutions the better it will be. These Resolutions ought to appear upon the Paper in order that they may be seen by Members. I know that the Treasury does not like that, but I would point out that there is such a thing as the convenience of Members of Parliament, who have some rights, and the sooner the Treasury realises that the better. I wish to say a word with regard to this new tax, which is a serious imposition on motoring. Motorists do not hesitate to pay their share of taxation, but we have just passed a Resolution dealing with additional taxation on motor spirit larger than that of last year. The price of motor spirit has now risen nearly 3s. per gallon, and I should like to know from the Chancellor of the Exchequer or the Secretary to the Treasury what he is really driving at in this matter. Is it to get more money out of motoring by an additional tax upon the present use of petrol? If it is for the purpose of getting more money I greatly doubt whether it will be successful, for that portion of the community which is concerned in this tax are already taxed sufficiently high. Another point is that motorists are already doing much public work voluntarily, and have been doing it during the last eighteen months. I think there is great possibility that the Government will not be justified in placing a higher tax on petrol, in view of the fact that those who use petrol are already paying more than their share of general taxation.
    I want to know whether the real object is to stop the use of petrol. If that is so, I am not quite sure whether this is the proper way to do it. We have heard animadversions upon those who go to race meetings in motor cars, but investigations have been made from which it would appear that a large number of the people who go to race meetings in motor cars hire those motor cars, and it is not the ordinary motorists who go to these meetings. If it is desired to stop people from motoring to races, why not stop the racing itself? There is a very strong feeling on all sides of the House and outside—an
    388
    almost unanimous feeling—that if you, object to racing in war time you should stop it; but you should not try to do it by stopping motorists from doing what they are entitled to do. As long as racing is in existence anybody who chooses to go may go by train or by motor car, and you have no right to put a special tax on motorists to stop them from going to races while you allow the racing to go on. One important point I want to mention has reference to the commercial use of petrol. I understood from the Secretary to the Treasury yesterday afternoon that it is not quite clear whether the tax is going to apply to commercial motors or simply to motor cars used for pleasure purposes; but if this new special tax on petrol is to-apply to cars used for commercial purposes it will be a very serious matter for the commerce of this country. The object of this tax on petrol is to replace the new Licence Duties which were in the Finance Bill and have been dropped.
    These new Licence Duties, as I understand, were to be applied to pleasure cars alone, and would not apply to commercial cars. Therefore, when you are merely substituting a new form of taxation on pleasure cars, you have no right suddenly to rope in the whole of the commercial cars in addition. From what the Secretary to the Treasury told us yesterday, it was not clear how this tax would touch commercial cars. The Committee should know, even at this stage, what motorists are paying. There are 50,000,000 gallons per annum used by commercial cars, the use of petrol having enormously increased during the War, because of the enormous amount of war material carried by commercial vehicles owing to the railways being so blocked. An enormous number of horses have gone, and in consequence the petrol-using commercial car has to carry a great deal of traffic. Fifty million gallons per annum of petrol will mean, when subjected to the new tax, a sum of £625,000 of taxation on the commerce of the country. That is rather a tall order for the right hon. Gentleman to spring upon us in lieu of the Licence Tax on pleasure cars which was given up yesterday. I remember the old saying as to fearing the Greeks when they bring gifts, and I feel that my right hon. Friend would not have given up the Licence Duties if he was not aware that he was going to put on something heavier. I desire to express my disappointment in regard to this matter, and I hope that before the Clause comes up there will be a very

    389
    serious alteration as to the commercial position, and the difficulties in regard to commercial cars.
    Resolution agreed to.

    EXCESS PROFITS DUTY (SALE OF SHIPS).
    Motion made, and Question proposed,
    4. "That it is expedient in calculating Excess Profits Duty in cases where a ship has been sold since the fourth day of August, nineteen hundred and fourteen, to take the pre-war standard of profits to be—

    (1) where the standard adopted is a profits standard, the profits arising from the use of the ship during the pre-war trade years; and

    (2) where the standard adopted is a percentage standard, the same standard as if the ship had not been sold, or, in the case of a ship which was used for the first time after the fourth day of August, nineteen hundred and fourteen, the capital represented by the ship at the date when it was first used,

    and to make further provisions as a consequence of the alteration of the standard."
    Mr. McKENNA: This Resolution is as to excess profits due to the sale of ships. This subject is not new in this House. We had a Clause in the Finance Bill last year which we subsequently withdrew because it did not appear to offer a proper remedy for an evil which everybody has recognised. It is quite obvious that the sale of a ship at the present time would alone be to deprive the State of the benefit of the Excess Profits Duty in respect of the profits earned by that ship. Everybody is agreed that it is quite clear that some steps must be taken so that either the vendor of the ship or the purchaser of the ship shall be made to contribute out of the excess profits on the sale of the ship the due share of taxes. It is not an easy matter. It is a very difficult matter to assess in regard to taking the due proportion as between the vendor or the purchaser, or whether it shall fall altogether on the vendor or the purchaser. But we have a proposal now which I think has been agreed, which is in the Bill in italics, and which I hope will prove satisfactory to the House.
    Mr. DENNISS: I do not quite understand why the Clause in the last Bill was withdrawn. It seems to me that the argu-
    390
    ment which applied then applies now, and with greater force. Take an instance. The freights which prevailed then were not anything like as large as they have become since. The Argentine freights before the War were 12s., and they rose to 80s. last September, and they have now risen to £9 10s. In consequence, ships have gone up enormously in value, and anything like a decent ship is now two or three times its former value. I would like to think that the Chancellor of the Exchequer will not allow these enormous profits to go directly into the pockets of the shipowners, in addition to the astounding profits they have already made out of freights, which profits, of course, come out of the pockets of the people of this country, and inflict the greatest possible hardship on the poorest people, whose principal food is bread. It presses especially hardly on old age pensioners, who can only afford to buy two and a half loaves per week now, where before they could buy four. I am delighted to think that the Chancellor has seen his way, without any injustice to the shipowners, and to the great advantage of the country, to put on this very desirable tax.
    Resolution agreed to.

    1. RESTRICTION: OF RELIEF.
    Motion made, and Question proposed,
    5. That the relief given under Section fifty-four of the Income Tax Act, 1853, as amended by any subsequent enactment, shall not as respect insurances, or contracts for deferred annuities made after the twenty-second day of June, nineteen hundred and sixteen, be given except in respect of premiums or payments for—

    (1) an insurance limited to the payment of a capital sum on death; or

    (2) an insurance limited to the payment of a capital sum on death and the payment of a sum on reaching a certain age, so long as—

    (a) the age is not less than sixty years; and

    (b) there is an interval of at least twenty years between the date of the contract of insurance and the date on which the sum becomes payable, and

    (c) the sum payable on attaining the required age is not greater than the sum payable on death;

    391

    (3) contracts for deferred annuities where—

    (a) the contract is limited to the payment of an annuity commencing at an age not less than sixty years; and

    (b) there is an interval of at least twenty years between the date of the contract and the date on which the annuity commences;

    and that the relief under that Section by way of repayment of tax, and the deductions from income allowed for the purposes of Super-tax under Sub-section (2) of Section sixty-six of the Finance (1909–10) Act, 1910, shall be accordingly limited.
    Mr. McKENNA: This Resolution relates to insurance premiums and the relief, which is now a statutory right, with regard to those premiums. As a consequence of the high rate of Income Tax there are signs, perhaps more than signs, of the birth and growth of a practice to defeat the revenue by what I must describe as a method of insurance which is not really intended to be insurance at all. As the Committee knows, up to a certain limit all sums invested in insurance premiums are free from Income Tax. Certain insurance companies have taken advantage of this freedom from tax in order to advertise new schemes of deferred annuities. They are not really insurance schemes in any sense whatever. The payments made for these deferred annuities are free from tax, and consequently, with a tax of 5s. in the £, the inducement to save money through deferred annuities, and thereby to escape Income Tax, is very great. We have not the smallest desire to interfere with the practice of persons saving money through deferred annuities, but we do not think that the relief from Income Tax ought to be granted to saving of that kind, when it is not granted to any any other kind of saving. We feel that this House ought to protect itself against schemes of this kind, which are universally recognised and advertised as schemes, not for insurance, but as schemes for avoiding the Income Tax. I hold in my hand an example of the kind of thing I have mentioned. It is headed, "Income Tax Saved," and continues:
    "A method which enables you to save every penny of Income Tax and without recourse to life insurance, and at the same time secures an investment at 7½ per cent. free from depreciation, offers the test security known to finance, is well worthy of your attention and investigation."
    392
    The worst of this advertisement is that it is all true. It is possible, without any insurance, and quite practicable to obtain in perfectly reputable offices and with absolute security 7½ per cent. on your investment at the expense of the Income Tax. I do not think that the State ought to encourage or to allow a practice of this kind. As I have said, we do not propose to interfere with bonâ-fide investments of this kind which have been made in the past. We think that in the future there should be a strict limit upon the right to obtain deduction of Income Tax in respect of premiums on annuities of this kind, and this Resolution upon which a Clause will be founded I now beg leave to move.
    Mr. J. SAMUEL: I desire to ask whether this Resolution applies to what is known as endowment policies. From the terms of the Resolution I should think that the Income Tax allowance which is given on endowment policies now of fifteen years, will be withheld. I think that would be a very great hardship. So far as deferred annuities are concerned, I quite agree that some protection ought to be given to the Income Tax, but a very large number of insurance companies do a very legitimate business in endowments of ten years, twelve and a half years, fifteen years, twenty years, twenty-five years, and thirty years. If the Income Tax allowance is removed in the case of endowment policies under twenty years it will be a very severe charge, and one to which I think exception will be taken. I think the Chancellor is justified in safeguarding the Income Tax on the point he mentions.
    Sir THOMAS WHITTAKER: This is rather a difficult matter. Undoubtedly advantage has been taken, and is being taken, of the allowance which is made in respect of Income Tax on life assurance policies to devise schemes and methods which are really not life insurance at all, but are simply devices for obtaining from the Government a big return on an investment. Now that the Income Tax is at the level that it is, the inducement to do that is very considerable indeed. I could give the House instances where so-called insurances are being effected, say, for a term of ten years or so, and there is only one premium paid throughout the whole thing, and a very heavy allowance is got each year from the Government, when not a single penny is being paid. It really is an

    393
    abuse of a very valuable concession, and I believe that we have reached this point that unless this kind of thing can be effectually stopped, there is a real danger of losing altogether the allowance which is made, and it will become essential in order to protect the revenue. One of the difficulties is that, although it may be true that only a few offices are doing this kind of thing, yet if they do it others will be driven in self protection to do it also, and it is extremely undesirable that it should be so. The Resolution, as I understand it, is rather a wide and far-reaching one, and when we get into Committee on the Clause itself it will be possible to discuss it a little more closely and under the rules under which we work here it can be reduced, but it cannot be extended. I quite agree that there are a number of fifteen-year endowments taken out by persons at fifty to fifty-five years of age that ought to come within the scope, and I suggest that that ought to be done when we get into the Committee stage. The passing of this Resolution will not prevent discussion of that phase of the matter, and there is also another question on the limit of age. Women take out endowments a little earlier, but these are matters of detail. The proposal is one which has got to be made, and I am satisfied that something of the kind is required. There is one thing I should like clearly to understand, and that is that the Commission which is to be set up at the first favourable opportunity to deal with the whole Income Tax question, will deal with this matter. When we get into Committee on the Clause I may have other suggestions and remarks to make, but in general I think that something should be done.
    Mr. GLYN-JONES: I am sure that the object which the Chancellor has in mind here is one which will meet with the approval of the Committee. I rise to ask him to consider before he finally decides on the form of the Clause, whether it is necessary that the double check which he is placing here should be continued. As I heard the Resolution it appears to me that two conditions have to be complied with. One is that the terms of the endowment are not less than twenty years, and the other that it should not be at an earlier age than sixty. I should like to point out the case of comparatively young men, of poor lives, whose only life insurance available is an endowment scheme payable
    394
    at fifty-five years of age. I know personally of cases of legitimate life insurance in that form, the only form open to the insured person because of the poorness of the life. I hope the right hon. Gentleman will consider that case.
    Mr. CURRIE: I am glad that the right hon. Gentleman is taking steps to bring a flagrant abuse of this kind to an end. There is one small point I wish to mention. It is not an uncommon thing for insurance companies in the case of endowment policies for fifteen years, to give the policy holder the option at the end to renew. I think the position with regard to that case under this Resolution should be made quite clear.
    Resolution agreed to.

    2. TAX ON SURRENDERS, ETC.
    Motion made, and Question proposed:
    6. "That where relief has been given under Section fifty-four of the Income Tax Act, 1853, as amended by any subsequent enactment in respect of premiums, or other sums payable on insurances, or contracts for deferred annuities, and the policy of insurance, or the contract for a deferred annuity is surrendered, or alienated, there shall be paid as a debt due to His Majesty a sum equal to that which would be payable if Income Tax (including Super-tax) were charged on the amount received in respect of the surrender, or alienation of the policy or contract at the rates at which the relief was last given in respect of the premiums, or other sums payable."
    Mr. McKENNA: The object of this proposal is that in an arrangement of the kind advertised in the advertisement which I have read and where the person who gets the benefit surrenders the policy he shall have to pay in one quarter of the Income Tax which he has saved. It is the remedy for the evil when it has occurred, and, as in the case of the last Resolution, I do not think it can really be fully understood by the Committee until they get the whole of the two Clauses before them. I think that then the scheme will be far better discussed, if I may suggest it to the Committee, than piecemeal on the terms of the Resolution itself.
    Resolution agreed to.
    Resolutions to be reported upon Monday next; Committee to sit upon Monday next.

    FINANCE BILL.
    Considered in Committee. [Progress, 21st June.]
    [Mr. WHITLEY in the Chair.]

    CLAUSE 28.—(Belief in Respect of Colonial Income Tax.)
    If any person who has paid, by deduction or otherwise, United Kingdom Income Tax for the current Income Tax year on any part of his income at a rate exceeding three shillings and sixpence proves to the satisfaction of the Special Commissioners that he has also paid any Colonial Income Tax in respect of the same part of his income, he shall be entitled to repayment of a part of the United Kingdom Income Tax paid by him equal to the difference between the amount so paid and the amount he would have paid if the tax had been charged at the rate of three shillings and sixpence, or, if that difference exceeds the amount of tax on that part of his income at the rate of the Colonial Income Tax, equal to that amount.
    In this Section the expression "United Kingdom Income Tax" means Income Tax charged under the Income Tax Acts; and the expression "Colonial Income Tax" means Income Tax charged under any law in force in any British Possession or any tax so charged which appears to the Special Commissioners to correspond to United Kingdom Income Tax.
    The CHAIRMAN: With regard to the first Amendment standing on the Paper, it is not quite in the correct form. It proposes to leave out two lines of the Clause, and then to put them back again, and the effect of that is that the Amendment in the name of the hon. Member for Nottingham (Sir J. D. Rees) has precedence.
    Sir J. D. REES: I beg to move, after the word "person" ["if any person"], to insert the words "or body corporate."
    I do not think any speech is necessary on this matter. It may be that this is not necessary, but I am not sure that when the word "person" is employed in Section 28 of the Finance (No. 2) Bill of 1916 it covers companies. Section 192 of the 1842 Act states that
    "Wherever in this Act, with reference to any person, matter, or thing, any word or words is or are used imparting the singular number or the masculine gender only, yet such word or words shall be understood to include several
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    persons as well as one person, females as well as males, bodies politic or corporate."
    If that is so, my Amendment is not needed, but I am not quite sure that it is so, and I should like to be quite clear that the benefit of this Section does accrue to a company or body corporate. I therefore beg to move the Amendment standing in my name.
    Mr. McKENNA: I understand "person" does include "body corporate." I have always understood so.
    Sir J. D. REES: Has the right hon. Gentleman any objection to putting it in?
    Mr. McKENNA: Yes, because if it does include "body corporate" it would be most undesirable to have it in the one Act and to leave the inference that it does not include "body corporate" in other Acts, whereas it does.
    Mr. BRYCE: I think the hon. Member for Nottingham (Sir J. D. Rees) will be assured when he knows that I put this in, because in the Interpretation Act of 1889 it expressly provides that the word "person" does include "body corporate," and that Act applies to all Acts passed after 1889.
    Sir J. D. REES: I ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    The CHAIRMAN: The Amendment of the hon. Member for Inverness (Mr. Bryce) should be moved in this form: To leave out from the word "income" ["any part of his income"] to the end of the paragraph, in order to insert the words "proves to the satisfaction of the Special Commissioners," and so on.
    Mr. BRYCE: I am very glad to adopt the suggestion, and I will accordingly move the Amendment in this form: To leave out from the word "income" ["any part of his income"] to the end of the paragraph, and to insert instead thereof the words "proves to the satisfaction of the Special Commissioners that he has also paid any Income Tax levied in any of His Majesty's Dominions, Colonies, or Dependencies, Colonial Income Tax, not being an Income Tax imposed locally for local purposes, in respect of the same part of his income, he shall be entitled to repayment of a part of the United Kingdom Income Tax paid by him equal to the amount of the Colonial Income Tax paid by him, or

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    the whole of the United Kingdom Income Tax when the Colonial Income Tax rate is not less than the rate for the time being in force in the United Kingdom."
    With regard to the general arguments, as the House will see, this is an Amendment introduced with a view to obviating double Income Tax within the Empire. The general argument against the double Income Tax has been very often laid before the financial authorities of this country, and ever since the year 1896 there have been continual memorials to the Chancellor of the Exchequer of the day with regard to the evils inflicted by the present system. But of late years, and especially since the beginning of this War, these evils have become very much more accentuated. The other day a very heavy war tax was imposed by the Commonwealth of Australia, and it is highly probable that if the War continues other Dominions and Possessions of the Crown will be forced to follow the same example. My argument with regard to this divides itself really into two branches. First of all, there is the individual aspect of the question, and, secondly, the Imperial, which includes the commercial, aspect of it. With regard to the individual aspect, I think even the Chancellor, who wishes to get money from every source that he can, and very properly wishes to do so, must admit that while on all sound principles of taxation it is fair that people equally able to bear the burden should be the persons to contribute, it cannot be right or fair, however much money he wants, that he should ask people in exactly the same position in different parts of the Empire to pay a very different rate of taxation for the very same purposes. That the question arises at all is due to the fact that the principle of taxation pursued in most of the Overseas Dominions, I think in all of them except in the Dominion of New Zealand, is based upon the principle that taxation should be levied upon the income earned in the particular country, whereas here the principle is that taxation should be levied upon the income of the person resident here, no matter where his money is earned. Personally, I am quite clear in my mind that the former principle, the principle pursued by the majority of the Overseas Dominions, is the right one. It appears to me a fair thing that a State should have power over the income earned within its own jurisdiction, and if that principle had been pursued in the Income Tax procedure of this country this ques-
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    tion would not have arisen at all. We ought to try to approximate as nearly as we can to the carrying out of that principle, and I suggest, as it was well put the other day by Mr. Young, the Agent-General for South Australia, that this war taxation should be regarded as a single tax for the purposes of the War, and that if a man has paid towards this war taxation in any part of the Empire, that should be counted to him in the other part. In other words, my Amendment tries to secure that if a man has paid in Australia, New Zealand, South Africa, or India towards war taxation, he should have that taxation deducted from the amount payable in this country, whatever it may be. The Chancellor, by the wording of this Clause, has admitted the principle already. The Exchequer up to this time has always disputed the principle. It has said that as there were two protecting countries, it was perfectly fair that a man should pay in each of the countries that protected him. I think, however, that with the views we have now of the unity of Empire, and the actual facts of to-day, that view is no longer maintainable; and the Chancellor himself has agreed that it is no longer maintainable by making the concession that he does up to the point of 3s. 6d. in this Clause 28.
    6.0 p.m.
    I need not argue that particular point further, but I want to say a word or two with regard to the further aspect of the question. The persons who have studied this subject, and especially those who have to pay the extra taxation, do not consider that the concession which the Chancellor of the Exchequer has made is nearly enough, and they ask that on the principles of equity alone, he should modify his proposal. Surely it cannot be fair to ask a man merely because he has an investment in Australia, in India, in South' Africa, or in New Zealand, to pay Income Tax twice over? Why should he be in a1 worse position than the man who holds securities in the United States, in South America, in Japan, or in China? Why should his investments in the Empire be penalised, and his investments in foreign countries not be penalised? It seems to me that if you are going to penalise investment in any way, it would be much fairer to penalise investments held in foreign countries, and relieve those held in States of the Empire. The Treasury used to argue that it would be inequitable to make any distinction between the two

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    classes of investment, but I hope they have now abandoned that idea, and that we shall not hear anything more of it. I should rather hope that, as things are shaping, we shall find a distinction always maintained between investments in His Majesty's Dominions over the seas and investments in foreign countries. In regard to that point, I do press on the Chancellor that it is not fair that a man who holds investments in the Commonwealth of Australia, or in New Zealand, should have to pay double the taxation— because it amounts in many cases to that—that the man has to pay who holds investments in Japanese securities. In the case of Japanese securities, the man pays no Income Tax in Japan, and pays on it once only. In the case of the investment in Australia, he pays on it in Australia, and he pays also here. On no principle of equality of sacrifice can that principle be maintained. With regard to the actual amount of the imposition, the concession which the Chancellor has already made practically covers the grievance in the case of investments in India and South Africa, because the 1s. 6d. which he agrees to take off the 5s. Income Tax in the case of Colonial investments more than covers the tax in India, the Income Tax there being now 1s. 3d. It very nearly covers the total of the South African Income Tax, even at its highest points, on incomes of £24,000 a year and upwards. The Income Tax in South Africa is 2s. at the highest point, and is graduated downwards, so that practically with regard to investments held in that country there will no longer be, under the Chancellor's proposal, any grievance. The grievance remains extremely heavy, however, in cases of investments in Australia. The Commonwealth Tax has been put on since the War began. Before that there were State Income Taxes, used for local purposes, and they had a maximum amount of not more than 2s. in the £. But in the case of the Commonwealth Tax, which has had to be imposed for the very heavy expenditure which the Commonwealth has undertaken for the assistance of the Allies, the tax runs from 3d. in the £ on small incomes up to no less than 5s. in the case of incomes over £7,000 a year, and its incidence between those points becomes very heavy as the amounts become large. Besides that, investors in companies have
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    the double tax. A company under this Commonwealth tax pays 1s. 6d. on its undistributed income, and on its distributed income its shareholders also pay rates varying, according to their means, up to 5s.; so that it may be that a man holding an investment in Australia, and living here, will have to pay something like 13s. under this 5s. tax—now reduced to 3s. 6d. He will pay 3s. 6d. plus 5s., or 8s. 6d., and in the subsequent year his share of the undistributed income of the company in previous years plus his local taxation. The total amount would be something like 13s. or 14s. in the £. I do claim that investors holding investments of that nature are entitled to more consideration than the Chancellor seems to have given—that is so far as individuals are concerned. But I want to point out to the Chancellor what the effect of this very heavy double taxation is upon the whole commercial, industrial, and Imperial aspect of the question of taxation. It has already been shown that an amount of money is going to be taken away from this country. Many companies which are here and have been taxed here make large incomes in foreign and outside dominions and the Overseas Dominions of the Crown, and they are removing their head offices from London in order to escape British taxation. I have several times before pointed out to the Chancellor of the Exchequer that the Bombay Electric Supply and Tramways Company, Limited, paid in Income Tax £17,000 a year, and it is now removing its head office to Bombay. The effects of such procedure are various.
    In the first place, it takes away from the Chancellor incomes from which the Chancellor would have derived Income Tax if the company had stayed here. Again, a large number of shareholders are resident in India and they will no longer pay any British tax at all; whereas, if the company had remained here, they would have paid their share of the taxation. Further, that company ordered its machinery from British manufacturers. Now that it head office is removed to India you cannot guarantee that the machinery will any longer be ordered here. The directors will be different. Their policy may be different. I am glad to say that we have seen much patriotic feeling in these matters, but still it would not, probably in the future, be the same kind of feeling that we have here in regard to the ordering of goods and the

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    developing of the resources of the Empire. It is not to be expected that it should. The result of all this may very probably be—I think probably will be—that large orders for machinery needed for the development of the company will be given in other countries—America and elsewhere— and not in this country. That will be the universal tendency if this leaving of England by important companies goes on, and it must continue. Numbers of companies are now considering whether or not they shall withdraw from England altogether, and the Chancellor will lose altogether very large blocks of Income Tax. Besides that loss of Income Tax and the loss of orders for machinery, there is the other fact that the Colonies will suffer, because they no longer will have put into them investments of large numbers of people in this country. It is perfectly clear that if you are going to have a double Income Tax, 5s. here and 5s. in the Commonwealth of Australia, people will begin to withdraw their investments from the Commonwealth of Australia.
    Probably the Chancellor will say that there are very large amounts of British money in Australia. There are, and some of them are in a locked-up form which may not prove very easy to remove. But others are in a very fluid form. For instance, many of the Australian banks have very large deposits, principally or. very largely from Scotland, amounting to very many millions of money. Those deposits, which are very fluid, can be removed at seven days' notice, and they are already being removed in very considerable quantities from the Australian banks simply because the depositors will not stand an Income Tax of 10s. or more in the £. Surely we want to encourage investments within the Empire itself, instead of encouraging investments of money in foreign, and perhaps hostile countries. The existence of a tax like this will tend to drive money away from the King's Possessions Overseas to foreign countries: the existence and continuance of this tax inevitably involves withdrawals of this character. There is another point. The withdrawal of capital from our Overseas Dominions will necessarily involve a decreased flow of British population to those regions. Labour will flow where capital exists to employ it. If you diminish capital you inevitably diminish labour. It has been a happy thing for us that we have had these great Dominions in which our surplus population can settle
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    and live under good normal conditions. But with the withdrawal of capital, which is certain to follow upon the continuance of this taxation, we will find that the flow of population to those Overseas Dominions must inevitably diminish, and perhaps, eventually altogether cease. Our surplus population will, therefore, be diverted into countries where this heavy taxation does not exist.
    The case of India offers some special features upon which I should like to say a word. In the case of our Overseas Dominions, all of which, irrespective of the Crown Colonies, are self-governing, the control of taxation is necessarily in the hands of the Governments of those countries. Delicate questions must necessarily arise between the Government of this country and the Governments of the great Overseas Dominions in regard to such taxation. I think that is an additional reason for diminishing the weight of this taxation—that it must necessarily, to some extent, hamper the free action of the Overseas Dominion Governments. If we take the case of Canada, which at present has no Income Tax—although it is going just to impose an Excess Profits Tax—is it not certain that the Canadian Government, although it may wish to impose an Income Tax, may feel a difficulty about it, knowing what the heavy effect will be on the United Kingdom investor? For most money in Canada comes from the United Kingdom! Is it not almost inevitable when the Canadian Government realises the heavy burden of the imposition that they will feel the freedom of their action restricted? I think that is a question which the Chancellor of the Exchequer ought to keep constantly before himself. One can see that there must be very great difficulties between the Governments which can only be settled by the Imperial Conference, and no doubt that question is one of the questions which will be brought up before the Imperial Conference. The Chancellor of the Exchequer has several times said that the whole of this question of double Income Tax is one which can only properly be settled by a Royal Commission, which he himself—or his successor—means to set up when the War is over. But the question is so urgent a one that it cannot be safely deferred to the Greek Kalends! We do not know when the War is going to stop. Besides, we all know that a Royal Commission takes a very long time to come to any conclusion. We also know that after the

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    Commissioners have come to a conclusion—as in many very important cases most definite conclusions have been arrived at—no action whatever has ever been taken on their Report. We can scarcely be satisfied that the question will be dealt with by a Royal Commission after the War.
    I have said the case of India presented some special features. They present them in this way—that the great majority of the European inhabitants of India stay there only a limited time. They come away then, but they very, very often leave their money there. If they went on living there they would escape the double Income Tax. But as they must come home for the sake of their children's education and must eventually live here—India not being a place where a European wishes to stay all his time—the result will be that when they come home they will also bring home their money, instead of as at the present time largely leaving it in India. In the second place, India has the special feature that it is entirely under the control of the Home Government, and so it cannot take such measures to protect itself as it might seem desirable. It has not got the freedom of action of the self-governing Colonies. That being so, it is especially our duty to see that justice is done to India in regard to these matters of taxation. We in this House are the trustees for India. We ought not to permit any legislation which unduly weighs upon Indian interests. With regard to the Imperial question, I do not know that I need say very much, because the facts are clear. Investment must be diminished largely by the continuance of this taxation: that is an aspect which cannot fail to be obvious. There is the cessation of the investment of capital, the diminution of investments of capital, the diminution of the flow of population. There is one other aspect, and that is that it tends to prevent the interchange of residence between the Overseas Dominions and this country. There has been an increasing tendency of late years for Australians and Canadians to come to England for the education of their children. If they remained more than six months they become liable to this double taxation. The result of that is that already many of them have arranged to leave this country in order that they may not be subject to the taxation. The tendency is also to drive even the ordinary resident out of this country in order, to avoid the taxation. The Chancellor of the
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    Exchequer last night said that he realised what a very disastrous effect high taxes had not only on the life, but on the development of the country which had to impose them. Therefore, I confidently appeal to him to give further consideration to this question, and if he will, by the Report stage, endeavour to give us still further concessions, I am sure all those who have this matter at heart will be greatly indebted to him.
    This question has been warmly taken up by great numbers of public bodies throughout the country, and particularly in the Overseas Dominions. The London Chamber of Commerce, the Associated Chambers of Commerce, special associations formed to promote the abolition of excessive Income Tax, and many chambers of commerce throughout the country, and in the Overseas Dominions, have warmly espoused this. A deputation was received this morning by Mr. Hughes, the Premier of the Commonwealth of Australia, and he gave his warm approbation to the proposals which the deputation laid before him, and which are embodied in the Amendment I am now moving. He said he would draft a special memorandum to the Chancellor of the Exchequer about it. I do not know whether the Chancellor of the Exchequer has yet received that memorandum, but I hope he will give it the consideratoin it deserves as coming from a man of such great power and ability as the Premier of the Commonwealth of Australia.
    Mr. MONTAGU: If this Clause had not been put in, the Income Tax on Colonial incomes this year would be increased along with all other incomes. The Government is suggesting to the Committee that they should not increase the Income Tax in this case, yet the hon. Member makes the same speech that he would have made if we had never made a concession at all. I most respectfully suggest to the hon. Member that he has taken advantage of the peaceful condition in which we find ourselves in this House owing to the War, to air a very, very old grievance. Here we are at war, but the only arguments he used were peace arguments. He talked about inducements to invest in Colonial securities. We do not want our people now to invest in Colonial securities. He talked about the flow of the population of this country to the Colonies. We do not want emigration to our Colonies at this moment. He talked

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    about the disappearance of companies from this country, the investment of money in foreign countries, and a hundred and one other arguments, all very convincing if we were not at war, but absolutely irrelevant to the position in which we find ourselves. What is the position with regard to this double Income Tax? It is this, that year after year it has been aired in this House, certainly "ever since I was a Member of it, and year after year it has been postponed for settlement. It is not always to be regarded as something done for the benefit of our gallant fellow citizens who live in Australia. It is not to be regarded, as my hon. Friend suggested it should be regarded, as a boon to the helpless 300,000,000 citizens of India. It is not to be forgotten that it is also a boon, and in many cases a much larger boon, to the wealthy Australian merchant, in the City of London. This Clause we have introduced into this Bill in recognition of the fact that there would have been, if peace had obtained, an Imperial Conference before now, and that one of the subjects on the agenda would have been the subject of the double Income Tax. It is a very difficult question and a very difficult principle which is there involved. It is not necessarily right to say, as the hon. Member airily suggests, that our Income Tax is wrong in principle, and that the Colonial Income Tax is right in principle.
    Mr. BRYCE: I did not say so.
    Mr. MONTAGU: It is a matter of discussion and adjustment. It is a matter of detail and complicated examination. It is a matter of how you are to apportion the loss of revenue between the Dominions concerned and this country, and, therefore, it is obviously necessary that it should be submitted to an Imperial Conference and to that Committee on Income Tax to which the hon. Member refers. Therefore, admitting that the grievance exists, and the question of (principle and the application of principle being in dispute, what is obviously the right course for this House to take? Why, obviously, I would suggest, you should take the course of leaving the grievance where it was, and taking care that no enactment made by this House this year, or next year, pending the settlement of this question, should make the alleged grievance worse than it was before the Bill was introduced. That is what we have done. The grievance my hon. Friend is
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    attacking is not instituted by this Bill. The grievance is no worse to-day than it was when the Budget went through last year. We have sacrificed something over a million of revenue in order to make sure that the grievance would be found by the postponed Imperial Conference where it was before this Bill was introduced. Now the hon. Member comes forward and says, "That is not satisfactory to me; you must take this opportunity of remedying the situation, and go much further." He would ask us to lose a certain revenue, as we have calculated, of £2,500,000, and a prospective revenue of £18,500,000. Why do I give that large figure? Because, if you exempt these subjects from taxation altogether, because they are being taxed in the Colonies, there is nothing to prevent anybody at once putting upon these people an Income Tax equal to the British tax. It would not make any difference to the subject concerned under the hon. Member's scheme, but we should lose every penny of Income Tax in this country on Colonial Investments—a sum of £18,500,000 altogether.
    I tell the House, frankly, I am not prepared at this juncture, pending the sitting of an Imperial Conference, to recommend to the Committee the loss of a vast revenue of that kind. I will go further and point out, that when you do adjust this question you will have to consider not only the rate of tax, not only the double tax, but also methods of assessment. My hon. Friend must be aware that the methods of assessment in the Dominions and here differ very much indeed. Let me take one example. It is perfectly easy to imagine an income assessed in a given year on £200 here (on our three years' average) and on £2,000 in one of the Dominions on the basis of the preceding year. We could have examples worked out in which that might very, easily occur. Under my suggestion in this Budget, in the two years such an income would get relief amounting to £165. I am assuming here that the Dominion Income Tax is 2s. 6d. in the £, and the British Income Tax 5s., reduced to 3s. 6d. Under his scheme, in the two years that income would only get a relief of £75. My scheme works equitably year after year; his scheme is not always so generous. I do not say that by "way of criticism, and I do not base any other arguments upon it than this: It is not the simple matter it seems. A large number of complicated questions have got to be: examined, and they can only be

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    examined by the Imperial Government at home in relation to the Dominions. It seems to me we are justified in willingly sacrificing over a million revenue in order to ensure that the evil, if evil there be, is not exaggerated pending that examination. I most respectfully suggest to the (Committee that the hon. Member has not devised a reasonable means of solving the question, that it would be very expensive to adopt his suggestion, and that we have shown ourselves ready to sacrifice revenue by the very means of this Clause, which must not be accepted as a sacrifice of principle or the establishment of a new principle. It is only at best a temporary expedient until the restoration of peace. The deliberations I have suggested must at the earliest opportunity occur, and until they do occur I think we had better leave the matter where it stands. I would venture to point out that by the concession we make we are doing something which is not done by the Dominions which have the same Income Tax principle as ourselves. I mean New Zealand, British Columbia, and other Dominions. I submit with confidence that we have handled this matter in the best way possible. I submit that the hon. Member has been a little ungrateful, and I hope the Committee will not accept a proposal which is full of anomalies, and might cost as much as £18,500,000.
    Sir G. REID: I have often listened to the statements made by the right hon. Gentleman, and I have always admired the clearness and force with which he has put the view of the Treasury. I regret that on this occasion I cannot quite accord to him the praise which mentally I have given to all his previous utterances. I would like to point out that this is not what has been represented by the right hon. Gentleman, but the urgency of this matter arises almost entirely out of the War. I know it has been a long standing injustice, but I do not now wish to refer to pre-war conditions. I am now speaking more for the Dominion with which I am more intimately acquainted, and I say that the urgency of this matter arises out of the War and out of the fact that the Australian Dominion has sent a large force to take part in this great struggle at its own expense. In consequence of the expense of maintaining that force the Federal Government of Australia, which had no Income Tax before the War, has imposed taxation now amounting to 5s. in the £. Consequently Australians are paying their war taxation twice over,
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    because they pay 5s. in the £ in Australia for this Imperial War and then if they indulge in the old sentiment of coming here they are called upon to pay another 3s. 6d. in the £ for the same War. I should like to know how the men of England would look if, after they had paid 5s. in the £ in Income Tax in this country, they were called upon to pay another 3s. 6d. in the £ when they went to the Colonies in respect of the same War! We really must remember this, because the present Chancellor of the Exchequer and his predecessor have always treated the representations and suggestions which we High Commissioners made during the course of the last six years with the greatest kindness and consideration.
    I feel that the urgency of this matter is so great that I shall support the hon. Member for Inverness. I quite see the difficulties which might arise under this suggested Clause, but what I would suggest to my right hon. Friend is that this matter really shows a pressing aspect of the War, owing to the fact that although Australians are paying this heavy contribution cheerfully once they will not pay it cheerfully again, and the question of £2,000,000 or £3,000,000 in connection with this matter is not a very large question, because if there is one money interest or Treasury interest that ought to be remembered it is this fact that geographically the Imperial centre is not the centre of this vast Empire. We do not want to shift the grand centre which exists here. We have always come to it thousands of miles, and might I suggest, apart from these people who have investments and dividends; the aspect of the case which has struck me most forcibly of all: There are people who have come here not to make money but to spend it, and they are charged on the money they bring here to spend just the same as if it was money they had earned here. That has always seemed to me to be somewhat of an intolerable injustice, but I fear that we cannot raise those matters at a time like this. I think this is the first time I have shown any spirit of obstruction, and I do feel a spirit of obstruction in this matter, because I think it is the most vital interest of the British Isles not to discourage the movement of population and money from the outlying Dominions of the Empire. As years go on this country will have more and more to depend on the gigantic development of the great Dominions and the

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    outlying parts of the Empire. This, perhaps, touches Australians upon a tender point, because they have the Imperial sentiment in its keenest form. They have a feeling that their children should come here and breathe the same atmosphere and be educated here and spend their money in the Old Country.
    Lord Rosebery once made use of a noble expression to a great conference of Imperial journalists from every part of the Empire, and he electrified that vast influential assemblage by using two simple words—"Welcome home!" I think the Board of Inland Revenue Commissioners is going to use that phrase "Welcome home!" with more sincerity than even that great Imperial statesman used it. I am so conscious of the difficulties of the Treasury, so sensible of the splendid way in which they have risen to the vicissitudes of this great crisis, that I am rather disappointed that the right hon. Gentleman should speak as he has done, and I do hope that there will be some opportunity in some way or other—I do not pin my faith to the Amendment altogether, because I see the difficulties of carrying it out; if the Treasury will only devote its great judgment and ability and experience to this matter, I think it will find a means of making the situation a little less hard for loyal Colonists who come here, and if they will only do that I think it will be a good tiling and in the lasting interests of this country.
    Mr. STEWART: I should like to associate myself with the remarks which have been made by the hon. Member for Inverness and my right hon. Friend below me. I quite sympathise with the anxieties of the Chancellor of the Exchequer in this matter, but his action will be watched very closely by the Dominions, and I wish he could have given them a little more sympathy. It seems to me that the hon. Member for Inverness wants to lay down two principles, one that money invested in the British Empire should get as good treatment as money invested outside, and the other that British subscribers to the War should be asked to pay their taxes once and not twice. I do not minimise the difficulty at all, and I do not pin my faith to the actual wording of this Amendment, although I pin myself down to the principle of it. The Financial Secretary reproached us with bringing up this matter as an old grievance. The right hon. Gentleman has been in Parliament longer than I have, and all I can say is that my experience has
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    been that if you do not repeatedly bring up a grievance you will never get it lessened, or removed at all. The great difficulty about this matter is the height of the Income Tax in both places. I speak chiefly of Australia, because the Income Tax there is about the same as it is here. In old days people paid their Income Tax when it was a few pence in the pound, without saying anything about it; but now that is impossible, because people cannot stand double taxation like this.
    Our difficulties have been very much added to by the all round the world taxation passed on the 8th of July, 1914, under the guillotine, when we passed a law that the British tax collector should gather in taxes in every quarter of the globe, no matter whether the money was brought back to this country or not. I think if you had a relaxation of that particular taxation, and if you allowed money which is invested in the British Empire, if not brought to this country, to remain there paying the local taxation and escaping additional taxation, it would be a good thing. Supposing a man has £2,000 a year. I am not dealing with large figures and I know of people who look upon £2,000 or £3,000 a year as enough for them. Supposing that a man with £2,000 a year income has half of it invested in Australia and half of it at home upon which he lived. In the old days his money would be allowed to fructify in Australia and he would live on his home money, and so continue holding investments under our own flag. I do not think that to brush this matter on one side, and say it is impossible to meet us in any way, is at all a sound thing to do. At the present moment no man in the world would think of investing money in Australia, because, if a man had £5,000 or £10,000 to invest, he would not put it anywhere where it was liable to such taxation as is now being imposed. Any man in the City will tell you that a rich man to-day in Australia may have to pay 5s. or 6s. in the £ here, 5s. in the £ in Australia, and 3s. 6d. in the £ Super-tax, or about 14s. 6d. in all, which is most unjust and calls immediately for a remedy. I agree with my right hon. Friend that it is highly essential for our future welfare that we should gather round ourselves as closely as we can the men who have come forward so magnificently in this War to help us, and for a matter of £2,500,000 of temporary advantage which the Treasury may get out of this double tax I do not

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    think anything could compensate us for the disappointment—bad blood and ill-will which this taxation will cause in those great Dependencies, which are now forced to put on heavy taxation themselves.
    May I point out that you have already issued bonds in America free of Income Tax; and if you do that in the case of a friendly neutral, why should you charge investors in your own Colonies 10s. Income Tax? That does not seem to me to be at all fair or reasonable. The Chancellor of the Exchequer is so determined that nobody shall invest money even in our old Colonies in America that he charges 40 per cent. extra Income Tax if anyone chooses to do so. But in Australia, if you want to invest, you have to accept an extra income Tax of 100 per cent. I know you do not like taxation in another country interfering with your own taxation, but you accept that principle in the very Clause you have inserted in this Bill, and also in regard to the Probate Duty. If a man in India dies worth £50,000, and half of it is invested in India and half in this country, the Probate Duty which is paid in India is credited in this country, and you do not ask that man's children to pay double duty on the same money. It is not wise that you should wait till a man is dead before you treat him fairly, but you should encourage him to invest his money in our Empire and allow him some advantage for doing so. It is extremely hard, as the right hon. Gentleman the Member for St. George's, Hanover Square (Sir G. Reid), said, if an Australian father comes home because his son is fighting for us in Flanders, that he should have to surrender half his income in order to be near his own son. I do not think that that is a thing upon which we could possibly look with any approval at all.
    The hon. Member's remarks about public companies are quite true. They are afraid of your Income Tax and of your exactions, and they do not know what your next move will be. I know two companies which have removed their offices from this part of the world and have gone to China, with which country most of their business is connected. The chief objection to this double Income Tax is the possibility of it stirring up a feeling that our Dominions are not fairly treated, and that is about the last feeling of which we ought to run any risk. Our wide Empire varies In climate, in local conditions, and in every particular, and each of the Dominions
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    throws up a special type of its own. This country is a common meeting ground, and we should not raise up barriers to keeping up a free interchange of sentiment and knowledge between the growing generations of our Colonies and ourselves. We are being welded together by blood and iron and German aggression into one solid unity, which we hope will not only be a war unity, but which, when peace comes, will be an economic and real unity of very far-reaching effect. With regard to the wealthy Australian merchant whom my right hon. Friend said was the only one to suffer, our Colonies and Dominions, when this War is over—please God it will not last for ever; I hope it will not last very much longer—are going to offer to our seamen and soldiers the hand of welcome, and if you are going to put up such barriers of taxation those men once they leave this country will never be able to come back again. When you have such taxation men have to consider where they will live, and many Australians and others will pack up and go home when perhaps they would rather spend a little more of their lives here. When you make those who pioneer for us in every sort of trade and occupation face taxation up to 10s. or 12s. in the £ you absolutely put a stop to a man coming back to spend the autumn of his days in this country, though he might wish to do so. These are some of the reasons why I think this system of double taxation requires very careful supervision. It has in it the elements of injustice and of danger, and I shall certainly support my hon. Friend if he goes to a Division.
    Sir F. BANBURY: This is an extremely difficult question, and, though I sympathise with the hon. Gentleman opposite, still I cannot help thinking that to a certain extent the Government are in the right. The position has been very greatly aggravated by the passing of the Act of 1914, which provided that income which was never received in this country but which was made abroad should be liable to taxation here in England. If my hon. Friend below the Gangway had proposed that Act should be repealed, I should have had much pleasure in voting with him.
    Mr. BRYGE: I shall do so later on.
    Sir F. BANBURY: Then I shall have much pleasure in supporting the hon. Member. The present Amendment goes a little too far. It has been said it is very hard upon a man who has made his fortune in Australia that because he comes over

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    to England to spend it he should be subjected both to Income Tax in Australia and in England, but, after all, one has got to remember that Income Tax is imposed partly because a person living here in England enjoys the privileges of England, and if you are going to say because a person has lived in a particular part of the Empire that he is only to be subject to Income Tax in that particular part of the Empire in which he makes his money and he may come over and live here and enjoy all the advantages of living here without paying anything, then I must say that I agree with the Government and not with my hon. Friend below the Gangway. It must not be forgotten that people do not send their money over to Australia for philanthropic purposes, but because it suits them to do so. Is that any reason why a man living here and investing his money in Australia should not be liable to an Income Tax here to which everybody else is liable?
    Colonel GRIFFITHS: It is double.
    Sir F. BANBURY: I beg the hon. Member's pardon. If he did not invest his money in Australia he would not be liable to any double Income Tax at all. When he invests his money there he knows perfectly well that he will have to pay Income Tax both here and in Australia.
    Sir J. D. REES: It has grown up to this height since he invested his money.
    Sir F. BANBURY: He can remove it from Australia.
    Mr. BRYCE: That is just what we do not want.
    Sir F. BANBURY: What is required is that there should be a preference given in this country to money which is invested in Australia.
    Mr. BRYCE: In the Empire.
    Sir F. BANBURY: This is going the wrong way about it. If the Australian Government require English money, the Australian Government should encourage it. It is going to benefit the Australian country; it is not going to benefit us. It is to our advantage that it should remain in this country and be invested in enterprises in this country. The encouragement to its going out should be given by those people who benefit by its going out, and those people are the Australian Government, and not this Government. Under these circumstances, while
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    I quite agree that there is very great hardship in the Act of 1914—I cannot conceive that the right hon. Gentleman the Financial Secretary on consideration will really say that it is right that a man whose money is made and remains in Australia should be subjected to a tax here on something which he never received here—and while I shall have much, pleasure in supporting any Amendment to repeal that Act, which was passed in a very great hurry, I cannot agree that we should encourage English capital to leave this country by giving it a preference which the people who are going, to benefit by receiving it refuse to give it.
    Colonel GRIFFITHS: I must candidly say that I was disappointed by the remarks of the right hon. Gentleman the Member for the City of London (Sir F. Banbury) when he said that it was more or less of no consequence whether money went to Australia or to some other part of the world.
    Sir F. BANBURY: I said that it was more important that capital should remain, in this country than go to Australia. I said nothing about it going elsewhere.
    Colonel GRIFFITHS: I am sorry if I misunderstood the right hon. Gentleman. You cannot keep your money entirely in this country, and our main object, and the object, I submit, of the Paris Conference just finished, is to take measures by which we can encourage the investment of money within the countries of the Allies, and, so far as this present discussion is concerned, within this Empire. I submit that it is a very small matter whether you are going to lose a possible income of £18,500,000 compared with what you might achieve if you relieved the intense feeling which does exist on this question. This is the psychological moment to make some practical recognition of the way in which the Dominions have come forward both in treasure and men to join the Mother Country in this great War. Unless you deal with this question in some way you will arouse very great and intense feeling; but if you give way on this point and accept the Amendment moved by the hon. Member for Inverness (Mr. Bryce) you will take a great step in the direction of encouraging money to remain and circulate within the Empire, and you will get far greater benefit and return than is represented by the possible revenue of £18,000,000 at the most. Money would remain within the Empire, and you

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    would increase and encourage Imperial trade. Instead of money going into American or foreign securities, you would keep that money within the Empire and you would materially influence its coming back here as it constantly does in materials, goods, and what not that we require. It is of great importance that the Government should give way and in some manner meet the suggestion embodied in this Amendment. I hope if the Treasury do not see their way to accept the Amendment it will be carried to a Division, and I, personally, shall support my hon. Friend.
    Sir J. D. REES: In spite of what my right hon. Friend opposite has said, we Indians and Colonials who are interested in this subject are not ungrateful for Clause 28. In point of fact, it is a very fair and reasonable Clause, though it leaves the matter where it was. That is what we do not quite want. Profits made in British India are taxed at 1s. 3d. Do I understand that sum is deducted from the English Income Tax in respect of the profits of a company registered in this country? If there is any doubt about it, it will be desirable to have it quite plainly stated.
    Mr. BRYCE: That is all right.
    Sir J. D. REES: I believe that is a correct statement of the case?
    Mr. BRYCE: Yes.
    Sir J. D. REES: I should like to have that clearly from my right hon. Friend. I am sorry that he made the remark he did about relief to wealthy Australian merchants.
    Mr. MONTAGU: I did not say anything of the kind. What I said was "wealthy merchants in the City of London."
    7.0 p.m.
    Sir J. D. REES: Yes, but deriving their income from Australia. They are the people who are hardest hit; they are hit harder than we Indians, and when a man pays a sum of 13s. in the £ Income Tax I think he ought to be very tenderly treated on the Treasury Bench. Here you have the case of a man paying high taxes in Australia called upon to pay Income Tax in England and Super-tax as well. He is made to pay 13s. in the £. I call that confiscation and not taxation. And then he is spoken of as a wealthy Australian who is able to pay anything he is asked.
    Mr. MONTAGU: If the hon. Gentleman will quote me I would ask him to do so accurately. I never referred to wealthy Australians at all.
    Sir J. D. REES: I took down the words. I did think, sitting in this place, I could hear what my right hon. Friend said, because one of his many merits is that he speaks up like a man. If he says he did not use these words, I, of course, withdraw the expression, but I am in the memory of the House. He gave us some figures prepared for him by someone in a public office no doubt capable of preparing figures. I do not pretend to think that it is a small sum that is involved, or that it can be lightly foregone in taxation under present circumstances. But, nevertheless, he must not be astonished if what he is supposed to have treated rather light-heartedly as an ancient grievance is brought up again and again. I do not think his criticism on the speeches was really quite fair. You have people coming here with quite small incomes who suffer under this grievance. Take the case of Indian officials, and remember how they are affected by this double Income Tax. Take the case of people who come home and leave their money invested in India. My right hon. Friend the Member for the City of London (Sir F. Banbury), with whom I nearly always agree, said that if they did not like to invest their money in Australia and India let them bring it home. But how is a man who owns a silver mine in Australia to bring it home in his waistcoat pocket? How is a man who owns a tea estate in Bengal, or in Madras, to bring it home? Is property so mobile and so easily transferable that a man can pluck it up by the roots, roots which have been growing during the whole of his lifetime, and suddenly bring it home here in the lights hearted manner in which the right hon. Baronet suggests? This is really a serious matter.
    When you speak of a man investing his money in Australia, you are dealing with the position upside down. The fact is the man began his investment before the taxes reached these penal and prohibitive rates. That is the position with which we have to deal. It is not the case of a man who, having money to spend as he thinks right, invests it in tea estates in India or in mines in Australia. These things have grown with him. He has grown old with the investment, and now he finds that 13s. out of every 20s. of the profits is

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    taken away from him by this tax. That is a man whose case requires most sympathetic attention, and I am sorry the right hon. Gentleman the Member for the City of London did not meet it in that spirit. I know that companies already registered in London have left the country on account of this double Income Tax. When I asked a question on this subject the other day I was told that their leaving the country was not due to the tax. But I feel sure it was, and it is the case that on account of the double Income Tax the Bombay Electric Supply Company removed its offices from London. I am afraid this is only the first of a long string of such removals, unless something is done to remedy this ancient but still acute grievance.
    I consider it an unpardonable thing in war time to make long speeches. I do not remember, since the War commenced, having made one speech which lasted more than ten minutes. If it can be shown I have done so I will undertake not to make another speech in this House for another ten days. I want to remind the Committee that this is an extremely serious matter, so serious, indeed, that my hon. Friend was perfectly justified in bringing it up. All of us who are thoroughly at home in this subject, and who know where the shoe pinches, agree with him. We think that even in war time the House can properly spare a short time for the consideration of the question. I do not allow the right hon. Gentleman could go no further than he has done today. He has left things where they are. We want a great deal more, and if he is not going to do anything more to-day, the very least he can do is to devote the remainder of his days, which I hope may be long, to putting the Income Tax Committee which is going to deal with this matter in a proper frame of mind, to see that this double Income Tax grievance is so mitigated as to leave no further justification for the frequent, but not too loud, complaints that are heard about it.
    Mr. MONTAGU: Let me say at once the Government are not anxious to persist with this Clause, and if hon. Members are convinced that it is of no use, I shall be delighted to recommend the Committee to drop it, and so get an extra revenue of something over £1,000,000 sterling. I confess I thought it would be regarded as a very satisfactory solution of the difficulty in the state of suspense in
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    which we now find ourselves. If the Indian Income Tax is 1s. 3d. it has the effect of abolishing the double Income Tax, so far as India is concerned. The last thing I had in my mind was to suggest any aspersion upon the Australians who see a difficulty in regard to this double Income Tax system; and anxious as the British Government are to find an adjustment which will cure the difficulty without putting the whole burden of the loss of revenue on the Imperial taxpayer at home, what makes me sick is, when an Australian father sending his family here for education, or coming home to live after a life spent in Australia, or even, it may be, coming home in order that he may visit his son in Flanders, is made the instrument to get a boon which is intended for the British shareholder in the City of London.
    Mr. RUTHERFORD: I am inclined to agree very largely with the attitude which the Government have taken up on this question. There is no doubt at all that any appeal which is made to British audiences from the Colonial point of view is sympathetically listened to when it is put in the way we have heard it put to-day, that because the Colonials have behaved so splendidly, because they have organised large armies, and subscribed big sums of money, therefore some especial exception is to be made in their favour from a purely British fiscal point of view. Such a proposition, I venture to say, will not hold water. One cannot help agreeing with the right hon. Gentleman who represents the Government in the few words which he addressed to us with considerable feeling a few moments ago, when he pointed out that it was a dangerous thing to try and exploit the great gratitude which we owe to our Colonial kinsmen, and to use it for the purpose of giving them special financial or fiscal privileges. The figures which have been given in the course of the Debate show that this is really a serious and important matter. What lies at the root of the question is that we are now taxing for British purposes a large amount of income which does not come to England at all, which does not belong altogether to English people, and which ought not therefore to—and in fact did not prior to 1914—pay British Income Tax. The whole root and gravamen of the difficulty arises from the fact that we are now charging such high rates of Income Tax upon money which does not come to this country, and which has been invested in enterprises undertaken by English people

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    abroad. Whether these undertakings are in the Colonies or in foreign countries they have to pay the taxes to which they are subjected by the Dominions or foreign countries where the British enterprise is carried on. The money should not be treated as income for the purpose of putting the British Income Tax on it unless it arrives here in the shape of profit. That was the rule formerly. It was a reasonable one, and I think a great deal of the complaints which we have heard, and which no doubt are justified, have arisen owing to the applications of the Act of 1914.
    I do not see any difficulty in the matter of principle between a silver mine, such as my hon. Friend for East Nottingham (Sir J. D. Rees) has referred to in India, or a similar mine in South Africa or in any foreign country. Take the three cases. The money is British, and is provided from London. The company is housed in London, and wherever that concern carries on its operations it is liable to pay the local taxes, whatever they are. In some cases it may be a Property Tax. In other cases it may be Government royalties on output, but still that concern has to pay that taxation on the spot where its operations are carried on. We say that if a company is registered in London it shall pay the full tax upon the whole of its profits, although they are made abroad, and although they do not come to England at all. I think that is unreasonable, and the right hon. Gentleman the Member for the City of London has pointed it out. If there is an Amendment calculated to deal with that aspect of the question, if it can be met in some reasonable way by the Government, I think it would do a great deal to dispose of the complaints made in the course of this Debate, and would certainly bring about a state of affairs far more equitable in the imposition of this Income Tax.
    Sir J. HARMOOD-BANNER: I only want to add a few words rather in the nature of an appeal to the Chancellor of the Exchequer to consider this matter with a sympathetic mind. I must confess I quite agreed with the speech of the Financial Secretary in the first instance, when he pointed out the great difficulties in the way at the present time of dealing with this Amendment. The fact that it was an old matter which had been discussed on many previous occasions, the fact that the grievance is becoming larger and larger, and the fact that the Income Tax has risen
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    to such a high figure, probably make the grievance more serious, and there is no wonder the Amendment has been moved. I therefore ask the right hon. Gentleman to favourably consider it. When the Financial Secretary spoke of the difficulty of dealing with these matters at the present time, and told us it would be necessary to have a Colonial Conference to consider it, and when one recognises that the right hon. Gentleman has already reduced the 5s. to 3s. 6d., and tints to some extent met the justice of the claim, I rather gathered he was quite sympathetic with the Amendment, and considered it was an absolutely proper matter to be dealt with according to the justice of the case. The justice of the case is absolutely convincing. We send money out to the Colonies, and with it they buy large quantities of manufactures from us. They add immensely to the trade of this country. In some cases the whole of the trade is done in Australia or these other places. For instance, tramways are carried on. The only thing the company has to do is to remit money monthly home to be divided by the directors here among their shareholders. Australia now, because of the War, has had to put on high taxation, and those who send their money out pay that high taxation there. Simply for the receipt and distribution of the money in this country the recipient has to pay another 5s. in the £, making nearly 10s. altogether out of the money which has been earned there and with which this country has had nothing to do beyond its mere distribution.
    That has been going on up to the present. There are many cases in which to my knowledge companies have closed their offices—for instance, sugar estates in Natal—simply because they prefer to carry on their business in Natal and pay Income Tax there rather than pay it again here in this country. In many cases the residents were in Natal and did not get the benefit of the residential occupation referred to by the right hon. Gentleman as being so beneficial to them. That a man in Natal should have his whole trade in Natal and yet be subject to the English Income Tax seems a very great hardship. In his first speech—I will not say in his second, when he rather made a violent attack upon the Treasury dispatch box—the Financial Secretary to the Treasury spoke quite sympathetically. I would ask him to consider

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    this case in that light. It is an old injustice from which Colonials, Indians and people in this country suffer. I would ask him to give us an undertaking that as soon as possible after the War is ended this subject will be taken up at a Colonial Conference in order that all may bear their proper share and none shall have to bear the very extreme charge which is now inflicted on anyone who resides in Australia or in this country. We must keep up the Imperial spirit now existing between us and we cannot do so if we inflict a damage on trade and on individual expenditure. We can only do it by sharing our burdens and by laying upon a man who in both countries is doing his best for the State in general a just and proper charge about which he will not have to complain.
    Mr. PETO: The main argument brought by the Financial Secretary to the Treasury against my hon. Friend the Member for Inverness (Mr. Bryce) was that this was an old grievance and that it had been aired year after year and postponed. The right hon. Gentleman the Member for St. George's, Hanover Square (Sir G. Reid), speaking with authority for Australia, pointed out that this is a difficulty and a grievance which has arisen in consequence of the special War taxation that Australia in particular has had to put on in order to defray the expenses of the great assistance she has rendered to this country. No answer has been made to that. All the arguments of the Financial Secretary about this being an old grievance and its being left where it is have absolutely fallen to the ground. We are in a most extraordinary position if we pass this Clause without the Amendment of the hon. Member for Inverness. In effect, the Financial Secretary claims merit for the Clause in the Bill because it makes matters no worse than when the Budget went through last year. Which Budget? I suppose he means the Second Finance Bill, in which the new Income Tax went through at the rate of 3s. 6d., which is the rate mentioned in this Clause. We are in no more logical position if we say we will not charge this double Income Tax in this country at higher than 3s. 6d. than we were when we fixed upon the figure of 3s. 6d. Why is the conscience of the Chancellor of the Exchequer only just aroused to admit there is some injustice when it becomes an injustice of 5s.?
    I would call attention to that part of the speech of the Financial Secretary in which
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    he said my hon. Friend's speech was only applicable to peace times, and that he had pointed out that double Income Tax offered no inducement to investment in the Colonies and checked the flow of emigration. Dealing with it as a fundamental fact that if you have such a state of unjust taxation that you check the flow of population and capital to our Dominions, on what do you propose they should raise their very necessary revenue in order to assist us in the fight with the enemy? It is perfectly clear to my mind that you cannot possibly expect people to pay cheerfully. My right hon. Friend the Member for St. George's, Hanover Square, said the people in Australia were prepared to pay, but he would not admit that they were ready to pay cheerfully twice. On that argument the Financial Secretary to the Treasury said something which everybody will admit they did not think we should have lived to have heard. We find him saying that it was not the purpose of my hon. Friend's proposal to benefit the poor people, the 300,000,000 of India, but the gravamen of his charge against my hon. Friend was that the person he had in his mind was the wealthy Australian merchant in the City of London.
    When we find a Financial Secretary to the Treasury putting it to the Committee that it is a crime to protect the interests of capital which is in the hands of wealthy Australian merchants in the City of London, and that we should do nothing to prevent robbery by the Treasury, the time is approaching when these wealthy businesses will remove from the City of London to the City of Adelaide or Perth, or any of the other great cities of Australia, and truly we have come to a time when, if that spirit is to prevail at the Treasury, it will be difficult for them to raise by means equitable or inequitable the revenue to carry on the country. I hope my hon. Friend will go to a Division upon this Amendment, because I regard this as a matter of principle. This is an injustice. War taxation has been imposed for the purpose of fighting the common battles of the whole Empire. The Australians pay the Australian share of it. Because these arguments have not been met in the slightest degree I shall vote, as a matter of principle, against the system being continued—I admit it is an old system—now that it has become simply monstrous and a great injustice. I hope, therefore, that my hon. Friend will go to a Division, and that he

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    will have, as I know he will have, the support of the right hon. Gentleman the Member for St. George's, Hanover Square, and, I hope, from a large section of the committee, who regard with horror this attitude of the Treasury towards capital and particularly towards capital which is invested in all parts of the Dominions of the Empire.
    Mr. BRYCE: I had not thought it would be necessary to go to a Division upon this Amendment, because I hoped the Treasury would have met the suggestions made in a more reasonable spirit. But, especially after the extraordinary outburst of the Financial Secretary to the Treasury in his second speech, when he said that this was an attempt to boom the Imperial feeling of the Empire for the sake of saving the pockets of some wealthy people in London, it is absolutely impossible to pass over such a statement as that without a protest and without going to a Division. If the Financial Secretary to the Treasury had reflected, I am certain he would not have given vent to that outburst, because it will produce a most unfortunate effect all over the Empire. Nothing was further from my intentions, my position in these matters is perfectly well known. I have never been what is known as an Imperialist in the Jingo sense. I have never had, and have not now, any desire to exploit any such jingoistic feeling, and I am certain that none of the hon. Gentlemen who have spoken in favour of the Amendment had any such feeling whatever in their minds. The protest against this double Income Tax is a protest made, not with a view of making any boom in Imperial feeling, but with a view to remedying the crying injustice that a man should have to pay twice over for the same investment. It is a crying injustice that he should have to pay a War Tax in Australia, a tax imposed since the War in Australia, for the purpose of meeting the expenditure arising during the War, and that he should, at the same time, have to pay a similar tax here for the same purpose. No Chancellor of the Exchequer can justify an injustice of that kind. It is perfectly right that he should ask everybody to pay according to their means, but he has no right to make anybody pay twice over. I am therefore reluctantly compelled to go to a Division.
    Mr. McKENNA: I hope my hon. Friend will reconsider the decision to which he has come. I did not have the pleasure of
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    hearing my right hon. Friend, but I am sure that the general tone of his speeches in this House is not of the kind attributed to him. Not having heard him, I cannot enter into the question of what he said. Suppose for a moment that we accept the whole of the argument put forward by my hon. Friend the Member for Inverness (Mr. Bryce). I do not say we do accept them, but supposing that for the present we do, and say that everything he says is true, let us consider the remedy. At the present moment any person in this country who has property in Australia from which he draws a profit which he brings into this country pays Income Tax here, and he pays Income Tax in Australia. That is quite true. Any Australian who has property in this country from which he draws a profit pays Income Tax in this country and pays Income Tax in Australia.
    Mr. BRYCE: No, he does not pay Income Tax in Australia on money earned in this country. He pays Income Tax in Australia only upon money earned in Australia.
    Mr. RUTHERFORD: The Australian rule and practice is just. They only levy their Income Tax upon the income which goes to Australia.
    Mr. BRYCE: If it goes to Australia.
    Mr. McKENNA: "Comes there" is the right word. If it comes to Australia it pays. That is the situation.
    Mr. RUTHERFORD: That is just. Yours is not.
    Mr. McKENNA: The hon. Member is prejudging the answer. I am assuming for the moment that his view is right in order to follow the argument. We propose in our Bill, as a beginning, that Australian money in this country remitted to Australia shall not pay our excess Income Tax and we propose that British money in Australia remitted here should also not pay the excess tax.
    Mr. PETO: The last addition?
    Mr. McKENNA: I mean the difference between 3s. 6d. and 5s. Is my meaning clear? Is there any hon. Member who does not understand what I mean?
    Mr. PETO: Why is it right that they should pay 3s. 6d. and not 2s. 6d.?
    Mr. McKENNA: I am endeavouring to state the case as it is. I am assuming the whole of the hon. Member's argument for the moment. We say that at the present

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    moment, both in the case of British money remitted from Australia here and of Australian money remitted to Australia, we lose the whole of the Income Tax in excess of 3s. 6d. That is the beginning. Hon. Members go further and say that in both cases we ought to lose the whole Income Tax up to 5s. if the Australian tax is at the same rate. That is to say, that if the Australian Government put their tax up to 5s. we should lose the whole of our Income Tax, not merely on Australian money remitted to this country, but on British money remitted to Australia, while the Australian Government would get the whole 5s. from both. Is that quite reasonable? What we say is this: We have made a beginning. We have given the Dominion Governments the benefit of the whole case, so far as the addition is concerned between 3s. 6d. and 5s., and we go further and say that this is a case which must be a matter of arrangement between the British Government and the Dominion Government, and the Treasury say to this House, do you ask us to go into that arrangement with the Dominion Government, having first of all given up everything and clearly some things which hon. Members do not think we ought to give, up, because it would mean that the Dominion Government would get Income Tax on both sets of money where we get Income. Tax on neither. This is clearly a matter of arrangement. We have said again and
    again that we are willing to enter into an arrangement with the Dominion Governments on the subject, and in the meanwhile I think we have done very fairly in leaving the situation where it stood last year, and saying that, so far as this additional tax is concerned, we will not impose anything additional, and we will lose the advantage of both sets of moneys so far as the additional tax is concerned.
    Mr. J. W. WILSON: My right hon. Friend has not quoted another case, namely, that of the Dominion of Canada, which recently passed a fresh Income Tax, and in that they have made a reciprocal arrangement with regard to avoiding double tax, and I commend that to the attention of the Chancellor of the Exchequer and of my hon. Friends who have been talking so much about Australia. They have made allowances in their new tax that they propose with regard to moneys which are coming over to the Old Country from Canada, and they are making certain exceptions with regard to Income Tax. A reciprocal arrangement like that is very different from what is advocated here this afternoon.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 128; Noes, 32.

    Division No. 27.]

    AYES.

    [7.35 p.m.

    Adamson, William

    Davies, Timothy (Lines., Louth)

    Kenyon, Barnet

    Agg-Gardner, Sir James Tynte

    Denniss, E. R. B.

    King, Joseph

    Ainsworth, John Stirling

    Dickinson, Rt. Hon. Willoughby H.

    Lambert, Richard (Wilts, Cricklade)

    Anderson, W. C.

    Dixon, C. H.

    Layland-Barrett, Sir F.

    Arnold, Sydney

    Dougherty, Rt. Hon. Sir J. B.

    Lewis, Rt. Hon. John Herbert

    Baldwin, Stanley

    Duncan, C. (Barrow-in-Furness)

    Lough, Rt. Hon. Thomas

    Balfour, Sir Robert (Lanark)

    Edwards, Sir Francis (Radnor)

    Lowe, Sir F. W. (Birm., Edgbaston)

    Banbury, Rt. Hon. Sir F. G.

    Essex, Sir Richard Walter

    M'Callum, Sir John M.

    Baring, Sir Godfrey (Barnstaple)

    Falconer, James

    Macdonald, Rt. Hon. J. M. (Falk. B'ghs)

    Barnes, Rt. Hon. George N.

    Fell, Arthur

    McKenna, Rt. Hon. Reginald

    Beach, William F. H.

    Ferens, Rt. Hon. Thomas Robinson

    Magnus, Sir Philip

    Beale, Sir William Phipson

    Finney, Samuel

    Markham, Sir Arthur Basil

    Beck, Arthur Cecil

    Fisher, Rt. Hon. W. Hayes

    Mason, David M. (Coventry)

    Bliss, Joseph

    Flannery, Sir J. Fortescue

    Mason, James F. (Windsor)

    Bowerman, Rt. Hon. C. W.

    Fletcher, John Samuel

    Millar, James Duncan

    Brace, William

    Glanville, Harold James

    Montagu, Rt. Hon. E. S.

    Bridgeman, William Clive

    Goddard, Rt. Hon. Sir Daniel Ford

    Morton, Alpheus Cleophas

    Brunner, John F. L.

    Goldstone, Frank

    Munro, Rt. Hon. Robert

    Bull, Sir William James

    Gretton, John

    Needham, Christopher T.

    Byles, Sir William Pollard

    Gulland, John William

    Newdegate, F. A.

    Cator, John

    Hancock, John George

    Nicholson, Sir Charles N. (Doncaster)

    Cautley, Henry Strother

    Hardy, Rt. Hon. Laurence

    Outhwaite, R. L.

    Cawley, Sir Frederick (Prestwich)

    Harris, Percy A. (Leicester, S.)

    Parker, James (Halifax)

    Chancellor, Henry George

    Harvey, A. G. C. (Rochdale)

    Parkes, Ebenezer

    Clynes, John R.

    Harvey, T. E. (Leeds, West)

    Pearce, Sir Robert (Staffs, Leek)

    Collins, Sir Stephen (Lambeth)

    Henderson, Rt. Hon. Arthur (Durham)

    Pease, Rt. Hon. Joseph A. (Rotherham)

    Compton-Rickett, Rt. Hon. Sir J.

    Herbert, Major-Gen. Sir Ivor (Mon. S.)

    Pollock, Ernest Murray

    Cornwall, Sir Edwin A.

    Hewart, Gordon

    Pratt, J. W.

    Craig, Ernest (Cheshire, Crewe)

    Hobhouse, Rt. Hon. Charles E. H.

    Pryce-Jones, Colonel E.

    Crooks, Rt. Hon. William

    Jacobsen, Thomas Owen

    Radford, Sir George Heynes

    Currie, George W.

    Jones, Edgar (Merthyr Tydvil)

    Raffan, Peter Wilson

    Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)

    Jones, William S. Glyn- (Stepney)

    Rea, Waiter Russell (Scarborough)

    Davies, David (Montgomery Co.)

    Joynson-Hicks, William

    Richardson, Thomas (Whitehaven)

    Roberts, Charles H. (Lincoln)

    Spear, Sir John Ward

    Wilkie, Alexander

    Roberts, George H. (Norwich)

    Strauss, Arthur (Paddington, North)

    Williams, Aneurin (Durham, N.W.)

    Roberts, S. (Sheffield, Ecclesall)

    Sykes, Sir Mark (Hull, Central)

    Williams, Llewelyn (Carmarthen)

    Robinson, Sidney

    Tickler, T. G.

    Wilson, Rt. Hon. J. W. (Worcs., N.)

    Roch, Walter F. (Pembroke)

    Toulmin, Sir George

    Wilson, W. T. (Westhoughton)

    Rowlands, James

    Wason, Rt. Hon. E. (Clackmannan)

    Wing, Thomas Edward

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

    Watt, Henry Anderson

    Sherwell, Arthur James

    Weston, J. W.

    TELLERS FOR THE AYES.—Mr.

    Shortt, Edward

    White, J. Dundas (Glasgow, Tradeston)

    Geoffrey Howard and Mr. James Hope.

    Smith, Harold (Warrington)

    Whiteley, Herbert J.

    Snowden, Philip

    Whittaker, Rt. Hon. Sir Thomas P.

    NOES.

    Banner, Sir John S. Harmood-

    Henderson, John M. (Aberdeen, W.)

    Perkins, Walter F.

    Bellairs, Commander C. W.

    Hewins, William Albert Samuel

    Peto, Basil Edward

    Benn, Arthur Shirley (Plymouth)

    Hibbert, Sir Henry F.

    Rees, Sir J. D. (Nottingham. E.)

    Bird, Alfred

    Hickman, Colonel Thomas E.

    Rutherford, Watson (L'pool, W. Derby)

    Boyton, James

    Hogge, James Myles

    Salter, Arthur Clavell

    Butcher, John George

    Hunt, Major Rowland

    Scott, A. MacCallum (Glas., Bridgeton)

    Campion, W. R.

    Ingleby, Holcombe

    Walker, Colonel William Hall

    Coats, Sir Stuart A. (Wimbledon)

    Mackinder, Halford J.

    Yate, Colonel C. E.

    Cowan, W. H.

    Macleod, John Mackintosh

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

    Nield, Herbert

    TELLERS FOR THE NOES.—Mr.

    Hamilton, C. G. C. (Ches., Altrincham)

    Norton-Griffiths, J. (Wednesbury)

    Annan Bryce and Mr. Stewart.

    Harris, Henry Percy (Paddington, S.)

    Pennefather, de Fonblanque

    Question put, and agreed to.

  EXCESS PROFITS DUTY.

    CLAUSE 29.—(Continuance and Increase of Rate of Excess Profits Ditty).
    (1) The Finance (No. 2) Act, 1915 (in this Part of this Act referred to as the principal Act), shall, so far as it relates to Excess Profits Duty, apply, until Parliament otherwise determines, to any accounting period ending on or after the first day of July, nineteen hundred and fifteen, as it applies to accounting periods ended after the fourth day of August, nineteen hundred and fourteen, and before the said first day of July.
    (2) Section thirty-eight of the principal Act shall, as respects excess profits arising in any accounting period beginning after the expiration of a year from the commencement of the first accounting period, have effect as if sixty per cent. of the excess were substituted as the rate of duty for fifty per cent. of the excess.
    Where part of an accounting period is after and part before the date of the expiration of a year from the commencement of the first accounting period, the total excess profits and any deficiencies or losses arising in the accounting period shall be apportioned between the time up to and including, and the time after, that date in proportion to the length of those times respectively, and the rate attributable to the time after and the time before and including that date shall respectively be sixty and fifty per cent. of the excess.
    In the case of trades or businesses commencing after the fourth day of August,
    428
    nineteen hundred and fourteen, the rate of duty shall be sixty per cent. of the excess in respect of any accounting period ending after the fourth day of August, nineteen hundred and fifteen.
    In calculating any repayment or set off under Sub-section (3) of Section thirty-eight of the principal Act any amount to be repaid or set off on account of a deficiency or loss arising in any period in respect of which duty would be payable at the rate of fifty per cent. of the excess, shall be calculated by reference to that rate of duty.
    Any additional duty payable by virtue of this Section in respect of a past accounting period may be assessed and recovered notwithstanding that duty has already been assessed in respect of that period.
    (3) It shall be the duty of every person chargeable to Excess Profits Duty under Part III. of the principal Act as extended by this Act, if he has not previously given notice of his liability to be charged with Excess Profits Duty in respect of any accounting period, to give notice to the Commissioners of Inland Revenue before the expiration of two months after the termination of any accounting period in respect of which he is chargeable, or if the accounting period terminated before the passing of this Act, within one month after the passing of this Act.
    If any person fails to give the notice required by this provision he shall be liable on summary conviction to a fine not exceeding one hundred pounds, and to a

    429
    further fine not exceeding ten pounds a day for every day during which the offence continues after conviction therefor.
    Mr. S. ROBERTS: I beg to move in Subsection (1), after the word "apply" ["so far as it relates to Excess Profits Duty, apply"], to insert the words "except as to controlled establishments under the Munitions of War Act, 1915, during the period they are under such control." The Sub-section will then read:
    The Finance (No. 2) Act, 1915 (in this Part of this Act referred to as the principal Act), shall, so far as it relates to Excess Profits Duty, apply, except as to controlled establishments under the Munitions of War Act, 1915, during the period they are under such control, until Parliament otherwise determines, to any accounting period ending on or after the first day of July, nineteen hundred and fifteen, as it applies to accounting periods ended after the fourth day of August, nineteen hundred and fourteen, and before the said first day of July.
    I very much regret the necessity of having to move this Amendment because, as the Chancellor of the Exchequer knows. I have been a consistent supporter of himself and the Coalition Government, and I hold the view that it is the duty, during the period of the War, of all loyal Members to support that Government. You get the best out of people, and my remark is general, by encouraging them and helping them. You do not get the best out of people by always criticising and nagging and finding fault. Therefore, it is with much regret, for that reason, that I feel it my duty to move this Amendment, but I hope I shall do so in a spirit which will in no way impinge upon the principles which I have studied in supporting the Coalition Government. In order that the Committee may understand the point, I must shortly describe the history of this question. In the summer of last year it became necessary for the Munitions Department to pass a new law to control establishments which were going to make munitions of war, or were already making munitions of war. The object of that Act was a labour one, and not a financial one. The object was, so far as this House could secure, to see to it that during the period of the War there should be
    430
    no difficulty with labour in regard to wages or strikes. So essential was it that during the War munitions should be turned out regularly and well that it was felt that the Government must have certain control, especially over the large armament works which were such important factors in regard to that output. That being so, the trade unionists, very naturally and justly I think, said, "Very well, if we are going to give up our normal, rights in regard to wages and strikes and things of that kind, we must have some security that these large works are not going to make immense profits out of our labour, if we do our best for the Government during the War." I think that was a natural request, and the Government acceded to it, and said, "We will send to the armament firms and put the case to them."
    The representatives of large armament firms were sent for. It was confined to those firms at that period, because it was not thought then that the Munitions Act would have to be largely extended. That view, however, did not come true, because very shortly after the passing of that Act a large number of establishments which were not controlled before were put under control. I am sorry that there is no representative of the Munitions Department present. They are so much mixed up with this question that I should have liked a representative of that Department in the House while this question is discussed. The Munitions Department, having sent for the representatives of the large armament firms, put the case to them and represented to them how very important it was that the work should continue to go on well during the War. They told them that they would have to agree to a certain deduction from their profits. The exact amount was stated, or arranged, I think, to be a sum of 20 per cent. above the average profits of the two pre-war years. That is to say, that the controlled establishments might retain as profits 20 per cent. above the amount of the average profits of the two years previous to the War. I do not say that that was a bargain, but it was a thing which the large works agreed to at the request of the Government. I want to make that perfectly clear. The right hon. Gentleman the Member for Walthamstow (Sir J. Simon), who was then one of the Law Officers of the Crown —I think he was Attorney-General—was

    431
    one of the members of the Government in charge of the Bill, and this is what he said on the Second Reading:
    "We are not endeavouring to force this upon unwilling employer. I do not think—"
    This is the part I want the Chancellor of the Exchequer to listen to—
    "I break any confidence when I say that the scheme which is to be found in this Clause—"
    That is the Clause putting the duty on—
    "as regards limitation of. profits is a scheme, the foundation of which, the source of which, will be found in the suggestion of some patriotic employers themselves, and it is immensely to their credit."— [OFFICIAL REPORT, 28th June, l915, col. 1546, Vol. LXXII.]
    That was the view of the Government at that time. What happened? In the autumn of last year the Chancellor of the Exchequer brought forward a Finance Bill and, quite rightly and justly, he introduced an Excess Profits Tax upon all firms. Not only were the controlled establishments to be taxed under the Munitions Acts, but all firms were to be taxed; but he confined his taxing or accounting period to those firms making up their accounts before the 30th June in the summer of last year. If the provisions of the present Bill had not been introduced that tax would have ceased. This Bill continues the Excess Profits Tax. I quite agree that it should be continued, though T would like to put in the caveat that T think the right hon. Gentleman has made a mistake in putting on the extra 10 per cent., making it 60 per cent. I think he would have got ample money by leaving it at 50 per cent. What I fear is that if he is not very careful he will take away that inducement to work for profit which is so very essential. I think that if he would withdraw that 10 per cent. increase and let the 50 per cent. go on as it was before, he would cure this question, and my Amendment will have gone. That is my view. I think that has been the cause of the whole thing. In bringing forward the Excess Profits Duty last year the right hon. Gentleman made it perfectly clear that that Excess Profits Duty, and the munitions levy as he called it, were not to apply to the same firm for the same period.
    Mr. McKENNA: In that period?
    Mr. ROBERTS: For the same period. That is to say, that the Munitions Tax did not commence until the establishment was controlled, and then it did commence. Before it was controlled it was liable to Excess Profits Duty. That is what the right
    432
    hon. Gentleman said on that point. Speaking in Committee on the Finance Bill in the autumn of last year the Chancellor of the Exchequer said:
    "The Excess Profit Tax as it now stands does not operate during any period a controlled firm is in existence as a controlled firm. The Munitions Act did not pass until: 2nd July. As we limit the charge under our present law to the 30th June, there can be no overlapping period—"
    Of course there could be no overlapping, because controlled firms did not become liable until after they were controlled, which could not be until after the Act was passed—
    "but of course, during any accounting period which ends prior to 1st July, 1915, all firms are liable. Whether after that date they become controlled firms or not is immaterial— [OFFICIAL REPORT, 27th October, 1915, page 283, Vol. LXXV.]
    8.0 P.M.
    That was the position then, and it is the position at the present time. These firms are not liable. Now the right hon. Gentleman makes this proposal, that the Excess Profits Duty should be extended after the 30th June, 1915, so as to count the periods after that date, until Parliament otherwise determines. These words are large words, which include all firms, and, therefore, include munition firms, controlled firms. My Amendment is to limit the operation of the extension of the Excess Profits Duty to firms other than controlled firms, and to leave the controlled firms entirely as it was intended and arranged and agreed to leave them, under the operations of the Munitions Act. We think that is a just proposal. Whether it involves much money I do not know, but at all events the right hon. Gentleman is going to get a great deal of money from both the Munitions Act and the Excess Profits Duty. We do not know at present, because the machinery is blocked—the accounts have not been settled and arranged, and I am afraid it is going to be a very long time before these moneys make their way into the coffers of the Exchequer. Unless this question is settled, and settled amicably in the way that I suggest, I venture to say that the right hon. Gentleman is going to have very great difficulty. In justifying his action the right hon. Gentleman said, "Yes, I admit what you say, but the munitions contribution was a levy; it was not a tax. I am entitled to come on the top of that levy and tax it, if by taxing it I can get more out of it." Really, that is a quibble which is unworthy of the right hon. Gentleman, and unworthy of the Treasury. What does he mean by a levy? This Excess Profits Duty is entirely the

    433
    same thing, but there is a different percentage. There is a choice of selection as to which two of the three years will be chosen, but when the choice is made the machinery for arriving at the assessment in the two Acts of Parliament is entirely different. But that does not alter the fact that in both cases these are taxes coming into the Exchequer, and my point is that Munitions Acts controlled establishments are now being taxed and taxed in a way which was agreed to in the Act passed, and now the right hon. Gentleman is coming in, and it is regarded—this is a serious matter—by the controlled firms as a breach of faith.
    There are now nearly 4,000 of these firms. It was never intended, to start with, that there should be so many. It was merely to meet the case of the large armament firms. These controlled establishments are so struck by the difficulties before them that it is no secret that they are forming associations for self-defence, associations to get what they 'consider their rights. I regret it and I regret the reasons. This is one of the reasons. I do not know why the right hon. Gentleman should wish to interfere with a body of men who, all through this War, have done their duty to their country, both in money and in labour. It is the very last thing which the right hon. Gentleman ought to do. I have talked with a great many of these people, and there is going to be trouble; but I hope that to-night the right hon. Gentleman will be, as I am glad to say he was yesterday, in a conciliatory spirit. Believe me, I am not moving this in a hostile spirit, but because I think that it is just to these firms whom I have the honour to represent. It is a question also which the Chambers of Commerce have taken up all over the country. I have got resolutions here from the Sheffield Chamber, from the city which I have the honour to represent. They say this Chamber must earnestly protest against the entirely unbusinesslike proposal contained in Finance (No. 2) Bill, 1916, whereby controlled firms, of which there are over 3,500 in the country, are rendered liable to dual assessments on two different principles in respect of the same profits. Recognising the necessity of raising revenue by drastic taxation, and while cheerfully according this, the chamber is of opinion that the proposed duplication will involve unnecessary expense and trouble at
    434
    a time when useful economy is of paramount importance. The chamber, therefore, respectfully urges that the provisions for the Profits Tax should be dealt with in one Act and by one tax only, and should be administered by one Department instead of two.
    Just fancy any business concern having two assessments going with a duplication of officials, and all this trouble and worry during a great war! It is not business. It is one of the most stupid arrangements which can possibly be imagined. These firms are doing their duty to their country and to the Executive, but there is danger of upsetting the good feeling which at present exists between the Munitions Department and the firms and the! trade. It is the very worst policy of the Government to try to offend these people, who are spending their nights and days in the service of the country in this way. A large armament firm which I have the honour to represent—perhaps the Committee will excuse me for introducing this point because it just shows what is due to them—have undertaken to manage one of the large new national factories of the Government for making large shells. The Government are spending their money. We could if we wished have received a commission, a large commission, for ourselves. We declined to receive a farthing. We said, "We will give you our services for nothing; we are patriots.'' Is it proper treatment for a firm like this, who are willing to give their services for nothing to the Government from patriotic motives, that the right hon. Gentleman should come down to this House and perpetrate what we consider a breach of faith in respect of an honourable arrangement?
    Sir WILLIAM PEARCE: The case has been put from the opposite bench of a very large firm being taken under Government control. When the system was started it was everybody's belief that only a comparatively small number of firms would be affected. Since then nearly 4,000 firms have been put under control, most of them very much to their financial detriment. Most of them would be only too glad to come back under the Treasury. What is objected to is that they should be under two masters, under both the Ministry of Munitions and the Treasury, and many of these smaller firms that have been controlled are already placed at a

    435
    great disadvantage with competitors, because—I am referring now particularly to the chemical industry—some people who are making chemicals are controlled, and others, like gas firms, who for financial reasons cannot be put under control, escape, and already there is wide divergence in the same industry. If the Treasury thought fit to resume control, I think that the situation would be very largely met. What I am trying to press on the House is this: For goodness sake do not put any firm under two masters! It is difficult enough now to meet the Ministry of Munitions. If you have besides to meet the Treasury your, trouble is added to, your accounts are complicated, and one begins to wonder whether you have sufficient clerks or sufficient accountants to deal with such circumstances. There are rumours that the Treasury are going to accept abatements or reductions made by the Ministry of Munitions. I trust that in the course of the Debate the Chancellor will be able to clear up points of that kind. But what I am at a loss to understand is why he is anxious to have this dual arrangement. The trouble and injustice must be manifest to everybody. What is he going to get out of it? I am at a loss to see how any large sum can possibly accrue to the Treasury.
    If you take people who are making a comparatively small percentage of profits it is very unjust, when they have a bargain that their profits should be limited to 20 per cent. on the pre-war standard, that the Treasury should come in now and take another share; and if the Treasury had in mind people making very much larger profits still, I think that there again they will find that very little will accrue to them. Again, they are liable to do great injustice, because in certain industries where large profits are being made they will go to the Ministry of Munitions unless in special circumstances. And there are industries in this country which the Ministry of Munitions quite recognises— explosive works, chemical works, dye works, and such like—must get a special allowance to the advantage of all concerned, because it is absolutely necessary in things like dyes, and pharmaceutical chemicals, that the production of the country should be increased, and, if arrangements can be made by the Ministry of Munitions encouraging the erection of this plant, and this has all again to come under the review
    436
    of the Treasury, it can only impede the production of commodities which are absolutely necessary for the safety and future prosperity of the country. I do-beg that the Government will do one thing or another, that they put individual works either under the Ministry of Munitions or under the Treasury—personally speaking for the smaller people I would prefer to be entirely under the Treasury —but complications ensue and a sense of injustice remains if we have to make contribution first to the Ministry of Munitions and it is all reviewed by the Treasury. This leaves a sense of burning injustice, and in the long run is not to the national advantage.
    Mr. McKENNA: I have nothing to complain of in the tone and temper of the speech either of my hon. Friend opposite or of my hon. Friend who has just spoken. I am the first to recognise that the controlled establishments at the present time do labour under considerable difficulties. I am going to ask the Committee to bear with me while I recall some of the circumstances of the case, and I am going to ask them seriously to consider whether it would be possible, having regard to the practice of this country and the necessary practice of this country, for the Treasury to abandon the position of taxing authority and consent to treat one set of firms from the point of view of taxation in a different way from other firms. We have to go back to the history of the Munitions Act before we can realise fully what the position is. Part two of the Act is the relevant part, so far as this discussion is concerned. Section 4 says:
    "If the Ministry of Munitions considers it expedient, for the purposes of the successful prosecution of the War, that an establishment in which munitions work is carried on should be subject to the provision as to limitation of employer's profits and the cnotrol of persons employed and other matters, contained in this Section, he may make an Order declaring that establishment to be a controlled establishment."
    From the point of view of the employer it will be observed that this Section is double-barrelled. It is to his disadvantage in limiting his profits and to his advantage so far as the control of the persons employed is concerned, and it was felt at the time that it would be impossible to give special advantages to particular employers in the way of control

    437
    of labour without, at the same time, limiting their profits. I am merely going through the whole case, and it is necessary for me to do that if the position of the Treasury is to be understood. This is a special Act dealing with a special set of firms who were receiving an advantage on the one hand, so far as the control and management of labour was concerned, and on the other hand they had the disadvantage so far as the payment of the tax was concerned. The whole effect of the Act may be to damnify the employer as to a sum of money, but he certainly will have the advantage as to the management and control of labour.
    Sir W. PEARCE: It is not the case with small employers.
    Mr. McKENNA: It would be advantageous to the employer to know that his workmen were being daily supplied with work, and for this advantage, I put it no higher, the employer has to suffer the loss inflicted upon him by certain limitations in profits. That is the bargain, as it has been called, between the Munitions Department and the firms incorporated in the Act of Parliament. It has two sides, one, the limitation of profits, and the other, the control of the persons employed. I do not want to contravene the argument of my hon. Friend, who deals with the small firms, but I wish to say-that in the case of some of the controlled firms, at any rate, the power of dealing with the employed persons has been an advantage, but for that advantage, in those cases, they have had to pay in a limitation of profits. Before the Munitions Act was introduced notice was given in this House of the intention to impose an Excess Profits Tax as soon as it was possible to do so. In the month of September that Act was introduced to the House. Immediately, of course, the question was raised as to the relations of the controlled firms, who had to pay the Munitions levy, to the new taxation. The answer which was then given, the answer to which my hon. Friend opposite has referred, was that it would have to be settled at some future time, and that it need not be settled at that moment, because the Excess Profits Duty for the first year would not overlap the period of the controlled establishment.
    Now that the Excess Profits Duty is continued, the question does arise, what ought to be the relation of this duty to the controlled establishments, who are
    438
    already subject to the munitions levy? I am going to submit to the House, so far as the Treasury is concerned, that no other arrangement but the arrangement which we have proposed is possible; for very obviously the Treasury proposes to Parliament a tax which clearly, in the nature of things, must be of general application. It is quite clear that we could not distinguish between Firm A and Firm B, and say that one was to be subject to taxation and that the other was not. It is quite clear that the tax has to be equal, from our point of view, in its incidence on all persons. I think the two propositions are self-evident, that the tax must be universal, and must be equally applicable to all firms of equal means. Supposing the Amendment of the hon. Member were accepted, what would be the effect of the two taxes then? Firms which were not controlled would be subject to a tax of general application, known in principle, and equal in its incidence upon all firms similarly placed, but there would be a body of firms removed from this tax, some of whom were paying less than the Excess Profits Tax.
    Sir W. PEARCE: Most of whom pay a great deal more.
    Mr. McKENNA: Allow me to complete my sentence. It was obvious that I was in the middle of a sentence—some of whom would pay less than the Excess. Profits Duty, and others of whom would pay more. What is the position of the firm that would pay less? There are a great many, I am told, not in amount, but in number, not in the total amount paid, but as to the number of firms, who would pay less. Those firms, then, who are the parties to this agreement, ratified by Statute, who, in some cases at least, to put it no higher, were receiving from the limitation all the benefit, are not only to receive that statutory benefit, but are to pay less in taxation than other firms of the country. I submit to the Committee it is unthinkable that we should allow any firm, on the one hand, to receive an advantage under the Munitions Act, and, on the other hand, to be relieved from taxation to which all other persons are subjected.
    Mr. HENDERSON: Your premises are-wrong.
    Mr. McKENNA: When my hon Friend comes to answer me, if he takes the stand that in no case will a controlled firm pay

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    less in the way of munitions levy than it would have to pay in Excess Profits Duty, then I quite agree my premises are erroneous; but I do not think that any hon. Gentleman will get up and say that there are not cases, and many cases, in which controlled establishments would pay less by way of munitions levy than they would have to pay by way of excess profits. First of all, if a firm pays less by way of munitions levy than they would by way of Excess Profits Duty, why should the Committee allow those firms to avoid that taxation to which all other firms are subject. We say, in cases of that kind, that those firms which pay less by way of munitions levy must pay the difference between the amount paid as munitions levy and the amount they would have to pay as Excess Profits Duty. That is all we say. Once a firm is paying the difference between what it is liable to pay as munitions levy and what it is liable to pay in the Way of Excess Profits Duty, it is clear of ns so far as payment goes. I am dealing only now with the question of payment. The firm under those circumstances is clear of us, and I do not think that anybody can dispute the fairness of that proposal. Where the munitions levy is equal to or in excess of the amount payable by way of Excess Profits Duty, there is nothing to pay under the Excess Profits Duty.
    I come now to other aspects of the question. I do not believe really that hon. Gentlemen who take an opposite view from me in this case, if that were the whole of the case, would differ from my argument. I quite recognise they have another objection which they put forward. They may say to me, "It is all very well to say that you only ask for the difference to be made up in those cases in which the munitions levy is less than the Excess Profits Duty, but you make us show accounts in order to determine what is the munitions levy, and then you make us show accounts in order to determine what is the Excess Profits Duty, and we have to go through the accounting work twice over." That is a grievance, I admit, and a serious grievance, and a grievance which is inherent under the existence of the munitions agreement. I will tell the Committee why. So far as Excess Profits Duty is concerned, there is certain work which has got to be undertaken by the controlled establishment, like all other establishments. In the first place, the datum line has got to be fixed. That datum line has
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    got to be fixed whether the hon. Member's Amendment be accepted or not, because that datum line was fixed for the year 1914–15, before controlled establishments came into existence as controlled establishments. For the purpose of the Excess Profits Duty, that datum line has got to be fixed for the first year of the Excess Profits Duty, and a controlled establishment has got to give a datum line for Excess Profits Duty. The datum line, once taken from a firm, continues the same datum line throughout the operation of the tax. Therefore there is no new rule imposed on controlled establishments by applying Excess Profits Duty to them in respect of fixing the datum line. When they fix the datum line, what have they got to do? I will give the qualifications in a moment, but in general terms they have got to declare their profits according to Income Tax rules. That they have got to do anyhow. They are not asking to be relieved from the burden of Income Tax. In general the procedure for determining the profits of the firm for Excess Profits Duty is the same as the machinery for determining the profits for Income Tax assessment, and that has got to be done anyhow, and whether this Amendment be accepted or not that work has to be gone through. There are certain variations, and I am sure the House will agree that the most important variation under ordinary Income Tax rules is the allowance which is made for depreciation, and we propose to accept the Munitions Act rules for that purpose. How do we impose by our Act any great new accounting duties on the firm?
    Mr. J. M. HENDERSON: What about other allowances under the Munitions Act?
    Mr. McKENNA: I am dealing with the point that we impose no new work by the Excess Profits Duty, and whether the acceptance of this Amendment would relieve them of the task of accounting. I have shown, first of all, that they have got to have a datum line according to the Excess Profits Duty rules for the year 1914–15. That they agree to. I have shown that they have got to keep acounts under the ordinary Income Tax rules whether this Amendment be accepted or not for the payment of Income Tax. I have shown that the great variation in the Income Tax method of assessment is in the allowance for depreciation, and in that respect we are willing to accept the Munitions Department findings.
    Mr. DENNISS: For new capital?
    Mr. McKENNA: That is the main item, new capital put into the business, for depreciation, and we have agreed to accept the findings of the Munitions Department. The whole machinery will be the machinery of the Munitions Department under that head.
    Sir W. PEARCE: Will the right hon. Gentleman mind telling the Committee how far he goes in the Munitions Department rules. They range from A to G. Is the right hon. Gentleman accepting their adjustments down to the end of E or only to the end of B?
    Mr. McKENNA: I will look into it. Perhaps I may say generally the arrangement we propose and the origin of it. It was represented to us that a great many firms have invested capital in plant at the request of the Ministry of Munitions or for the purposes of the Ministry of Munitions, and in respect of which the ordinary Income Tax allowance for depreciation would be wholly insufficient. We have, therefore, agreed that the allowance recognised by the Ministry of Munitions would be accepted in those cases.
    Mr. DENNISS: There is the ordinary depreciation which is very much heavier in controlled establishments because they work night and day.
    Mr. McKENNA: We agree to that. We agree with the Munitions Department. [An HON. MEMBER: "How far?"] This is really a Munitions Act question, and I am only dealing with it from a Treasury point of view. I am endeavouring to persuade my hon. Friend that we have done our best to meet the reasonable part of the case. The case divides itself into two heads, that of payment, and that of extra labour. So far as extra labour is concerned, I am endeavouring to show that we are not by our Act imposing any additional labour on the firms. If anyone gets up and says that these controlled firms ought to escape Income Tax—[HON. MEMBERS: "No, no!"] —then, of course, the case would be entirely different. Nobody suggested that for a moment, and therfore the double set of accounts must be kept if they come under the Munitions Act. I hope hon. Gentlemen will now agree that my premises are more reasonable than they thought. If there be a defect owing to the system by which double accounts have got to be kept, that defect arises from the Munitions Act, and came into existence
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    the moment the Munitions Act was passed. When hon. Gentlemen consented to what they regarded as a bargain in Section 4, under which their profits became limited, they thereby tied themselves down to keeping a double set of accounts, one for the purposes of the Munitions of War Act, and the other for the purposes of Income Tax. Under these circumstances I put this to the Committee: First, it is not reasonable that any controlled firm should pay less by way of munitions levy than other firms have to pay by way of Excess Profits Duty. Secondly, when a firm pays by way of munitions levy as much as the Excess Profits Duty or more, we ask nothing more; we have nothing more to do with them. Thirdly, the defect of the additional trouble thrown upon firms in the way of account keeping is inherent in the Munitions of War Act, and would not be remedied by the acceptance of this Amendment.
    Sir TUDOR WALTERS: During the ten years that I have been in this House I have seen more than one illustration of the great public disadvantage that accrues from the lack of proper harmony between different Departments of the State, but I think that this is the most grotesque illustration of the lack of anything like proper consultation between different Departments of the State that the mind of man could conceive. As far as I can understand, the Chancellor of the Exchequer bases his case chiefly upon the fact that the Munitions Act is all wrong as far as finance is concerned. If I misinterpret my right hon. Friend, that is the impression left upon my mind. He seems to have discovered that this new Department has been poaching upon his prerogatives, and that the Minister of Munitions has actually been presuming in the Munitions Act to undertake work of taxation properly belonging to the Treasury. That may have been an extremely improper thing for the Minister of Munitions to do, but these two Gentlemen belong to the same Cabinet, and—
    Mr. McKENNA: I neither said, nor implied, nor meant anything of the kind.
    Sir T. WALTERS: With very great respect, I accept the statement of the Chancellor of the Exchequer, but all I can say is that for a Gentleman with his powers of lucid expression he has singularly failed to convey any other impression to a humble mortal like myself. Probably it may be my fault. I thought I was really

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    discovering some sort of argument in the Chancellor of the Exchequer's speech. If that were not the basis of his argument, I cannot see where he has any premises from which to draw the deduction he does. The position in which we find ourselves is this: The Ministry of Munitions entered into an arrangement for the purpose of producing a large quantity of munitions, an arrangement carrying a restriction of profits and making certain other conditions, and they did it for a definite purpose. They did not do it so much for the purpose of securing revenue; they did it for the purpose of getting an extraordinary production of the material they desired. Now the Chancellor of the Exchequer comes and looks at it from another standpoint—purely from the standpoint of taxation. I want the Committee to contrast those two standpoints, and decide which they think is the more important. I say that, in comparison with the small sums of money which the Chancellor of the Exchequer will raise, the other aspects of the case, namely, the method that gives the most incentive to the production of munitions, dwarfs into absolute insignificance all the schemes and plans the Treasury may have in mind for securing a little additional taxation.
    What is the position in which we stand in respect to the great firms producing munitions? We have said to them, "It is vital to the interests of the Empire that we should have the largest possible output. In order to secure this output we give you special conditions in respect of labour. We ask you to accept a very moderate percentage of the profits you make. We ask you to go ahead on these conditions and produce the largest quantity of munitions you possibly can." On the faith of that arrangement these firms, great and small, have incurred all sorts of liabilities. They have embarked large sums of capital. They have altered their plant. They have put down extra plant. They are working largely from patriotic motives, but even when a man works from patriotic motives he wants to see that he will not be bankrupt at the termination of the proceedings. They say, "We have a certain margin upon which to work. Under the munitions arrangement we know exactly the percentage leviable, and to the extent of that percentage we can incur fresh liabilities, undertake fresh obligations, and extend our business in different directions." If you to the tune of one single 6d. for the
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    purpose of getting extra taxation reduce that margin with which the firms have to work for the purpose of extending their business, you will be doing grave harm to the prosecution of the War. I want to lift the matter entirely above peddling Treasury considerations. As to these questions of whether you draw the balance sheet in this way or that, whether A would have £10 to pay to the Treasury or B would have £10 to draw from them—I do not suppose there will be any drawing—I want to get rid of all that nonsense at once. We have these great munition firms with a gigantic task before them. I have had an opportunity of meeting a number of these men. I am not interested in munition firms at all. I have not the fortune to be either a shareholder or a creditor. But I know something about the feeling among these great munition firms. They say, "We cannot be harried and worried in this ridiculous fashion about excess profits. We have entered into a definite arrangement and we are prepared to carry it out." As three of the largest men in this country said to me on these premises yesterday, "This is a severe tax upon our patriotism. We are anxious to do all we possibly can. We have made commitments already that render very-slight any chance of profit at the end of the War when we come to realise and try to get back our old trade." For that is the great question. It is not simply a question of getting an allowance or altering machinery; it is getting back from various countries the trade which you have given up for the purpose of making munitions. They say, "What encouragement is there for us to go on endeavouring to extend our munitions department? We have had to study new Acts of Parliament. First one Department is down upon us and then another. Now, although we have made a definite bargain, we are to come into some ingenious proposition which will be a case of heads I win, tails you lose.'" They say, "We care too much for the interests of the country to say that we will not do our best, even with these burdens." They are large firms, and they take a broad view. But there are other men who, although they take a broad view, have not the resources with which to run these risks. I put it very strongly, but with great respect, to the Chancellor of the Exchequer, for whose financial genius no one in this House has a profounder admiration than I have, that in this matter he

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    has allowed pedantic Treasury considerations to obscure one of the vital interests of the nation. If this particular scheme of his would raise another £10,000,000–1 do not think it will raise anything but a small sum—with the discouragement it would give to munition workers and to the controlled firms, and the feeling of uncertainty and unrest to which it would give rise, that £10,000,000 would be purchased at a very high price.
    Even at this eleventh hour I hope the Chancellor of the Exchequer will reverse his decision. Although the Ministry of Munitions may have done quite wrong, although they have made a bargain which in the opinion of the Treasury officials they ought not to have made, although they have obtruded upon functions which belong to another Department—never mind that! In time of peace we might fight out those questions, but in the midst of a great war we have not time to bother ourselves about such trifles as those. I wish to put the matter rather from that standpoint than from any mere statement or discussion of mere details. If the Chancellor of the Exchequer realises what the feeling of the people is, what is the feeling in Sheffield and in other parts of the North of England, if he realises the grave discouragement this means to controlled firms, I am quite persuaded that he will not entertain the proposal another moment. It may not be possible to persuade the Treasury to take that broad view, but I think, even in the mere sword play of the two Departments, in the premises laid down and to be drawn therefrom, that the Treasury is hopelessly wrong.
    Take a simple analogy from my own trade. Supposing my partner and myself were concerned in the building of a large colliery village for my hon. Friend the Member for Mansfield—and I may add I wish we were, for he is a good paymaster. Supposing my partner got hold of a contractor, and said to him, "Go ahead and build this village, keep an account of what you spend, I will add 10 per cent. to it, and that shall be your profit." Assume that the two entered into a contract with that object in view. Supposing, again, that I, as a partner, looked at this matter six months afterwards and considered that I could have done much better than my partner. Supposing that I then proceeded to get tenders and offers and found that the lowest tender brought the contract out at a much lower price. Supposing that I then found that the man who tendered
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    lowest was perfectly willing to take 5 per cent. profit, and that I, then went along to the contractor who, presumably on the present supposition, would have been misled by my partner in thinking that he had authority to speak in my name, as is customary in these commercial operations, and said to him, "Oh, no, this bargain won't stand. I find you are to have 10 percent, profit, but I think you only ought to have 5 per cent., therefore I am going to make you refund the 5 per cent." Of course the man would look round to see if he had a remedy at law. If not he would take care to keep out of the way of such sharks for the rest of his life. I say that if the head of a munitions firm, or any other controlled firm, makes a bargain with one partner in the State, with one member of the Cabinet, by which it is assured to him that he shall have a certain percentage of profit if he does certain things, under certain conditions, and that if that gentleman's partner, another member of the Cabinet, comes around with some other Act of Parliament relating to excess profits and extracts half of that percentage from him, then the head of the munitions firm or of the other establishment is entitled to say he has been swindled by the Government Department.
    I put it quite plainly at that. I do not see how in fair play and in justice you can alter bargains in this way. You have entered into a definite arrangement. Unless there are some grave questions of public policy involved, unless something new has occurred that renders it necessary to revise the whole position, I do not see how you can possibly make an alteration. The Chancellor of the Exchequer made great play upon this: He said, "Is it to be considered for one moment that cases should be allowed to occur by which men who are working under the Ministry of Munitions, as heads of controlled establishments, should be allowed to get more profit than someone else who is not in charge of a controlled establishment? For the life of me I cannot see any case arising from that. If a man has entered into a definite bargain, and if he is working under a certain set of conditions, if there are certain arrangements and regulations that apply to him, you have no business to compare the percentage he pays of excess profits with the percentage which someone else pays! You have no right to go to a man who is working under an entirely different set of conditions and to ask him to pay on the same terms as

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    someone else who is working under an entirely different set of surroundings. You can only talk about the man's contribution being the same when the conditions under which ho works are the same. If there is anything at all logical in the argument of the Chancellor of the Exchequer, if what he says is a sound proposition, that no man ought to pay less who has a controlled establishment than he would if he were an uncontrolled establishment, then the converse is quite true, that no man ought to pay more if he is a controlled establishment! Does the Chancellor of the Exchequer propose to give a man who is working a controlled establishment the choice to pay either under the Munitions Act or under the ordinary Excess Profits Act. Of course he does not.
    What the right hon. Gentleman proposes to do is this: He has got two methods, and he is going to get accounts rendered in both ways, and he is going to take the unfortunate man by the throat and make him disgorge. That is not fair play. I have heard about people having two prices in the same shop for the same article, so that they might charge a different price to different people; but the Government here proposes to have two different methods of keeping accounts, in two different departments, and in the reckoning of the profits to charge the poor wretch with the one that hits him most. That is a worse method than that of the dishonest shopkeeper. I do not like these kind of accounts and this system of accountancy. I do not believe it is good finance. I do not believe it is good policy. I do not think it gets the best out of people. I do not think it appeals to the best motives. One could go on for the hour dealing with these futile considerations, but it is not worth while. The great question is this, Will it pay us better from the standpoint of the production of munitions of war to stand by the Act passed by the Ministry of Munitions, that gives the men who are working under it a sense of security and confidence, to give them every possible inducement to extend their business, to increase their production and output? Is it, I say, much better to do that, and perhaps to lose a little money in the way of the Excess Profits Tax, than to do otherwise, to irritate and annoy them, to give them a sense of injustice, and take an infinity of extra profit, so diminishing
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    output and lessening their interest in the work they have to do? All for what? For the few paltry thousands for the Exchequer, and to prove that the Treasury is the proper Department to do the taxing, and not the Ministry of Munitions! I shall be ashamed of the Government if they do not accept the Amendment of my hon. colleague in the representation of Sheffield.
    Mr. J. MASON: The Chancellor of the Exchequer in the earlier part of his speech said that the most important thing was that taxation should be equal in its incidence. I suppose there has seldom been a more glaring case of a tax which was so unequal and in so many unnecessary directions. To begin with, this tax as it stands now in the Bill differentiates between controlled and uncontrolled establishments, in some cases in a very serious manner against controlled establishments. Secondly, it differentiates in the extraordinary way in which the accounting periods have been taken at the beginning. In some cases they start nearly a year before the commencement of the War and in other cases only a few weeks. This tax has been applied to firms under similar conditions except that their accounting period differs from one month to another, and it has been in some cases applied for months longer to one firm than another. Not only that, but it is proposed under this Bill to change the amount taxed from 50 per cent. to 60 per cent. in equally as unfair a manner. The Chancellor of the Exchequer a little while ago said where the controlled levy was highest he was going to take nothing. I am not at all sure that that is so. I do not say it is his intention, but unless some Amendment is accepted he is certainly going to take a good deal more than he said just now. Let me, before I forget it, deal with another remark of the right hon. Gentleman. He said there was no complaint, and there ought to be no complaint, as to the cost and trouble of keeping different sets of accounts, because the same machinery was available for this tax as was available for the Income Tax. Surely this tax and the Income Tax are based on entirely different standards. Unless I am mistaken, the Income Tax is based on the average of three years, whereas this tax is based on any two of three years at the choice of the individual, so that they are not based on the same standard, and therefore they are not based on the same figures on which the accounts

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    are made up. Therefore the grievance about keeping two sets of accounts is a perfectly good one.
    The case as between the controlled establishment and the uncontrolled establishment, I think, is a very important one to bring up, because I do not feel quite sure that the Treasury intend to tax in the way I am going to suggest, and I want to know definitely whether that is so. I take as an illustration two firms, one controlled and the other uncontrolled, and I assume identical figures in the two to show the amount of taxation which will be paid in each case. I assume that the profit for the accounting period is in both cases £160,000, and I assume that the pre-war standard was in each case £100,000. Now the uncontrolled establishment will pay half of £60,000, that is £30,000, under the Excess Profits Tax, but the controlled establishment, starting with a pre-war standard of 100 is allowed to add on to that 20 per cent., that is £20,000, making £120,000, and pays a levy to the Munitions Department of £40,000, as against £30,000 paid by the uncontrolled establishment.
    Sir A. MARKHAM: Surely the uncontrolled firm pays more than £30,000. It pays 60 per cent. of the £60,000, that is £36,000.
    Mr. MASON: This is based on the old tax of 30 per cent., and for the sake of clearness I think it is a little easier for my illustration. At the present moment it is 50 per cent., and it makes the case a little clearer if I keep to the figures I have here. I think the hon. Member will see that the point is not very material. I say the tax takes £30,000 in the case of the uncontrolled establishment. Now the controlled establishment on the same profits has paid £40,000. I believe that under the Bill the Chancellor of the Exchequer was far from being satisfied that the controlled establishment is paying more under the munitions arrangement than under the arrangement of the Profits Tax. So far as I can make out, under the Bill the Chancellor of the Exchequer will come down for 50 per cent. of the £20,000, making in all £50,000 for the controlled establishment, as against £30,000 for the uncontrolled.
    Mr. HENDERSON: Oh, no!
    Mr. MASON: I am glad to hear it, because I do not think I am the only Member of the House in doubt about this question. My impression is that the Chancellor
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    of the Exchequer claims 50 per cent., or under the new rate 60 per cent., of the £20,000 which is allowed by the Munitions Department to be retained by the manufacturer. I am only too delighted if I am told that that is not so.
    Mr. MONTAGU: Where did the hon. Member get that?
    9.0 p.m.
    Mr. MASON: I cannot refer to the Section for the moment. I would like to make one other remark, because it refers to a statement made by the Chancellor of the Exchequer on a previous occasion, when he laid down with a great deal more emphasis than he did to-day that the munitions arrangement was in the nature of a levy, and not a tax, although I do not quite appreciate the point in that, and that it was a bargain made between the Minister of Munitions and the manufacturers. To begin with, I do not know that it is quite fair to say it was a bargain, because, of course, a very large percentage of the controlled establishments had nothing whatever to do with that bargain, and were never consulted at all. Probably 90 per cent. of those controlled had never been asked to enter into a bargain at all, and I think a bargain to be a bargain must be made by both sides. But let that pass. When the controlled establishments made that bargain, if bargain there was, they were under the impression that they were making a bargain with the Government and not with a particular Department of the Government, and if under that impression they were justified in assuming that the bargain was final, that the terms implied in the bargain would be maintained, and that they had nothing more to fear. So far from that being the case, the bargain was made with a particular Department, arrangements were entered into between that Department and them by which they were to spend large sums of money—in many cases those large sums of money have been expended—and provision was made for the finding of capital necessary to enable them to enlarge their works. And now that that work has been undertaken, based on the requirements of one Department, another Department comes down and suggests that a considerable levy should be made beyond what was anticipated. I say, as things stand now the fact that these bargains had been looked upon as final by the manufacturers, who

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    have been asked to extend their work and enter into increased engagements on their part for patriotic reasons, it is very unfair that any bargain of that sort should be upset by one Department, when the manufacturers concerned were perfectly justified in regarding it as final. If I am wrong in the assumption which I raised just now about the 20 per cent., I should be very glad to be told so. I know that that point has been raised by a considerable number of people, and there is considerable uncertainty on the point. But to return to the Amendment, it seems to me that the principal reason for which the Amendment can be recommended to the Committee is that as the bargain was entered into, not by one Department, but certainly by the Government as a whole, and, at any rate, it was carried through by one of the Departments, it ought to be supported by the Government as a whole, and cannot reasonably be upset by another Department.
    Mr. HENDERSON: I should like to say a word with regard to the reception of this arrangement, and I am very sorry that the Minister of Munitions is not here to uphold the contract which he, not for himself, not for a Department, but as an officer of the State, made for the State, and I say it is not open to any other Minister of the State to come and say, "Oh, you made a bargain with some other Department." You cannot divide the State into watertight compartments and say, because one Minister made a bargain another Minister can come and say, "That was not a bargain, and I am going to alter it." The Chancellor of the Exchequer in his speech took occasion to say that it was unthinkable that anyone under the Munitions Act should pay less than under the Excess Profits Tax. He took very good care to say nothing about the man who would pay more. The controlled establishments are perfectly prepared to accept either standard, but they object to both. What is the position in regard to this? If my right hon. Friend would refer back to his speech he would find that the Chancellor of the Exchequer said:
    "Excess profits, as it now stands, does not operate during any period upon a controlled firm which is in existence as a controlled firm."
    I agree that he did not bind them to some future arrangement, but what he did say was that this excess profits did not apply to controlled establishments just now.
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    They were to see how it would work, and then in a future Bill he said they might dovetail the two. The Munitions of War Act was passed on the 2nd July, 1915, and the Finance Act was not passed until the end of October, 1915, but the controlled establishment firms were at work then. What we all understood was that the dovetailing was merely the adjusting of the position as to the duties on which the two operations were to work. What was really the position of those controlled establishments? You were in very great stress; you wanted munitions and the great munition firms had failed you. The Government must get munitions, and they established a Ministry of Munitions and negotiated with the unions and the Labour party to remove their restrictions upon output, and at any rate in this way they forced the bargain. I know the Minister of Munitions did not admit it as such, but the unions would not consent to this restriction on the right of stopping output unless there was a restriction on the profits of the firms engaged.
    What was the arrangement then made? You said to these people, "You shall give up your business; you shall undertake to be controlled and we shall control you. We shall limit your ordinary customers." As a matter of fact, in a great many cases they gave up their businesses entirely. I know of any number of cases where these people have not sold anything of their usual output since January, 1915. There were over 3,000 of these firms, and I do not suppose there were twenty-five out of all those who were drawn in who had been previously engaged in making munitions. Anyone who had engines or overhead equipment, or a few lathes, or any engineering capacity at all was roped in, whether he would or not, into this arrangement. The Government said to them, "You will get more machines; you will enlarge your premises; you will go on with this work, about which you know absolutely nothing, but you will pick up a knowledge of it by and by, and all you have to do is to be at our beck and call, to do all we want you to do and allow us to control you so that you shall not do any other work than that which we allow you to do." They asked, "Where do we stand?" You reply, "Oh, you shall be secured 20 per cent. above your standard, and all the rest you hand over to us." There is a popular delusion that all these men have made a great deal of money, but there is nothing further from the truth.

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    A few of the large firms who were accustomed to the work have made money, but a good many of them undertook to make a scientific thing called a shell, or a shell fuse, on which there is any number of gauges, and a thing which requires the greatest care. These men, who had been accustomed to making other things, tackled the making of shell fuses and shells, and so forth, with the result that thousands of those articles were rejected when they went to Woolwich.
    I can assure the Committee that out of 3,500 of these firms there is at least 1,000 who would thank goodness that they had never seen the control. With regard to the rest, the control has been thrust upon them. Why should you not keep your bargain with them? The right hon. Gentleman said it was unthinkable that anybody should pay less. I ask: Is it not equally unthinkable that anybody should pay more. I am sure those who represent controlled establishments are prepared to stand on the level of uncontrolled establishments. They say, "Treat us exactly as they have been treated, and put us under the same tax; we ask nothing more, but we do say that it is wrong that when there is a large profit you should take 80 or 90 or 100 per cent. whereas, in the case of some other firms, you only take 20 per cent." Thousands of people have given up their works and goodwill, and do you suppose that 20 per cent. will repay them or enable them to replace that goodwill after the War is over. With regard to that control, which is supposed to be so advantageous, I will mention one or two cases. There is a case where a firm had a very large order from the French Government, and that Government asked them to repeat the order. Meantime they became a controlled establishment, and they had a large contract for munitions for Woolwich. They asked leave to undertake this French contract, which they could perfectly well have done, but the Minister of Munitions said, "No, you won't; you must not touch it; you must go on with our work and leave that alone." That connection is now lost to this firm. That is only one instance. Almost any allowance you can make these men will be insufficient to replace them in the position they were in before the control; but in the case of those who have made large sums of money, of course you will get a large sum from them. Why do you not put the controlled and the uncontrolled on the same footing? Stand by your bargain in
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    its entirety. Do not break it in one part which is disadvantageous to you and adhere to it in the other part which is disadvantageous to the controlled establishment. If you want all to pay the same tax, then let all stand on the same footing, and I am sure that they will not disagree. But let me warn you that the whole of these controlled firms are up in arms against this proposal. They feel the gross injustice of it. There is the Engineers' Association in London, the Boilers' Association in the Midlands, the Shipbuilding Association, and any number of them, and, if you do force it through, I can assure you that this will not be the end of it. You talk of having no big discussions during war time; but why do you break contracts, and why do you say, "Because I am Chancellor of the Exchequer I will not agree with the arrangements of the Ministry of Munitions"? The Ministry of Munitions are against you. They wish to stand by the contract, and I say that the Minister of Munitions ought to be here to support this bargain. He made the contract with them for the State, and it is his bounden duty to support it.
    Mr. S. ROBERTS: May I interrupt the hon. Member to tell him and the Committee that the Minister of Munitions is with us on this point?
    Mr. HENDERSON: I know that the Minister of Munitions is with us, but why is he not here to support us?
    Sir A. MARKHAM: It is a swindle.
    Mr. HENDERSON: There are no Departments in the case of taxation; it is the State. It was a bargain. You do not deny that. Both the Speaker and Chairman of Committees have ruled it to be a bargain. If it were not a bargain, it would be illegal, because it was not originated in Committee of Ways and Means. Then why do you not adhere to it, or, at all events, why do you not say, "We will have one bargain and one tax. Let us put them all on the same level"? What is your objection to doing that? I put that question to the Chancellor of the Exchequer, and what was his answer? "I do not ask more than 60 per cent., but if you have made more than 60 per cent. you will have to pay not by my tax, but by the Munitions Tax." Could anything be more preposterous? If so, I should be glad to learn what it is. I appeal to the Chancellor of the Exchequer not to be so obstinate over this important matter as he appears to be.

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    The Ministry of Munitions are with us. They stand by their bargain. They think it was a proper bargain to make, and they made it for good or bad. If you will not adhere to that bargain, then come to the fair position of all firms, controlled or uncontrolled, paying the same equality of taxation without fear or favour in any direction. I appeal to you not to discourage these controlled firms. A great many of them have worked night and day and have not spared themselves. I have seen the way in which the day shifts and the night shifts work. They have worn out the machinery, and they have worn out themselves, all in the belief that they could at all events count on the 20 per cent. margin. They do not grudge you anything else. Let me give a simple case. Ten thousand pounds is the standard of profit of a controlled firm. It makes £20,000. That is £10,000. They only keep £2,000. That is 20 per cent. You take £8,000, whereas if they were uncontrolled you would only get £6,000. The Committee ought to know that in the last six months the Ministry of Munitions, very properly, have been cutting down prices 40 per cent., 50 per cent., and 60 per cent. The result is that a great many of these smaller men and even the bigger men will find themselves with not more than 5 per cent. or 10 per cent., and possibly not even that. But whatever it is, they ought to be left with it as the least compensation you can give them for all that they have lost, their goodwill and their connection. If you want more, then in Heaven's name put them all on an equality!
    Sir J. HARMOOD-BANNER: This is a very important question, and I think the Government would enlighten us if they would tell us what they mean by taking up this position with regard to the Excess Profits Duty. The chief thing we wish to remedy by this Amendment is the view which has got in the minds of all the controlled firms that the Government intend to break the bargain which has been made with them by the Ministry of Munitions. I was very much indebted the other day to the Chancellor of the Exchequer when he got rid of one fallacy by agreeing to allow depreciation. It may be depreciation in a rather more limited degree than I desired. I came away rather satisfied that depreciation was being allowed, but I was met outside by the remark, "That is all very well, but are you aware that you made a contract through the Ministry of Munitions
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    to take the pre-war standard of profits upon a very poor basis as compared with the Excess Profits Tax, plus 20 per cent.? Now the Chancellor of the Exchequer comes in and says that he is going to treat that 20 per cent. as excess profits and take 60 per cent. of it, so that there is only left 40 per cent. of an amount which was agreed with the Ministry of Munitions we should have in consideration for handing over to him the whole of our work, and placing ourselves entirely under his control." I was not quite certain whether the Financial Secretary, in a little interjection, intended to say that we were wrong in believing that he intended to take this 60 per cent. I should like him to answer it. If he says, "I am not going to take the 60 per cent. off the 20 per cent," it will shorten the discussion, and will bring us into a very much better frame of mind. I think the right hon. Gentleman took rather a wrong view in regard to the foundation of the Munitions Act. That Act was not sought by the controlled establishments or by the Government. It was brought about after certain conferences with the President of the Board of Trade in consequence of unrest among the working classes. The Chancellor of the Exchequer put it in a rather different light. But what occurred was this: The working classes complained that the munition firms were making huge profits and that they were receiving no corresponding advantage. Without going into details on this point, I may say that the Munitions Act was brought in as a result, and firms were called upon to give up all rights of control, in return for which they were to get a certain percentage of profits.
    But what occurred was this: Some firms were making telephones. They were compelled to make fuses. Others were making wire ropes and were compelled to make mattresses. Others were called upon to manufacture explosives in lieu of their ordinary work. They were placed under disabilities of every kind. They gave up the goodwill of their businesses, which probably they will not be able to revert to, and they did all this in consideration of the 20 per cent. which they were to receive above the pre-war standard. But that 20 per cent. was varied by the Minister of Munitions when he said, "You are producing 2,000 tons of steel, we want you to produce 4,000," or "you are producing so much explosives, we want more." The manufacturers were in consequence compelled to fit up plant for

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    all these purposes, and all that had to be done in consideration of the 20 per cent. they expected to receive. They got a fearful shock when the Budget came in, as, apparently, the, Chancellor of the Exchequer was going to override the arrangement made by the Minister of Munitions. Depreciation, of course, was an important item. The point was raised with the Chancellor of the Exchequer directly the Budget was introduced, and I wrote to the Minister of Munitions asking him at once to go into this matter. I have never been able to obtain a reply from him, and I believe many other persons connected with controlled establishments have also expressed a desire to know from the Minister of Munitions whether he intends to keep the bargain he has made with them.
    Efforts have been made during the last month to get the Chancellor of the Exchequer and the Minister of Munitions together to discuss this matter. But so far they have been unsuccessful. I have been several times at the Ministry of Munitions and have asked there whether the bargain which they have invited me to enter into is going to be performed, because, as I have pointed out, according to the Budget it looks very much as if we are not going to have the covenant fulfilled. The officials I have met there have agreed that the bargain ought to be carried out, and have stated that they would be disposed to throw up their offices if it were not, as they would consider themselves honourably bound by the engagement into which they have entered. Why does not the Minister of Munitions display the same feeling? We have tried to get him to meet the Chancellor of the Exchequer to discuss this matter. Two such attempts were made, and on the second the Parliamentary Secretary to the Ministry of Munitions attended, but the Chancellor of the Exchequer declined to go on with the discussion because he said he and the Parliamentary Secretary were not in a position to settle anything, and it was Mr. Lloyd George with whom he had to deal. It does seem strange when an arrangement has been made with 4,000 controlled establishlishments and when large sums of money have been spent upon them, when the control has been given up on terms agreed with the Minister of Munitions, that the right hon. Gentleman should not have the courage to meet the Chancellor of the Exchequer and insist on the bargain he has made being carried out. I do not like attacking a man in his absence, but I am
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    obliged to do so when I find that the Chancellor of the Exchequer is ignoring the Minister of Munitions and is saying, "I do not know anything about the bargain or about the arrangement." It must be remembered that both right hon. Gentlemen are members of the same Government; one is the head and the other the arm—I will not suggest which. But at any rate they are part of the same body, and it is strange to have one member appending his signature to one document and the other putting his signature to another.
    I say distinctly the Minister of Munitions, having entered into certain covenants, the Chancellor of the Exchequer is bound to perform them. Having got all the money out of it it does not lie with the Treasury, under those circumstances, to say, "We have got sacred rules regarding Income Tax; we have got sacred principles and sacred words about levies and receipts, depreciation and wear and tear, and these things are so sacred that we must override the bargain made by the Minister of Munitions, and must insist on having our way, and our way only, carried out." I must confess the way in which the work is now being done at the Ministry of Munitions is rather curious. They have there the new position of Minister of War. They are dealing with Irish matters. If we are to go away from this House with the idea that every arrangement we make with one Minister can be torn up and discarded by another Minister, it will be very regrettable, and a very strange departure in the matter of government. I appeal to the Chancellor of the Exchequer to say that what the Minister of Munitions has agreed to do he himself will carry out. It is quite true that in some cases the controlled establishment will get the benefit But I think it takes something like 35 per cent. extra profit before the parties become equal. Again, it must be remembered the control of the works has been given up, and the businesses formerly carried on have been surrendered, and I suggest it is not right the Government should take all the benefits and discard all the disadvantages. I again ask for a clear and definite assurance that this 60 per cent. is not to apply to the bargain which we made for 20 per cent. If we get such an assurance it will shorten the discussion. If we do not, then we must take it that it is intended to whittle our 20 per cent. down to something like 8 per cent. That

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    is what it comes to. We want it laid down that when a member of the Government enters into an undertaking it will be abided by, and I do not think it will be in any way to the loss of the nation that that should be done.
    Mr. PARKES: The opinion of the manufacturers in the country is very much on edge as regards this matter. There is no doubt that manufacturers a short time ago were distinctly of opinion that they were to get 20 per cent. of their excess profits, and it is the feeling which has been engendered that that promise is going to be broken that is causing unrest among the commercial community at the present time. It does not pay the Government at all to make irate a great number of the manufacturers of this country. On the whole the manufacturers have been very loyal to the Government. They have made great sacrifices, they have done whatever the Government have wanted them to do in the most generous way, and to deprive them of what was promised to them some time ago by the Minister of Munitions is in itself a great blow, and is looked upon by them as a breaking of the contract made between them and the Ministry of Munitions. It looks very suspicious that two great Departments who are concerned practically with the same object are not prepared to come together and square their differences in this matter. I do not know whether they are capable of so coming together, but in a case like this, before this Bill was introduced, their differences ought to have been made plain and clear between them. It is a reflection upon the Government; it is something which the country will never forget. Whether a man is to get the 20 per cent. depends upon what is his basis. If he has a good basis his 20 per cent. will be a secondary consideration, but if he has only a poor basis from which to start 20 per cent. to him is a mere bagatelle. At the present time there are a great many men in this country who have what is called a very low basis, and instead of getting the 20 per cent. which was promised they are only going to get 8 per cent. I have a ease here—there are many of a similar character—in which a man says that instead of getting 20 per cent. he will only get 8 per cent. This is a great trial to these people, and I sincerely hope the Government will remedy it. I do not believe it will cost them a great amount of money to do it, but un-
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    less they do it they will lose in good will and their reputation as a Government very much in the estimation of this country.
    There is another question. I take it that a controlled body will never get more than 20 per cent., but that an uncontrolled body is quite capable of getting more than 20 per cent. It may get twice 20 per cent.; it may be 40 per cent. or 50 per cent. If that is the case, the generosity of the Government ought to extend to giving a man 20 per cent. from the beginning until the end. It is not a large thing to ask. There is no doubt that the chambers of commerce and many of the commercial men of the country are very much annoyed now. It will seriously affect the Government's reputation, and will cause the manufacturers to think that they have not been fairly done by if this tax is persisted in. I hope sincerely that the Government will carry out the bargain made in the first place, that the controlled firms should have their 20 per cent.
    Sir A. MARKHAM: I think the Government have deteriorated since the time they started owning racehorses. It seems to me a proceeding on their part which is only worthy of gentlemen who are generally found in railway trains or attending race-meetings, namely, card-sharpers and welshers. This arrangement which was entered into by the Ministry of Munitions was an honourable understanding arrived at between the munitions firms of this country and the Government as a whole. I ought to have prefaced my remarks by saying that I have no interest in any controlled firm. Everybody in this House is judged more or less by the concerns in which he happens to be financially interested. I have no interest in controlled firms. I am fortunate in not having interest in any controlled firms because under this Bill the controlled firms appear to have been sold bag and baggage by the Treasury for reasons of which we have yet heard no explanation whatever. The position of the Government is one they are bound to explain. The Minister of Munitions ought to have been here this afternoon on an important matter of this kind which affects the whole output of munitions in this country. When the Minister of Munitions entered into this bargain with the controlled firms they thought that the word of the Government on a financial matter would be carried out. There is no precedent in the history of

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    this House, so far as I know, in which an undertaking given by a Minister of the Crown on a financial matter has been repudiated by another Minister. I ask the right hon. Gentleman, is it or is it not a fact that the Minister of Munitions is in complete disagreement with the views of the Chancellor of the Exchequer upon this point? He remains silent.
    Mr. MONTAGU: I will interrupt the hon. Member. I know nothing at all about the matter. This Bill was introduced on the authority of the united Cabinet, of which the Minister of Munitions is a member.
    Mr. DENN1SS: Does he know anything about it?
    Sir A. MARKHAM: That is not the question I put to the right hon. Gentleman. I asked him whether it was a fact, yes or no, that the Minister of Munitions was in complete disagreement—
    Mr. MONTAGU: How can I answer that?
    Sir A. MARKHAM: Surely the right hon. Gentleman is in charge of the Bill, with his partner, who sits next him, the Chancellor of the Exchequer. We always thought the Financial Secretary to the Treasury at least had the confidence of the Chancellor of the Exchequer on an important matter of this kind, which he knows has been the subject of acute difference among all the controlled firms. This matter is one of common honesty. Are you carrying out a pledge given or are you not? Does the right hon. Gentleman deny that this undertaking was arrived at between the Minister of Munitions and the controlled firms? Therefore all I ask is will the right hon. Gentleman and the Chancellor of the Exchequer explain why they put a controlled firm which is working its machinery night and day in a worse position than they put coalowners or shipowners who are making far more profits in proportion to their capital than any controlled firms? What is the reason why, then, you take the works of one man, who employs machinery, working it night and day, with all the depreciation that follows, you work that machinery to its utmost capacity at a time when it is impossible to carry on repairs, and you say that firm should be placed in a worse position than a firm which is only working probably five shifts a week? The whole thing is absolutely indefensible.] What is the; explanation that the Govern-
    462
    ment is going to give us of this extraordinary proceeding? What actually occurs in practice is going to be this: If a controlled firm which before the War made a profit of £1,000 makes now a profit of £1,200 a year, the total amount it is going to receive under the Bill as it now stands is £1,080. That is to say, if the Government is going to take the Excess Profits Tax on the £200, which the company is allowed to retain under the bargain made with the Ministry of Munitions, all that they will be entitled to retain is £80 out of their excess profits over £1,000. But instead of paying Income Tax at 1s. 6d. in the £ on the £1,000, you are now levying tax on them at the rate of 5s. in the £, and therefore the controlled firm, working night and day, is going to be in the position of making a considerably less sum than it was actually before it was carrying out this bargain with the Government. I assume the Chancellor of the Exchequer is aware that the Minister of Munitions has entered into copartnership with a number of employers. Is he aware of the fact that he is finding part of the capital of some of these controlled firms with an undertaking that if the price of the commodities manufactured is below a certain figure, a certain scale is to apply, but if the price of the commodity exceeds the maximum amount named in the agreement, no further profit is to be made, and that at the end of the War there is a bargain on the part of the Government to take over this concern, or likewise there is a bargain for the firm itself to find the money to discharge the liability.
    I am not going to say it is right or wrong that you should establish and gather together a great number of accountants, and put them in munition buildings. In my opinion, you have a very able staff at Somerset House, and you never ought to have departed from the principle of keeping the whole taxing arrangements in the hands of the officers who have had such great experience. But you departed from that principle, very unwisely, and set up in the Ministry of Munitions a brand new set of accountants, gathered together from all parts of the country, who are working in absolute opposition to the officials of Somerset House. When the Chancellor of the Exchequer came to his office he found that the Minister of Munitions would not give him over these officials, and therefore you have two Departments, the Ministry of

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    Munitions and Somerset House, dealing with the subject of taxation. In both cases, owing to the Munitions Act not coming into operation till 15th July, all the accounts of these munitions firms have to go before the officials of Somerset House, and their pre-war standard has to be settled with the officials of Somerst House, and I cannot see for the life of me why you want to complicate the matter by bringing in another set of officials at the Ministry of Munitions, which can only be for the purpose of settling depreciation. That is all really that it is necessary to accomplish. I have always supported the Government on every single tax they have introduced for the purpose of raising money for carrying on the War, but I feel that this is an immoral proceeding. I have never yet known, since I have been a Member of the House, nor do I believe it has ever been in the history of the House, that a bargain entered into by a Minister of the Crown with the great industries of this country has been set aside for the sake of expediency because two Ministers did not happen to agree. The Chancellor of the Duchy says this is the Pill of a unanimous Cabinet. We have been told so often about this unanimous Cabinet, and we know that they have their secret meetings to discover how they can arrive at unanimity between one section and another. But be that as it may. There is no doubt whatever—the hon. Member for Sheffield said so across the floor of the House—that the Minister of Munitions was with the controlled firms. He was anxious to see that the bargain was carried cut. Therefore, I say to the Financial Secretary, even at this late hour, that Ministers have made a bargain which they have never repudiated, and it is the duty of the Treasury to see that it is carried out.
    Mr. NEEDHAM: I wish to support my hon. Friend by quoting the opinion of large numbers of engineers and firms situated in Manchester and the neighbourhood. Mainly those firms are textile machinists engineers, who have in previous years never done a single stroke of munition work until the War came. They all feel very strongly indeed that, having entered into this arrangement with the Minister of Munitions, it is not competent for the Chancellor of the Exchequer to start fresh terms at all. It is an unfortunate thing that there is an endeavour to make a new set of conditions in regard to
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    excess profits, and whether the bargain is a good one for the State or not, at any rate they feel that having made the arrangement of 20 per cent. over the prewar average, that is a position which should be adhered to. I want to give evidence from firms in Manchester and the district that they feel very strongly and urge upon the Chancellor of the Exchequer that the arrangement made with the Minister of Munitions should be adhered to.
    Mr. MONTAGU: I wish to assure the Committee generally that I feel very deeply the accusation of bad faith which is made from all quarters of the House, and I rise at the earliest possible moment to explain what I think to be the perfect justification, on that score, of this tax. I am not now talking of merits, but of the argument which has been advanced in all parts of the House about the bargain which was entered into by the Minister of Munitions with the controlled firms, and the statements which have been made that the whole of this arises out of a quarrel between two Government Departments, and that one Minister has repudiated the bargain of the other. In answer to the remark made by the hon. Baronet (Sir A. Markham), the Bill was introduced with this Clause in it after discussion and correspondence with the Minister of Munitions. I will also say that since my right hon. Friend made his Budget speech there have been conferences at the Treasury between the officials, the Minister of Munitions, the Chancellor of the Exchequer, and myself, as a result of which, in order to improve the dovetailing of the two charges one into the other, we agreed to accept the Ministry of Munitions calculations for depreciation and allowance for new capital, and we agreed that appeals should go from our tax to the Ministry of Munitions referee in order that there should be no avoidable duplication. So that the two Departments, the heads of the two Departments and the officials of the two Departments, have worked in complete harmony throughout this matter. Now I come to the charge of breach of faith.
    Sir A. MARKHAM: Does the right hon. Gentleman say, in specific language, that the Chancellor of the Exchequer approves of the principle embodied in this Bill. Yes, or no?
    Mr. MONTAGU: Yes, certainly.
    Sir A. MARKHAM: Docs the Minister of Munitions agree?
    Mr. MONTAGU: Yes.
    Sir A. MARKHAM: Does the Minister of Munitions personally agree? That is the question I asked.
    Mr. MONTAGU: There was a controversy—
    Sir A. MARKHAMmade a remark which was inaudible in the Reporters' Gallery.
    Mr. MONTAGU: The hon. Member, I regret to say, suggests that I have said something which is not true. There was a controversy between the Minister of Munitions and the Chancellor of the Exchequer on the subject of the dovetailing of the two plans. The Chancellor of the Exchequer, just before the introduction of this Budget, received a letter from the Minister of Munitions on the subject. This plan was explained to him in a letter, and he expressed himself satisfied with it. That is the whole history of the thing so far as I know. The Chancellor of the Exchequer is by my side, and he knows the circumstances. I very much resent the charge of untruthfulness that has been made against me. Now as to the charge of breach of faith. I base myself, Mr. Whitley, now that you have resumed the Chair, on an argument that was used by you. When this munitions levy was introduced, a point of Order was raised by the hon. Member for East Aberdeen, and you described it as not being a tax. You said it was a bargain, and that it could not be described as a tax. Your exact words were:
    "The State proposes to give certain establishments orders for war materials, and then it proposes limitation of profit, or what in Committee of Supply is called an Appropriation-in-Aid."
    That is a statement which I accept, and which I take as the foundation of my argument. This was part of a bargain between the Minister of Munitions, the trade unions and the controlled firms as a condition precedent for certain work which was to be done by those firms for the Government. I quite accept that, but it was not a tax, and it was not a bargain which in itself can exempt either party or any party from taxation. At the time that this bargain was made it was known that there was to be an Excess Profits Tax. On the 16th June I announced in this House the intention of the Government to introduce a War Profits Tax; therefore the people who made that bar-
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    gain with the Minister of Munitions knew that there was pending an Excess Profits Tax and had no reason to suppose that they would be exempted from it. The hon. Member's argument is this, if it is carried to its logical conclusion—I made last year £1,000 profit. This year I am entitled to make 20 per cent. extra on that or £200 extra. I made that bargain when the Income Tax was 3s. 6d. in the £; it has now been put up to 5s., and I have taken away from me by the subsequent enactment of another Department a large share of the profits that I believed at the time the bargain was made we were to be allowed to keep."
    10.0 p.m.
    The Income Tax is wholly different from the Excess Profits Tax, but my point is that they are both taxes and nobody can be exempt from one or the other by any bargain that may have been made with the State. That bargain does not contract them out of taxation. The Chancellor of the Exchequer, in his capacity as Chairman of the Sugar Commission, has made certain arrangements in regard to sugar, but that does not exempt the sugar merchants from the Excess Profits Tax. Under the Defence of the Realm Act there are numbers of contracts, where the contracts were bargains, but that does not enable those concerned to escape taxation, either Income Tax, Super-tax, Death Duties, or Excess Profits Tax, and I am at a complete loss to understand why a bargain entered into for the supply of materials on the one hand, or the supply of labour on the other, and for the limitation of profits in addition, can exempt the person who consents to it from any taxation which may be afterwards imposed. I cannot understand the argument. The position seems to me perfectly plain and straightforward. These gentlemen who are making munitions for the State are, like every other trader, to pay a tax which will leave them 40 per cent. more profits than they made before the War, as a consequence of their activities during the War. Is that a bad thing in principle?
    Mr. HENDERSONmade a remark which was inaudible in the Reporters' Gallery.
    Mr. MONTAGU: I am talking of the Excess Profits Tax. That is levied on everybody alike. We take 60 per cent. and leave them 40 per cent. Is that a fair thing?
    Mr. HENDERSON: Not in controlled establishments.
    Mr. MONTAGU: I am talking of the Excess Profits Tax, which is the subject we are now discussing. I hope the hon. Member (Mr. Henderson) will be kind enough to bear with me while I make my point. He said very hard things of me and my colleague.
    Mr. HENDERSON: I never said a word about you.
    Mr. MONTAGU: Does the hon. Member think that an imputation of bad faith in not keeping a bargain is a fair thing to have to listen to from this bench? We have our feelings as much as anybody else. The Excess Profits Tax leaves 40 per cent. in addition to the pre-war profits and takes 60 per cent. Is that unfair? That applies to everybody. I venture to suggest that just as the Super-tax applies to everybody who has more than £3,000 a year, so Excess Profits Tax ought to apply to everybody who has excess profits more than, I think it is, £200 that we allow. We allow no exceptions from the one and no exceptions from the other, and no relation between the State or any person, apart from taxation, ought to affect the taxation. You might just as well say that because a man has entered into a bargain with the State to supply munitions he ought to be exempted from the Super-tax that is put upon everybody with over £3,000. Taxation is a thing which does not admit of exceptions. It is a thing which ought to apply equally to all people.
    HON. MEMBERS: Hear, hear!
    Sir A. MARKHAM: That is my point.
    Mr. MONTAGU: My contention is, if the hon. Member for Mansfield would see it, that the munitions levy which he has so much in his mind is not a tax; it is part of a bargain with the Minister of Munitions. That is wholly apart from taxation.
    Mr. HENDERSON: You referred to it as a tax which was going to yield £65,000,000.
    Mr. MONTAGU: The munitions levy?
    Mr. HENDERSON: Yes.
    Mr. MONTAGU: Oh!
    Mr. HENDERSON: When you introduced the Bill, one hon. Member raised the question that you were not raising enough
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    taxation, and you said, "We are raising taxation by the Munitions Act of £65,000,000." Those are your own words.
    Mr. MONTAGU: I am surprised to hear that estimate. I do not know where I got it and I do not recognise it. I will make my hon. Friend a present of the fact that very possibly in some connection or other at some time or other—I have a very limited vocabulary—I forgot to use the word "revenue" and used the word "tax." Nobody knows better than the hon. Member himself that it is not a tax.
    Mr. HENDERSON: I can assure my right hon. Friend that the Minister of Munitions and he himself constantly referred to it as a tax.
    Mr. MONTAGU: I submit that a tax is something which is paid to the State as part of the cost of keeping up the Government of the country. This was part of a bargain. You got contracts from the Government, you got your labour under particular conditions, and you agreed to limit your profits. I appeal with confidence to the judgment of the House. The fact is that controlled firms are looked upon in the country, and I submit rightly looked upon, as a privileged class of firms, and to-day they are claiming additional provisions, exemption from taxation, which I venture to suggest they have no right whatever to obtain.
    Mr. HENDERSON: I would refer the right hon. Gentleman to a passage in Volume LXXIV. of the OFFICIAL REPORT, in which he will find he stated that the munitions taxes were £65,000,000.
    Mr. MONTAGU: Have you got it there?
    Mr. HENDERSON: I will get it.
    Mr. STUART-WORTLEY: The right hon. Gentleman who has just sat down referred to privilege. If the word means anything, it means a difference of status. In this case the difference of status means difference in burdens as well as the difference in rights, and if the right hon. Gentleman thinks that by basing the moralities of his behaviour and the equities that he seeks to impose upon others upon high-and-dry distinctions of House of Commons Standing Orders phraseology he will find himself led into some very strange places and he will find himself in some very strange company. I do not rise to make charges of bad faith, because for the benefit of the case for this Amendment no such

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    charges are necessary. Whether you call it the levy of a tax or whether you call the state in which these 4,000 controlled establishments are being put a state of privilege or not, it was expected when the Munitions Act was passed that the thing was being seen through, and that a definite arrangement was made which would be honoured by all parties. The Chancellor of the Exchequer says you cannot have a difference between classes of persons who are subject to taxation. So you ought not to. The person who has the least right of all to claim the protection of such a doctrine is the person who, if he has not created, has stood by while other persons have created—a fundamental distinction which makes that further distinction necessary. These firms were placed in a position of difference by the Government themselves, a position of difference such that you cannot in subsequent dealings with them do otherwise than recognise that difference. The right hon. Gentleman who has just sat down distinguishes between charges of bad faith, between charges of quarrels that have taken place between Ministers, of which I know nothing and say nothing, between those and the merits of the case. Those things are the merits of the case. There is nothing else in the merits of the case. Arrangements were made under which value has been given and received on both sides, expenditure incurred and risks taken, and every possible expectation created that you were finished with a matter which would benefit the State as much as the firms. I do not know whether after all the extremely able speeches that have been made much remains to be said. But it does remain possibly to say that in this doubtful position of getting what can in no case be a large additional revenue the Chancellor of the Exchequer is offending against all the canons of taxation of which previously he had been a defender in Parliament. While he is going to keep alive duplication of collecting staffs and a large and most unreasonable expensive collection, he is going to harass to the utmost the subject in his taxation, and he is going to leave behind him the deepest possible sense of injustice.
    Mr. MONTAGU: On a point of personal explanation. I have now discovered the horrible truth of the accusation of my hon. Friend behind me (Mr. Henderson). But if he bases his case on this quotation, it is a poor one. I will read it to the House. The hon. Member for Blackburn—this was
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    the argument—asked whether our principle was to obtain no more in taxation than that which is necessary to pay the, interest upon the debts which we have incurred, and I said—
    "That is certainly not our intention. Neither is it the result of what we have done. So far the interest on the New Debt will be £78,500,000 on the 31st March next, and the new taxes imposed by the Minister of Munitions will yield £65,000,000."
    I was interrupted, and I repeated:
    "A full year's interest on the debt that we shall have created by the 31st March next will be £78,500,000. The yield of the taxes proposed by the Minister of Munitions next year will he £65,000,000, and it is provisionally estimated that the yield of the new taxes proposed by the Chancellor of the Exchequer will be £101,000,000."—[OFFICIAL REPORT, 13th October, 1916, col. 1343, Vol. LXXIV.].
    The House will observe from those figures that I was giving the yield of the new taxation under two Budgets, one proposed by the Minister of Munitions when he was Chancellor of the Exchequer, and one proposed by my right hon. Friend.
    Mr. HENDERSON: That is not the point at all. The point was he spoke of taxes.
    Mr. MONTAGU: Those are not munitions taxes.
    Mr. PENNEFATHER: Like the hon. Member for Mansfield, I can say that I have no interest in controlled establishments, and I do not speak for them. But I would ask the Chancellor of the Exchequer to believe that there is a very strong feeling with regard to this subject among the commercial men of this country, and for this reason, that all respectable commercial men, such as those who constitute the chambers of commerce referred to by the Mover of this Amendment, who, as he very truly said, are generally agreed in this matter, have a very strong regard for what they call the sanctity of contract. What would the right hon. Gentleman say if in a private firm there were two partners and if one of them repudiated the contract on the ground that he himself did not sign the contract but that it had been signed by a partner? He would at once say that however honourable the intentions of that man might be, that in his act he was doing something which was not regarded as being strictly honourable—something which would not stand in a Court of Law. I would further ask the right hon. Gentleman: Are two Ministers in the Cabinet not practically partners in the Government of this country; and, if it is

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    wrong for a private individual to repudiate a contract made by a partner, can it be right, no matter how good his intentions, for a Minister to repudiate the act of another Minister with whom he is in co-partnership? That really touches the question of morality, and I do hope that the Government will not bring the House of Commons into disrepute in the country by urging it to repudiate, or consenting to repudiating, a contract made by one of His Majesty's Ministers in the name of the Government.
    Mr. McKENNA: Will the hon. Member point to any contract which liberated controlled firms from future taxation?
    Mr. PENNEFATHER: That is exactly, if I may say so with all humility and deference, the line of argument which is resented by the business men of this country. They will call it to-morrow or next day "legal quibbling." It is perfectly true, perhaps, that the Financial Secretary on some day in June, made the casual remark in this House that there would be an Excess Profits Tax, but does anybody suppose that went through the length and breadth of the country? I do not suppose one business man out of a hundred in this country was ever aware that the remark was made. What the business man does know is that when the Munitions Bill was introduced the Minister of Munitions made a very definite statement, and at this point I think that anyone who was likely to make munitions began to take notice, and to read very carefully, and he would find that the Minister of Munitions had said very definitely on the 23rd of June that the trade unions had insisted that there should be a definite Clause in the Bill in regard to the munitions profits. Therefore the people naturally turned to the Bill to sec what was the definite Clause. This was one proposing to increase the profits by 20 per cent. (not up to 20 per cent., as was said just now), but by 20 per cent. That was definitely proposed in the Bill and agreed to. Then the point was raised by the hon. Member for West Aberdeen as to what was the nature of the proposal. The Financial Secretary to the Treasury has just read out some words in support of his view, but unfortunately he read out the wrong words. If he had looked a little bit higher up he would have found that the Chair had ruled on that occasion that these two Clauses in the Bill relating
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    to this limitation. of profits "contained an arrangement by which certain persons who receive certain benefits" in the way of relaxation of customs and rules would at the same time surrender certain financial advantages which would otherwise accrue to them. It is in the nature of a contract; in other words a quid pro quo. Here was a very definite statement made by the Minister of Munitions, and here was a ruling by the Chairman, and I think the controlled firm and every business man would say that there was something "in the nature of a contract," and would never imagine, that a year afterwards the head of another great Department of the Government would turn round and say, "Ah, but we now have another proposition to make which will vitiate that contract." That was never contemplated. I do not impute any bad motives, but this what I may call mistaken and misguided action on the part of the Government is creating an intensely bad impression in the country. Rightly or wrongly, people think, and I can only use their own words in my own Constituency, "that it is crooked, that it is not straight." That is their view. I have here a communication from the Chamber of Commerce in my own Constituency which says definitely:
    "The Chancellor of the Exchequer has now stated that he will respect the arrangement, made in so far as it limits the surplus profits of such firms, but that he will ignore that portion of it which provides that such firms shall be entitled to receive profits up to the agreed amount."
    I think that is a fair statement of the case; a perfectly fair statement, and at all events that is the impression people are under. I submit it is a bad thing for the country and for the Government if, as a consequence of this—unintentionally perhaps—sharp practice, the best class of men in the country lose confidence in the Government. I do not think any amount which the Treasury can get out of these proposals will compensate it for that loss of confidence in the country. I should like to remind the Committee of certain matters which passed in this House, and which have convinced the people of the country that an agreement was made which is now being repudiated.
    Mr. McKENNA: An agreement not to impose taxation?
    Mr. PENNEFATHER: No. Of course everybody knows of Income Tax. If I may say so, I think the Financial Secretary

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    endeavoured to make a very weak point when he tried to show that his mere statement on 1st June that there was to be Excess Profits Tax—of an unspecified kind and an unspecified amount—practically put everybody under notice. He compared it with the Income Tax. We all knew there was Income Tax and Super-tax. That we could take into calculation, but how could anybody at the time the Munitions Bill was brought in bear in mind that simple statement of the Financial Secretary. I do not suggest that there was any bargain that no future taxation should be imposed, but if the right hon. Gentleman wants to secure the confidence of the country let him come boldly to the country and bring in a new Bill stating definitely that he proposes to introduce some new taxation under the authority of this House, and submit to this House and discuss it as a new measure. Do not let him try to bring this, thing in by way of a side-wind. I do not mean anything offensive, but I am telling him quite frankly the way the matter is looked at in the country. The country do believe that they have good reason, because the Minister of Munitions, in reply to some interruption—I think by the hon. Member for Blackburn—gave an example of what the new Regulation about the 20 per cent. increase of profits would mean. He said, on 28th June, that if they had paid—that is the munition firms—5 per cent., I assume he meant dividend previously paid, they would now pay 6 per cent. He did not say "provided an Excess Profits Duty does not come in and take away the means of paying 6 per cent." He made no reservation whatever as to an Excess Profits Duty being brought in and levied concurrently with this. Again, the hon. Member for the Attercliffe Division (Mr. Anderson), speaking on 1st July, 1915, made quite a number of calculations as to how this percentage would affect certain large firms, and in none of those calculations did he make any allowance for an Excess Profits Duty. Yet the Minister of Munitions, and the other members of the Government present, never disputed any of his calculations, or suggested that those calculations might be vitiated by the introduction hereafter of an Excess Profits Duty. There has been no correction of the common impression until quite recently, and until that announcement the munition firms were quite satisfied to pay liberally; but they feel now, rightly or wrongly, that they are the subjects of sharp prac-
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    tice, that they are being taken advantage of, that they are having something extracted from them more than was originally intended. It is only because of that feeling that the commercial men of the country are rising—the right hon. Gentleman smiles; I do not know why he should. I come into contact with chambers of commerce and with at least as many of the leading commercial men of the country as he does, and they do not smile; they take this matter very seriously, because it is, they say, against public morality. They think it cannot be good for the Government to set a bad example in commercial morality, and they claim, I think rightly, that the Government should not endorse the action of the sharpers in the City—[HON. MEMBERS: "Oh, oh!"]—one of whom would say, "I will not be bound by a contract because I did not sign it personally; it was only signed by my partner." That is the point which rankles in the minds of commercial people, and that is why a large number of influential business men of the highest class are prepared to support the owners of the controlled establishments in their resistance to this arrangement.
    Sir FRANCIS LOWE: Representations have been made to the Committee by Members representing several of the large towns, including Sheffield, Liverpool, and, I think, Manchester, to the effect that this proposal of the Chancellor of the Exchequer is creating a great deal of ill-feeling amongst the owners of the controlled establishments in those large towns. I want to say that I represent Birmingham, another large town, where there are a great many controlled establishments, and that a like feeling of irritation exists there. I have had a very great many communications on the subject. It is perfectly certain that in the case of the smaller establishments of this kind this proposal will press very heavily. An instance was given to me in which a firm's standard amount of income was £10,000, with excess profits of £2,000. That meant that they were entitled to retain the £2,000. Under the proposal of the Chancellor of the Exchequer, £1,200 of that £2,000 will be taken, so that the firm will only be entitled to retain £800. The Chancellor of the Exchequer made a great deal of the advantages that were given to the controlled establishments by the arrangements entered into. I fail to see that advantages were conferred upon them. They did not seek to become controlled

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    establishments: they were asked by the Government to become controlled establishments. [An HON. MEMBEB: "No!"] And they simply, as patriotic men, consented to do so. On the basis of that arrangement a certain agreement, or, as it was described by the Chairman of Ways and Means, a contract was entered into. That contract having been entered into, whether it is by one member of the Government or another, I myself think it is very desirable that it should be observed. If the contract is abrogated by one side it certainly is likely to cause a very considerable amount of irritation in the minds of those people who are injured by it. I cannot for the life of me see why that irritation should be caused, unless the Chancellor of the Exchequer can tell those concerned that he is going to gain a considerable amount by breaking the contract. I do not believe that he will gain anything at all by it. He said himself that some of those controlled establishments would have to pay more, and some less, under the alteration which he had proposed. I think if he works it out he will find that the chances are that he will get less rather than more by making this alteration. I say unless he can absolutely convince himself that he is going to make more by the alteration proposed than he does by the present system it is perfectly childish and foolish for him to cause this irritation in the country, and lay open to the imputation of bad faith any member of the Government. For these reasons I most strongly urge upon the Chancellor of the Exchequer to reconsider his position in this matter. It is perfectly worth while that he should do so even from the practical financial point of view. The amount he will gain by this alteration, I am perfectly certain, will be practically nil. Therefore, I do not think it is worth while for the right hon. Gentleman to lay himself open to this charge of bad faith.
    Sir GEORGE TOULMIN: do not wish to follow on the lines in which, in rather too large a fashion, a Minister is charged with bad faith, because there is certainly something in the argument of the Chancellor of the Exchequer as to the necessity of equality in any such tax as an Excess Profits Tax. But I think that in this case he is not doing quite justice by imposing his tax in the manner in which it will be imposed, unless this Amendment is carried. It is penalising the smaller firms, who are not
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    making great profits. The Secretary to the Treasury spoke of the controlled firms as a "privileged class." But this privileged class is privileged in paying not 60 per cent. extra, but the whole of the extra above a certain datum line—that is, extra over one-fifth above their standard year. Against that they have had to have their whole ordinary business disturbed. Why were they allowed this one-fifth extra profits It was given to them because the whole of their business and the whole of their goodwill were put at the disposal of the Minister of Munitions. It was too much for the disturbance which in many cases was caused to businesses which were developed on a special line. Lathes had to be changed, new machinery set up, and their ordinary customers very frequently very much disappointed. It was not too much to say to those men that they should be allowed to secure one-fifth extra profit—that is to say, if they were making 5 per cent. they should be allowed to make 6 per cent.—and even if there is a large and generous allowance made to restore the works to their past footing, it still is for a great many of them, I might almost call it a gamble as to whether they will come out with any particular profit at the end of it. Several speakers have quoted the instance of a firm making £10,000 and now being allowed to keep £800 instead of the £2,000 less Income Tax which ought to have gone to meet the liability which every firm will have to face at the end of its period of control. I really think that the Chancellor of the Exchequer should look upon this as a question of graduation. He has allowed a lump sum as a graduation of this Excess Profits Tax. He allows a couple of hundred pounds whatever the profits may be. In the case of small firms that is a substantial amount, but in the case of a large firm it is not a matter of very great moment. I think the graduation with regard to controlled firms ought to be the amount of the graduation which the Minister of Munitions allowed, which was a fifth. I hope the Chancellor of the Exchequer will take notice of the fact that, so far as I recall, not one Member of the House has supported his proposal. During the whole of this evening every Member has criticised it, and I hope he will reconsider this tax before it is carried.
    Mr. PETO: I want to ask the Chancellor of the Exchequer whether, before we divide on this Amendment, he cannot

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    give the Committee some estimate, at any rate an approximate estimate, as to what it is he is really out to gain for the Treasury, because if you get a proposal on the part of the Treasury which meets, as the hon. Member who has just sat down said, with the absolutely undivided opposition of every member in the Committee who represents any business, or is in contact with any business of any sort or kind, surely there must be something of real import for the winning of the War to make it worth while to persist in a proposal which, however much it may be defended by the Chancellor of the Exchequer and the Secretary to the Treasury, does in the eyes of the business community certainly not savour of straight and fair dealing. I do not wish to add to the many hard things that have been said by various Members. Several have merely tried to represent to the right hon. Gentleman what is the ordinary accepted opinion of the business community as a whole. Now is it worth while to run counter to that opinion? With all deference to your ruling whether this is technically within the Rules of Order or not, what does all that mean to the business community outside? Our technicalities are incomprehensible to the business community outside this House. All that they know is that one Minister has made an arrangement by which a large contribution—I use the word advisedly—to carry on the War is made on a certain basis, and that after they think the whole matter is finished and settled, after they have entered into elaborate arrangements with the Minister of Munitions, another Department of the Government can come over the head of that Minister, who was so lately Chancellor of the Exchequer, and who therefore stood in a peculiar position of responsibility in any matter of any charge upon the trade, and can say, "Quite apart from that, our rights as the Treasury override everything that has been done." The Financial Secretary said that they had made arrangements to accept the scale of depreciation fixed by the Minister of Munitions in order to avoid duplication of accounts, but the Chancellor of the Exchequer says they had to ascertain whether he would pay more or less under the munitions levy or the Excess Profits Tax, and I ask is it possible to avoid this duplication of accounts? I will not go further into the question now, but will the Chancellor of the Exchequer tell us now how much he is out to get? There
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    will be an enormous loss of time in making up two statements of accounts to satisfy two sets of officials and that, quite apart from the question of bringing in the Treasury officials to go over the accounts a second time in order to get practically nothing at all in £ s. d. to help to win the War. Is it worth while? There is no money in it, and why run counter to the universal opinion of the business community throughout the country? Is it worth pressing to a Division in this Committee a proposal about which not a single Member who has spoken can vote with the Government although most of them have been consistent supporters of the Government all through in order to get nothing and merely to maintain the principle of Treasury control over all taxation? The Munitions Act is a temporary measure, and all that the Chancellor of the Exchequer is out to gain will be ensured to the Treasury the moment the War is over, and then this special imposition ceases to be operative. I know that in the view of the Chancellor of the Exchequer this is not a tax, that it is an imposition purely temporary in its operation, which must not be reckoned in with the total of his Budget. It is a thing, sui generis, that must not be reckoned up as part of the general taxation of the country. I know that that is the view of the Treasury, but the whole thing will lapse in a few months, or a year, and what the Chancellor of the Exchequer really wants to get is the maintenance of a principle which is bound to come in the moment the country is at peace. I cannot help thinking that the Chancellor of the Exchequer will think it worth while to give up this proposal even at this late hour in the discussion.
    Mr. CURRIE: I have listened with growing indignation to most of the speeches made to-night levelling charges of bad faith against the Government and the Chancellor of the Exchequer. The myth as to the attitude of the late Chancellor of the Exchequer has been dissipated, and the story about the £65,000,000 of so-called taxes has been discovered to be a first-rate mare's nest. The hon. Member for Windsor (Mr. J. Mason) admitted that at least 90 per cent. of the firms affected were not in existence as controlled establishments when the alleged bargain was made, and the hon. Member for West Aberdeenshire (Mr. J. M. Henderson) admitted that no time limit or element of permanency was attached to the original bargain. I admit that a contract was made, but it

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    was a contract for the division of profits, very much of the same nature that an ordinary manufacturer makes a dozen times in a week. After all, most of his contracts effect a division of his profits in some way. But to make a contract as to the division of profits is one thing, and how you are to be taxed on your profits after you have made them is another thing. I submit that the persistent attempt to assume that the one hangs upon the other, which has underlain nine out of ten of the speeches in this Debate, is extremely fallacious. Nothing would induce me to believe in the proposal that the Chancellor of the Exchequer or the House of Commons should give up the right to say what tax ought to be levied. When I hear arguments as to the unfair incidence of the tax, I must say that if the War goes on long enough, some of those who use them may have to revise their views. I do not think it sound to lay such emphasis on the trouble caused to firms by the different accounts required by the Income Tax and the other taxes. I agree that the trouble is great, but it is not so great as it has been endeavoured to make out. The hon. Member for West Aberdeenshire (Mr. J. M. Henderson) drew a picture of the profits which controlled firms were not making, and instanced the case of a contractor who unfortunately had made bad shells of some sort and had made no profits. I ask him: If there is no profit, where is the tax? If there is no profit, there is no tax.
    Mr. HENDERSON: The hon. Member attributes to me something which I did not say. I never said anything of the kind. I said that a man who makes a small profit requires the whole of it and more to replace his goodwill which he has lost.
    Mr. CURRIE: My recollection is that the hon. Member said a great deal more than that, but one thing the hon. Member did say was that the Minister of Munitions had been quite right to reduce his prices for a good many things 40, 50, and 60 per cent. It appears to me that if he adheres to that opinion he has not very much of a case against the Ministry of Munitions. I do not agree that the goodwill of all businesses which have spent large sums in falling in with this agreement has been dissipated. It remains, of course, to be seen. If, when the time comes, these firms are badly treated by the Government, then I dare say that
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    some of us may have a good deal to say, but they have not been badly treated yet. I do not know what the Chancellor of the Exchequer intends to do, but something has been said about the feeling in the country. If the Chancellor of the Exchequer is going to tax some 4,000 firms, of course I suppose he knew all along that there would be a good deal of feeling among them; tout, after all, there are other people in the country in addition to the 4,000 being taxed. I have had the ordinary circular sent to me on the subject, and I know the argument quite well, and the feeling quite well, too. The feeling in the country is behind the Chancellor of the Exchequer. When we were first told by the Chancellor of the Exchequer that the tax for the coming year was to be 60 per cent. he did indicate that he recognised that 60 per cent. was as high a tax as he could possibly impose, and the Secretary of State for India (Mr. Chamberlain), who spoke the same afternoon, indicated that he shared that view. I do not know what view the Chancellor of the Exchequer might have been inclined to take on the merits of the argument addressed to him, but I sincerely hope that as he has been accused of unfair dealing, or being a sharper, a swindler, and a dishonest shopkeeper, he will inform those who used that language that whatever he might have done in response to argument he is not going to give in response to their abuse.
    Sir J. COMPTON-RICKETT: Those hon. Members who have brought this question forward at the desire and on behalf of constituents have, if I may say so, overdone their ease. It makes it very difficult indeed for the right hon. Gentleman to make concessions, supposing he were inclined to do so, when he has to make them under levelled guns and charges of dishonesty and unfair treatment. So far as the Government is concerned, I think they have made out an unanswerable case The only thing that could be said is that when arrangements was first made it was not known although it had been foreshadowed that there might be and probably would be a step taken by which a large proportion of the profits in excess of those made in ordinary times would be taken. But subsequently there was a large addition to the number of munition factories, and I should have thought it would have occurred to the representatives of those interested to have got from the

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    Chancellor of the Exchequer a statement whether the arrangement made would preclude any subsequent taxation on the profit left in their hands. I want to be perfectly fair: they were negotiating with a Minister who had once been Chancellor of the Exchequer, and they may have fallen into the mistake that the large proportion taken in excess of the normal profits was all that would be demanded. If the case had been urged in another way—in a more moderate way there might have been reason for asking the Government to reconsider the matter to some extent, but it could only follow the withdrawal of the charges that have been made; otherwise I do not see how the right hon. Gentleman could make a concession when technically he is on safe ground. The proportion of the profit is sometimes spoken of as if it were the whole of the profits. But many of these firms had been making other profits up till then, and this is only the sugar on the cake itself. I would suggest if the matter is allowed to go over to-night, some further consideration could be given to it. It is not for me to say, but if a better spirit were shown the Government might see their way to listen, at any rate, to further explanations, and perhaps make some further concession.
    Mr. ANDERSON: One would rather gather from listening to the speeches that have been made that the country is more or less seething with discontent in regard to this matter.
    Sir F. LOWE: Not seething.
    Mr. ANDERSON: I can only say that so far as many of us are concerned we have not yet encountered any of this discontent, and I am quite sure working people are not aware of any of the terrible hardships the Treasury are said to be imposing on these firms. The general feeling is that far too large profits are being made out of the War, and that the prices of commodities are being forced up very high indeed. [An HON. MEMBER: "Not on shells!"] The question that seems to have been raised is that there was a contract between the Government and the controlled firms, and that any increase in taxation is a breach of that contract.
    Mr. HENDERSON: No.
    Mr. ANDERSON: Yes. It is said that to increase the amount of the excess profit that is taken is a breach of the understanding.
    Mr. HENDERSONmade an observation which was inaudible in the Reporters' Gallery.
    Mr. ANDERSON: You are quibbling on the matter. I can say this, that the financial needs of the country will be paramount in regard to a matter of this kind. The point I particularly want to make is one that must be taken into account by those who are pressing forward this matter and also by the Chancellor of the Exchequer. It was not only the heads of these controlled establishments who were affected by the establishments becoming controlled. Very serious restrictions were placed upon labour at the same time under the Munitions of War Act. Under that Act, which deals with the question of controlled establishments, the working people were legally debarred from leaving one establishment in order to go to another establishment where they could get higher wages. If you have a contract with labour and working people are debarred from going where they can get higher wages, are you going to stop all increase of wages? Have you done anything to bring down the Income Tax? Have you done anything to bring down the taxes on food stuffs or the tax on sugar? Do you propose to stop all those taxes because labour in regard to all these controlled establishments is not entitled to leave except under the penalty of six weeks' enforced idleness? These matters are vital. It is not only you who will have charges to make against the Chancellor of the Exchequer. We, in turn, may also have charges to make against the Chancellor of the Exchequer in regard to a matter of this sort. No contract of this kind can be made that will not be subject to the financial and other exigencies of the country. That seems to be the paramount interest. I know hon. Members do not mean anything. I know they do not expect to get anything out of this matter. If that is the position, I do not know what all the trouble is about.
    Mr. HENDERSONmade an observation which was inaudible in the Reporters' Gallery.
    Mr. CROOKS: You expect to make a bit out of it. Do not make a row.
    The CHAIRMAN: The hon. Member for West Aberdeenshire (Mr. Henderson) has had a good share of time in this Debate.
    Mr. ANDERSON: The whole question that arises in this Debate is whether more money is going to remain with these controlled establishments, or whether more money is going to the Treasury. If that is not the issue, I should like to know what it is and what the Debate has been about. The whole question from the workers' standpoint is involved in this matter, and from every point of view the Chancellor of the Exchequer will be well advised to stick to his guns and see the thing through.
    11.0 P.M.
    Mr. McLEOD: After hearing one or two speeches in this Debate, I made up my mind that I would take no part in it, for the simple reason that what was said by hon. Members who have spoken fully and entirely expressed my views. But since I have been in the House lately I have heard a reference made to the opinion of certain Members for large industrial cities in England, and I should like, as representing one of the large industrial cities in Scotland, to say that the feeling there with regard to the proposals of the Chancellor of the Exchequer is very strong indeed. I regret certain expressions which have been used. They are wholly unnecessary. I am sure the Chancellor of the Exchequer believed be had the power to make this charge, but I can assure him that if he went to Glasgow and induced the Financial Secretary to go with him and make speeches such as we have heard tonight, it would not alter one whit the feeling of all the controlled firms in Glasgow that something that they held to be a bargain has been broken. Reference has also been made to the fact that the controlled businesses have certain advantages over the uncontrolled businesses. It is entirely the other way. All the uncontrolled busineses are allowed to go on continuing their whole businesses, and in no way losing their goodwill, but in a very large number of cases they have had to drop entirely the work they were doing before they took on munitions work for the Government and look on, while other countries are eating up the business they did before. Therefore the position of the controlled business is very much worse than that of the uncontrolled.
    Mr. POLLOCK: I agree with the hon. Member (Mr. Anderson) that the issue of the Debate has become a little obscured. Thinking over the weight of the arguments, it occurs to me that we may cast aside all the so-called charges which have
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    been levelled against the Chancellor of the Exchequer. I do not think he looks any the worse for it, and, as I understand, there was an effort to translate from Parliamentary language into the vernacular certain things which are being said in the market place and in the various places where people meet, and, like many other translations, they suffer somewhat in the process. There we may leave it. But the Chancellor of the Exchequer will feel not the least uneasy. He will sleep just as soundly, although a great many observations have been made, possibly in order that he may understand what he would hear if he was to go down to the market place, where he, happily, has not got to go. He is here with us, and we may cast aside all this sort of observations as rather obscuring the Debate. Then let us see how he puts the case. As I understand it, it is this. I cast aside, from myself, these words "levy," or "tax," or "imposition," and so on. We might possibly focus attention on an expression like loss of money, because in both cases it involves loss of money. But the Chancellor of the Exchequer might fairly put it this way, that such money as is taken from the controlled establishments is by way of an entrance fee, whereby these controlled establishments were able to come into the body which now numbers 4,000, and in which control was to be exercised, he says, for some privilege that they gained.
    Sir A. MARKHAM: They were forced to come in.
    Mr. POLLOCK: You are quite right. They say, "No privilege was granted to us. We were forced to come in. Therefore we have paid the entrance fee, if you like to call it that, under force. We were compelled to pay it." Having made them pay this entrance fee the Chancellor of the Exchequer comes down and says, "We will now impose a further tax which is to be levied upon you and is to be levied upon the uncontrolled establishments in respect of excess profits in precisely the same measure and in the same way," subject to this, that there is to be a superfluity of method by which he is to get this tax. In fact, having got this entrance fee he now levies a tax upon the just and the unjust. That is very fair on the right hon. Gentleman's part, but those who are going to suffer do not feel it in that way, and they have expressed their feeling warmly through their representatives to-night. That feeling exists, and what I cannot

    485
    understand is that the Chancellor of the Exchequer has not told us what is the real amount that is at stake. Supposing we were told this, "Well, if I give up I shall lose £10,000,000, £20,000,000 or £30,000,000." In that case we should all feel that in the finance of the nation it is a very important thing not to lose so large a sum, but if the sum is, as the hon. Member for Birmingham said, a matter of estimate only, and possibly that the Chancellor of the Exchequer will lose more by this method than he will gain, then why on earth do we have this discontent? Why do we have these misgivings arising? Why do not we have a system on which we can all work harmoniously together? I suppose we are going to proceed to a Division at once. I regret very much that the Committee should be put in the position of striking possibly a discordant note. I should have thought the Chancellor of the Exchequer, unless he is going to gain some very large sum from it, would have made some sort of proposal which would have enabled us to join together and to report what is really the true feeling of the country, and desire, even under some difficulty, to work together.
    Sir T. WHITTAKER: I should like to say how this Debate has struck me. I came here with an absolutely open mind on this matter, and, as hon. Members know, I have no interest of any shape or form in it. I will say what appears to me to be the real view of what has been called a bargain. I think there was a feeling that when these concerns were being taken over by the Government there should be some limit put on the profit which they were to be allowed to make, and it was decided that the limit should be as was provided. It was a decision that there should not be above a certain amount of extra profit made. When you have arrived at the amount of profit made these firms are in the same position as anybody else, and if the Excess Profits Tax is to be levied upon people who have made a profit in excess of the profit they were making before the War, surely these people who as controlled firms have made these extra profits should be liable to that Excess Profits Tax in the same way as anybody else.
    Mr. HENDERSON: But no more.
    Sir T. WHITTAKER: They are not going to pay any more.
    Mr. HENDERSON: Yes, they are.
    Sir T. WHITTAKER: No. The provision which limits their profit is not a tax. It is a provision that under the conditions under which they are working, where the ordinary rules of commerce will not apply, they shall not make profits in excess of the profit they made before beyond a certain limit. That simply decides what the amount of profit is to be, but they will still be making possibly an excess profit as we understand it, a profit in excess of what they made before the War If they are in that position surely it is just that they should pay Excess Profits Tax in the same way as anybody else who is making a profit in excess of that which was made before the War. That is the way the matter strikes me. I am free to confess also that I am much impressed by the fact that the representatives of large industrial constituencies do say that this has not been their interpretation of what it means. I regret very much that charges should have been made—most offensive charges, and in my judgment absolutely indefensible and unjustified—as to bad faith. I do not believe that there is an atom of ground for them. That is perfectly clear.
    Mr. HENDERSON: I did not make them.
    Sir T. WHITTAKER: Yes you did. There does remain the solid fact that there is a feeling that this was intended as a tax and that there is some misunderstanding in connection with it. I do not know whether the Chancellor of the Exchequer will see his way after what has taken place to do anything to meet that feeling. Personally I feel that the tax which he proposes to levy is perfectly justified on the ground that it is a tax on profits in excess of those which were made before the War.
    Sir H. DALZIEL: I cannot but feel that the Committee has been labouring during the whole of the evening under the disadvantage and not having someone present able to speak with full authority on behalf of the Ministry of Munitions. It does seem to me that in a Debate of this kind the Committee would have been greatly assisted by someone who was in a position to say exactly what the view of the Ministry of Munitions was. Then the Committee could have decided as to the merits and demerits of the various arguments put forward. I am not blaming, my right hon. Friend the Minister of Munitions. We all know that his hands are very full at the present time. But I do think

    487
    that someone might have been able to state the views of the Ministry of Munitions on the present occasion. I do not agree with some of the strong language that has been used as to charges of breach of faith. I believe that my hon. Friend the Member for Mansfield (Sir A. Markham) did make some rather strong charges. Even he, I am sure, would not suggest that he was making any charge of a personal breach of faith against the Chancellor of the Exchequer. So far as I am concerned that is the only thing that counts. To make a charge of breach of faith against the Government is patriotism in perpetuity, therefore I think we need not attach too much importance to what has been said on both sides with regard to this matter. I am concerned principally with what is going to assist the successful carrying on of the War. I am against undue profits of manufacturers in regard to the making of munitions, but I am also against the Government doing anything that is going to cause any disgruntled feeling among the people who are responsible at the present time for the equipment of our arsenals. I would suggest to the Chancellor of the Exchequer that he does not wish to carry this merely by a vote to-night with all the influence which the Government can bring to bear by putting on the official Whips. That would probably not settle the question, and I appeal to him as an old Parliamentarian who is able to judge the opinion of the House generally whether, apart altogether from the merits of the case, there has not been stated to-night a case which requires a little fuller consideration than has been given to it at the present time. He can lose nothing, because this question can be raised again. He will have the satisfaction that he is not simply carrying this out in the teeth of the expression of opinion which has been made in all parts of the House. He will still have a majority at his command which he can use on a future occasion. I would suggest whether it would not be to the benefit of the general purpose he has in view to adjourn the Debate in order that he may confer with his right hon. Friend the Minister of Munitions; and probably he might come forward with a further view on a future occasion, not necessarily a different view from what he has expressed to-night. Therefore, I beg to move, "That the Chairman do report Progress and ask leave to sit again."
    Mr. McKENNA: My right hon. Friend who has just spoken, and my right hon. Friend behind me (Sir T. Whittaker) have both suggested that it would be advisable that the conclusion of this subject should take place on a later occasion, on Monday next, instead of going on at this late hour. I am very much impressed, and particularly impressed by the fact that I have been asked through the whole course of this Debate if I can give any figures as to the effect on the revenue of accepting the Amendment. At this moment I am not sure that I could give figures on Monday, but I do feel the force of the argument which has been advanced that we are having a great deal of discussion about matters concerning pounds, shillings, and pence. It has been said that it would not be a very large amount, but in my opinion it would be a very large sum. I do not know whether I shall be able to give the figures on Monday. I hope that I shall be able to give some figures, and I do feel the importance of the argument that we-should know the sum. I accept the-Motion to report Progress.
    Mr. S. ROBERTS: I should be only too pleased to agree with the Motion if I thought that the object of the Adjournment is really to meet this question, but I am rather doubtful whether it has not been accepted because the right hon. Gentleman has not got a majority.
    Mr. McKENNA: I have got a majority. I understand it is small, but it is a clear majority.
    Mr. ROBERTS: I will put it in this way—a better majority on Monday, and I do not think that a proper reason. But if the Adjournment is for the purpose of really meeting the question, then I concur; if it is only for a larger majority, I do not.
    Sir W. ESSEX: I am one of the Members who have sat patiently listening to the Debate, and I cannot but resent the charge implied against the Chancellor of the Exchequer by the hon. Member with regard to the Adjournment. We have 6at here as men of business, some of us having no interest whatever in munitions, and we have felt that a lot of cant is being talked by these people.
    Mr. STUART-WORTLEY: On a point of Order. Is it in order, on a Motion to

    489
    report Progress, that an attempt should be made to bring back the main subject of discussion by the use of unparliamentary language?
    The CHAIRMAN: What are the points of Order?
    Mr. STUART-WORTLEY: They are the raising again of the main debate and using unparliamentary language.
    The CHAIRMAN: Whether the hon. Member was speaking irrelevantly to the Motion I was unable to gather from his first sentence. With regard to the use of unparliamentary language, I gather from what I have heard since I resumed the Chair, that there has been a great deal of unparliamentary language used, and I do not think, having regard to the character of this Debate, that I can rule out the discussion.
    Sir W. ESSEX: I do not want to excite feeling, but what I say must, on the whole, stand. I do not want to say I am not prepared to support the Motion to report Progress, but do not let it be supposed that by the acceptance of that Motion those of us who have sat here have less strong feelings or are one whit less loyal in our support of the Government. Our anxiety to get this business through has kept us silent.
    Sir F. LOWE: I readily and cordially accept the suggestion of the Chancellor of the Exchequer that we should not come to a decision to-night. I know that on several former occasions the Chancellor has proposed the Adjournment in order that he might have time to consider the question further, and with most admirable results. I venture to express the hope that this Adjournment will lead to a very satisfactory settlement of this undoubtedly great difficulty.
    Mr. AINSWORTH: I think that hon. Gentlemen might very profitably spend the time between now and the resumption on Monday in making up their minds as to the reply to the question asked earlier this afternoon by the Chancellor of the Exchequer as to the taxation to be imposed.
    The CHAIRMAN: Is the hon. Member proposing to resume the Debate on the main subject?
    Mr. AINSWORTH: Oh, no, Sir!
    The CHAIRMAN: At any rate he was doing so, perhaps unconsciously. He must deal solely with the Motion to report Progress.
    Mr. AINSWORTH: The only reason for the Motion to report Progress is to enable hon. Members to come to a decision, and I suggest that they should employ the time in considering what answer they will give to the question of the Chancellor of the Exchequer.
    Committee report Progress; to sit again upon Monday next.
    The remaining Orders were read, and postponed.

  MILITARY SERVICE.

    CONSCIENTIOUS OBJECTORS.
    Whereupon Mr. DEPUTY-SPEAKER, pursuant to the Order of the House of the 22nd February, proposed the Question, "That this House do now adjourn."
    Mr. BARNES: I desire to ask the Under-Secretary a question of which I have given him notice. It is in reference to a report current in the Lobbies to-night that four men in France have been sentenced to death. These men are stated to be conscientious objectors, and there is a very general feeling of resentment or alarm that after the many statements which have been made from the Front Bench in regard to the treatment of these men and the promises which have been made about their being turned over to the civil power by the military, and the assurances that these men would not be sent to France at all—it is somewhat alarming that a report of this sort should be current. I cannot believe it is true, and I merely raise the question now to give the right hon. Gentleman an, opportunity of assuring the House that this particular report is not true. I hope he will also give an assurance that something will be done by which public feeling may be allayed in regard to this matter.
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): Many rumours with regard to the treatment of conscientious objectors have been circulated, and the great majority of them are untrue.

    491
    This is only, I assume, one of those. When I say that I assume, I have no information on the subject. As my right hon. Friend will realise, I have had no opportunity of ascertaining anything of the kind. I can assure my right hon. Friend that I believe it to be wholly untrue, and I shall be very glad when I have had time to investigate the question to give full information to my right hon. Friend and to the House. I can assure my right hon. Friend that there is no wish on behalf of the military authorities that they should treat conscientious objectors in any other way than other soldiers. They are soldiers. They are handed over to us as soldiers, and we must treat them as such. [HON. MEMBERS: "Oh, oh!"]
    Mr. WHITEHOUSE: Are you going to shoot them?
    Mr. TENNANT: They are handed over to the military authorities as soldiers. There is no option on the part of the military authorities to treat them in any other way than as soldiers. If my hon. Friend, who seems to be excited over that statement, really takes any other view, I should like to hear what it is.
    Mr. WHITEHOUSE: I will tell you when I get the chance.
    Mr. TENNANT: It is quite obvious—
    Mr. WHITEHOUSE: What about your promises?
    Mr. TENNANT: It is quite obvious that they must be treated as soldiers. It is quite true that we have given promises in relation to this matter—
    Mr. WHITEHOUSE: Carry them out!
    Mr. TENNANT: Because it is impossible that desertion in the face of the enemy can occur in regard to non-combatants. They are not in the face of the enemy; therefore they cannot be treated in any other way than as persons who are not in the face of the enemy. I can assure my right hon. Friend who has put the question that there is no intention of dealing with them in any way harshly, and that there will be no question of their being sentenced to death.
    Mr. WHITEHOUSE: May I—
    It being Half-past Eleven of the clock, Mr. DEPUTY - SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned accordingly at Half after Eleven o'clock till Monday next, 26th June, pursuant to the Order of the House of the 22nd February last.

  PETITION PRESENTED.
  The following. Petition was Presented and ordered to lie upon the Table:—
  TUESDAY.
  Manufacture and Sale of Intoxicating Liquors during the War. Petition from Huddersfield for prohibition.
WAR.
  NORTH-EAST COAST BOMBARDMENT (COMPENSATION INQUIRY).
  NORTH-EAST COAST BOMBARDMENT (COMPENSATION INQUIRY).
  EXCESS PROFITS DUTY.
  EXCESS PROFITS DUTY.
  AMERICAN BEEF TRUST (INCOME TAX).
  AMERICAN BEEF TRUST (INCOME TAX).
  WAR SAVINGS (WEEKLY STAMPS).
  WAR SAVINGS (WEEKLY STAMPS).
  REGISTRATION OF SHIPS IN BRITISH PORTS.
  REGISTRATION OF SHIPS IN BRITISH PORTS.
  DROGHEDA (CLOSING OF PORT).
  DROGHEDA (CLOSING OF PORT).
DISTURBANCES IN IRELAND.
  AKBESTS.
  AKBESTS.
  TEEATMENT OF PRISONERS.
  TEEATMENT OF PRISONERS.
  PRISONERS' LETTEES.
  PRISONERS' LETTEES.
  PRISONERS RELEASED
  PRISONERS RELEASED
  DUBLIN CORPOBATION.
  DUBLIN CORPOBATION.
  COMPENSATION (BASIS).
  COMPENSATION (BASIS).
  IRISH PRISONERS IN ENGLAND (VISITS).
  IRISH PRISONERS IN ENGLAND (VISITS).
  YOUTHFUL PRISONERS.
  YOUTHFUL PRISONERS.
  WANDSWORTH DETENTION BARRACKS.
  WANDSWORTH DETENTION BARRACKS.
  RAHENDORAN LIME WORKS.
  RAHENDORAN LIME WORKS.
MILITARY SERVICE.
  NON-COMBATANT CORPS.
  NON-COMBATANT CORPS.
  CONSCIENTIOUS OBJECTORS.
  CONSCIENTIOUS OBJECTORS.
  RECRUITS (ALLOTMENT TO REGIMENTS).
  RECRUITS (ALLOTMENT TO REGIMENTS).
  METRICAL EXAMINATIONS (INSTRUCTIONS).
  METRICAL EXAMINATIONS (INSTRUCTIONS).
  ARREST AVTER CLAIM TOR EXEMPTION.
  ARREST AVTER CLAIM TOR EXEMPTION.
  CLACTON LOCAL TRIBUNAL.
  CLACTON LOCAL TRIBUNAL.
  TEMPORARY COMMISSIONS.
  TEMPORARY COMMISSIONS.
  NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
  NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
  FRIENDLY ALIENS (ENLISTMENT).
  FRIENDLY ALIENS (ENLISTMENT).
  KUT-EL-AMARA (PRISONERS OF WAR).
  KUT-EL-AMARA (PRISONERS OF WAR).
  NORTH MIDLAND (46th) TERRITORIAL DIVISION.
  NORTH MIDLAND (46th) TERRITORIAL DIVISION.
  SOLDIERS IN FRANCE (LEAVE).
  SOLDIERS IN FRANCE (LEAVE).
  NATIONAL RESERVE.
  NATIONAL RESERVE.
  MILITARY FUNERALS.
  MILITARY FUNERALS.
  ARMY LOSSES.
  ARMY LOSSES.
  TERRITORIAL FORCE REGIMENTS (DRAFTS).
  TERRITORIAL FORCE REGIMENTS (DRAFTS).
  MILITARY SERVICE (CIVIL LIABILITIES) ACT.
  MILITARY SERVICE (CIVIL LIABILITIES) ACT.
  SCOTTISH BATTALIONS. (AMALGAMATION).
  SCOTTISH BATTALIONS. (AMALGAMATION).
  VOLUNTEER TRAINING CORPS (SPECIAL CONSTABLES).
  VOLUNTEER TRAINING CORPS (SPECIAL CONSTABLES).
  SURGICAL APPLIANCES.
  SURGICAL APPLIANCES.
  RECEIVING DEPOT, DUBLIN.
  RECEIVING DEPOT, DUBLIN.
  MOTOR OMNIBUSES (WAR OFFICE SERVICE).
  MOTOR OMNIBUSES (WAR OFFICE SERVICE).
  VOLUNTEER FORCE (REGULATIONS).
  VOLUNTEER FORCE (REGULATIONS).
  WOOL (PURCHASE AND SALE).
  WOOL (PURCHASE AND SALE).
  DEPENDANTS' ALLOWANCES.
  DEPENDANTS' ALLOWANCES.
  JAM AND FRUIT JUICES.
  JAM AND FRUIT JUICES.
  DISABLED SOLDIERS (PENSIONS).
  DISABLED SOLDIERS (PENSIONS).
  HUTTING CONTRACTS.
  HUTTING CONTRACTS.
  CHELSEA COMMISSIONERS (PENSIONS).
  CHELSEA COMMISSIONERS (PENSIONS).
  SOLDIERS DEAFENED ON ACTIVE SERVICE.
  SOLDIERS DEAFENED ON ACTIVE SERVICE.
  PRISONERS OF WAR.
  PRISONERS OF WAR.
  DEFENCE OF THE REALM LOSSES COMMISSION.
  DEFENCE OF THE REALM LOSSES COMMISSION.
MUNITIONS.
  MANUFACTURE IN UNITED KINGDOM.
  MANUFACTURE IN UNITED KINGDOM.
  CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).
  CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).
  REES ROTURBA COMPANY.
  REES ROTURBA COMPANY.
  WARWICK PRISON.
  WARWICK PRISON.
  INTERNATIONAL MERCANTILE MARINE COMPANY.
  INTERNATIONAL MERCANTILE MARINE COMPANY.
  INDUSTRIAL AGREEMENTS.
  INDUSTRIAL AGREEMENTS.
  OLD AGE PENSIONS.
  OLD AGE PENSIONS.
  TRANSIT OF GOODS AND COAL PRICES.
  TRANSIT OF GOODS AND COAL PRICES.
  Ceylon.
  Ceylon.

VISCOUNT CHAPLIN.
The Right Honourable Henry Chaplin, having boon created Viscount Chaplin of St. Oswald's, Blankney, in the county of Lincoln—Was (in the usual manner) introduced.
The LORD CHANCELLOR acquainted the House, That the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that the Standing Orders applicable to the Petition for the following Hill have not been complied with:
Conway and Colwyn Bay Joint Water Supply Board.
The same was ordered to lie on the Table.

RHODES ESTATE BILL. [H.L.]
Prevented, and read 1a.

CONWAY AND COLWYN BAY JOINT WATER SUPPLY BOARD.
(Petition for Bill.)
Examiner's Certificate of non-compliance with the Standing Orders referred to the Standing Orders Committee on Monday next.

GREAT CENTRAL AND SHEFFIELD DISTRICT RAILWAYS BILL. [H.L.]
Reported from the Select Committee, with Amendments.
METROPOLITAN ELECTRIC TRAMWAYS BILL.
Reported, with an Amendment.

UXBRIDGE GAS BILL.
WAKEFIELD CORPORATION BILL.
ST. JOHN'S CHURCH, KINGSTON-UPON-HULL BILL.
FOLKESTONE GAS BILL.
Reported, with Amendments.

ALEXANDRA (NEWPORT AND SOUTH WALES) DOCKS AND RAILWAY BILL.
Reported, without amendment.

ELECTRIC LIGHTING PROVISIONAL ORDER BILL.
LOCAL GOVERNMENT (IRELAND) PROVISIONAL ORDER (No. 1) BILL.
Reported, without amendment, and re-committed to a Committee of the Whole House on Tuesday next.

SOUTH METROPOLITAN GAS BILL.
Returned from the Commons, with the Amendments, agreed to.

RETURNS, REPORTS, &c
Diseases of Animals Acts, 1894 to 1914—
Order, No. 9754, dated 30th May, 1916, postponing the operation of the two Orders described in the Schedule thereto until 15th June, 1916:
Order, No. 9760, dated 14th June, 1916, further postponing the operation of the two Orders in question until 29th June, 1916:
National Insurance Acts—
The National Health Insurance (Deposit Contributors' Administration Expenses) Regulations (Ireland) 1916, dated 21st June, 1916;
The National Health Insurance (Naval and Military Forces, Service during War) Regulations, 1916, dated 9th June, 1916:
Laid before the House (pursuant to Act) and ordered to lie on the Table.

NORTH BRITISH RAILWAY BILL.
Report from the Committee of Selection, That the following Lords be proposed to the House to form the Select Committee for the consideration of the said Bill; (viz.),

E. Camperdown (Chairman),

L. Monteagle (M. Sligo),

L. Aberdare,

L. Avebury,

L. Weardale;

agreed to; and the said Lords appointed accordingly: The Committee to meet on Tuesday, the 4th of July next, at Eleven o'clock; and all Petitions referred to the Committee, with leave to the Petitioners praying to be heard by Counsel against the Bill to be heard as desired, as also Counsel for the Bill.

MARRIAGES PROVISIONAL ORDER BILL.
HALIFAX CORPORATION PROVISIONAL ORDER BILL.
LOCAL GOVERNMENT PROVISIONAL ORDERS (No. 1) BILL.
LOCAL GOVERNMENT PROVISIONAL ORDERS (No. 2) BILL.
LOCAL GOVERNMENT PROVISIONAL ORDERS (No. 4) BILL.
LOCAL GOVERNMENT PROVISIONAL ORDER (No. 6) BILL.
Read 2a (according to Order), and committed.

LECKY'S DIVORCE BILL. [H.L.]
Order of the Day for the House to be put into Committee, read.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF DONOUGHMORE in the Chair.]
Clauses 1 to 5 agreed to.
Clause 6:
Variation of settlements.
6. The said two Indentures of settlement dated the eighteenth day of July One thousand nine hundred and five shall respectively be varied in the following manner (videlicet.):—

(1) The grant by the Indenture first hereinbefore recited of a yearly rentcharge of two hundred pounds shall become and henceforth be null and void and the lands upon which the said rentcharge was charged shall henceforth be freed released and discharged there from and the grant demise and disposition of the said lands to the said Robert Lecky and Alfred Edward Brett made by the same Indenture shall also henceforth become and be null and void and the said lands shall be held and enjoyed to all intents and purposes as if such grant demise and disposition had not been made;

(2) The assignment by the same Indenture to the said Robert Lecky and Alfred Edward Brett of the two Policies of Assurance on the life of the said Hugh Lecky shall become and henceforth be null and void and the said Policies and the proceeds thereof shall be held and enjoyed by the said Hugh Lecky to all intents and purposes as if such assignment had not been made;

(3) The interests of the said Annie Margaret Lecky and all persons claiming or to claim through from or under her under the same Indenture in the said rentcharge and the said Policies of Assurance and the proceeds thereof shall cease and determine;

(4) The said Robert Lecky and Alfred Edward Brett or other the Trustees or Trustee for the time being of the Indenture secondly hereinbefore
342
recited shall hold the two sums of One thousand pounds each now vested in them pursuant to the provisions of that Indenture In trust for the said Annie Margaret Lecky absolutely and the interest of the said Hugh Lecky and all persons claiming or to claim through from or under him under the said Indenture in the said two sums and the income thereof shall cease and determine.

THE LORD CHANCELLOR (LORD BUCKMASTER): My Lords, this Amendment to Clause 6 and the subsequent Amendments are considered necessary in connection with this Bill, and with your Lordships' permission I move that all the Amendments standing on the Paper be inserted.
Amendment moved—
Clause 6, page 7, subsection (1), line 21, leave out from ("the") [" shall hold the"] to ("In") in line 23 and insert ("securities representing the proceeds of the Policy of Assurance therein referred to and the further sum of One thousand pounds also therein referred to and the income of such securities").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Amendment moved—
Clause 6, page 7, line 26, leave out ("two sums") and insert ("proceeds and sum of money and the securities for the time being representing the same").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 6, as amended, agreed to.
Clause 7:
Proviso that Annie Margaret Lecky is not to marry Robert Fox Goodman.
7. Provided always and be it further enacted that it shall not be lawful for the said Annie Margaret Lecky at any time hereafter to contract matrimony with the said Robert Pox Goodman but that such matrimony shall be and is hereby declared to be illegal and void to all intents and purposes whatsoever and the child and children born therein shall be illegitimate and subject to all the disabilities privations and restrictions to which any child or children born out of lawful wedlock is or may be subject by the laws and customs of the United Kingdom or any part thereof.
Amendment moved—
Leave out Clause 7.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Preamble:
Amendments moved—
Page 4, line 24, leave out ("thirteenth") and insert ("thirtieth").
Line 28, leave out ("two sums of One thousand pounds") and insert ("sum of One thousand pounds assured by the said Policy of Assurance (together with an addition thereto by way of bonus) and the said further sum of One thousand pounds").
Lines 29 and 30, leave out ("the moneys representing the said two sums").
Line 31, after ("to") insert ("the securities representing the sums so realised").—(The Lord Chancellor.)
On Question, Amendments agreed to.
Preamble, as amended, agreed to.
The Report of Amendments to be received on Tuesday next.

SMALL HOLDING COLONIES BILL. [H.L.]
Order of the Day for the House to be put into Committee, read.
Moved, That the House do now resolve itself into Committee.—(The Earl of Selborne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF DONOUGHMORE in the Chair.]
Clause 1:
Power of Board to acquire land for small holding colonies.
1.—(1) Luring the continuance of the present war, and a period of twelve months thereafter, the Board of Agriculture and Fisheries (in this Act referred to as "the Board") for the purpose of providing experimental small holding colonies may, with the consent of the Treasury, acquire by agreement any land which, in the opinion of the Board, is suitable for that purpose:
Provided that the total area of the land for the time being acquired by the Board for the purposes of this section shall not at any time exceed six thousand acres.
(2) For the purpose of the acquisition of land by agreement under this Act, the Lands Clauses Acts shall be incorporated with this Act except the provisions of those Acts with respect to the purchase and taking of land otherwise than by agreement and the provisions relating to the sale of superfluous land.
LORD LOVAT LORD LOVAT moved, after the word "land" in subsection (1) [" acquire by agreement any land"] to insert "in England and Scotland." The noble Lord said: I bring forward this Amendment as a whole-hearted supporter of the principle that we should do something worthy of the country for the men who have fought for us oversea. I listened with great interest the other day to the statement made by Lord Lansdowne that there was nothing which the Government were not prepared to do to support any movement for bettering the condition of ex-Service men after the war. The scheme in this Bill, however,
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can only be regarded as experimental, or the forerunner of something much larger, because it is unbelievable that the total effort of the country in the settlement of ex-soldiers and sailors on the land should be confined to a number which represents merely a double company. Compare this with what happened in South Africa. There a single member of your Lordships' House, the Duke of Westminster, spent himself something approaching one-third of the total sum involved in this Bill in settling men, largely from his own Yeomanry, after the war.
If this experiment is to be of any value, the most important factor is the time-table. The principle on which it is based has to be proved a success in order that before the end of the war, or immediately afterwards, there may be in existence a definite scheme which the country is prepared to take up. But if the Committee, as in this Bill, have to deal with two Public Departments—the Board of Agriculture in England and the Board of Agriculture in Scotland—the difficulties in the way of getting to work will be doubled. There is not a member of your Lordships' House who has not been occasionally brought into touch with Government Departments. We know that the £300 a year clerk, who has a very great say, or appears to have, in the running of the Public Departments, is the nigger in the fence on every occasion when it comes to the question of land schemes, and almost insuperable difficulty is experienced in getting even the smallest reform through. I contend that if, in connection with the scheme in this Bill, you have to deal with two Departments, you will be doubling what will prove your greatest difficulty.
Next you have to invite public attention and eventually public support, and I submit that if you have one well-chosen Committee who will deal with a single Department your chance of having the work done well and quickly will be greatly increased. It may be argued that in having one Committee to deal with England and Scotland there may be difficulties on account of different laws and matters of that kind, but it would, I suggest, be possible to have a subcommittee thoroughly acquainted with Scottish affairs to deal with the Scottish side of the question. The scheme in this Bill settles only 300 men. Surely this is not going to represent the total effort of this country to settle men on the land after

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the war. Yet if you are unable to put this experiment through with rapidity and to invite public opinion in its support, it will probably begin and end with this Bill. We are all aware in Scotland of the slowness with which any advance has been made there in regard to land settlement. We also know that a large expenditure of money has been incurred in order to set up a very few holdings. There is in Scotland a feeling of profound distrust, of the way in which the land question is being administered there.
If this experiment is to be any success at all in Scotland, you must have, as Lord Lansdowne pointed out the other clay, good land, a sufficiency of capital by the individuals who settle on the land, and also experience. Good land, I am certain, will be forthcoming in sufficient quantities provided that landowners recognise, to use a colloquialism, that they will have, a run for their money. I am confident that the question of a sufficiency of capital will be met in a great many cases by officers wishing to assist individual members of their company or regiment who have done good service. We saw that after the South African War, and we shall see it on an infinitely larger scale after this war. In the South African War the majority of the Yeomanry were serving at the rate of 5s. a day, which enabled them at the end of the war to have sufficient capital to settle on the land. In the present case, where men are paid only the regulation rate, there will not be the same number who will have a couple of hundred pounds at the end of the war. Therefore the question of outside help, which I am confident will be readily given, is one of importance. But I am certain that aid will be forthcoming only provided those who can give it are satisfied that the scheme will have a working chance. Again, on the question of experience, which includes the character of the individuals serving, the more you invite public support to a scheme of this sort the more easy it will be to get in touch with the character of the men you put on to the land. In this case you will want more than the small bit of parchment, the good conduct certificate, which every man takes away with him at the end of his service.
Looking at this Bill from the Scottish point of view, I see that forestry forms no part of the scheme. I very much regret that this is not one of the experiments to be
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tried by His Majesty's Government in connection with putting men on the land. Forestry possesses a good many advantages in the settlement of men with small capital. The settlement is cheaper than in the case of agricultural land, and in connection with forestry there is work in the winter. I have no doubt that most of your Lordships read the figures which were given in The Times a few days ago by Sir John Stirling-Maxwell, whose letter embodied the opinions of, I believe, the large majority of people interested in afforestation. It is known that under forestry 100 acres of land will support a man. It is equally the fact that 100 acres can be obtained at between £2 and £3 an acre; and taking into consideration houses, etc., you should be able to settle individual men on the land at an expenditure of not much more than £1,000. But there is this great difference, that while every man settled under forestry is an addition to the population on the land, the settlement of men by a division of land already farmed simply means in many cases replacing one class by another. Further, you are certain of a return from forestry, whereas in the case of small holdings it is well known that many of them cannot be made to pay. I submit this Amendment chiefly for the reason that it would make this experiment go quicker, because by having one authority you would get over departmental difficulties. You would also, by having one Committee, be able to have a stronger body and one which would command public confidence; and the differences in the law between the two countries could be dealt with by means of sub-committees. I am certain that unless you have something entirely dissociated from the present method of administration of land in Scotland, you will not get anything like the support which you ought to have to ensure the success of this scheme.
Amendment moved—
Page 1, line 10, after ("land") insert ("in England and Scotland").—(Lord Lovat.)
THE PRESIDENT OF THE BOARD OF AGRICULTURE AND FISHERIES (THE EARL OF SELBORNE): My noble friend made an interesting speech on the Second Reading of this Bill, but unfortunately for me he did not stay to hear my reply. I would have pointed out to him then, had he been able to remain, and I point out to him now, that this Bill does not for one

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moment profess to be part of the Government schemes for dealing with all the national obligations to discharged sailors and soldiers. It never has professed to be part of our method of dealing with demobilisation. In the same way with afforestation. The Government are deeply alive to the importance of afforestation after the war, and I am glad of this opportunity of assuring the House that this is so. But neither demobilisation nor afforestation is the subject or object of this Bill. This is simply a small experimental measure in small holdings, which may have an ultimate effect in dealing with the problem of demobilisation, but it is not in itself a contribution to that problem except in a very small degree.
What this Amendment proposes is to abolish the Scottish Office and the Scottish Board of Agriculture for the purposes of this Bill. The noble Lord cannot expect me to accept his Amendment. To get rid of the Scottish Office and the Scottish Board of Agriculture by the side wind of an Amendment would be to make the Bill extremely controversial in the House of Commons, and it would absolutely destroy any possible chance it may have of passing. Therefore I am quite unable to accept the Amendment, which has that object and no other. Nor can my noble friend expect me to endorse his criticisms of the administration of the Scottish Office. I am not familiar with Scottish affairs, and do not pretend to have the knowledge of them that he has. I can only say that in the various matters in which I have sought the assistance and co-operation of my right hon. friend the Secretary for Scotland, I have always met with great courtesy and consideration.
My noble friend is under a misapprehension. He talks of a Committee, and says that the proceedings of that Committee will be delayed and hampered by having to deal with two Departments instead of one. But there is no Committee. The colonies established in England and Wales will be dealt with exclusively by the Board of Agriculture for England and Wales; the colony to be established in Scotland will be dealt with exclusively by the Scottish Office. There will be no interdepartmentalism of any sort or kind. Therefore that criticism of my noble friend falls to the ground. For the reasons I have given I cannot accept the Amendment.
THE EARL OF CAMPERDOWN: This Amendment is one of a series the object of which, as the noble Earl has correctly stated, is to get rid of the Scottish Board of Agriculture so far as the administration of this Bill is concerned. That is the whole meaning of the Amendment. What Lord Lovat proposes is that this Bill and the land to be taken under it, whether it be taken in England or Scotland, shall be under the administration of the English Board of Agriculture and Fisheries. The noble Earl says he cannot and will not accept the Amendment, so I dare say my noble friend will not press it to a Division. At the same time I can assure the noble Earl that, so far as this Bill is concerned, it is putting a very great impediment in the way of its being brought successfully into operation in Scotland if it is administered under the Scottish Board of Agriculture. It is not the Secretary for Scotland at all. The Scottish Board of Agriculture is practically an independent body. There is another practically independent body called the Scottish Land Court. The universal experience of those in Scotland who have had to do with the Board of Agriculture there leads them to entertain the most profound dissatisfaction and discontent with the manner in which that Board has done its business; and if the Scottish Board of Agriculture is to be entrusted to ask people in Scotland to lend or sell land to it—it must be remembered that there is no compulsion in this Bill—I am afraid that the Bill will most likely be a dead letter so far as proprietors in Scotland are concerned. It is not necessary for me to trouble your Lordships further on the subject, but the view I have stated is the one which I must say I take with regard to this Bill.
THE DUKE OF BUCCLEUCH: I cordially agree with everything that my noble friend Lord Lovat said. It will be a perfect farce if this Bill is passed in its present form. What your Lordships have to consider is whether this is to be the basis of a real measure to settle ex-Service men on the land after the war. I would point out that the Committee on whose recommendations the Bill is based had no Scottish representative upon it, nor do I think there was any representative of the North of England.
What has been said concerning the Scottish Board of Agriculture is perfectly correct. The noble Earl, in moving the Second Reading of the Bill, said that the

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object was to run these small holdings on sound economic lines. I think I am right in saying that very few holdings, possibly not a single holding, created under the Scottish Board of Agriculture can be said to be on sound economic lines. That may be because it is impossible, or it may be due to bad management. But if that is the case with local men placed on the land by the Scottish Board of Agriculture, how is it possible to hope that ex-Service men can be placed in possession of sound economic holdings when they will have to pay probably double what is paid by the present small-holders? I venture to think it will be impossible, for them to make a living. It will simply be asking them to take up an occupation which is bound to end in bankruptcy.
I will give your Lordships one example, as regards my own property, of the way in which the Scottish Board of Agriculture carry these matters out. They took certain land. I objected first of all on the ground that it was unsuitable; secondly, on the ground that the buildings to be erected were not adequate or up to modern standard. The plans were somewhat improved, but the Land Court, when they came to give a decision on the subject, appended a note to the following effect—
"Owing to the distance of the holdings from the market and railway, and the exposed situation of the land, the scheme cannot be considered an ideal one; and as regards accommodation, while satisfactory provision is made the Court cannot avoid the expression of some sympathy with the contention of the proprietor that so far as construction and general appearance are concerned the buildings erected on the holding fall far short of the minimum standard adopted by the estate for a long period of time."
I ask, Is it desirable that a Government Department which selected unsuitable land and erected inferior buildings should be allowed to carry out this scheme which is supposed to be for the benefit of our ex-soldiers and sailors? Your Lordships must recognise that the scheme in this Bill ought to be made a much larger scheme. Are we to carry out the same old policy of "Wait and see"? As it is, it will take some years to ascertain the result of this scheme, far too long to give any experience in regard to the larger scheme. Therefore, I am sorry that this Amendment is not going to be accepted, because as the Bill stands the scheme as regards Scotland will be a dead failure. It will only throw discredit on the whole experiment. And I am afraid that, over and above that, our
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ex-soldiers and sailors will have good reason to think that your Lordships are trifling with this question.
LORD BALFOUR OF BURLEIGH: I do not intervene for more than a moment, but if I may venture to do so I would express my cordial sympathy with the noble Earl the President of the Board of Agriculture in the difficult position in which he is placed. I hold no brief either for the Land Court or the Board of Agriculture in Scotland. Your Lordships may remember that I was consistently opposed to the formation of the Scottish Board of Agriculture. When I was at the Scottish Office I worked with extreme cordiality and friendship with the Board of Agriculture which has its headquarters in Whitehall. I thought then, and I think now, that it would be better to keep agriculture under one Board. I certainly do not think that the things which have been said about some of the actions of the Board of Agriculture in Scotland or of the Land Court are a bit too hard. But the point we have to decide to-day, there being a Board of Agriculture for Scotland, is whether it is possible, to pass it by, and whether, if you are to have a scheme of this kind applicable to Scotland, it is at all consistent with the existing state of matters to work the scheme, whether large or small, through any agency so far as it concerns Scotland except that of the Board of Agriculture in Scotland and the Land Court. On that ground I am afraid—I say it with some regret—that if you are to work this at; all in Scotland you must take the policy of the noble Earl opposite and allow it to be worked through the Scottish authority.
LORD LOVAT: I did not gather from the noble, Earl opposite whether this is to be regarded as the sum total of the effort to settle ex-Service men on the land. If it is not, how is he going to get over the fact that we should have an organisation which would invite the co-operation of those who have the land and the money? The argument that it is impossible to deal with this subject in Scotland outside the Board of Agriculture for Scotland leaves me comparatively cold. In the case of South Africa, the biggest experiment of land settlement of this sort, four Colonies were dealt with by a single Board. It does not really matter whether it is a committee or a sub-department. Presumably under this Bill the authority will be of sufficient magnitude to be a sub-department. Therefore I think the term "Committee,"

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though not exact, covers the point. If it is to be a sub-department, why should we not have one sub-department to deal with the subject in England and Scotland? And as the money is Imperial money, I should hope that the sub-department, would deal with Ireland also. I have no doubt that a great many ex-soldiers and sailors will wish to settle overseas. Surely we might do something in co-operation with our Colonies overseas to facilitate that, so that there might be one body carrying out the whole of this work. We wish to do everything we can for those men who are going to settle on the land after the war. As to the remark of the noble Earl that this Bill does not form part of the solution of the problem of demobilisation, I never said it did. It is desired, I take it, to make the time in which this experiment is tried as short as possible, so that when we have settled that this method is a success we may possibly take these men immediately on leaving the Service and place them on the land. This should be made an experiment which would give possibilities of a great increase, seeing that a large number of ex-Service men will not be going back to indoor and city life but will wish to settle on the soil.
THE EARL OF SELBORNE: On the big question which my noble friend has again raised, there is really no difference of opinion between him and myself. The problem of demobilisation will be one of very great magnitude and difficulty, but it will be manifestly impossible for any Government to undertake that fresh start in life for every one of these millions of men that they may desire. But it will be, in my judgment, part of the duty of the Government to assist those men who wish to go on to the land, whether here or in the Colonies—that is to say, to co-operate with the Dominion Governments; not to endeavour to administer any scheme in the Dominions, but to co-operate with the Dominion Governments in dealing with the problem. I can assure my noble friend that we are quite as keen as he is that this question, not only should not be neglected, but should be met sympathetically within such financial powers as the State can command at the close of the war. I am glad that he understands that this particular Bill is only an experimental one, and I can assure him that on the general principles of which he is so eloquent an advocate there is no difference of opinion between him and myself.
LORD LOVAT: Why not take action, then?
On Question, Amendment negatived.
VISCOUNT GALWAY VISCOUNT GALWAY moved, before the proviso at the end of subsection (1), to insert "Provided that at least one of the said small holding colonies shall be devoted to the purpose of reclamation of waste land." The noble Viscount said: The noble Earl the President of the Board of Agriculture has stated that this is an experimental scheme, and to carry it out he proposes to obtain, either by purchase or lease, some of the best land in different parts of the country on which to found these various colonies. That will necessarily involve clearing out some of the best farmers in the country, men who are large producers of food. There is no doubt that many of the men whom it is proposed to settle on these colonies will be without experience in agriculture, and possibly also without sufficient capital, which will have to be provided for them. At the commencement of this scheme these men will have to be paid wages, good wages in many cases.
It seems to me that if you are going to pay good wages to these men it is better that you should settle them on waste land, and then, after one or two years of cultivation and tillage, they would have an improving holding. If you adopted this principle, you would be able to have men on the land who would take some pride and pleasure in improving the piece on which they hoped eventually to settle. I am afraid that in many cases, if you put inexperienced men on the best land that you are able to get, the land will seriously deteriorate. Such a state of things cannot be to the interests of the country. The increase of food production should be as much encouraged as possible. The noble Earl on the Cross Benches (Lord Grey), in his speech the other day, seemed to give colour to the idea that landowners willingly keep bad tenants on their farms, because be used these words—
"Landowners ought to be penalised who keep bad tenants on their farms."
I would remind the noble Earl that at the present moment, owing to the action of the Board of Agriculture, landowners are heavily penalised if they try to get rid of bad tenants. In justice to landowners, the noble Earl ought to have admitted that fact.
EARL GREY: Hear, hear. Naturally the two reforms would go together.
VISCOUNT GALWAY: If the difficulties at present in the way of a landowner getting rid of a bad tenant were removed, it would be much more easy for landowners to have their estates cultivated on a sound commercial basis, and on, perhaps, a more economic basis than the Board of Agriculture are likely to cultivate some of these small holdings. This, it seems to me, is a great opportunity, not only for settling men on land which they could improve, but also for giving an object lesson—if the Board of Agriculture employed the best authorities on tillage—as to how indifferent land could be reclaimed by careful cultivation. This idea, if adopted, could come in very well in Scotland, where portions of what is waste land at the present moment could be used either for forestry or to increase the land under cultivation. If an Amendment of this sort were inserted in the Bill the country would feel that, even if the other colonies which were started were not a success, at any rate in this case there would be an improved area of agricultural land producing food stuffs to the benefit and advantage of all.
Amendment moved—
Page 1, after line 11 insert:
"Provided that at least one of the said smallholding colonies shall be devoted to the purpose of reclamation of waste land."—(Viscount Galway.)
THE EARL OF SELBORNE: This is a small Bill, as I have often pointed out, but the noble Viscount's Amendment would make it very much smaller. Labour is quite unobtainable for the purposes of reclamation at the present time, and if the noble Viscount's Amendment were accepted it would mean that one of these three colonies would have to be abandoned altogether until after the war. Therefore I cannot accept the Amendment. But I am in complete sympathy with the object which the noble Viscount has in view. I have been studying and working on this question of reclamation, as I have on the question of afforestation and on the general subject of land settlement on demobilisation, for many months past. I think my noble friend Lord Lovat is unreasonable in his impatience. The whole of this work is being studied in the Reconstruction Committee, and even if we had all our schemes ready, which I do not pretend, there would be no object that I can see in producing
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at the present moment a scheme for general land settlement after the war. Nor can I produce to my noble friend a scheme for reclamation; but I ask him to take it from me that this is one of the subjects which we are going to tackle.
THE EARL OF PORTSMOUTH: I sympathise with what fell from Lord Galway, but I think his proposal requires time, for this reason. We are supposed to be acting, and I have no doubt we are, in the interests of ex-Service settlers themselves. If we employ men to reclaim land, the question arises whether they ought not to be the potential owners, as in the case of those to whom in the Colonies grants of land are given, and who, if they stay a sufficient time and comply with certain conditions, become the owners of the freehold. I cannot imagine the system being very popular under which ex-soldiers and sailors were to become merely annual tenants under the State of land which they had reclaimed and brought into a proper state of cultivation. That would be extremely unpopular and indefensible from the point of view of the tenant farmer. I recognise the importance of reclaiming waste land, but I do not see how you could bring it into this scheme for the reason I have stated.
On Question, Amendment negatived.
LORD STRACHIE LORD STRACHIE moved an Amendment providing for compensation of the tenant for loss directly attributable to the quitting of his holding, and for a further sum not exceeding one year's rent against indirect loss.
The noble Lord said: This Amendment, like the other Amendment standing in my name, is put down at the request of the Central Chamber of Agriculture, and the Amendments were drawn up by its Parliamentary Committee. Your Lordships will be aware that in this Bill there is no provision for protecting the interests of tenants who are turned out to make way for the ex-Service men who are to be brought in. It will be remembered that in the Small Holdings and Allotments Act, 1908, no provision was made, owing to an oversight, for compensation to tenants on whom notice to quit was served with a view to the use of the land for the provision of small holdings. The hardship was so great that in 1910 the Government of that day carried an Amending Bill providing compensation

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for tenants who were dispossessed. With the exception of the necessary alterations, the first part of my Amendment is almost word for word the provision in the Act of 1910. So strong was the feeling in the country at the time that tenant farmers were unfairly treated in receiving no compensation when they had to make way for other men, that the Treasury allowed this precedent to be made.
But my Amendment goes a little further, because at the end it provides for a further sum not exceeding one year's rent against indirect loss due to the quitting of the holding. The reason for putting that in is this. The Parliamentary Committee of the Central Chamber of Agriculture had to consider the strong objections made by a very influential valuer, Mr. Middleton, who said that in the hundreds of cases in which he had to settle compensation where land was taken for public purposes under the Small Holdings Act the tenant did not get the full and adequate compensation which he ought to have; and at his suggestion the provision was put into the Amendment that, in addition to the compensation which he would get under the Agricultural Holdings Act, the tenant should have further compensation for indirect loss not exceeding one year's rent. Naturally a man settled upon the land for many years has farmed it exactly as if it were his own, and put a great deal of time, money, and thought into it, and it is very hard that he should be turned out without getting adequate compensation. There are other indirect losses. For instance, a man living near a large town may have a successful milk round, the whole of which he loses, together with any business that he may have built up for the sale of butter and other commodities, when he is turned out of his holding. It is a common saying among agriculturists that when a man changes from one farm to another it takes him three years before he is able to understand the climatic conditions, the difference of soil, the general amenities of the farm, and to get the land into a high state of cultivation. That, I submit, is another reason why the tenant should have this additional compensation. I hope your Lordships will see that this is only a fair and just proposal, and will be inclined to accept the Amendment.
Amendment moved—
Page 1, after line 11 insert:
"Provided that where the Board, or a landlord at the request of the Board, terminates a tenancy
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of land by notice to quit with a view to the use of the land or any part thereof by the Board for the provision of small holdings under this Act, the tenant upon quitting shall be entitled to recover from the Board or the landlord compensation for the loss or expense directly attributable to the quitting which the tenant may unavoidably incur upon or in connection with the sale or removal of his household goods or his implements of husbandry, produce, or farm stock on or used in connection with the land, and for a further sum not exceeding one year's rent against indirect loss due to the quitting of the holding, compensation to be awarded as provided by section one of the Small Holdings Act, 1910."—(Lord Strachie.)
LORD CHANNING OF WELLING-BOROUGH: I support the Amendment moved by my noble friend opposite. I have had a great deal to do with this particular question for years past in the Chambers of Agriculture, and I dare say the noble Earl is as well aware as I am of the feeling which was aroused in the country throughout farming circles by the omission from the Act of 1908 of a provision of this nature. I can assure the noble Earl, if he is not aware of it, that the feeling amongst the agricultural classes was of the strongest character with regard to this. I should like also to say that in the opinion of most of us the proposal in this Bill is a wise, generous, and sound proposal for an experiment in the direction of providing colonies of small holdings for ex-soldiers and sailors, and it is desirable that no obstacle of a sentimental or pecuniary nature should stand in the way of the successful carrying out of this scheme.
THE EARL OF SELBORNE: As Lord Strachie pointed out, his Amendment consists of two parts. The first part is an adaptation to this Bill of the provision in the Act of 1910. To that he adds a further provision to which I will refer presently. So far as the question is, Shall the provision in the Act of 1910 be adapted to this Bill? I am in complete accord with the two noble Lords who have spoken, and this provision shall be inserted in the House of Commons, which is the proper place for its insertion, as a question of money is involved. Therefore I hope your Lordships will understand that the compensation already provided in the existing Act will be applied to this Bill by a Government Amendment in the other House. And let me say that this applies also to the noble Lord's other Amendment on the Paper regarding the labourer, which is taken directly from the Act of 1908; and perhaps if I tell him that he will not think it necessary to move that

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Amendment presently, because this will be applied in the same way.
But the noble Lord asks me to go further. He asks me to agree to "a further sum not exceeding one year's rent against indirect loss due to the quitting of the holding." I cannot accept that addition. It raises a very big question indeed. If a tenant who is disturbed for the sake of what may be described as a public purpose is to get a year's rent, why not a tenant who is disturbed for another public purpose—to wit, the small holdings established under county councils? If that principle were once admitted, I am quite sure there are people who would wish to apply it also to cases where the tenant had been disturbed in the ordinary operations of landlord and tenant. Those words would, as I say, raise a very big question; and I would remind the noble Lord that Lord Haversham's Committee made no such proposal. I am unable to hold out any hope of accepting these additional words either here or in another place. But if the noble Lord will withdraw this Amendment, I will undertake that the provision in the Act of 1910 shall be applied to this Bill in the House of Commons.
LORD STRACHIE: I am a new member of this House, but I confess I cannot understand the noble Earl's statement that this is an Amendment which ought not to originate in this House. He says it is a House of Commons Amendment. Surely if that is so, this is a Bill which ought to have originated in the House of Commons. The noble Earl takes power under the Bill to buy 6,000 acres of land; also there is the provision as regards expenses under Clause 5; and in Clause 2 there is the power, with the consent of the Treasury, of making grants and advances. I should be the last person to want to interfere with anything involving the privileges of the House of Commons, but perhaps the noble Earl will explain to the House why this Bill, if it is a Money Bill, did not originate in another place. If it is not a Money Bill, then clearly your Lordships are being asked to give up your right to amend the Bill.
THE EARL OF SELBORNE: I do not profess to be an authority on that mysterious question of the privileges of the House of Commons, but I certainly think they have often been stretched too far. That has been the view I have expressed on the
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other side of the Table, and I have not changed my view. But as I do not want this Bill to go down to the other House in a form which will raise unnecessary questions, I prefer, if the noble Lord and the House will kindly consent, that this particular matter should be dealt with in the House of Commons.
LORD STRACHIE: I cannot help saying that the question which I think is much more likely to be raised in another place is whether this Bill ought to have originated here. I know something about the feelings of hon. Members in another place, having spent many years there, and I am confident that they would never raise a point on the question of giving compensation to agricultural labourers and tenant farmers.
LORD HENMAGE: I am anxious not to interfere with the conduct of the Bill, but I cannot help thinking that we are going to create a very dangerous precedent if we say that we cannot in this House carry out the machinery of the Bill because it verges on a Money Bill. Either it is a Money Bill or it is not. If it is a Money Bill, it ought to have originated in the House of Commons. If it is not a Money Bill, then I maintain that we are perfectly entitled in this House to put into it a provision which is already in another Act of Parliament. At the same time I agree with my noble friend Lord Selborne with regard to the difference between the first part of the Amendment and the addendum, which is not in the 1910 Act. I think it is a very controversial question, and one which will have to be considered with regard to other matters. But with regard to the right of your Lordships' House to put this Amendment into the Bill so far as it is copied from the old Act, I am bound to repeat that I think it would be a very dangerous precedent to admit that we have not the right to do it. Therefore I hope the noble Earl will accept this Amendment in so far as the first part of it is concerned, and I do not think the House of Commons will raise any objection.
LORD ST. DAVIDS: I must press the noble Earl in charge of the Bill on this point, because frankly I do not understand his answer. The noble Lord opposite wants to provide in this Bill that tenants whose land is taken away shall be compensated. That is reasonable enough. The noble Earl in charge of the Bill says, You cannot

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do that, because of the question of the privilege of the House of Commons. But what is he doing himself? He is initiating here a Bill which finds money for buying up the rights of landlords.
THE EARL OF SELBORNE: It does not provide money.
LORD ST. DAVIDS: Then it provides machinery. I will put it that way. The noble Lord opposite does not propose to find money either. He merely says, Let Us extend the machinery to buy up the rights of the tenant. We will assume roughly, that the rights of the landlord must be worth at least five times what the rights of the tenants are. If the Government are in order in a Bill originating in this House in setting up machinery which buys five-sixths of the rights of the land, how can the noble Lord opposite be out of order in extending that machinery so that it buys the other one-sixth? I think the noble Earl might explain his point of view further.
THE EARL OF SELBORNE: This is not a subject on which I have ever professed to be an authority. I did not want to run an unnecessary risk. But if noble Lords feel strongly on the subject, and think that it would be going too far in caution to take the line which I have indicated, I am prepared to run the risk with them and to accept the Amendment. I must, however, ask the noble Lord to omit the words "or the landlord," because they are not included in the existing Statute.
LORD HENEAGE: The noble Earl does not accept the second part of the Amendment?
THE EARL OF SELBORNE: No; I accept the Amendment down to "land," leaving out the words "or the landlord."
THE EARL OF CAMPERDOWN: The noble Earl omits the latter part of the Amendment beginning "and for a further sum not exceeding"?
THE EARL OF SELBORNE: Yes.
THE LORD CHAIRMAN: In order that we may have it right, I will read the proviso in the form in which it is accepted by the noble Earl in charge of the Bill—
Provided that where the Board, or a landlord at the request of the Board, terminates a tenancy of land by notice to quit with a view to the use of the land or any part thereof by the Board for the provision of small holdings under this Act,
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the tenant upon quitting shall be entitled to recover from the Board compensation for the loss or expense directly attributable to the quitting which the tenant may unavoidably incur upon or inconnection with, the sale or removal of his household goods or his implements of husbandry, produce, or farm stock on or used in connection, with the land.
LORD STRACHIE: I think the last words in the Amendment as on the Paper go in.
THE LORD CHAIRMAN: That is the question as to which I want direction—namely, whether "compensation to be awarded as provided by section one of the Small Holdings Act, 1910" should remain in the Amendment.
THE EARL OF SELBORNE: It will require a little adjustment to be made on Report.
THE LORD CHAIRMAN: I will put the Amendment in the form in which I read it a moment ago.
LORD STRACHIE: Does the noble Earl object to putting in "compensation to be awarded as provided by section one of the Small Holdings Act, 1910"? There must be some machinery, and this adopts the machinery of the Act of 1910.
THE EARL OF SELBORNE: It does not run properly in that form.
On Question, Amendment, as amended, agreed to.
LORD ST. DAVIDS: I understand that the provisions of the Bill provide for a maximum of only 6,000 acres being taken. Now 6,000 acres over the whole of Great Britain is a very small amount; and under Clause 9 of the Bill there is a direction that 2,000 of these 6,000 acres shall be taken in Scotland. If Clause 9 is agreed to as it stands, it is virtually a direction that part of this scheme shall apply to Scotland; and this leaves only 4,000 acres for the whole of England and Wales.
THE EARL OF CAMPERDOWN: I think not. If the noble Lord looks at the Bill he will see that it provides for 6,000 acres for England and 2,000 for Scotland.
LORD ST. DAVIDS: The 2,000 acres for Scotland are additional?
THE EARL OF SELBORNE: Yes.
LORD ST. DAVIDS: I thought it was 6,000 acres for the whole.
THE EARL OF SELBORNE: No; 8,000.
LORD ST. DAVIDS: At any rate, 8,000 acres for the whole of Great Britain is very small. I want to insert "eight" instead of "six" in the proviso at the end of subsection (1). This would raise the total area of the land to be acquired in England and Wales—excluding the 2,000 acres in Scotland—to 8,000 acres. And I hope that the noble Earl will also let me insert a proviso that 2,000 of those 8,000 acres should be in Wales. I am rather afraid that if a provision of this kind is not inserted in the Bill no experimental settlement will be set up in Wales; and we have in Wales, happily, several landowners who have already expressed their willingness to offer land suitable for this purpose. In Wales, where we have a good number of small holdings in proportion to farms, the counties where; you could set up such a scheme with advantage are not many. Land has been offered in Anglesey and in two other counties which I am told is very suitable and which can be taken from the existing holders without any hardship owing to accidental circumstances. That being so I should like to insert words to increase the area in England and Wales to 8,000 acres, and later I would move the insertion of a provision that one of the experiments should be made in Wales. I do not know whether the noble Earl in charge of the Bill could see his way to accept that Amendment. I would remind him that the Bill as it stands is a very small one, and even as an experiment I do not think 8,000 acres in the whole of Great Britain is enough. But if he cannot accept the Amendment, I would ask him at any rate to assure us that as far as he is concerned he will try to get one of these experiments tried in Wales, where the people are exceedingly anxious to have it for the benefit of Welsh soldiers.
Amendment moved—
Page 1, line 14, leave out ("six") and insert ("eight").—(Lord St. Davids.)
THE EARL OF SELBORNE: I am afraid I cannot accept my noble friend's Amendment. The scheme of the Government is confined to 6,000 acres in England and Wales and 2,000 in Scotland, and it would be a complete departure from the scheme were I to accept any enlargement of its scope. The noble Lord asks me whether I can hold
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out a hope of establishing one of these three colonies in Wales. I think I may repeat what I have already said to-day to a deputation of Welsh Members of Parliament drawn from both political Parties. I pointed out to them that, if this Bill attempted to deal on a national basis with the question of small holdings or of the settlement of discharged sailors and soldiers, Wales would, of course, be entitled to a definite share of the provision made. But this, as I explained, was quite different. It was an experiment, a small experiment, and I could not promise that one of the colonies would necessarily be placed in Wales. I do not admit any claim on the ground of nationality on behalf either of Wales or of England to a definite share of these three colonies. I should feel perfectly entitled to put all three of them in Wales, if I found there the best sites; and I should feel equally entitled to put all I three in England if the best sites offered happened to be in England. Therefore I can only say, with regard to any offers made from Wales, that they will receive exactly the same careful consideration as offers made from England. I cannot say more than that.
THE EARL OF NORTHBROOK: As a member of the Departmental Committee, may I say that I am extremely glad to hear from the noble Lord opposite that there is such a desire on the part of Wales to have one of these colonies established in the Principality. I say so for this reason. We took a great deal of trouble to get witnesses from Wales to express their views before our Committee, but we never succeeded in getting a private individual or a representative of any body in Wales to give evidence. I am therefore glad to learn that Wales does take an interest in the subject.
Amendment, by leave, withdrawn.
THE LORD CHAIRMAN: Does that cover the noble Lord's next Amendment?
LORD ST. DAVIDS: Yes. I do not move.
THE EARL OF SELBORNE: Your Lordships will remember that on the Second Reading I undertook to try to find words to indicate that the intention of the Government is to make provision in the first instance and mainly for ex-soldiers and sailors. I told your Lordships at the time that I could not accept words that would tie my hands too much at the present or

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in the future. The words that I have put on the Paper and now move I venture to think do indicate the intention, and bind me or my successors in office from time to time to adhere to the intention therein expressed—that is, that in the selection of persons to be settled on the land so acquired the Board shall give preference to persons who have served in the naval or military forces of the Crown in the present war. I hope your Lordships will accept those words and not insist on the more stringent form of words which have been suggested by more than one of my noble friends, because, as I pointed out on the Second Reading, if these colonies are a success a time must come when the successors of the first colonists cannot necessarily be soldiers or sailors or have served in the present war. I must also have my hands free at the present moment to introduce into these colonies that very small proportion of teachers who will give assistance to ex-soldiers and sailors who have not had previous agricultural experience. I can assure your Lordships that I have no other object but to make these colonies for ex-soldiers and sailors, and that any civilian element will be reduced to the smallest possible dimensions.
Amendment moved—
Page 1, line 14, after ("acres") insert ("and that in the selection of persons to be settled on the land so acquired the Board shall give preference to persons who have served in the naval or military forces of the Crown in the present war").—(The Earl of Selborne.)
THE EARL OF PORTSMOUTH: I shall be glad to withdraw my Amendment on the Title. [The noble Earl had on the Paper an Amendment to the Title, after ("Colonies") to insert ("for sailors and soldiers returned from active service abroad").] I am quite satisfied with the words now proposed by Lord Selborne.
THE EARL OF CAMPERDOWN: I also have an Amendment which comes later referring to the same subject. But perhaps I had better defer any remarks that I have to make until we reach it. I have no objection, however, to the words which the noble Earl in charge of the Bill proposes.
On Question, Amendment agreed to.
LORD STRACHIE: I need say very little in moving the next Amendment, as I understood from the noble Earl just now that he was quite ready to accept it, as
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the words are taken from the Act of 1908. It was necessary in the Small Holdings Act of 1908 to put in provisions for the protection of labourers who might lose their employment or be turned out of their cottages owing to the acquisition of land for the purposes of small holdings; and it will be still more necessary to see that labourers are protected in the case of these colonies, because the noble Earl proposes to take large tracts of 2,500 acres each and clear them entirely. Therefore practically the whole of the labourers will be turned out of their homes and holdings and will lose their employment. It may be said that in these days they can soon get other employment. That may be so in the case of the great majority, but I submit that no labourer ought to suffer harm in connection with this Bill.
Amendment moved—
Page 1, after line 19 insert as a new subsection:
(3) "Where a labourer, who has been regularly employed on any land acquired by the Board for the purposes of this Act, proves to the satisfaction of the Board that the effect of the acquisition was to deprive him of his employment, and that there was no employment of an equally beneficial character available to him in the same locality, the Board shall pay to him such compensation as they think just for his loss of employment or for his expenses in moving to another locality, and any sum so paid shall be treated as part of the expenses of the acquisition of the land."—(Lord Strachie.)
THE EARL OF SELBORNE: I accept the Amendment. But it must be in the same words as the section of the Act of 1908 from which it is copied, and there is one word different.
LORD STRACHIE: Which is the word?
THE EARL OF SELBORNE: You have put in "shall" instead of "may."
LORD STRACHIE: May I explain that? The Parliamentary Committee of the Central Chamber of Agriculture were unanimous in thinking that this was not a case where it ought to be in the discretion of the Board of Agriculture whether they would give compensation or not; and I am surprised that the noble Earl should object to making it obligatory upon his Board to give compensation in this matter. It may be said with regard to the other Act that the power has been very little used. But it is very different where you clear the whole countryside.
THE EARL OF SELBORNE: The noble Lord knows perfectly well that Acts of Parliament constantly contain the word "may" when he and I, as laymen, would have put in "shall." I am strictly within my rights in adhering to the exact words of the principal Act. There would be no advantage in having this Act and the principal Act differing.
LORD STRACHIE: I was responsible for this particular provision in the Act when it originated in the House of Commons. It was inserted in that form because it was thought undesirable to tie the hands of the county councils at that particular moment, and it was thought very unlikely that the discretion would be ever used. The noble Earl has not said why he objects to having his hands tied.
LORD HENEAGE: I am sorry that my noble friend Lord Strachie has not accepted the offer of the noble Earl, because it is perfectly fair that we should take the provision as we find it in the other Act. It was well considered at the time the word "may" was used, and I think the word "may" should be continued in this clause. I therefore move that the word "may" be substituted for the word "shall" in the noble Lord's Amendment.
Amendment moved to the Amendment—
In line 6 of the Amendment, leave out ("shall") and insert ("may").—(Lord Heneage.)
On Question, Amendment to the Amendment agreed to.
On Question, Amendment, as amended, agreed to.
Clause 1, as amended, agreed to.
Clause 2:
Power of Board to promote co-operation in connection with small holding colonies.
2. With the consent of, and subject to regulations made by the Treasury, the Board may promote the formation or extension of societies on a co-operative basis, having for their object, or one of their objects, the profitable working of holdings provided under this Act, whether in relation to the purchase of requisites, the sale of produce, credit banking, or insurance, or otherwise, and may assist any such society by making grants or advances to the society, or guaranteeing advances made to the society, upon such terms and conditions as to rate of interest and repayment or otherwise, and on such security, as the Board think fit.
THE EARL OF PORTSMOUTH: I hope my noble friend will consider carefully the point of my Amendment to this clause. We have been constantly told, and it is the case, that this is an experimental Bill on a small scale. That being so, it is of the greatest importance that all the elements which go to prove whether the scheme is a successful one or not should be upon strictly sound economic lines. The noble Earl (Lord Selborne) stated, in his speech on the Second Reading, that he deprecated any idea of this degenerating into a philanthropic scheme, and I am sure that is the view of all those interested in the welfare of the scheme. It is part of the necessary consequence of the Bill that you are not merely settling men but you are displacing others. For every 100 acres you take you displace certainly not fewer than three professional agriculturists. In addition to that, it may be that adjoining these State colonies you may have professional agriculturists, market gardeners, men who have attained to their position by their own industry and their own wits. I do not think it is fair that these State tenants whom you are setting up should be placed in a superior position to compete against them. It would be unfair if they were able—as I understand from the reading of this clause as it now stands would be the case—to borrow money on benevolent terms at 3 per cent., whereas the professional agriculturists adjoining would be only able to get money from their banks at the market rate of 5 per cent.
To meet this case I propose that the lending of money for purposes in connection with this clause should be at the market rate of interest, and that loans should not be on more than two-thirds of the capital value of the security. That is the general rule applicable to all sound financial arrangements. I do not want it for one moment to be supposed that this Amendment is antagonistic to the principle of the Bill. Hitherto none of these experiments have been successful. I defy my noble friend to point to a single case in which the creation of annual tenants or State tenants has been a success. However, let us give this experiment a fair trial. But in order that it may have a fair trial and be of some guidance to us in regard to larger schemes hereafter, we ought to know that the basis of all the various expenditures upon which the charge to these tenants is to be made is a commercial and a fair one. If all sorts of

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subterraneous and benevolent advantages are introduced you will never arrive at the real fact as to whether it is a safe thing to extend the operation of these colonies and to use the State as a landlord on a much larger scale. It is for that reason that I very respectfully urge this Amendment upon my noble friend. I hope he may sec his way to accept it.
Amendment moved—
Page 2, line 9, leave out from ("society") to the end of the clause and insert ("at the market rate of interest and on not more than two-thirds of the capital value of the security and on such conditions as to repayment as the Board, subject to the approval of the Treasury, may think fit").—(The Earl of Portsmouth.)
VISCOUNT BRYCE: I want to say a few words to reinforce what has been said by the noble Earl opposite with regard to the extreme difficulty of this experiment. Like my noble friend near me, Lord Grey, I welcome the experiment of the co-operative principle. I think it is a great pity that co-operation so far has had very little success in Great Britain. It has had some success in Ireland, a success chiefly due to the disinterested and persistent labours of Sir Horace Plunkett, who has, I am sorry to say, received very little encouragement in the quarters where he ought to have received it. And he, I think, was to some extent guided by what he learnt in Denmark, where the co-operative principle has been carried further than anywhere else. It has been considerably adopted in other places, particularly in Australia, where co-operative dairying similar to that carried on in New Zealand has been prosecuted very successfully.
But the whole subject is so difficult that I think the noble Earl and His Majesty's Government will be well advised if they study carefully all that is recorded on the subject, and the reasons why so many of the experiments have failed. The experiment of settling soldiers is one of the oldest in history. It gave occasion to the first Bucolic of Virgil, and since his time by Roman Emperors and other persons it has been constantly tried and seldom succeeded. I would suggest to my noble friend Lord Selborne that he would do well, if he has not done so already, to obtain full information with regard to the cooperative colonies planted both in New Zealand and in Australia. I think a great deal has happened there which would be of importance to us. After all, national
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aptitudes and national traits count for something, and the Australians are people whose qualities are substantially the same as those of Englishmen; and it is important to know the difficulties which English persons set down to do this kind of thing experience when they are asked to work together in a co-operative way which is quite foreign to our national habits and national character.
Lord Lovat, earlier this evening, called attention to the question of applying this Bill for the purpose of reclaiming waste land and particularly of afforestation, a subject on which we have had some extremely interesting articles lately from one who is very well competent to speak—I refer to Sir John Stirling-Maxwell. That is rather outside the scope of this Bill though it is work which could well be done co-operatively. The employment of woodlands is a thing easier to take up than modern scientific agriculture, and if the noble Lord succeeds in prosecuting this experiment successfully I hope that later on after the war, when the present difficulties to which he has referred may have ceased to exist, he will go on and see whether something cannot be done as regards afforestation on the general lines he is laying down now. It was said with great truth by the noble Earl opposite (Lord Portsmouth) that the finance of the scheme is all-important, because if the scheme succeeds financially it may be capable of indefinite extension. Therefore, it is impossible to take too much trouble, even going down to the smallest details, to see that everything is done in the most economical way, and that the finance is such as to make the scheme offer a good promise for the future.
LORD CHANNING OF WELLING-BOROUGH: On this matter I have no doubt that my noble friend on the Front Bench (Lord Selborne) will take the same view that I do, that it is far better to leave the Bill as it stands and to ensure the greatest elasticity of movement in dealing with co-operators. I say that advisedly, because I took very great interest in promoting the success of the Act of 1908 in my own county, which I then represented in another place. Many conferences were held and many efforts made to enlist cooperative action to carry out the policy of small holdings in a successful way. But what was the chief stumbling block? It

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was that some of the Commissioners of the Board of Agriculture imposed just the sort of conditions which the noble Earl opposite would wish to impose now, over-strict and tyrannical conditions, which simply paralysed the activity of the co-operative societies. I know of more than one Small Holdings Society in Northamptonshire which gave up the co-operative principle in despair, simply owing to the regulations laid down by one of the Commissioners.
EARL GREY: I cordially agree with the remarks of the noble Lord, and I hope that the noble Earl in charge of the Bill will adhere to the clause as it stands. At the same time I concur with the noble Earl who moved the Amendment that you cannot point to a single case of successful land settlement by the Government. But this experiment is on an entirely new principle. All the other experiments have been individualistic; but this one is based upon the application of the co-operative principle. In other countries these co-operative experiments have been successful. The object of this Bill, as I understand, is to enable His Majesty's Government to make an experiment of land settlement on lines which have been successful in the Dominions. Therefore I would express the very sincere hope that the machinery should be as elastic as possible, and not bound up by red tape and by conditions which might throttle a very interesting experiment.
LORD JOICEY: So far as co-operation is concerned, I am with the noble Earl who has just spoken. But I am altogether against him with regard to the Amendment which has been moved by the noble Earl opposite. This is an experiment which, if successful, will go far and lead to the development of these colonies to an enormous extent, affecting millions of money. Therefore it is absolutely necessary that the first experiment should be one which will show whether or not it is going to be an economic success. If the Treasury are empowered to advance money at less than the market rate, where is your economic success? This is a vital question, and I hope that the noble Earl in charge of the Bill will accept the Amendment. Without it you cannot get a fair trial of the experiment.
THE EARL OF SELBORNE: I must say that the noble Lord who has just sat down has a view of the Treasury which has never
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occurred to me. He seems to think that there is a danger of the Treasury lending money to another Public Department at a philanthropic rate of interest. My experiences in three or four Government Departments must have been singularly unfortunate, because I have never found the Treasury opening its philanthropic arms to me or lending money for any public purpose whatever except upon what seemed to me to be the hardest rates. And that is really the answer to my noble friend who moved the Amendment. The whole thing is subject to the Treasury. Is it reasonable to imagine that the Treasury will give money away? Whoever heard of the Treasury lending money at too cheap a rate of interest? My only fear is that the Treasury may be so stern on the subject of the rate of interest and the amount of the sinking fund that we may be able to do very little with this clause. But it is not a new clause. This is an old clause; it is Section 49 of the Act of 1908 adapted to this Bill. Therefore all that I am asking your Lordships to do is to agree to a clause to which you have already agreed in connection with the institution of co-operative societies in regard to small holdings, and to apply a machinery which, although I admit it has not been extensively used as yet in connection with the previous Act, has, so far as I know, stood the test of criticism and experience.
Let me refer to what Lord Bryce said about the experience of co-operative land societies in Australia and New Zealand. I am grateful to him for drawing my attention to those experiments. I am not familiar with them, but I will at once see that we gain all the experience we can from that of our fellow-subjects in the Antipodes. I also thank him for his suggestion that afforestation may possibly be dealt with on the same basis. If he has time I hope he may elaborate that to me on some future occasion, because I confess the idea is new. Forestry has been miserably neglected in England and Scotland by every Government, Conservative and Liberal, and this war has found us short of the supplies of timber which this country ought to be producing for itself. Of course we are able to import it, but to import during a war like this, with the ever-increasing calls upon our shipping, is in itself a handicap; and we are using now our coniferous timber, such as it is, at such a rate that when the war is at an end there will be hardly any

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coniferous timber left in this country. Therefore it will become a matter of prime State necessity to establish a real forestry policy for Scotland, England and Wales. But unless I am very much mistaken, the lead in this matter will have to be taken by the State. It will be quite beyond the power of private individuals to meet the necessities of the case. If my noble friend will be so kind as to make his contribution to the consideration of this question which is now being undertaken in my Department I shall be grateful to him. For the reasons I have given, I cannot accept my noble friend's Amendment.
THE EARL OF PORTSMOUTH: I am sorry that my noble friend cannot accept my Amendment. I am not at all reassured by the somewhat imaginary picture he has drawn as to the strict and insistent view taken by the Treasury with regard to finance. That may have been the case in the days of Mr. Gladstone, but certainly has not been so in the more recent régimes. What I feel strongly is this. If this is to be an experiment which, if it proves to be a success, will be largely adopted, we ought to be assured that these colonies do not get any adventitious advantages over other commercial enterprises. Unless that is assured we may be certain that the loss to the State will be considerable. More than once I have heard my noble friend Lord Grey refer to the great work which Mr. Rhodes did in Rhodesia. That was with the money of the Chartered Company, and the company has not paid one shilling in dividends and is not likely to. I should be sorry if the millions of money to be taken out of the pockets of the taxpayers were to be administered on philanthropic lines like that. It is no use pressing this matter, having regard to the views of my noble friend, and I withdraw my Amendment. I am glad, however, that this discussion has taken place, and I hope that another discussion may arise in the other House, where this Bill, seeing that it involves the expenditure of millions of money, should have been introduced.
EARL GREY: I cannot understand why the noble Earl should endeavour to find in the support which it was my pride and privilege to give Mr. Rhodes in this connection an analogy for my support of the co-operative principle in this Bill. Let me tell the noble Earl that Mr. Rhodes never applied the principle of co-operation to the
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agriculture of Rhodesia. The noble Earl pointed out that millions have been spent in Rhodesia by the shareholders of the Chartered Company, and that they have never received one penny in the shape of dividends. But they have the glory of having added 750,000 square miles to the Empire out of their money, without having called upon the Empire to pay a sixpence out of the taxes of the people.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 agreed to.
Clause 4:
Powers of management of land acquired.
4. The Board shall, in relation to any land acquired by them under this Act or under Part I of the Development and Road Improvement Funds Act, 1909, whether acquired before or after the passing of this Act, have power—

(a) to let or manage the land or improve the same by the erection of buildings or otherwise;

(b) to enfranchise the land, and to purchase or redeem any land tax, quit rent, chief rent, tithe rentcharge, or other rentcharge or any perpetual sum issuing out of the land;

(c) subject to compliance with any conditions prescribed by regulations made by the Treasury, or with the consent of the Treasury, to sell or exchange the land.

THE EARL OF CAMPERDOWN THE EARL OF CAMPERDOWN had the following Amendment on the Paper:
Page 2, leave out lines 20 and 21 and insert
"(a) to let the land, giving preference to sailors and soldiers returned from active service abroad;
"(b) themselves to manage the land or improve the same by the erection of buildings or otherwise, with the intention of the land being occupied ultimately by sailors and soldiers returned from active service abroad."
The noble Earl said: I put down this Amendment for this reason. The noble Earl, on the Second Reading of the Bill, told us that he could not limit himself to ex-soldiers and sailors in distributing the land, because it was necessary that there should be certain persons skilled in this matter to assist and give instructions to the ex-Service men. It was to meet that point that paragraph (b) of my Amendment was intended. It would enable the Board themselves to manage the land or improve the same by the erection of buildings or otherwise, with the intention of the land being occupied ultimately by ex-soldiers and sailors. But if the noble Earl thinks it

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better not to insert the Amendment I will not move it. It seemed to me, however, that it was giving him in express terms the power which he thought he ought to have with regard to the occupation of a certain portion of the land.
THE EARL OF SELBORNE: I am much obliged to my noble friend, but I do not think the Amendment necessary.
Clause 4 agreed to.
Clause 5:
Expenses and receipts of Board.
5.—(1) Any expenses of the Board incurred in the exercise of any of their powers under this Act in relation to land acquired or to be acquired under the Development and Road Improvement founds Act, 1909, shall be defrayed out of any advances made to the Board for the purpose under that Act: and any sums received by the Board in respect of any such land shall be applied as the Treasury may direct.
(2) Any sums expended or received by the Board in pursuance of their powers under this Act in relation to land acquired under this Act, shall be paid out of or into the Small Holdings Account.
VISCOUNT GALWAY [on behalf of Lord HARRIS]VISCOUNT GALWAY [on behalf of Lord HARRIS] moved to add the following new subsection to the clause—
"(3) There shall be presented to Parliament annually, as soon as possible after the accounts of the working year have been completed, a return with balance sheet and profit and loss account for each colony, and with balance sheet and profit and loss account for each holding, the holdings to be distinguished by numbers."
The noble Viscount said: My noble friend Lord Harris has asked me to move the Amendment standing in his name, and I do so with the greater pleasure because I am sure it will commend itself to your Lordships and I think it will not be regarded as unreasonable by His Majesty's Government. This Bill is going to affect a large sum of public money, and on looking through it your Lordships will see that there is no provision for an annual report. I am sure it is the wish of the President of the Board of Agriculture that this experimental scheme, about which there is so much doubt, should be judged on its merits, and the only way for that to be done is to provide for an annual return to be submitted to Parliament. I submit that when Parliament votes money Parliament has a right to have a return showing how the money has been spent. Some do not think that there is the certainty of this scheme being the success which the President of the Board of Agriculture anticipates.
My noble friend Lord Harris did not understate the case the other day, because on looking at the matter your Lordships will see that the President of the Board of Agriculture expects to get £2 an acre land, and these allotments are to consist of about 20 acres; that will mean a rent of at least £40 a year. Then the occupier of the holding would expect to get at least £60 a year out of it to keep himself. That makes £100. Taking £10 an acre as the capital necessary for a farm, that would mean £200 for the 20 acres. My noble friend wishes me to say that in this case these smallholders would require to make 50 per cent. on their money, and that if every small holding were as successful as that there would be many more of them and a greater demand for small holdings in England than is the case at the present moment.
I do not hold the optimistic view entertained by the President of the Board of Agriculture, because various schemes of this sort have been tried in England and have not proved a success. I should like to remind the President of the Board of Agriculture that in the Journal of the Board of May this year there are certain statistics proving how a colony did not succeed. In 1906 the late Mr. George Herring left a large sum of money to found a colony for poor people. Land was bought, and in 1910 about fifty families were settled on this colony. It very shortly came about, the small-holders having no capital, that the trustees had to make an allowance of 10 s. a week to each occupier, with an additional 1s. for every child. The result was that in 1911 the trustees of this estate began to realise that they had made a mistake in putting inexperienced men on the land, and the upshot of it was that in 1912 an inquiry was made into the matter. Twenty men out of the fifty were given leases, but since they all failed to pay any rent the whole scheme has been wound up. That, it was proved, was owing partly to the men having no capital, partly to having to give maintenance allowances, and partly to the fact that the men were unsuited for the work. In view of that experience, quoted in the Board of Agriculture Journal, I am sure it will be recognised that it is necessary that Parliament should be supplied with an annual report showing how this scheme has operated. I should like to suggest that when this return is made statistics should also be given as to the amount of produce sold off the various

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colonies, so that the public can judge which was doing the most good for the country—the good farmers who had been turned off the land, or the new men put upon it. I beg to move the Amendment standing in my noble friend's name.
Amendment moved—
Page 2, after line 39 insert the following new subsection:
"(3) There shall be presented to Parliament annually, as soon as possible after the accounts of the working year have been completed, a return with balance sheet and profit and loss account for each colony, and with balance sheet and profit and loss account for each holding, the holdings to be distinguished by numbers."—(Viscount Galway.)
THE EARL OF SELBORNE: The principle for which my noble friend contends is perfectly reasonable, and if he will withdraw his Amendment now I will move a new clause later to provide for this.
VISCOUNT GALWAY: I wall withdraw the Amendment subject to power to raise the point again on Report if the noble Earl's new clause is not satisfactory.
THE EARL OF SELBORNE: Certainly.
Amendment, by leave, withdrawn.
THE EARL OF SELBORNE: Your Lordships will see an Amendment in my name to omit Clause 5, and to insert a new clause. I put down this Amendment because I found that the authorities in another place would take exception to Clause 5 as it stands at present, but they will take no exception whatever to any part of the Bill if this Amendment is made. What will happen in another place is that Clause 5 will be reinserted.
Amendment moved—
Leave out Clause 5, and insert as a new clause:
" Postponement of exercise of powers.
" 5. The powers conferred on the Board by this Act shall not be exercised unless and until provision is made by Parliament for defraying the expenses incurred by the Board in the exercise of such powers."—(The Earl of Selborne.)
On Question, Amendment agreed to.
Clause 6:
Power to sell land to Board for perpetual rent.
6. Any person having power (whether subject to any consent or conditions or not) to sell land authorised to be acquired by the Board may, subject to the like consent and conditions, grant or demise the land in perpetuity or for any term
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of years to the Board at such fee farm or other rent, secured by such condition of re-entry or otherwise as may be agreed upon, and with or without a right of renewal, or grant to the Board an option to acquire the land:
Provided that, where the power to sell arises under the Settled Lands Acts, 1882 to 1890, the powers conferred by this section shall be exercised only with the consent of the trustees of the settlement for the purposes of those Acts, or with the sanction of the court.
THE EARL OF SELBORNE: The reason for the addition to this clause standing in my name is that at present Crown Land is limited in regard to the length of lease that may be granted. This Amendment will enable leases to be granted sufficiently long for the purposes of these colonies.
Amendment moved—
Page 3, after line 13, insert as a new subsection:
"(2) This section shall extend and apply to land belonging to His Majesty in right of the Crown or of the Duchy of Lancaster, and to land belonging to the Duchy of Cornwall."—(The Earl of Selborne.)
On Question, Amendment agreed to
Clause 6, as amended, agreed to.
Clauses 7 and 8 agreed to.
THE EARL OF SELBORNE: I propose, with your Lordships' permission, to insert here the new clause to which I referred during the discussion on Lord Galway's Amendment.
Amendment moved—
After Clause 8, insert as a new clause:
"The Board shall present to Parliament an annual report of their proceedings under this Act which shall include a statement of the financial position of each colony."—(The Earl of Selborne.)
VISCOUNT GALWAY: Might I suggest that the noble Earl should provide for the inclusion in the annual report of the further details necessary to carry out the views of Lord Harris?
THE EARL OF SELBORNE: Our object will be to give an absolutely fair and complete view of the financial position of each colony. I do not want to put in words regarding details the effect of which I cannot foresee.
LORD JOICEY: The noble Earl ought to include the words "showing the profit and loss." The financial position may not always show that. I think we ought to know exactly what is the result of the year's working. I hope the noble Earl will submit the statements in such a form as will show whether or not the colonies are financial successes.
THE EARL OF SELBORNE: I quite agree. That is the whole object of this proposed new clause.
On Question, Amendment agreed to.
Clause 9:
Application to Scotland.
9. This Act shall apply to Scotland, subject to the following modifications:—

(a) The Board of Agriculture for Scotland shall be substituted for the Board of Agriculture and Fisheries, the Agriculture (Scotland) Fund shall be substituted for the Small Holdings Account, "easements" mean servitudes, and "small holding" means a small holding as defined in section thirty-three of the Small Landholders (Scotland) Act, 1911:

(b) Paragraph (b) of section three and sections six and eight of this Act shall not apply:

(c) Section one shall be read and construed as if two thousand acres were substituted for six thousand acres.

THE EARL OF SELBORNE: The first Amendment in paragraph (a) is consequential.
Amendment moved—
Page 3, lines 38 and 39, leave out ("the Agriculture (Scotland) Fund shall be substituted for the Small Holdings Account").—(The Earl of Selborne.)
On Question, Amendment agreed to.
Amendment moved—
Page 4, line 3, paragraph (b), leave out ("three") and insert ("four").—(The Earl of Selborne.)
On Question, Amendment agreed to.
Clause 9, as amended, agreed to.
Remaining clause agreed to.
VISCOUNT MIDLETON: My Lords, before the Bill is reported to the House I should like to ask my noble friend what provision he proposes to make for limiting the expenditure on stall in connection with this Bill. There has been no greater abuse than the manner in which these Bills are passed and an unlimited power given for the creation of staff, Parliament subsequently finding that, without the slightest idea of justification, new posts amounting to £20,000, £30,000, £40,000, or £50,000 a year have been set up. Constant representations have been made that where this is done it should be shown by a clause in italics giving the power, and also that we should be given an estimate, of what it is intended to do in the way of creating such staff.
THE EARL OF SELBORNE: Is it Departmental staff of which the noble Viscount is talking?
VISCOUNT MIDLETON: Any number of staff may he set up under Clause 5 provided they are paid out of certain funds. What has been urged by the Retrenchment Committee is that there should always be given by the Minister in charge of a Bill a clear statement of the approximate staff which it is proposed to appoint, not the actual names or even the numbers, but what the expenditure is expected to be. Hitherto this has been one of the greatest abuses. And here in the middle of the war is another of these Bills, which I apprehend will lead to the same state of things as past measures. Gradually there will grow up a whole page of Estimates in order to carry out the expenditure in this Bill. I would request my noble friend not to ask us to take the Report stage until he is in a position to lay before us some such estimate as that for which I have asked.
THE EARL OF SELBORNE: I cannot give the undertaking for which my noble friend asks, for reasons that I will make perfectly plain to him. I am starting this work with no additional staff. I have not added a single man to my staff for the purpose of bringing this Bill into operation, and I have been able to avoid this through the generosity of Captain Bathurst, who has come to my assistance. When the schemes are worked out I have not a doubt that an addition to the staff of the Department will be necessary, but it is quite impossible for me to give any estimate on that subject now, because I have not got a single one of the schemes in a position yet to put it to the Treasury. I only began work a few weeks ago. But I am quite confident, as regards these three colonies, that any addition to the staff of the Board of Agriculture would be a very small one. What the addition might be if the schemes are as successful as I hope, I am not in a position to prophesy. If the noble Viscount was referring also to the staffs that will be working in the actual colonies, as I told him on a previous occasion all expenses in connection with the colonies will be included in the cost of the colonies, except such as may be entailed in the first instance in educating ex-soldiers and sailors who are not experts in agriculture. I have consistently said—and noble Lords have approved my intention, although they may think me an optimist—that our object is

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to make this an economic success, and that I am not embarking consciously on a scheme of philanthropy. But it is not in my power at the present moment to tell the noble Viscount what the ultimate effect on the staff of the Board of Agriculture may be.
THE EARL OF CAMPERDOWN: It may not be in the power of the noble Earl to tell us this at the minute. But as soon as he has organised a colony will he, at the time when that colony is instituted and money is taken for it, make a return showing the amount of staff which he proposes to employ? I do not mean the staff of his own Department so much as the staff of educators of whom he spoke just now.
THE EARL OF SELBORNE: I will certainly give that information at the earliest possible moment.
VISCOUNT MIDLETON: My noble friend displays an almost Gladstonian aptitude for making a statement which is very pleasing and soothing to your Lordships' House, but which leaves open all the possibilities of the abuses that I apprehend will arise. As I understand, no staff will be needed at once; but the noble Earl's successors will not have any difficulty in following out my noble friend's words to the letter and yet establishing a considerable staff presently. There must be of necessity a large staff in the colonies themselves, and when the colonies once have staffs they will have to be superintended by the Board of Agriculture. So far from being satisfied, I am very much afraid that in this case as in many previous ones there has been no attempt on the part of the Board of Agriculture to estimate what their staff requirements will be to carry out the provisions of this Bill. I would ask my noble friend before he takes the Report stage to look into the matter and see whether he cannot give us rather more definite assurances.
The Report of Amendments to be received on Thursday next, and Bill to be printed as amended. (No. 46.)

TOTAL DISABLEMENT PENSION.
THE EARL OF MAYO THE EARL OF MAYO had the following Question on the Paper—
To ask His Majesty's Government why totally disabled soldiers are not granted 25 s. per week pension as per Army Form B 218 P. dated 15th June, 1915, and to quote instances.
The noble Earl said: My Lords, I wish to draw the attention of His Majesty's Government to the question of totally disabled soldiers. The Army Form to which I refer in my Notice on the Paper says—
"The rate for a private soldier totally incapable of earning a livelihood will be 25 s. a week, with 2s. 6d. a week for each child (under age 16) born before discharge."
That is a definite promise made by the Army authorities. Then I have in my hand a recruiting paper which has been sent to me from the Headquarters in Dublin. It begins by asking the would-be recruit whether he has ever seriously considered how his financial position would be affected if he joined the Army. The paper continues in the form of a catechism, and I will read to your Lordships the portion bearing on the subject which I am bringing forward—
"Q.—I understand also that pensions are allowed to disabled soldiers?
"A.—That is so. Men disabled through war service are eligible for pensions, varying according to rank and the extent of their injuries. The rate for a private soldier totally incapable of earning a livelihood is 25 s. a week, with 2s. 6d. a week for each child under sixteen years of age born before he was discharged from the Army."
This recruiting paper was largely used in Ireland by the head recruiting committee. It was sent out to the local recruiting committees; and many men joined the Army understanding that they would have this pension. Again, in a pamphlet issued from the War Office during August of last year and headed" What the disabled soldier wants to know," there appears as the first paragraph—
"Every European soldier discharged as totally incapable of earning a livelihood owing to wounds or injuries, or sunstroke, received in action or in the performance of military duty…gets a pension of 25 s. a week, under the Royal Warrant of 21st May, 1915."
This promise, therefore, has been very definitely made by the Army authorities.
I will cite to your Lordships the cases of two men who were in the Dublin Fusiliers, and who, each of them, lost a leg in the present campaign. Previous to the war they were agricultural labourers, and now, naturally, they are totally incapacitated from earning a livelihood as agricultural labourers. Their names are Walsh and Drumin. Walsh is in receipt of only 10 s. 6d. a week. He says—
"It is very little for me, and I would be very grateful if you could do anything for me."

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Drumin writes—
"I was wounded in action…. The pension I have is 25 s. a week for two months only; and then 10 s. 6d. a week!"
That was written a little while ago. He is now getting the 10 s. 6d. a week. I have instanced only two Irish cases which have come to my knowledge, but naturally there must be many other cases throughout the United Kingdom of soldiers totally incapacitated yet not in receipt of the 25 s. pension, which, as I have pointed out, had been distinctly promised to them. If an agricultural labourer loses a leg in the war, how can he possibly do the ordinary work of an agricultural labourer, such as digging, reaping with a scythe, pitching hay, or loading a dung cart? It is only fair that those who, as the result of losing a limb in the war, are unable to earn a livelihood should get the 25 s. a week. I hope that the answer which the noble Lord opposite will give to-day will be more satisfactory than the reply given to Lord Salisbury a short time ago. I feel strongly on this subject, as do Army officers who have spoken to me on the matter. Of course, a clerk who has lost a leg or an arm may still be able to earn some money at his desk. But it is different in the case of a man who has to work out of doors, and I cannot see how the Government can decline to pay him the full pension promised, especially when men were induced to join the Army voluntarily by such promises.
LORD SANDHURST: My Lords, I am sure we all sympathise with my noble friend opposite in doing what he can to get the best possible terms for men who have done so well and suffered so much. On April 18 last I explained the whole story at the instance of my noble friend Lord Salisbury, and I think I correctly stated the arrangements for pensions and the principles upon which the matter was worked. I do not propose to repeat all I then said, but I may point out to my noble friend opposite, who perhaps was not in the House on that occasion, that the arrangements at Chelsea are under a Royal Warrant which is based upon representations of a Select Committee; of the House of Commons, I think in 1915. That was a very strong Committee, and included the then Chancellor of the Exchequer, Mr. Bonar Law, Mr. McKenna, Mr. Barnes, and Mr. T. P. O'Connor. There may have been one other member, but I cannot for the moment recall his name.
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As the noble Earl stated, where it is established that a man is totally incapacitated he would receive 25 s. a week plus 2s. 6d. a week for each child under sixteen years of age born before discharge. But, as laid down in the Report of the Committee to which I have referred, that incapacity does not refer to the man's actual trade or calling before he went to the war; it refers to what is known as his position in the general labour market. Experience has shown that men incapacitated from following their original line of business have in many cases been able to obtain other occupation from which they have received, we will say, 12 s. 6d.—half the amount of the total incapacity pension. The wage they receive is made up by the State to the amount of 25 s. I wish to lay stress on this, that the guide in this matter is not incapacity in one particular trade, but what is known as the man's value in the labour market.
The noble Earl spoke of two soldiers who had lost a leg each and were in receipt of 10 s. 6d. a week. This rate of 10 s. 6d. has been somewhat, modified. A man who has lost a leg at the hip gets 16 s., a man with a "short thigh" 14 s., a man who has lost his leg just above the knee 12 s. 6d., and a man who has lost his leg below the knee 10 s. 6d. For the amputation of an arm, if it is taken off at the shoulder, he gets for the right arm 16 s., for the left 15 s.; above or through the elbow, Ms. for the right, 13 s. for the left; and below the elbow, 11 s. 6d. for the right, 10 s. 6d. for the left. The 10 s. 6d. pensions to which my noble friend referred may have been made before this modification.
THE EARL OF MAYO: Yes, they were. But the men are still getting 10 s. 6d.
LORD SANDHURST: If my noble friend has cases of hardship, or cases in which he considers total incapacity is made out, and will be so good as to send particulars to me, if he thinks that is a more expeditious method—Chelsea is not at all anxious to delay matters, though of course the volume of business which has to be dealt with is very great—I can assure him of the most prompt and sympathetic consideration of those cases.
LORD BERESFORD: My Lords, I should like to ask my noble friend opposite whether the promise to increase the staff

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at Chelsea and the size of the building in which they work has been redeemed. In reply to a question which I put a little while ago, the noble Lord said that if a man lost a limb he received 25 s. a week. What I want to find out is whether the man is ever in the position of receiving 10 s. 6d. only when not earning anything from any other employment, or does he receive 25 s. until he earns money from some other employment.
LORD SANDHURST: I am speaking without notice, but in reply to the noble and gallant Lord's first question I can say this. I happened to go to Chelsea this afternoon to make myself acquainted with the answer for the noble Earl, and I found the hall crammed with papers in connection with cases and the place full of young ladies and stools—very uncomfortable it looked. They are doing everything they can to get the necessary increased accommodation. Lord Beresford's second question dealt with the case of a man who had lost a leg or an arm. My noble friend will remember that a man who has lost a limb receives 25 s. A man is not discharged, of course, immediately his leg or arm is amputated. He may wait perhaps a month until he gets better. Then he is provided free of charge with the best mechanical limb, and whilst he is getting accustomed to that leg or arm, or looking about for employment after he is able to use the artificial limb, he receives for a period of two months the 25 s. a week. I understand that in no case will he receive a less pension for the loss of the limb than 10 s. 6d. a week, irrespective of any wages he may earn.
THE EARL OF MAYC: I thank the noble Lord for what he has said with regard to the cases which I brought forward, and I shall certainly forward to him full information thereon. The noble Lord said something about the man's value in the labour market. I should like to ask any member of this House whether he would employ as an agricultural labourer a man who had lost a leg. Here you have two men who fought in the Dublin Fusiliers, uneducated Irish labourers. They have families, and are getting only 10 s. 6d. a week. How can
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they live on that? Their labour market is the agricultural labour market, and they cannot get anything to do. It is extremely hard that they should get only 10 s. 6d. a week. I must say that I do think the scale of 12 s. 6d. when a leg is cut off at one place, 14 s. if cut off at another, and 16 s. if amputated at the hip is a dreadful statement to hear from the Government.
LORD SANDHURST: That was arranged some time ago. I do not make the statement for the first time.
LORD JOICEY: My Lords, in all the industries of the country there are men who meet with particular accidents. These questions are gone into carefully in connection with the Employers' Liability Act, and it is astonishing how accurately the Judges value an arm, a leg, an eye, or anything else. The question of these pensions is most difficult and complicated, and I am sure His Majesty's Government will realise that it is the wish of the country to be generous to the men who have been fighting for us. At the same time I think that men with only one leg can get employment. I know many such men who are employed. I have a keeper who has lost a leg, and he is still the best keeper I ever had. If a man can do a certain amount of work it is always customary to take that into consideration when he receives a pension. If the Government consulted men who have had great experience in dealing with this question in connection with employers' liability insurance, and so on, they might get a good deal of useful information that would enable them to come to a correct decision on this point.

LOCAL GOVERNMENT (IRELAND) PROVISIONAL ORDER (GAS) BILL.
LOCAL GOVERNMENT (IRELAND) PROVISIONAL ORDERS (No. 2) BILL.
Second Reading (which stands appointed for Tuesday next) put off to Thursday next.
House adjourned at Seven o'clock, to Monday next, a quarter before Eleven o'clock.