Sitting of 28 June 1916

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

PRIVATE BUSINESS.
South Eastern and London, Chatham, and Dover Railways Bill [Lords],
To be read a second time To-morrow.
Land Drainage (Welland) Provisional Order Bill,
Order [21st June] that the Land Drainage (Welland) Provisional Order Bill be committed, read, and discharged:—Bill withdrawn.—[The Chairman of Ways and Means.]

BOARD OF EDUCATION.
Copy presented of Report for the year 1915 on the Victoria and Albert Museum and the Bethnal Green Museum [by Command]; to lie upon the Table.
NATIONAL INSURANCE ACT.
Copy presented of Provisional Regulations, dated 27th June, 1916, made by the Irish Insurance Commissioners, entitled the National Health Insurance (Insurance Committees: Representation of Insured Persons) Amendment Regulations (Ireland), 1916 [by Act]; to lie upon the Table.
EAST INDIA (LOANS RAISED IN INDIA).
Copy presented of Return of all Loans raised in India, chargeable on the Revenues of India, outstanding at the commencement of the half-year ending on the 31st March, 1918, etc. [by Act]; to lie upon the Table, and to be printed. [No. 91.]
AVOODS, FORESTS, AND LAND REVENUES.
Copy presented of Ninety-fourth Report of the Commissioners, dated 29th June, 1916 [by Act]; to lie upon the Table, and to be printed. [No. 95.]
DESTRUCTIVE INSECTS AND PESTS ACTS, 1877 AND 1907.
Copy presented of Order, numbered D.I.P. 364, declaring an area described in the Schedule thereto to be infected with American Goosebery Mildew and an infected area for the purposes of the American Gooseberry Mildew (Infected Areas) Order of 1915 [by Act]; to lie upon the Table.
PRISONS (SCOTLAND) ACT, 1877.
Copy presented of Annual Report of the Prison Commissioners for Scotland for the year 1915 [by Command]; to lie upon the Table.
ORAL ANSWERS TO QUESTIONS.
  WAR.

    BULGARIANS IN MACEDONIA.
    Mr. RONALD MCNEILLasked the Secretary of State for Foreign Affairs if he has received any official information with regard to the atrocities committed by the Bulgarians in Macedonia; in particular, whether the Bulgars have massacred in the village of Doglavatz nine entire families, aggregating forty-seven persons, and 110 other individual men, women, and children, besides flogging or mutilating others; whether in fifteen other Macedonian villages the Bulgars massacred seventy-one persons -whose names are known, besides many others unidentified, these victims being knifed, shot, beaten to death, burnt alive, and tortured in various ways, while kidnapping and robbery of the worst type are of common occurrence; and, if so, whether any steps are being taken to compile an official record of these atrocities and to bring them to the knowledge of neutral Governments?
    The UNDER-SECRETARY Of STATE for FOREIGN AFFAIRS (Lord Robert Cecil): I have no official information as to such occurrences. Note is kept of reports of atrocities that reach His Majesty's Government with the view of subsequent verification and the eventual exaction of reparation, but it is of little use to communicate to neutral Governments unsubstantiated statements, the truth of which

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    those Governments are at present better able than His Majesty's Government to ascertain.
    Mr. R. MCNEILLasked the Secretary of State for Foreign Affairs whether Bulgaria has announced that her troops entered Macedonia as liberators of a Bulgar population from Serbian rule, and has put forward claims to the districts so occupied on grounds of nationality; whether these same districts contain the villages of Doglavatz, Marjar, Strevja, Rapesh, Vitalishto, Kostinatz, and others, in which the Bulgars have committed wholesale massacre, torture, mutilation, rape, robbery, and incendiarism; and whether an official record of these transactions will be preserved and considered in relation to the settlement of Balkan problems after the War?
    Lord R. CECIL: As regards the first part of the question, I understand that the Bulgarian Government have advanced extensive claims on the ground of nationality. As regards the second part, I have no official information; the suggestion contained in the last part will be borne in mind.
    Mr. R. MCNEILLasked the Secretary of State for Foreign Affairs whether he has any official information of the reign of terror said to prevail in the part of Nish under Bulgarian military rule; whether all works of art, manuscripts, and books of any value have been either destroyed or carried away; whether he inhabitants are being robbed and butchered by a force of gendarmerie sent from Sofia, assisted by a rabble of spies, detectives, and criminals enjoying Bulgarian patronage and pay; if he is aware tha the Bulgarian National Bank is buying up Serbian notes at a price fixed by Bulgarian official decree much below their market value, and that severe penalties are inflicted on any person offering to pay more than the official rate for such notes; and whether he will take steps in conjunction with the Allied Governments, to make it known that the King of Bulgaria will be held personally account able to the Allied Powers for the state of affairs prevailing in Serbia and particularly in the town of Nish?
    Lord R. CECIL: It is very difficult to know what is the real truth about the condition of affairs in territory occupied by our enemies, and I should be glad to receive any evidence possessed by my hon. Friend on the subject. If atrocities such as he describes are being committed His
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    Majesty's Government have repeatedly said that they will hold responsible those whoever they may be who have authorised or permitted such crimes.
    Mr. McNEILL: Is the Noble Lord able to say that in the absence of specific proof against individuals the head of the State will be held liable?
    Lord R. CECIL: I should not like to give a pledge of that kind without consultation with my colleagues.

    KUT (PRISONERS OF WAR).
    Mr. JACOBSENasked the Secretary of State for Foreign Affairs whether, in view of the fact that British officer prisoners of war captured at Kut have received excellent treatment at the hands of the Turks, he will arrange that all Turkish prisoners of war in our hands shall receive specially favourable treatment and cause such action to be brought to the notice of the Turkish authorities?
    Lord R. CECIL: The Turkish prisoners of war in our hands have been properly treated throughout, and the Ottoman Government are well aware of this from the reports on internment camps for Turkish prisoners of war which have been drawn up by United States officials and communicated to that Government from time to time by the United States Embassy at Constantinople.

    BUCHAREST (HIS MAJESTY'S REPRESENTATIVE).
    Sir HAROLD ELVERSTONasked what is the name and nationality of His Majesty's present representative at Bucharest; and whether any person of German or Austrian extraction has occupied that position during the last ten years?
    Lord R. CECIL: His Majesty's Minister at Bucharest is Sir George Barclay, a British-born subject. The answer to the second part of the question is in the negative. Sir Walter Townley was there from 1911–12 and Sir Conyngham Greene from 1905–11. None of these names, either Christian or surname, suggest German or Austrian extraction, and I would suggest that before the hon. Member puts questions of this sort on the Paper he should either by recourse to a book of reference

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    or by private inquiry obtain the information that would show him that a public question was unnecessary, if not ridiculous.
    An HON. MEMBER: We do not want your opinion; we want an answer to the question.

    FRENCH JOURNEY (UNDER-SECRETARY OF STATE).
    Sir A. MARKHAMasked the First Lord of the Admiralty if he will say whether on 30th May a special steamer was provided for the purpose of conveying an Under-Secretary to France; and whether a destroyer was also provided to escort this gentleman?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): The Parliamentary Under-Secretary of State for Foreign Affairs went over to France on urgent and important Government business on the 30th May, and a special steamer was provided for him to enable him to reach Paris that day. This was escorted not by a destroyer but a patrol boat. My right hon. Friend returned by the ordinary steamer.
    Sir A. MARKHAM: Is it not the fact that the Noble Lord reached the other side of the water and had a very hearty meal with a passenger who travelled in the ordinary way?
    Dr. MACNAMARA: I cannot say.
    Sir A. MARKHAM: I know.
    Mr. PRINGLE: Is it not the case that the Noble Lord objected to the late First Lord of the Admiralty doing the same thing?
    Dr. MACNAMARA: Not so far as I know.
    Mr. PRINGLE: He put a question down on the matter.
    Mr. ASHLEY: Perhaps the Noble Lord will inform us whether he did arrive as stated, and got the same train?

    NAVAL PRIZE MONEY.
    Colonel GRETTONasked where the Naval Prize Money funds are deposited; are they in the possession of the Admiralty, or have they been paid into the Exchequer?
    Dr. MACNAMARA: All moneys arising from the proceeds of prizes taken during the present War are in the hands of the several Prize Courts. They have not been paid into the Exchequer.
    Colonel GRETTON: Arising out of that reply, is the representative of the Admiralty aware that by law all Prize Money must be paid into the Exchequer, and will he take steps to see the law is carried into effect?
    Dr. MACNAMARA: Well, I will look into that.
    Colonel YATEasked the Secretary to the Admiralty whether the distribution of Prize Money to all officers and men in the Fleet under the new system will require to be sanctioned by Parliament; whether it will be necessary to bring in a Bill for that purpose; if so, when do the Government propose to introduce it; whether the Prize Money which would have been due to officers who have been killed in action or whilst serving on full pay is to be paid to their widows or next of kin or dependants; and how is the amount due to them to be calculated?
    Dr. MACNAMARA: The Admiralty are advised that legislation will be required to authorise the intended system of distribution of Prize Money to the Fleet generally instead of the previous practice, whereby it was granted to the captors only. No date can be given at present for the introduction of a Bill, the terms of which are still under consideration, but I may assure my hon. and gallant Friend that any shares due to officers and men who may lose their lives meanwhile will be payable to their legal representatives. My hon. and gallant Friend will be interested to know that prize bounty has been distributed in one case, and that a decree of the Court has been given in three other cases. As soon as the sums awarded have been placed in the hands of the Admiralty, distribution will proceed forthwith.
    Colonel YATE: Can the right hon. Gentleman give us no indication when the Bill will be introduced for the distribution of the Prize Money?
    Dr. MACNAMARA: As I have said, I cannot.

    MIDSHIPMEN (PRIVATE ALLOWANCE).
    Major HUNTasked the First Lord of the Admiralty whether the parents of

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    midshipmen have been required during the War to find £50 a year as a private allowance for each midshipman; and, if BO, as midshipmen are doing the work of officers in the turrets, the fire-control stations, and on the bridge, and giving their lives for their country, he will take steps to have this regulation rescinded during the War?
    Dr. MACNAMARA: The pay of a midshipman is 1s. 9d. a day, and this, together with the sum deposited by parents or guardians as private allowance, gives him a weekly income of 31s. 6d. The compulsory charge for messing is 7s. a week. During the War the tuition charge of 3d. a day has been waived and there is no other compulsory payment. The payment of private allowance still holds good, but as I have stated on several occasions, where, necessity exists, the Board of Admiralty is prepared to give favourable consideration to applications for whole or partial release. I am afraid I cannot give the general undertaking asked for in the second part of the question.
    Major HUNT: Are we to understand from the right hon. Gentleman that these boys are not only expected by the Government to give their lives for their country, but to pay for the privilege of doing so?
    Dr. MACNAMARA: Well, I should not put it quite in that way, but, as I have stated, in any case we are most ready to give any consideration to the question of waiving the parent's charge. We have not refused one of the many applications we have had.
    Major HUNT: Does the right hon. Gentleman really think it is right that these parents should have to pay for these boys doing—
    Mr. SPEAKER: The hon. Member is now raising a controversial subject which has been frequently debated.

    ADMIRAL JELLICOE'S MESSAGE TO GRAND FLEET.
    Sir H. DALZIELasked the First Lord of the Admiralty whether he can state the date on which Admiral Jellicoe's message to the Grand Fleet, published in the Press on 13th June, was first communicated to the officers and men; and can he explain the delay, if any, in its publication?
    Dr. MACNAMARA: The Commander-in-Chief's message was dated the 4th June, and no doubt reached a considerable part of the Fleet on that or the following day. It was received at the Admiralty on the 10th June, and two days later an inaccurate copy was submitted by a provincial newspaper to the Press Bureau for permission to publish. The Commander-in-Chief's consent to its publication was sought on the same day, and it was published the following day. It was not written with a view to publication, and such delay as there was does not appear to require any explanation.
    Sir H. DALZIEL: Does not the right hon. Gentleman think that in future, when the Admiralty are issuing the messages of the Commander-in-Chief, it would be more courteous to him to affix the date on which the message is written; does he also observe the significance of the message nearly a fortnight after it was written, having regard to the reference to the number of enemy vessels destroyed; would it therefore not be advisable to have published the date?
    Dr. MACNAMARA: In regard to the first point, I think that could be very well done.

    LOSS OF H.M.S. "HAMPSHIRE."
    Sir R. COOPERasked the First Lord of the Admiralty if he can say what circumstances determined him not to hold a public inquiry into the loss of His Majesty's Ship "Hampshire"?
    Dr. MACNAMARA: As the matter was fully investigated by the Court of Inquiry, no sufficient reason existed for holding a second inquiry.
    Admiral of the Fleet Sir H. MEUX: Is it not the case that when a naval Court of Inquiry is held that the witnesses are never put on oath?
    Dr. MACNAMARA: That is, I believe, the case.
    Mr. PRINGLE: Would only naval witnesses attend this inquiry; was there any evidence taken from civilians?
    Dr. MACNAMARA: The inquiry took place under circumstances which I have already described.
    Mr. FABER: Was any evidence taken from anyone on two destroyers that were ordered to go back?
    Dr. MACNAMARA: I could not say offhand.
    Sir R. COOPERasked if a properly constituted inquiry into the loss of His Majesty's Ship "Hampshire" was held; and, if so, was evidence taken on oath?
    Dr. MACNAMARA: The answer to the first part of the question is in the affirmative, and to the second part in the negative.
    Sir R. COOPERasked whether the official announcement on the part of the Admiralty, that it had now been established that the "Hampshire" struck a mine, was intended to convey the information that the Commander-in-Chief of the Grand Fleet endorsed this belief, seeing that the announcement referred to a further Report from the Commander-in-Chief?
    Dr. MACNAMARA: Yes, Sir.
    Sir R. COOPER: Can the right hon. Gentleman say whether the Commander-in-Chief, at the time he expressed his opinion, was aware of the condition of the bodies that had been recovered?
    Dr. MACNAMARA: I cannot say.
    Sir R. COOPER: Will the right hon. Gentleman make inquiries and let us know?

    GIBRALTAR (MEN FROM HOME DOCKYARDS).
    Sir BERTRAM FALLEasked the Secretary to the Admiralty if he is aware that men from the Home dockyards who volunteered for Gibraltar for a period of two years are not allowed to return at the expiration of the contracted time; and if he will see that this is remedied or that the men so detained beyond the contract time will be given an increased wage?
    Dr. MACNAMARA: I am calling for a report.

    ROSYTH DOCKYARD.
    Sir B. FALLEasked the Secretary to the Admiralty if he is aware that the men who recently volunteered for service at Rosyth were promised travelling time; if he is aware that this has not so far been granted, though the travelling time from Edinburgh, where the men live, to
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    Rosyth and back averages about two hours per day; if he will see to it that the travelling time is allowed and paid for; and if he can say if any provision for free warrants or concession tickets is to be made for men who go on leave?
    Dr. MACNAMARA: The answers to the first two parts of the question are in the affirmative. With regard to the undertaking respecting travelling time, it was decided last month in respect of men then transferred to Rosyth to grant one hour's pay per day to the workmen who travel between Inverkeithing and Edinburgh or Leith until such time as the housing accommodation at Rosyth is so complete as to make it unnecessary for men to live otherwise than in the locality. Since that decision, representations have been made on behalf of men who live in the other direction, namely, in the direction of Dunfermline and Kirkcaldy, and it has been decided to grant an allowance of 6d. a day all round to men permanently transferred from the South and who have to travel by rail to their work. I gather from the question that the men who recently came up from the South and are living in Edinburgh or Leith consider that this decision is a departure from the undertaking given to them. The matter will be looked into. As regards the last part of the question, since the men under reference volunteered for permanent service at Rosyth, it is not proposed to adopt the proposal of my hon. Friend.

  DECLARATION OF LONDON.

    WITHDRAWAL OF GRJTAT BRITAIN AND FRANCE.
    Mr. HEWINSasked the Under-Secretary of State for Foreign Affairs whether he can inform the House as to the result of his conferences in Paris?
    Lord R. CECIL: The chief purpose of the conferences which I attended in Paris was to consider whether it was desirable for the Allies to continue their partial adoption and enforcement of the Declaration of London.
    After careful consideration, the British, and French Governments have decided in the negative, and I hope that the other Allied Governments will concur in this decision. His Majesty will be advised in due course to issue an Order in Council withdrawing the successive Orders in. Council which have been issued adopting

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    with modifications the Declaration of London. A joint statement will also be issued explaining the reasons for this step.
    The opportunity was also taken to discuss with the French Government various minor matters connected with the blockade, in order that the naval operations of the Allies should be co-ordinated to the utmost possible extent.

  DISTURBANCES IN IRELAND.

    WOUNDED CIVILIANS.
    Mr. GINNELLasked the Under-Secretary of State for War (1) why the military authorities under martial law in Dublin refused to take the evidence of wounded civilians in the Dublin hospitals, seeing that all those wounded persons declared it was the soldiers who had fired on them, and were willing to give evidence o that effect; and (2) whether he has yet received a report in the case of Mrs. Naylor, shot on the bridge at Great Brunswick Street, Dublin, by soldiers firing from the belfry of Haddington Road Church; under whose orders those soldiers continued for five hours firing on that bridge, where there were no Irish combatants, thus preventing the removal of the dying woman, who eventually died while being carried to hospital; and why the military did not allow an inquest in this case?
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): I have no information on these matters to-day and cannot answer the questions without making inquiry.

    ARRESTED WOMEN.
    Mr. GINNELLasked the Under-Secretary of State for War under whose order seventy young Cumann-na-mban nurses wearing a red cross and doing Red Cross work for wounded on both sides during the insurrection in Dublin were arrested, imprisoned, three for a week in each cell constructed for one, given no beds, only one blanket too dirty to be used, no proper sanitary accommodation or facilities, attendance so dirty as to produce sickness, hardened criminals of the lowest class forced in amongst them; seeing that they were all daughters of respectable citizens ready to give security if required, why they were imprisoned; whether most of them were subsequently released without charge, trial, apology, or reparation;
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    why five have been kept in Mountjoy Prison and allowed only one visit of fifteen minutes each day; whether he is aware that of these Miss Foley did only one day's voluntary Red Cross work, while Miss. Perolz was in Cork and Miss Ryan in Wexford at the time of the rising in Dublin, and therefore had no connection with it; whether he is aware that this continued imprisonment affects the public position of the latter, in which she is maintaining a substitute; whether these five ladies will be released forthwith and compensated; and, if not, whether they will be allowed to live at large in some area chosen by them, as others in the same cause are now being allowed to do?
    Mr. TENNANT: I cannot, of course, accept as correct all the statements which the hon. Gentleman has reproduced in this question. The cases of all the women who were arrested in connection with the recent rebellion were investigated with the utmost rapidity possible in the circumstances, and sixty-two prisoners were released on the 8th of May. As regards the five ladies who have not been released, they, as I have several times informed the hon. Member, have been interned under an Order issued by the Home Secretary, and they have the right to lay their cases before the Advisory Committee. As regards the conditions at the time of their arrest, I may say that all possible consideration was extended to these prisoners.
    Mr. GINNELL: Will the right hon. Gentleman say what is the precedent for requiring a statement in the nature of a defence in cases in which no charge has been made? Has a charge been made against any one of these five, or will it be made before they make their statement?
    Mr. TENNANT: I would ask the hon. Member what is the precedent for the rebellion in Ireland? I would also ask him to address his question with regard to the treatment of these women to the Home Secretary.

    TREATMENT OF PRISONERS.
    Mr. W. O'BRIENasked why Messrs. Terence M'Swiney, Peadeer O'Hourihan, Joseph M'Bride, and two other Irish political prisoners detained in Wakefield prison, have been, contrary to his promise, cut off from all communication with their brother Irish prisoners and from association with one another; and whether this special harshness has any connection with

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    attempts by Members of Parliament to induce Irish political prisoners to assent to the partition of Ireland by promises of liberation from prison?
    Mr. TENNANT: I understand that these men are able to communicate with one another, but that they are accommodated separately from the rank and file of the prisoners. No "special harshness" is involved and the words seem to me inappropriate in this connection. I am not aware of any attempts or promises such as are referred to in the last part of the question.
    Mr. GINNELL: Is the right hon. Gentleman not aware that a private gentleman visited all these prisons and canvassed all the prisoners in support of the project for the partition of Ireland and the unanimous answer he got was that they would rather stay all their lives in gaol?
    Mr. TENNANT: No.

    MB. SHEEHY SKEFFINGTON (PUBLIC INQUIRY).
    Mr. GINNELLasked the Prime Minister when the promised public inquiry into the murder of Mr. Sheehy Skeffington and two other men will be held; what is its character; the composition of the Court; whether all the requirements of law and justice set out in the letter of 13th June from Mr. Lemass to the Prime Minister have been or will be complied with; if not, which of them; where Captain Bowen Colthurst now is; and subject to what restraint?
    The PRIME MINISTER (Mr. Asquith): I am now in communication with Mrs. Skeffington's solicitor on this subject, and that is all I can say at present. The last part of the question should be addressed to the Home Secretary.

    RICHMOND BARRACKS (PRIME MINISTER'S VISIT).
    Major NEWMANasked the Prime Minister whether during his visit to Ireland he saw and conversed with those confined in Richmond Barracks on suspicion of complicity in the rebellion that had just taken place; and whether as a result of his interview, he was able on parting to shake hands with those with whom he had had conversation?
    The PRIME MINISTER: The answer to the first part of the question is in the
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    affirmative. I must confess that my memory does not serve me for the second part.
    Major NEWMAN: Will the Prime Minister search his memory and find out?
    The PRIME MINISTER: Certainly not.

    COMPENSATION CLAIMS.
    Mr. O'GRADYasked the Prime Minister whether there is any intention to widen the terms of reference of the Committee of Inquiry dealing with the claims of property owners arising out of the recent trouble in Ireland to embrace claims that may be submitted by trade unions by reason of unemployment, death, and loss of workmen's industrial tools; and, if so, whether accredited representatives of workmen will be placed upon the Committee of Inquiry?
    Mr. BYRNEasked the Home Secretary whether he will see that the scope of the inquiry about to be held in Dublin to deal with the property owners' claims shall be so widened as to embrace the claims for losses sustained by the trade union organisations and workers generally of Ireland?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Herbert Samuel): Claims preferred by trade union organisations and workers may in like manner to other claims be entertained by Sir William Goulding's Committee provided they fall within the terms of reference, but it is not in contemplation to make any extension of these terms or to alter the constitution of the Committee.
    Mr. O'GRADY: May I ask whether the points in the question are included in the terms of reference or not?
    Mr. SAMUEL: So far as premises and the contents of premises are concerned, they are included in the terms of reference. That, I think, includes most things, such as tools, but the answer must depend upon the circumstances of the case.
    Mr. O'GRADY: Will the trade unions and the friendly societies be reimbursed for the large amount of death claims which they have had to pay out with respect to people killed, and also for the claims they have had to pay with regard to unemployed benefit?
    Mr. SAMUEL: It has not been found possible to give consequential damages in any case.
    Mr. BYRNE: Will the right hon. Gentleman index the terms of reference so as to include compensation to be paid for loss of life?
    Mr. SAMUEL: That is the question which I answered originally.

    INTERNED PRISONERS.
    Mr. BYRNEhad given notice of the following questions:—
    67. To ask the Under-Secretary of State for War if he is aware of the delay in delivery of letters and parcels of food to Irish prisoners of war at Frongoch camp, and that in many cases parcels of food have been rendered unfit for use owing to delay in delivery; if he will make arrangements to have letters censored and parcels delivered more rapidly?
    114. To ask the Home Secretary whether he has received a report as to the sanitation of Frongoch camp; if he is aware that Irish interned prisoners are deprived of Irish newspapers; that they are not allowed to write letters unless on a half sheet of notepaper; that, after censoring, their letters are sent out open in un-gummed envelopes; and if he will remedy these complaints?
    Mr. GINNELLasked the Home Secretary if he will state the rules under which Irish prisoners are detained in Frongoch camp; by whom drawn up; whether the Prime Minister has approved of the substantial departure from the scale of dietary set up at Richmond Barracks, Dublin, on the occasion of his visit there; why some parcels of supplementary food sent by friends are never delivered and other parcels are delivered after damage from delay; for what purpose, loss and inconvenience are imposed upon relatives from Ireland by refusing to allow them to visit prisoners except on compliance with conditions not publicly announced; and why letters are allowed to lie at the entrance to the camp undelivered?
    Mr. TENNANT: Letters and parcels for Irish prisoners at Frongoch are censored with all reasonable speed, and no cases of food having become unfit for consumption owing to delay in delivery have been brought to notice. Steps are being taken which will, it is hoped, make the censorship even more rapid. The latest report on the sanitary condition of Frongoch is satisfactory. The greater part of this camp has been in occupation by German
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    prisoners of war for over a year. Constant care, as in all such camps, is necessary to ensure proper sanitation. Special permission has recently been given by the Home Secretary for the introduction of Irish newspapers. The regulations as to correspondence are in accordance with the directions of the Home Secretary, and are the same as those which obtain in places of internment for prisoners of war. In accordance with the directions of the Home Secretary the rules which are in force for prisoners of war are applicable to interned Irish prisoners. The scale of rations and the rules for visits at Frongoch are in accordance with these directions.
    Sir E. CARSON: Where is Frongoch?
    Mr. TENNANT: It is in Wales.
    Mr. BYRNE: The right hon. Gentleman has not answered the last part of Question 114: If, after censoring, their letters are sent out open in ungummed envelopes for anybody to read them?
    Mr. TENNANT: I have no information of that kind. I can hardly think that it can be true, but if the hon. Member will put down a question I will make inquiries.
    Mr. BYRNE: I will supply the right hon. Gentleman with an envelope. Will he see into the matter?
    Mr. TENNANT: It is not the only thing that has come ungummed in this War.
    Mr. T. P. O'CONNOR: May I ask my right hon. Friend, as this place is a little remote, if the authorities cannot see their way to prolong the duration of the visits of persons visiting these prisoners more than a quarter of an hour? I have heard of cases of gentlemen who, although coming long distances, have only been allowed a quarter of an hour.
    Mr. TENNANT: It is really a question of the number of the staff available. I will see what can be done.
    Mr. GINNELL: May I ask my right hon. enemy if he will be good enough to answer Question No. 116—Whether the scale of diet arranged at Richmond Barracks on the occasion of the visit of the Prime Minister will be set up at Frongoch, and also whether he will arrange for visitors from distant parts of Ireland, as mentioned in the question—[HON. MEMBERS: "Order, order!"]. It is on the Paper.
    Mr. SPEAKER: If it is on the Paper it has been answered, as far as the right lion. Gentleman is able to answer it.
    Mr. GINNELL: It has not been answered.
    Mr. SPEAKER: The hon. Member is either repeating the question on the Paper or else he is putting a fresh one.
    Mr. GINNELL: No, Sir. I beg to ask those parts of Question No. 116 which have not been answered—one with reference to the scale of diet on a certain occasion at the Richmond Barracks and the other with reference to relatives from distant parts of Ireland.
    Mr. SPEAKER: Really the hon. Member must allow somebody else to ask questions as well as himself.
    Mr. GINNELL: Will you allow these questions to be answered?
    Mr. SPEAKER: I will not allow any further questions from the hon. Member.

    ARRESTS.
    Mr. FITZPATRICKasked the Home Secretary whether the case of Patrick J. O'Madden, an Irish prisoner at present detained in Wakefield prison, will be investigated at once with a view to his immediate release; whether Mr. O'Madden, since his incarceration, has been in the prison hospital suffering from illness; and whether, having regard to Mr. O'Madden's state of health, he will order his immediate release?
    Mr. SAMUEL: The case of Patrick J. O'Madden will be considered by the Advisory Committee at an early date. I am informed by the medical officer of the internment camp that the prisoner, who has recently been suffering from bronchitis, has improved satisfactorily in health since his reception at Frongoch.

  MILITARY SERVICE.

    UNDER-AGE SOLDIERS.
    Mr. HOGGEasked the Under-Secretary of State for War whether he can state the new regulations dealing with the cases of soldiers whose discharge or transfer to a Home-service unit is applied for by their parents on the ground that the lad is too young to serve under his present circumstances and conditions?
    Mr. TENNANT: I would ask my hon. Friend to refer to the very full answer which I gave on this matter on Monday last. In order to correct misapprehensions, I would add to what I then stated that applications should not be sent to the War Office, but to the Officer-in-Charge of Records concerned. Sending applications to the War Office only leads to delay. Underage soldiers serving with the Expeditionary Force will, if under eighteen years of age, be sent home if willing and posted to a Reserve unit. They will not be passed to the Reserve, as has been erroneously stated.
    Mr. HOGGE: Would it not be quite as well for parents to write direct to commanding officers?
    Mr. TENNANT: Yes, I think it would be quicker.
    Mr. WATT: Is the right hon. Gentleman aware that commanding officers are refusing to send boys back, notwithstanding his statement?
    Mr. TENNANT: I think if my hon. Friend would have full inquiry made, he would ascertain that, where a refusal has been made, it has been prior to the issue of the Order I have quoted.

    CONSCIENTIOUS OBJECTORS.
    Mr. SNOWDENasked the Under-Secretary of State for War if a conscientious objector named Arthur Slater is detained in the military prison at St. Alban's; if so, what is the sentence he is serving; by what Court he has been sentenced; what is his present state of health; when will he be allowed a visit; and why is he not given the benefit of the Army Order of 25th May last?
    Mr. TENNANT: I fear that I have nothing to add to what I said on the 26th June, except that if he is a soldier in detention the Army Order in question is inapplicable to his case.
    Mr. KINGasked whether four conscientious objectors, named Hayward, Bishop, Reccord, and Fromow, have been for more than six weeks at Shoreham Camp, and have during that time refused to obey orders; why have they not been court-martialled; why were they removed on 23rd June to Seaford Camp; whether it is intended to send them to France; and, if so, whether they will be allowed the usual five-days' leave before going abroad?
    Mr. TENNANT: Perhaps my hon. Friend will be good enough to give me the regiment and regimental number of the men mentioned in the question, so that I may be able to trace them.
    Mr. KINGasked the Under-Secretary of State for War whether he is aware that many conscientious objectors who have been refused exemption by the tribunals have had testimony borne to their genuine convictions and courage by commandants, governors, commissioned and non-commissioned officers, and men; and whether, in the case of men who are more than once court-martialled or tried as conscientious objectors, he will order that such testimony shall be taken and considered by the Court?
    Mr. TENNANT: Perhaps my hon. Friend will be good enough to wait until the Prime Minister makes the statement he is proposing to make. I trust that this will cover the points put forward in this question.
    The following question appeared on the Notice Paper in the name of Mr. SNOWDEN:
    54. To ask the Prime Minister if, in view of the number of cases of alleged brutal treatment by Army non-commissioned and commissioned officers of conscientious objectors, supported by the evidence of the victims and witnesses, and the repeated refusal of the War Office to have an independent inquiry made into the allegations, he will grant such an inquiry into a few selected cases which can be supplied to him?
    Mr. SNOWDEN: I have been asked to postpone this question until to-morrow on condition that the Prime Minister will then make his promised statement about conscientious objectors. That, I understand, is the condition?
    The PRIME MINISTER: I hope so, at any rate.
    Mr. MORRELL: Can the right hon. Gentleman say whether his statement will be in such a form as will allow discussion?
    The PRIME MINISTER: Not discussion at the moment, but eventually discussion.
    Questions Nos. 62, 63, 64, and 65 standing in the name of Mr. ROWNTREE, were also postponed till to-morrow.

    TIME-EXPIRED MEN (FURLOUGH).
    Mr. NEEDHAMasked whether soldiers who would have become time-expired men, but who will be retained with the Colours, are to be given a month's furlough at the expiry of their present terms of engagement?
    Mr. TENNANT: Soldiers who would have become time-expired men and who are retained with the Colours for the duration of the War under the Military Service Act, 1916 (Section 2), are to be given a month's furlough as far as the exigencies of the Service will allow.

    MEDICAL RE-EXAMINATION.
    Mr. MORRELLasked the Under-Secretary of State for War what instructions have been sent, or are proposed to be sent, to recruiting officers with regard to the re-examination of men who now hold a certificate of exemption on medical grounds; and whether he will provide that men whose rejection on medical grounds is recorded in the military register are not required to submit to a further examination?
    Mr. TENNANT: I will send my hon. Friend a copy of the instructions on this matter, which will give him full information.

    RE-ENLISTMENT (BOUNTIES).
    Major WHELERasked whether, as the Government are offering bounties up to £25 to non-commissioned officers and men who re-enlist for over twenty-one years' service, pensioner non-commissioned officers who re-enlisted in 1914 and 1915 will also receive bounties?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): The bounty is only given to non-commissioned officers and men who, under the terms of their engagement, were due for discharge during the War but have voluntarily or under the terms of the Act remained in or rejoined the Service.
    Colonel YATEasked the Financial Secretary to the War Office if he is aware of the feeling of dissatisfaction existing among men of the Territorial Force who voluntarily re-engaged before the passing of the Military Service Act in the withholding from them the bounty which is being paid to men who are now compulsorily retained; and whether, under the

    827
    special circumstances of the case, he will bring the question before the Army Council for reconsideration?
    Mr. FORSTER: The matter has already been reconsidered by the Government, and the bounty will be given to all soldiers who, having become time-expired since the outbreak of war, have voluntarily re-enlisted or re-engaged.
    Mr. JOWETTasked if a man who served four years ending 1911 in the Territorial Army, and who is of military age, will be entitled to the bounty for time-expired soldiers who are enlisted under the provisions of the Military Service Act, 1916?
    Mr. FORSTER: No, Sir. The bounty will be given to men who have become time-expired since the outbreak of war.

    PENSIONER WARRANT OFFICERS AND N.C.O.'S.
    Major WHELERasked the Under-Secretary of State for War whether there are a number of pensioner warrant officers and non-commissioned officers who volunteered for re-enlistment at the outbreak of the War to train the New Armies and who are with their units overseas; and, if so, will he consider the advisability of replacing these warrant officers by serving warrant officers and non-commissioned officers from Reserve battalions at Home?
    Mr. TENNANT: This proposal has already been under the consideration of the Army Council, who are in consultation with the General Officer Commanding-in-Chief on the matter. I cannot make any statement on the matter to-day.

    CASES UNDER INVESTIGATION.
    Sir H. ELVERSTONasked the Under-Secretary of State for War whether the Medical Board at Chester only sits from 9.30 a.m. to 4 p.m., with a break of two hours for lunch or four and a half hours per day; whether he is aware that since 29th May, the date on which Groups thirty-three to forty-one had to report, large numbers of men have been held over night at Chester and not examined till the following day; whether he is aware that hundreds of men have been called up by notice on Army Form A.W.F. 3195 to the sub-area recruiting offices in the Chester area and have had to be sent
    828
    home on pay and leave till a later date when they could be sent to Chester to be dealt with; and whether he is prepared to relieve this congestion by increasing the efficiency of the Medical Board at Chester?
    Mr. ANDERSONasked the Under-Secretary of State for War (1) whether he will cause further investigation to be made into the case of No. 24,417, Private W. H. J. Smith, E Company, 3rd battalion Duke of Cornwall's Light Infantry; whether he is aware that this young man went to Somerset House on the 12th January and was declared by the examining doctor to be medically unfit, but was refused rejection papers on the ground that he might be able to undertake some light duty such as clerical work; that on the 14th January, according to instructions, he went to the King's Hall, Hackney Baths, was again examined by two doctors, who corroborated the statement of the first that the man was fit only for light duty; that on the 3rd February he was sent to Stratford, and from there to Bodmin, being passed definitely into the Army for general service; that after a week of training he broke down and was removed to hospital, and that he has repeatedly broken down since, and that in all he has only been able to do eleven days' training since he joined five months ago, the greater part of his time being spent in the hospital; whether inquiries will be made with a view to his discharge; and (2) whether he will investigate the methods in connection with the enlistment of James Ford, 447, New Cross Road, New Cross, S.E.; whether he is aware that this man attested on 10th February and was passed fit for Home service only, that he lodged on the 28th February an application for exemption with the local tribunal, that on 15th March he received notice to join up, and two days later went before the medical board at Camberwell Baths, and was passed fit for general service at home or abroad; that on being informed by the Deptford recruiting officer that he would be called up within seven days of 30th April this man resigned his employment, but heard nothing further from the military authorities until he was asked to report at Chester on 1st June; that on reporting there on that date he was placed for sedentary work at Home and informed that his services were not required at present, and that he would be told when to report again; whether he is aware, that such action puts

    829
    men to personal inconvenience and financial hardship; and whether in such cases the War Office accept any financial liability to men treated in this way?
    Mr. TENNANT: I have called for reports on these cases.

    ARMY RESERVE TRANSFERS.
    Sir H. ELVERSTONasked the Financial Secretary to the War Office whether he is aware that Stephen Booth, o£ Hawthorn Street, Wilmslow, Group 41, called up for 8th June, was sent back from Stockport until 15th June; that he went to Chester on 15th June but could not be examined till 16th June; that he was examined on 16th June and passed for Class C (III.) and sent back home to await call; that he is entitled to 2s. 7d. per day (pay and ration money) from 8th to 15th June, inclusive, but he only received 3s. 2d. in cash when he was sent home on the 16th; that there are hundreds of similar cases in this area, where married men with family responsibilities have given up their work and have no means of livelihood during the time they are forced to be at home awaiting a summons to appear before the Chester medical board, and that they receive no pay and the wives receive no separation allowance because the authorities at Chester alter the date of the transfer from Army Reserve from the date actually called to the date they arrive at Chester; and whether he will take steps to correct this injustice?
    Mr. FORSTER: I am making inquiries into this case, and will let my hon. Friend know the result as soon as possible.

    SHERWOOD FORESTERS.
    Sir J. D. REESasked the Under-Secretary of State for War whether he has any official information regarding a raid made in the week ending 10th June by a small body of the Notts and Derby Regiment (Sherwood Foresters); whether they penetrated the enemy trenches and killed large numbers of the occupants; and whether he can make any statement on the subject?
    Mr. RENDALL: Before this question is put, may I ask your ruling, Mr. Speaker, whether it is proper or in good taste that questions about the actions of particular regiments should be asked by, hon. Members?
    Mr. TENNANT: May I say that I have a reference to that matter in my answer. I admire the hon. Gentleman's assiduity in inquiring for information in the interests of the Notts and Derby Regiment, but I tremble to think what my position would be if any large number of Members showed equal assiduity. Raids are a frequent occurrence, and the name of the regiment is mentioned only when, in the opinion of the military authorities in France, this can be done without unfairness to other units and without prejudice to the interests of the operations. I may add that the War Office has no information regarding any particular raid carried out by the Sherwood Foresters on the date in question.
    Sir A. MARKHAM: Is the right hon. Gentleman aware that the hon. Member who put this question has no interest whatever in the counties of Nottingham and Derby other than that of being a Parliamentary candidate?

    WOOL (ARMY PURCHASES).
    Sir J. SPEARasked the Under-Secretary of State for War if in fixing the price to be paid for wool, based on June and July prices in the year 1914, plus a percentage to cover the increased expenses of the farmer, in calculating the latter he will have regard to the fact that farmers are now assessed to Income Tax on the basis of the whole rent instead of on a third, as in 1914?
    Mr. FORSTER: I am afraid that in fixing prices for wool and other commodities required for military purposes increased taxation cannot be regarded as an expense for which producers are entitled to be recouped by the Government.

    PRETORIA FIRE BRIGADES.
    Mr. COWANasked the Under-Secretary of State for War whether he has ascertained from the Government of South Africa the precise position held in connection with the Pretoria Fire Brigades by an officer who is described in command orders as late Chief of Civil and Military Fire Brigades, Pretoria; whether he has verified the length and dates of that service; if he has ascertained the conditions under which his employment terminated; if he will not state in detail, after due varification, any fire brigade or similar professional experience this officer has had

    831
    in Great Britain or elsewhere since the military occupation of Pretoria; and whether he is still engaged in the Quartermaster-General's Department at the War Office?
    Mr. TENNANT: The War Office has documents which show that Mr. (now Captain) Moutray Read was appointed Superintendent of the Military (and Civil) Fire Brigades at Pretoria at the time of the occupation in June, 1900, and that he resigned office on the 18th May, 1902. He then came to England for three months' training with the Glasgow Fire Brigade as a volunteer, and in December, 1902, raised and commanded as chief the Volunteer Fire Brigade in Pretoria, until April, 1902. It is officially recorded that Captain Read carried out his work in Pretoria in a most satisfactory manner. He is now doing valuable work in the office he holds.

    STEEL HELMETS.
    Colonel YATEasked the Under-Secretary of State for War, if he is aware that one of the pioneer battalions working in the front line in France was quite recently provided with only 200 steel helmets; and whether he can now state how far the provision of those helmets has been completed?
    Mr. TENNANT: Up to last week the full number of steel helmets asked for had been supplied, but a further demand has just been received and it is hoped that this will be met before long.

    MILITARY SKETCHES AND DRAWINGS.
    Mr. ASHLEYasked whether the Army Order issued on the 22nd, which forbids officers and men without special authority to publish any article dealing witn the War or with military subjects, applies to sketches and drawings such as those which have been published from time to time by Captain Bruce Bairnsfather?
    Mr. TENNANT: Sketches and drawings will be submitted, when they deal with military subjects, in the same way that photographs and sketches of similar subjects are now submitted.
    Mr. ASHLEY: Can the right hon. Gentleman guarantee any sense of humour in the Press Bureau?
    Mr. TENNANT: I should be very sorry to go so far as that.

    VOLUNTEER CORPS (ENLISTMENT OF ALIENS).
    Mr. ASHLEYasked whether, in view of the fact that friendly aliens are now allowed to enlist in the Army, it is proposed to grant permission to the same class of men to enrol in Volunteer Corps?
    Mr. TENNANT: The Army Council consider that it would be premature to give any decision until there has been some experience of the experiment of enlisting aliens into the Regular Army, and until the Voluntary Force has taken a more concrete form.

    TERRITORIAL THIRD-LINE UNITS (BANDS).
    Mr. ASHLEYasked on what ground the Army Council have issued instructions that bands, including pipe bands, are to be abolished in third-line units of the Territorial Force?
    Mr. WATSONasked the Under-Secretary of State for War whether he will modify the recent Army Order of 18th June so as to allow third-line units of the Territorial Force to retain their bands, including pipe bands, on condition that no bandsman of military age and fit for general service is employed, seeing that bands teach the men steady route marching and lighten the monotony of camp life, and are helpful at Sunday services, Y.M.C.A. tent concerts, etc?
    Mr. TENNANT: This matter is being further considered. I cannot make any statement upon it to-day.
    Mr. ASHLEY: Will the right hon. Gentleman bear in mind that it is quite possible to have these bands without including any men fit for general service in them?
    Mr. TENNANT: Yes, Sir, I will bear that in mind.
    Mr. HOGGE: What objection have the War Office to Scottish pipers?
    Mr. TENNANT: It is not objection, but enthusiasm.

    ALLEGED POISONING OF SOLDIERS.
    Mr. RENDALLasked whether two doctors in the employ of the Army, since found to be Germans, have been proved to have administered drugs of a poisonous nature to soldiers they were attending at a camp in Wales with fatal results in several cases?
    Mr. TENNANT: I have no information of the kind suggested, and my medical advisers consider the story to have no basis other than imagination.

    NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
    Major WHELERasked whether the family of a pensioner warrant officer will be allowed to draw any of the pension if the pensioner should lose his life while in action or on active service?
    Mr. FORSTER: No, Sir; but they would be entitled to pension under the usual conditions.
    Mr. BYRNEasked the Under-Secretary for War whether his attention has been drawn to the case of Private Bernard Bannon, No. 9,838, 2nd Connaught Rangers, who has had seven years' service; if he is aware that this man, as a result of wounds, has had his leg amputated; if he is aware that he has been pensioned at 10s. 6d. per week, Ring Paper No. B 3,824; and if he will say whether there has been a mistake made in the amount of pension allowed?
    Mr. FORSTER: I am making inquiries and will communicate the result to my hon. Friend.
    Mr. STEWARTasked the Financial Secretary to the War Office whether ex-Rifleman William Raws, of the 6th Battalion -King's Liverpool Regiment, has been discharged from the Army on 11th March, 1916, after having lost his right leg at Hill 60; whether the only military payment made to him since his discharge has been
    834
    a sum of 10s.; and, if so, whether he can see his way to give this case more favourable and benevolent consideration?
    Mr. FORSTER: I am making inquiries and will communicate the result to my hon. Friend.

    BRITISH PRISONERS IN SWITZERLAND.
    Mr. J. M. HENDERSONasked the Under-Secretary of State for War whether he will arrange to have a complete new outfit sent to each of the British soldiers recently removed from Germany into Switzerland?
    Mr. TENNANT: Arrangements have been made for the despatch of all articles needed by British prisoners of war in Switzerland on the requisition of the officer who has been specially attached to the British Legation at Berne to look after their interests. I should like to take this opportunity of expressing publicly on behalf of His Majesty's Government their thanks to the Swiss Government and people for the cordial welcome which was given to the prisoners on their arrival. The accounts of the reception have been received in all quarters with the warmest satisfaction.

    ENGLISH PRISONERS IN GERMANY.
    Mr. HUME-WILLIAMSasked the Under-Secretary of State for War whether, in view of the fact that English prisoners in Germany are proved to depend upon presents of food from England for the necessaries of life, he will now consider the advisability of such necessities being supplied by the State instead of being left to private effort; and whether he will advise the immediate creation of a Government or War Office Department charged exclusively with the duty of pro viding and forwarding a regular supply of proper food to English prisoners?
    Mr. TENNANT: The hon. and learned Member has been asked to withdraw this question.
    Mr. HUME-WILLIAMS: I have not received any such application.

    WAR SERVICE MEDALS.
    Mr. GILBERTasked whether, in view of the number of medals now being

    835
    granted to officers and men of the Navy and Army for war services and the interest taken by the public in the award of these medals, he can arrange that there shall be some public presentations of medals to officers and men who have won them at which the general public can be admitted?
    Mr. TENNANT: His Majesty personally invests officers who have been granted decorations. Non-commissioned officers and men who have been awarded medals are at the time usually at the front, and public presentation to them in the presence of the British general public would not, of course, be practicable. In such cases presentation would, as a rule, be made at a parade in the presence of the comrades of the recipients. In the case of soldiers coming home, either on leave or duty, the War Office arranges with the General Officer Commanding-in-Chief of the Command in which the soldier is staying for a public presentation on parade, and Members of Parliament and mayors of corporations sometimes arrange with the War Office to present medal or medals at a public meeting or gathering. I think that what the hon. Member desires is already being done to a large extent.

    FODDER SUPPLIES (RADSTOCK DISTRICT).
    Mr. KINGasked the Under-Secretary of State for War whether he has received a communication from the Radstock Co-operative Industrial Society, complaining that, owing to the action of the military authorities in commandeering all hay and to other causes, the society has no hay for the forty horses which are working daily in supplying the population of a large area with the necessities of life; and whether he has taken immediate steps to release enough hay and other fodder for the interests of the Radstock mining district?
    Mr. FORSTER: Yes, Sir. A communication was received from this society, and arrangements were at once made by which they have secured a supply of hay.

    ARMY SERVICE CORPS.
    Mr. O'GRADYasked the Under-Secretary of State for War whether his
    836
    attention has been drawn to the fact that men of the Army Service Corps who had been twenty months at the Western front of war, and who subsequently were attached to the Indian Expeditionary Force, were refused a short leave to visit their homes in this country on the ground that they were only lent to the Indian Expeditionary Force and in those circumstances no leave could be given; and whether, having regard to the fact that such men cannot in the nature of things get home until the end of the War, instructions will be given in such cases that men shall be allowed leave?
    Mr. TENNANT: No, Sir, these matters have not been brought to my attention. The granting of leave, whether to men of the Army Service Corps or of any other arm, is entirely within the discretion of the General Officer Commanding-in-Chief, and the War Office does not interfere with the exercise of his discretion. It is quite possible for those concerned to represent any particular circumstances in their case and I am sure that due weight would be given to any such representations.

    NORTH WALES BRIGADE.
    Sir A. MARKHAMasked the Prime-Minister whether he is aware that the late Lord Kitchener, on 31st October, 1914, had an interview at his request with Brigadier-General Owen Thomas, the Minister of Munitions also being present, when a pledge was given to the brigadier that in consideration of his agreeing to raise a North Wales Brigade the appointment of all officers should be in his hands, it being understood that Welsh-speaking officers should, where possible, be appointed; that Lord Kitchener further authorised the brigadier to give this pledge to the Welsh, people; whether the brigadier, despite this pledge, has now been superseded by a. Scotsman, a Territorial colonel, who was formerly a lieutenant in the Regular Army; and will he, in view of this pledge, give the matter his consideration?
    Sir H. ROBERTSasked the Prime Minister whether he is aware of the representations made from all quarters in Wales with reference to the value of the services rendered by Brigadier-General Owen Thomas in connection with the raising and training of the Welsh Army; and whether, in view of the change which has taken place in the command at Kinmel Camp, he

    837
    is able to give an assurance that General Owen Thomas' services will be continued in a position of equal responsibility within the Principality?
    Mr. TENNANT: My right hon Friend the Prime Minister has asked me to answer these questions. I cannot find that there is any record in the War Office of any such undertaking as that mentioned. On the representation of the Field-Marshal Commanding-in-Chief the Home Forces, and in the interests of efficiency, Brigadier-General Owen Thomas was relieved of his command and replaced by another officer. The services of this officer will, I understand, be utilised in an administrative military capacity in Wales.
    Sir A. MARKHAM: Has my right hon. Friend not made inquiries from the Minister of Munitions who was present when the interview took place, and is not that the only record which he could officially refer to?
    Mr. TENNANT: I only became aware of this question this morning, and I have not had time to consult my right hon. Friend.
    Sir A. MARKHAM: Is it not a fact that twenty of these officers who speak Welsh have been relieved of their command?
    Mr. PRINGLE: Will not all this be put right at the end of the week when the Minister of Munitions becomes Secretary for War?

    PARIS CONFERENCE.
    Major HUNTasked the Prime Minister if he can now say when he will make his promised statement as to what steps the Government Intend to take for the purpose of immediately acting on the resolutions of the Paris Conference?
    The PRIME MINISTER: I hope to make this statement early next week.

    GERMAN FIRMS.
    Major HUNTasked the Prime Minister if he can state why about 400 German firms are still allowed to do business in this country?
    The FIRST COMMISSIONER of WORKS (Mr. Harcourt): The Prime Minister has asked me to reply to this question. The work of eliminating enemy
    838
    interests in businesses carried on in this country, whether by Orders under Section 1 of the Trading With the Enemy Amendment Act, 1916, or by vesting Orders under Section 4 of that Act, is proceeding with all possible rapidity. It is proposed shortly to issue a statement showing the nature and extent of the work of the Board of Trade's Advisory Committee in this matter. It will be realised that each case must necessarily receive close investigation in order that injury to British interests may be minimised. In the meantime all the more important businesses not dealt with in the above manner have been placed under supervision, and steps are being taken to extend supervision to the remainder.
    Sir E. CARSON: May I ask the right hon. Gentleman whether these 400 German firms have any permits or licences from the Government?
    Mr. HARCOURT: I do not know whether 400 is an accurate figure, but I will obtain the information if the right hon. Gentleman will put down a question.
    Major HUNT: Is the right hon. Gentleman aware that only 200 firms have been rubbed out in nearly two years by the Government, and is he aware that the tenderness shown continually by the Government to Germans and German firms is making people think that there is an unseen hand somewhere behind the Government?

    FIRMS OF ENEMY NATIONALITY.
    Major HUNTasked the Prime Minister why, in view of the fact that trade is prohibited with persons and firms of enemy nationality or association, whose names are given, in Morocco, Portuguese East Africa, Argentina, Uruguay, Brazil, Chili, Cuba, Ecuador, Peru, Japan, the Dutch East Indies, Persia, Denmark, Greece, Holland, Norway, Spain, and Sweden, the same principle is not applied in America and this country?
    Mr. HARCOURT: The statutory list for the United States of America is in course of preparation and will be published shortly. Enemy firms in this country are dealt with by supervising or winding up the businesses under the powers contained in the Trading With the Enemy Amendment Act, 1916.

    OFFICIAL HISTORY OF WAR TO BE PUBLISHED.
    Sir GEORGE TOULMINasked what arrangements have been made for the publication of an Official History of the War?
    The PRIME MINISTER: In view of the demand which is likely to arise, and the desirability of providing the public with an authentic account, it has been decided to prepare for publication as soon as possible after the close of the War an Interim Official History dealing with its various aspects. This History will be based on the material which is being collected and arranged by the Historical Section of the Committee of Imperial Defence for an eventual Staff History.
    The work will be in three sections, which will deal, respectively, with the Naval and Military Operations and the General Effects of the War on Sea-borne Trade.
    The Naval Section has been entrusted to Mr. Julian Corbett, and the Military Section to Mr. John Fortescue, while for the Trade Section the Trustees of the Garton Foundation have kindly placed their staff at the disposal of the Historical Section.
    The sections will be published separately, but prepared in concert. The work is already well advanced.
    Mr. ASHLEY: Can the right hon. Gentleman say if photographs have been taken at the various fronts to incorporate in the history, just as the French Government are doing with their national history?
    The PRIME MINISTER: Photographs have been taken, but I cannot say whether they will be incorporated.
    Colonel YATE: Will there be a separate section recounting the doings of the Indian Army?
    The PRIME MINISTER: I will consider that.
    Sir C. KINLOCH-COOKE: Will the Report be published in volume.
    The PRIME MINISTER: Yes.

    ECONOMIC CONFERENCE IN PARIS.
    Mr. HOLTasked the Prime Minister whether the Governments of Russia and Italy were represented at the Economic Conference of the Allies at Paris; and whether their representatives assented to the resolutions passed at that Conference?
    The PRIME MINISTER: The answer to both parts of the question is in the affirmative.
    Mr. HOLT: Are we to understand that the Italian representatives committed themselves to these proposals as between their own country and Germany?
    The PRIME MINISTER: Germany was not a party to the Conference at all.
    Mr. HOLT: Did the Italian representatives commit themselves to these proposals as between their own country and Germany with which they are not now at war?
    The PRIME MINISTER: All I can say is that the Italians agreed to the resolutions.
    Mr. KING: Is it not the case that all the representatives went, as our representatives went, without any authority really to bind the countries that they represented?
    The PRIME MINISTER: I can only speak for our own representatives.

    WAR OFFICE DEPARTMENTS.
    Sir H. ELVERSTONasked the Under-Secretary of State for War whether careful inquiries are made as to the civil character, credentials, and financial status of persons engaged by the Quartermaster-General for services in the War Office; whether reliable recent civil references are taken prior to appointments being made; and, if so, whether he will state what persons or corporations gave references as to the civil character and previous civil occupation in respect to a temporary officer of the Army Service Corps, gazetted as lieutenant in May, 1915, whose initials, according to the Army List, are now H. M. R., but were previously H. A. M. R., and who appears to be engaged in the Director of Quarterings Department at the War Office?
    Mr. TENNANT: Yes, Sir, the obvious steps mentioned in the question are taken. In the case my hon. Friend has in mind two persons of standing testified to the character of the gentleman in question.
    Sir H. DALZIELasked the Under-Secretary of State for War how many persons of German extraction are employed at the War Office in the Intelligence Department?
    Mr. TENNANT: I do not know how far back my right hon. Friend contemplates that I should go.
    Sir H. DALZIEL: Take the present time, if you like.
    Mr. TENNANT: On the assumption that he is referring to two generations, the answer to this question is two.
    Sir H. DALZIEL: Does my right hon. Friend deny that a gentleman of German extraction, speaking broken English, is now employed in the Intelligence Department at the War Office?
    Mr. TENNANT: I do not happen to be acquainted with him, and therefore I cannot say. I have said that there are two.
    Sir H. DALZIEL: Does the right hon. Gentleman think it right that at the present time a gentleman of German extraction should be employed in the Intelligence Department, have access to the most confidential information, and have the opportunity of seeing it very often before the Secretary of State for War?
    Mr. TENNANT: The gentlemen I have in contemplation are both the sons of naturalised British subjects, who were naturalised before the birth of the persons concerned. One of them is a member of this House. One of them had a maternal grandfather who was a German.
    Mr. PRINGLE: Would this embargo as to persons of German extraction not apply to people of much more exalted position?

    WARM CLOTHING FOR TROOPS.
    Sir W. BYLESasked the Under-Secretary of State for War whether our troops in France have this month been deprived of their blankets and have had to sleep in their day clothes, and often without even straw to cover them; whether, as a result, severe and disabling colds have been caught, and unnecessary discomfort involved; and whether he will see to it that the thermometer and not the calendar shall determine the amount of warm clothing issued to the troops?
    Mr. TENNANT: I have no information on this matter. The withdrawal of blankets is within the discretion of the General Officer Commanding-in-Chief. An explanation of this step, if indeed it has been taken, may occur to my hon. Friend without any prompting from me.

    ROYAL ARTILLERY OFFICERS.
    Mr. STEWARTasked the Under-Secretary for War whether Regular captains of the Royal Artillery while in command of batteries in the field doing majors' work are seldom if ever given temporary rank and pay whilst so employed; wether this privilege is frequently accorded to officers in the Reserve; and whether he can see his way to grant similar privileges to officers serving at the front?
    Mr. TENNANT: A captain can only be said to be performing the duties of a major when he is commanding a six-gun battery, but this occurs only rarely and as a temporary measure. If when the hon. Member speaks of this privilege being frequently accorded to officers of the Reserve he is referring to the case of six-gun batteries at home, I may inform him that these officers are unfit for batteries at the front for various reasons, and their promotion does not prejudice the position of those abroad.

    ROYAL FLYING CORPS (OFFICERS' MESS).
    Mr. WATTasked the Financial Secretary to the War Office what are the arrangements made by his Department as to the messing of the officers of the various units still at Home, with particular reference to the Flying Corps; do the officers provide their own meals and pay for them out of their allowances or does his Department pay direct for such meals; and is he aware of the absence of anything like wartime economy, which is shown both in the quantity and quality of these meals?
    Mr. TENNANT: Officers of the Royal Flying Corps provide their own meals under conditions varying with the stations in which they happen to be serving. Every effort is made to keep the charge for messing within limits properly proportionate to the incomes of young officers. In cases where rations are not drawn in kind, officers pay for their own meals partly out of their own pockets and partly from their allowance in lieu of rations. In cases where rations are drawn, officers defray the expense of the meals from their own pockets. The average personal expense on account of food is 3s. per diem. The arrangements in other arms are similar, though the daily cost may vary.
    Mr. WATT: Is the right hon. Gentleman aware that the dinners are often eight-course dinners?
    Mr. TENNANT: I think I have some knowledge of the force, but I have never heard of anything in the nature of eight-course dinners.

    WOOL (ARMY PURCHASES).
    Sir JOHN SPEARasked the Financial Secretary to the War Office if he will cause a statement from farmers as to the persons to whom they have been in the habit of selling their wool, so that such persons may be engaged by the Government in any transaction the Government make in acquiring wool and so maintaining continuance of trading conditions?
    Mr. FORSTER: It is proposed to obtain returns from the farmers, which will include information as to the method by which he disposed of his wool last year, in order that the Government may, so far as possible, make use of the normal trade channels of collection.
    Mr. GWYNNE: Will the hon. Gentleman try and arrange that the farmers and not the Government get the benefit of any profit from the sale of wool which is not suitable for Government purposes?
    Mr. FORSTER: The arrangements for disposing of wool not suitable for military requirements is still under consideration, and I cannot give any pledge regarding it.
    Mr. PERCY HARRIS (Leicester, Harborough)asked the Parliamentary Secretary to the Board of Agriculture, on what basis it has been decided to fix 30 per cent, above average prices as the Government purchase figure for wool from English farmers; and whether the increased prices of labour and feeding-stuffs were considered in fixing this price?
    Mr. FORSTER: The percentage addition of 30 per cent. has been arrived at after careful examination of the price of wool during the last ten or twelve years, the various market conditions which have inflated the price of wool in the open market and among other things the increased cost to the farmer of what he buys. The answer to the last paragraph is in the affirmative.
    Mr. HARRIS: Is the same limitation of price imposed on Colonial farmers—on wool coming from the Colonies; and, if not, is this a form of Colonial preference?
    Mr. FORSTER: The prices referred to are those payable to the British farmer and not to the Colonial.
    Mr. J. HILLasked the President of the Board of Trade, in view of the fact that a large percentage of English wool is unsuitable for Army and Navy purposes, whether he can say how long this wool will be held up; whether it will be until after the Army Council has utilised all suitable wool; and whether he will consider the desirability of releasing the wool unsuitable for military purposes so that the manufacturers may be put to as little inconvenience as possible and serious disturbance in trade be prevented?
    Mr. FORSTER: Any-part of the wool acquired by the Army Council which proves to be unsuitable for naval and military purposes will be disposed of at the earliest opportunity.

  FINANCE BILL.

    MOTOE SPIIUT (IMPORTS).
    Mr. JOYNSON-HICKSasked the Chancellor of the Exchequer what was the total import of petrol spirit for the last twelve months of which he has a record, apart from that used for Government purposes, and of this how much paid tax at commercial rates and how much at private rates?
    The CHANCELLOR of the EXCHEQUER (Mr. McKenna): The total import of petrol spirit into the United Kingdom in the twelve months ended 31st May, 1916, was 144,000,000 gallons. The quantity imported apart from that used for Government purposes cannot be stated. The quantities on which duty was paid in the same period were:

    Gallons.

    At commercial rates

    48,500,000

    At private rates

    65,100,000

    Total amount on which duty paid

    113,600,000

    PETROL LICENCE DUTY.
    Mr. JOYNSON-HICKSasked the Chancellor of the Exchequer upon what amount of petrol he reckoned when estimating the sum of £962,000 as likely to be received from the new Petrol Licence Duty; and is he aware that the private consumption at the present rate would far more than bring in this sum, apart from commercially used petrol?
    Mr. McKENNA: The estimate was based upon an estimated annual consumption—32,500,000 gallons for private cars and cycles, 8,000,000 gallons for commercial cars (exclusive of hackney carriages), and 4,000,000 gallons for doctors and veterinary surgeons.

    EXCESS PROFITS DUTY (CO-OPEBATIVE SOCIETIES).
    Sir JOHN LONSDALEasked the Chancellor of the Exchequer if his attention has been called to the fact that certain co-operative societies are endeavouring to evade Excess Profits Duty by giving discounts on purchases without checks; and if he intends to take steps to safeguard the Exchequer from the loss which will be entailed by this practice?
    Mr. McKENNA: As I stated in reply to the lion. Member for Grimsby on the 22nd June, the practice referred to 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.
    Sir J. LONSDALE: Is the right hon. Gentleman aware that the co-operative societies recommended this system of giving discount—discount without checks—in order to avoid the enormous War Profits Duty exacted by the Government?
    Mr. McKENNA: I think such a statement was brought to my attention.
    Sir J. LONSDALE: Is not the practice very widespread?
    Mr. McKENNA: I do not think so.

  MUNITIONS.

    COAL FOR CONTROLLED ESTABLISHMENTS.
    Mr. CURRIEasked the Chancellor of the Exchequer whether any assurances have been given to either controlled or uncontrolled establishments that unlimited supplies of coal will be obtainable; and whether, in the event of a shortage or of an enhancement of price, uncontrolled firms may rely on the same treatment as the others?
    Mr. HARCOURT: My right hon. Friend has asked me to answer this question. I do not, know of any such assurance. In the event of a shortage of coal, an endeavour would naturally be made to supply firms in the order of their national importance.

    CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).
    Mr. MOLTENOasked the Minister of Munitions whether his attention has been drawn to the strong local feeling which prevails in the Annan district that the Liquor Control Board, so far from reducing the sale of liquor is, by its actions, extending it, and that the effect of its control is to increase revenue from the sale of drink, regardless of the evil, moral and physical, effects upon the community; and what action ho proposes to take?
    The PARLIAMENTARY SECRETARY to the MUNITIONS DEPARTMENT (Dr. Addison): The information which has reached me, both as to the feeling of the locality and as to the facts of the case, is widely different from that which my hon. Friend appears to have received.
    Mr. MOLTENOasked the Minister of Munitions whether the Liquor Control Board of the Annan district are free from the control of the Licensing Acts, and whether the police are in consequence unable to prosecute the Board or their managers for such offences, should they take place, as the supply of liquor to drunken men, the sale of liquor at any hour of the day or night, or tolerating disorder in their houses; and to what control, if any, the Liquor Control Board and their managers are subject?
    Dr. ADDISON: Under the Liquor Control Regulations the Control Board are not themselves subject to the jurisdiction of the magistrates, but their managers are liable in exactly the same way as ordinary publicans to prosecution for misconduct in the management of their houses.
    Mr. MOLTENOasked the Minister of Munitions whether the Liquor Control Board of the Annan district proposes to erect a new building for the sale of drink, which is to contain a picture house and public bowling green; and whether, seeing that this is contrary to the policy pursued by all licensing authorities throughout Scotland in discountenancing the sale of alcoholic refreshment in places where the youth of the community are being gathered for recreation, and that this building is to cost £4,000, he will take any steps to pre vent this proposal being carried into effect?
    Dr. ADDISON: I am informed that upon a large site which the Control Board have acquired for the purpose of relieving the exceptional congestion of the public

    847
    houses at Annan it is intended to make provision for the sale of drink, food and non-intoxicating refreshments, and for entertainment and healthy recreation. The canteen will be so designed as to make it easy to exercise proper supervision over the sale of such intoxicants as may be permitted, and its establishment will make it possible to close existing unsuitable houses. The hon. Member's question appears to me to betray an inadequate recognition of the exceptional conditions prevailing in this district.
    Mr. HOGGE: Is the hon. Gentleman aware that owing to the Entertainments Tax the bulk of the cinemas are beginning to close down because they will lose money by this?
    Dr. ADDISON: I will draw the Control Board's attention to that.
    Mr. MOLTENOasked the Minister of Munitions whether the accounts of the Liquor Control Board of the Annan district will be published at frequent intervals, say, monthly, in order that a proper control may be exercised over the trade?
    Dr ADDISON: I do not think that the hon. Member's object would be promoted by the means suggested in the question, but careful control will be exercised over the accounts and a statement published in clue course.

    WAR LOAN ISSUES (GOVERNMENT AGENCIES).
    Mr. CURRIEasked the Chancellor of the Exchequer whether, in view of the better facilities announced by certain of the London banks within the last few days for the transaction of business arising out of issues of War Loan, etc., he will consider whether arrangements can now be made for numerous important local bank agencies in Scotland to act practically as Government agencies for such business; whether his attention has been called to the discontent which exists in Scotland owing to the loss of interest imposed upon Scottish applicants for Government Bonds in lieu of the ordinary commission on the transfer of money from Scotland to London; whether the charge of this commission was abolished as the result of representations made in this House; and whether the new exaction is heavier than or at least as heavy as the old one?
    Mr. McKENNA: I would refer my hon. Friend to the answers previously given to him and other Members on this general subject, and in particular to answers to questions put by him and by the hon. Member for the College Division of Glasgow on the 26th January, 1916. Scottish investors in Exchequer Bonds can forward their applications direct to the Bank of England, together with a draft or cheque for the purchase price, in which case the bonds do not begin to carry interest until the date on which the draft is realised and the money actually received in London; or, alternatively, they can without charge obtain through their bankers a draft payable in London, thus enabling the bonds to be issued at once. The Bank of England has endeavoured, in making this latter arrangement with the Scottish banks, to provide special facilities for Scottish investors without cost to themselves, and it would not be reasonable that the expense and loss of interest involved in realising Scottish drafts should be borne by the Exchequer if these facilities are not availed of. It depends on the circumstances of each case whether it is cheaper for the investor to pay a bank charge for commission on the cashing of a Scottish cheque or to lose a few days' interest while the cheque is being realised. The arrangements made for avoiding the charge for commission were not intended and cannot be allowed to override the universal rule that bonds are not issued until the purchase money is actually received by the Bank of England.
    Mr. WATT: Cannot the right hon. Gentleman see his way to utilise the Bank of Scotland and the Bank in Ireland as his agents for those countries respectively?
    Mr. McKENNA: There are objections to such a course.

    REGISTRATION OF FIRMS BILL.
    Mr. BARLOWasked the President of the Board of Trade what the position of the Registration of Firms Bill is; whether he is aware of the anxiety of many traders in the country that that Bill should become law; and whether steps can be taken to secure its being passed into law during the present Session?
    Mr. HARCOURT: The Registration of Firms Bill is at present before a Select Committee of the House of Lords. With

    849
    regard to the future prospects of the Bill, I would refer the hon. Member to the answer given by my right hon. Friend the Minister of Munitions to the hon. Member for Inverness Burghs on the 30th March last.

    TEXTILE INDUSTRIES COMMITTEE.
    Mr. PERCY HARRIS (Leicester, Harborough)asked the President of the Board of Trade whether he will consider appointing an additional member of the Textile Industries Committee with expert knowledge of the hosiery textile trade, seeing that all other branches of the textile trade are represented thereon?
    Mr. HARCOURT: I regret that it has not been found practicable to provide for separate representation on the Committee of all the various interests concerned, and in view of the present size of the Committee any addition to its membership appears undesirable. Every section of the textile industries will, however, be given full opportunity to lay its case before the Committee.

    IRISH STEAMSHIP SERVICES.
    Sir J. LONSDALEasked the President of the Board of Trade if traders in Belfast are still unable to get goods of which they are in urgent need forwarded from England in consequence of the refusal of railway companies to accept goods for conveyance to Belfast; if he can now state that so far as the Belfast and Hey-sham route is concerned no traffic is being refused on account of the absence of steamer room or for any other reason; how many vessels formerly employed on the Heysham and Fleetwood routes are now laid up; and if the Board of Trade has taken any steps to bring about a settlement of the dispute which was the cause of the dislocation of traffic between England and Belfast?
    Mr. HARCOURT: I have made further inquiries in this matter, and am informed that, while there is still some restriction upon the forwarding of traffic by the Belfast and Heysham route, this is to a large extent only nominal, and generally speaking it is found practicable to take any traffic that is offered for conveyance. One boat is out of commission on this route. It is hoped that a resumption of the full service may shortly be arranged.
    850
    On the Fleetwood route two boats are employed on the service, and, as the hon. Baronet was informed on the 22nd June, they are able to cope with the traffic.

    PRICE OF COAL (LIMITATION) ACT, 1915.
    Mr. MacCALLUM SCOTTasked the President of the Board of Trade whether he has examined the complaints made by the chief city corporations and other gas-producing companies as to the failure of the Price of Coal (Limitation) Act, 1915, to achieve the results it was intended to achieve; whether he has satisfied himself that the Act is not being evaded in practice and that its machinery is adequate to achieve its object; and whether, if the Act has failed to achieve its object, he proposes to take any other steps?
    Mr. HARCOURT: Complaints have been made from time to time by municipal and other gas undertakings with regard to the price of coal. Where sufficient particulars have been furnished the Board have taken the matter up with those concerned. No doubt the Act is not always effective, but it can hardly be said that it has failed to achieve its object.

    BRITISH ARMY OFFICERS IN INDIA.
    Mr. DIXONasked the Secretary of State for India if the Indian Government promised that all officers sent to Mesopotamia and France should receive the Indian rate of pay; whether officers still serving in France are not still receiving Indian pay; and will he say why the officers taken prisoners at Kut, or rather their relatives, have been informed by the India Office that they will be put on English pay after June?
    Mr. REA (Lord of the Treasury): My right hon. Friend has asked me to answer this question. British service officers sent out of India since the outbreak of war receive Indian pay while on active service. If invalided, they receive Indian pay for three months before reverting to British pay. This is a concession made with the concurrence of the War Office. Similarly, if taken prisoners, they are allowed Indian pay for the first sixty-one days. British officers belonging to the Indian Army are treated similarly. That is, if prisoners of war, they receive full pay for the first

    851
    sixty-one days. After that they receive Indian Army leave pay, or the pay and allowances of a British service officer of the same rank, whichever is greater.

    ALIEN ENEMIES.
    Mr. JOYNSON-HICKSasked the Home Secretary how many alien enemies, distinguishing those of German and Austrian nationality, have been released from internment camps since the commencement of the War?
    Mr. SAMUEL: The figures asked for could not be given without excessive labour, and would be misleading if they were given, since many persons released from internment camps in the early months of the War were re-interned at a later date.
    Mr. JOYNSON-HICKSasked the Home Secretary how many alien enemies, distinguishing those of Austrian and German nationality and of the male and female sex, are still uninterned in London and in the country, respectively; and bow many of these are still within prohibited areas?
    Mr. SAMUEL: As regards London, I would refer the hon. Member to my answer yesterday to the hon. Member for West Newington. For the rest of Great Britain the figures are, approximately:

    Males.

    Females.

    Germans

    2,100

    2,250

    Austrians

    1,200

    900

    The number of male Germans and Austrians residing in prohibited areas is 730 and 136, respectively. I have not at present full particulars in regard to females in those areas, but a complete, Return is being prepared.
    Mr. JOYNSON-HICKSasked the Home Secretary whether his attention has been called to the statement by the French Minister of Commerce that the Deutsche Bank is preparing for a trade onslaught upon Allied countries after the War; whether, in that case, he will consider if it is desirable to still leave the London agency of such bank in existence with German clerks; and how many of such clerks there still are uninterned?
    Mr. SAMUEL: I am informed that the operations which the London agency of the Deutsche Bank has been permitted to carry on under the supervision of Sir
    852
    William Plender are those of getting in outstanding assets, discharging liabilities to British, Allied, and neutral creditors, and vesting securities in the hands of the Public Trustee. They have necessitated the continued employment of some of the original staff of the agency. The number of alien enemies employed has been steadily reduced from time to time as the work proceeded. It was 195 at the outbreak of war, and it is now ten. I have every hope that a further reduction may be made almost at once.

GOVERNMENT OF IRELAND.

  PROPOSED SETTLEMENT.
  The following question stood on the Paper in the name of Major NEWMAN:
  104. To ask the Minister of Munitions whether, pending any statement that he may make as to the result of his negotiations to settle the Irish difficulty, he can state that in any suggestion he has put forward for the consideration of parties in Ireland he has been at pains to attach to the words "temporary" and "permanent," "provisional" and "definite," their exact meaning as hitherto understood?
  Major NEWMAN: In the public interest, I do not put this question.
  The following question stood on the Paper in the name of Mr. GINNELL:
  48. To ask the Prime Minister whether it was with his concurrence that martial law and the Defence of the Realm Act were used in Belfast last week for the political purpose of facilitating a meeting in St. Mary's Hall to promote the partition of Ireland and preventing a meeting in the Ulster Hall in opposition to that project; and, seeing that the period for which the present Parliament was elected expired last January, whether he will delay the introduction of any Bill embodying that project pending the election of a Constitutional Parliament by the electorate, and in the meantime withdraw the restraints on free expression of opinion on that subject?
  Mr. GINNELL: I beg to call your attention, Sir, to the fact that this question has not been answered, and, as on a former occasion, the Prime Minister completely evaded answering a question in precisely the same manner, and said the following

  853
  day that he had answered it. I now desire to postpone this question until Monday next, and I want it on the record that it has not been answered.
  Mr. TENNANT: I quite agree. I did not know it had been put. I regret that I did not have the answer.

PERSONAL EXPLANATION.
Mr. SAMUEL ROBERTS: Perhaps I may be allowed to clear up a little incident which occurred during the Debate on the Finance Bill on Monday night. Yesterday I received this letter from the Parliamentary Secretary to the Ministry of Munitions. [HON. MEMBERS: "Speak up! We cannot hear."]:—
"I notice in the report of last night's Debate, on the Excess Profits Levy that at the conclusion of the discussion you said—'The Minister of Munitions was with the controlled firms.' The Chancellor of the Exchequer then said—'Why does the hon. Gentleman say that?' You replied—'I say it because the Parliamentary Secretary of the Ministry of Munitions told me so.'
In making this observation, you, quite unwittingly, I am sure, misrepresented my position.
As you are well aware, during the recent negotiations, the Minister of Munitions supported the view that the same standards for depreciation and writing-off of capital expenditure should be allowed by the two Departments. In all these matters, as the Chancellor of the Exchequer slated, the Treasury has agreed to accept the figures fixed by the Ministry of Munitions. Moreover, I agreed it was desirable that the rendering of a double set of accounts should be avoided if possible. Your observation, however, naturally led the Chancellor of the Exchequer—and I should think the House—to believe that controlled firms had received the support of the Ministry of Munitions in opposition to the Treasury in their contention that a bargain had been made with the Government as to the freedom of the 20 per cent. excess profits from taxation.
On 31st May I saw a number of Members at the House with you on the various points which I have already mentioned. At that time Mr. Henderson, I believe, raised the question of the bargain over the 20 per cent. I told the Members present that it was the first time I had heard of that contention; that the quotations read tome then certainly appeared to give some support to it; but that I could do nothing in the matter until I was supplied with the quotations on which the claim as to the bargain was founded. It was arranged that Mr. Henderson should supply me with them and that, if I then felt they supported the case, I would put them up to the Minister in a memorandum. As I did not receive the promised extracts, on June 9th I wrote to Mr. Henderson reminding him and asking him to send them to me, as the time was getting short. I received the quotations from Mr. Henderson on 11th June. They consisted of three extracts from 'Hansard,' which, on examination, did not appear to me to support the contention, with the result that I took no further action in the matter. On this point, therefore, the Ministry, so far as I am aware, has expressed no opinion, and there has been no discussion between the Ministry and the Treasury upon it. I am sure you will take an early opportunity of putting this matter right."
HON. MEMBERS: Who signs that?
Mr. S. ROBERTS: C. Addison, the Parliamentary Secretary. I have much plea-
854
sure in acceding to the hon. Gentleman's request. The facts are these: Last week my hon. Friend (Sir Tudor Walters) and myself, being very anxious to settle the matters in dispute amicably, without the necessity of fighting them out in the House, were seeking to get an interview with the Chancellor of the Exchequer and the Minister of Munitions. We met the Parliamentary Secretary in the Aye Lobby and told him our object, when he replied, "You should see the Chancellor of the Exchequer, as the Minister of Munitions is in sympathy with you." But I did not interpret that to mean any opinion on any particular Amendment for exclusion from the Finance Bill, as the subject was not mentioned. I was appealing generally for postponement, but if I unintentionally misrepresented the right hon. Gentleman I am very sorry.

ORDERS OF THE DAY.

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

  FINANCE BILL.

    NEW CLAUSE.—(Additional Income Tat on Securities which the Treasury are Willing to Purchase.)
    In addition to any other Income Tax or Super-tax charged under this or any other Act, there shall, subject to the provisions of this Section, be charged, levied, and paid for the year beginning on the sixth day of April, nineteen hundred and sixteen, in respect of any part of the income of any person to which this Section applies an additional duty of Income Tax at the rate of two shillings for every pound of that part of the income.
    The income to which this Section applies is the income derived from securities which are for the time being included in the Treasury special list as denned by this Section, while those securities are so included; and the income shall, for the purposes of this Section, be deemed to be derived at the time when the interest or dividends payable in respect of the securities become payable.
    (2) The additional duty under this Section shall not be charged on any income derived before the first day of July, nineteen hundred and sixteen.
    (3) A person shall be entitled to relief from the additional duty imposed by this Section—

    (a) in respect of income derived between the date of the publication of the Treasury special list and a date twenty-eight days thereafter if the securities are during that period offered to the Treasury and ultimately become at the absolute disposal of the Treasury; and

    (b) in respect of income derived from any securities included in the Treasury special list after the securities have been placed at the absolute disposal of the Treasury; and

    (c) in respect of income derived from any such securities after a person has placed the securities conditionally at the disposal of the Treasury,
    874
    if the securities ultimately become at the absolute disposal of the Treasury without unreasonable delay on the part of that person; and

    (d) in respect of income derived from any such securities which ultimately become at the absolute disposal of the Treasury, if it is shown to the satisfaction of the Treasury that any delay in placing those securities at the disposal of the Treasury has arisen from circumstances beyond the control of the holders of the securities; and

    (e) in respect of income derived from any such securities held, in any country outside the United Kingdom, by persons who are not domiciled in the United Kingdom, or by trustees who are prevented by the terms of their trust from placing the securities at the disposal of the Treasury, and are not entitled to the benefit of any indemnity conferred by Act of Parliament in respect of the contravention of those terms, if the securities were so held before the twenty-ninth day of May, nineteen hundred and sixteen; and

    (f) in respect of income derived from any such securities which are deposited with persons outside the United Kingdom as a security for a loan from those persons, or have otherwise been made security for a loan from persons outside the United Kingdom, if they were so deposited or made security before the twenty-ninth day of May, nineteen hundred and sixteen, or after that date with the approval of the Treasury, and if the Treasury are satisfied that the securities cannot be released without impairing the security for the loan; and

    (g) in respect of income derived from any such securities which are proved to the special Commissioners to be held by any company or persons concerned in trade or business in any country outside the United Kingdom as a condition (imposed in that country) of carrying on that trade or business.

    The provisions of this Sub-section shall apply to an offer of securities for deposit in the same manner as they apply to an offer of securities for sale, and securities when accepted for deposit shall, while so

    875
    deposited, for the purposes of this Subsection, be deemed to be at the absolute disposal of the Treasury.
    (4) The power under the Income Tax Acts to require a person to make returns for the purposes of those Acts shall include power to require him to make such returns as appear to the Commissioners of Inland Revenue to be necessary for the purpose of ascertaining whether any of the income of that person (whether or not Income Tax thereon is chargeable by deduction) is income to which this Section applies, including such particulars as to that income as the Commissioners may require, and those Acts, including the provisions imposing penalties, shall apply accordingly.
    (5) Where any income to which this Section applies is derived from securities which are held on trust by more than one trustee the securities may be placed at the disposal of the Treasury if, where there are two trustees, one trustee and the persons entitled to the income of the securities, and, where there are more than two trustees, one-half or more of the trustees and the persons entitled, to the income of the securities are willing that the securities should be so placed at the disposal of the Treasury; and any action taken by such trustees or beneficiaries for the purpose of placing any such securities at the disposal of the Treasury shall, notwithstanding anything in the terms of the trust or any rule of law to the contrary, be as valid and effectual in all respects as though all the trustees had consented thereto and had joined therein.
    (6) A person shall not be entitled to any exemption, abatement, or relief under the Income Tax Acts (other than relief depending solely on residence or domicile) in respect of the additional Income Tax imposed by this Section, but in all other respects the provisions of the Income Tax Acts relating to persons who are to be chargeable with duty, assessments, and appeals against those assessments, and to the collection and recovery of duty, and to cases to be stated for the opinion of the High Court shall, so far as they are applicable, apply to the charge, assessment, collection, and recovery of duty under this Section:
    Provided that the Treasury may give directions that the additional duty imposed by this Section shall, instead of being charged by deduction, be charged up to the same amount by direct assess-
    876
    ment for the period, and in the cases mentioned in those directions, and where any such directions are given, the Income Tax Acts shall have effect accordingly.
    (7) In this Section—
    the expression "securities" includes stocks, shares, and other securities; and
    the expression "The Treasury Special List" means any list published by the Treasury in the "Gazette," and for the time being in force, of securities which the Treasury are willing to purchase in connection with any arrangements for the regulation and maintenance of the foreign exchanges. — [Mr. MeKenna."]
    Mr. LOUGH: I beg to move, in Subsection (1), after the word "applies" ["applies an additional duty on Income Tax"], to insert the words "and to whom the official notice has been sent."
    The subject was elaborated in Debate yesterday. I will particularly refer to the speech of my right hon. Friend (Mr. Dickinson) who examined the Clause very closely and showed the necessity in many ways of the facts with regard to their points being brought home to those people for whom the penal tax is devised. I have always felt that possibly large numbers of people might own those securities and might come under the penalty involved in this very severe Clause, quite unconsciously, without knowing anything about it, and I thought that was the chief objection, saving the objection of principle, to imposing the tax. It has always seemed to me that it would be as easy to give them notice that the Government wanted the particular security or it will have to impose a tax on it, and if you can tax people, and especially impose a penal tax, you could easily give them some opportunity of putting themselves right beforehand, and that is the sole object of this Amendment. My words may not be what is strictly called a term of art, therefore they may require to be considered by the Government, and I should be very glad if my right hon. Friend would meet me in any way, to amend them. If the owner of the shares got official notice that they were wanted and then refused to give them, I do not think anyone would sympathise with him if he was exposed to penal taxes. The names of all holders of stock are inscribed at Somerset House.
    HON. MEMBERS: Bearer securities!
    The CHANCELLOR of the EXCHEQUER (Mr. McKenna): American railways.
    Mr. LOUGH: I hope my right hon. Friend will consider it. If individuals can be made subject to the tax they can equally well be warned beforehand that they are coming under the liability. The tax is imposed at the source and the source is available. At any rate, some step ought to be taken. If the form in which I have put it will not work, I hope my right hon. Friend will say he will consider the point, and that in deference to the careful arguments submitted by my right hon. Friend (Mr. Dickinson) and his own promise, he will see how far he can go to meet us.
    Sir F. BANBURY: May I explain that all American shares are registered, but they are transferable by endorsement on the hack. Sometimes they are not endorsed, in which case all the rules of registration apply, the same as in England. In the majority of cases they are endorsed on the back in black, and then they become as bearer securities; but the dividends are always paid to the people in whose names they are held.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): As my right hon. Friend said, I promised last night that his views on the matter should receive consideration, but really for the reasons which the right hon. Baronet has advanced, it would be quite impossible to send notices to everyone who might be the undiscovered owner of the securities which we desire. I do not think the danger of people not knowing of these penalties is very great. The Chancellor of the Exchequer's proposal has been almost without exception approved by the newspapers of the country. A list has been published in every newspaper in the country. We have also sent every broker and banker in the United Kingdom, to the number of about 12,000, copies of these lists. The Dollar Securities Committee are prepared to give bankers sufficient copies, if they ask for them, to distribute to all their clients, but I do not think it would be possible to send a list to every individual concerned. What I think would be possible is to repeat the advertisement in the newspapers, and if my right hon. Friend will not press his Amendment, which I assure him is quite
    878
    impracticable, I will give an undertaking that the advertisement will be repeated. Amendment, by leave, withdrawn.
    4.0 P.M.
    Sir F. BANBURY: I beg to move, in Sub-section (3), paragraph (a), after the word "thereafter" ["a date twenty-eight days thereafter"], to insert the words "but not earlier than the twenty-ninth day of July, 1916."
    The Chancellor of the Exchequer gave me some sort of assurance yesterday that he would accept a somewhat similar Amendment. The right hon. Gentleman knows the object of the Amendment. It is not quite clear in the Clause to which list the twenty-eight days' notice applies. There have been a large number of lists issued, and it is not clear whether the twenty-eight days' grace is to run from the first list, the second list, or the third list, or what list. The intention of the right hon. Gentleman, I think, is that the twenty-eight days' grace should run from the first of next month. What I desire is that words should be put in the Bill giving people clearly to understand that they need not send in their bonds or shares until the 29th day of July, 1916. The first day of July is next Saturday, and I understood from the right hon. Gentleman that the penalty would not be imposed even if the list of the securities had been advertised, until twenty-eight days' grace, dating from the 1st July had been given. There is nothing in the Bill which will show that. On the contrary, it is very doubtful when the twenty-eight days' grace given in this Sub-section begins. My Amendment is merely to show that the penal Clauses of the Bill are not effective until the 29th day of July.
    Mr. McKENNA: I think the Clause as it stands is perfectly clear. Twenty-eight days are allowed after the publication of the charging list. Until the charging list is issued there is no liability.
    Mr. MACMASTER: When will that be?
    Mr. McKENNA: Several lists have already been issued.
    Mr. BRYCE: Twenty-eight days is given from the publication of each charging list?
    Mr. McKENNA: Yes. Twenty-eight days from the issuing of the list. Income derived from particular shares is not chargeable to this tax unless those

    879
    shares have been included in a list. The moment they are included in a list and that list is published, the twenty-eight days begin to run in respect of those shares. If in a later list other shares are named, then twenty-eight days will begin to run in respect of those other shares in that second list. If a third list is published containing the names of further shares, then the charging period will begin to run in respect of the shares contained in that third list. I should have thought that the Clause was as clear as anything can be.
    Sir F. BANBURY: No. I have a list here; this list is dated May 1916, but no date in May is given on this list.
    Mr. McKENNA: That is not a charging list. Each list which is a charging list has been advertised as such, and it is so stated at the head of the list. The names of the shares are set out in a table, and the list has been published in all the newspapers. If there is complaint that the advertisement has not been sufficient we will as my right hon. Friend (Mr. Montagu) has stated, readvertise. The list which the right lion. Baronet has is not a charging list, and is not so described. It is quite true that the charging list contains some of the names in the list which the light hon. Gentleman has got, but the power to charge only begins to run twenty-eight days after the issue of the charging list.
    Mr. DICKINSON: There is more in this point than the Chancellor of the Exchequer appears to appreciate. I have put down an Amendment in order to meet this difficulty, and I think it would be met in the best way when we come to the expression, the Treasury special list"—
    Mr. McKENNA: Perhaps I may shorten matters if the right hon. Gentleman will allow me to intervene at this point. I will accept the Amendment of the right hon. Baronet (Sir F. Banbury) in view of the doubt that appears to have arisen. We do not want to be harsh in this matter. We desire to get the securities without harshness and without imposing a charge. Therefore, if there is any doubt, as my right hon. Friend behind me (Mr. Dickinson) also seems to think, I will see to it that on the Report stage we will put in words dating the charge as from the 29th day of July at the earliest.
    880
    Perhaps the Committee will allow me to draw up appropriate words, making the charge date from the 29th day of July at the earliest, and providing that in respect of lists issued after the 1st day of July the charge will not begin to run until twenty-eight days after the issuing of the list. We will put in words to make that quite clear.
    Sir F. BANBURY: On that understanding, I beg leave to withdraw my Amendment.
    Amendment, by leave, withdrawn.
    Mr. LOUGH: I beg leave to move, in paragraph (b), to leave out the words "placed at the absolute disposal of," and to insert instead thereof the words "offered on sale or deposit to."
    The words "at the absolute disposal of the Treasury" require a little further consideration, especially in regard to shares that are on loan or on deposit. The Chancellor of the Exchequer and the Financial Secretary to the Treasury have stated repeatedly that if the shares are offered on loan the charge will be avoided, but when we come to read the words of the Clause it says, "after the securities have been placed at the absolute disposal of the Treasury." By some slip in the offer, or owing to the fact that the shares may be held by people who are not skilled in these bills, there may be some difficulty in regard to the interpretation of the words "placed at the absolute disposal of the Treasury," and it is in order to meet it that my Amendment has been drafted. My Amendment may be faulty in that it may not be embodied in proper words. It may be open to this objection, that there may have been an offer to sell at some absurd or unfair price. I do not mean that; I mean offered for sale at a price fixed by the Treasury, or deposited. I think some words of that kind should be put in so that the Sub-section would read, "after the securities have been offered on sale at a price fixed by the Treasury, or on deposit to the Treasury." I think some words of that kind are necessary, and I hope that the Chancellor of the Exchequer will consider this matter in the same spirit that he dealt with the last Amendment.
    Mr. MONTAGU: I cannot conceive circumstances in which, if securities are offered to the Treasury, at a price at which they are willing to buy, and those

    881
    securities appear on the list, the Treasury will refuse to purchase them. If such circumstances do arise, it is quite clear that they have been placed at the disposal of the Treasury and that they "would be exempt from taxation. If a case should arise which is always present to the mind of the hon. Member for Inverness (Mr. Bryce) the owner of such securities would receive a letter from the Dollar Security Committee, written on behalf of His Majesty's Treasury, saying that he had offered to place his securities at the absolute disposal of the Treasury, and that would be evidence for the refund of the Income Tax. I do not think there is any necessity for this Amendment. The meaning of the words "absolute disposal" is, I submit, quite clear. If my right hon. Friend will look at Sub-section (3), after paragraph (g), beginning "The provisions of this Sub-section shall apply," etc., he will see how the Income Tax can be avoided by offering to place the securities on deposit. There is only one difficulty, and it is a difficulty which was present to the minds of the Committee yesterday, and which was raised by my hon. Friend (Sir J. Walton). I was not in a position yesterday to make an announcement about it. The case he raised was that of the unfortunate position of the small holder who does not want to sell and cannot lend. This notice will appear in the newspapers at the very earliest opportunity:
    "The Lords Commissioners of His Majesty's Treasury hereby give notice that holders of any suitable American dollar securities, of less than $5,0U0 in amount, can deposit the same on loan through the medium and in the name of their bankers, brokers, or other approved agents. Agents desirous of depositing such securities should apply to the American Dollar Securities Committee, 19, Old Jewry, London, E.C., for instructions and information,"
    That will enable any holder, however small, to deposit his securities through the agency of his banker, broker, or other approved agent, and in order to remove any misapprehension I may say at once that any costs of this proceeding the Treasury will pay, so that there will be no outlay at all on the part of the small holder. That causes the last difficulty about this Clause to disappear, and with that assurance I would suggest that my right hon. Friend should withdraw his Amendment.
    Sir J. WALTON: I thank the Financial Secretary to the Treasury for having met
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    the case which I put yesterday so fully and completely. It is entirely satisfactory to me.
    Sir G. YOUNGERmade a remark which was inaudible in the Reporters' Gallery.
    Mr. MONTAGU: No; there never has been any limit to the desire to purchase suitable securities.
    Sir G. RADFORD: Notwithstanding the explanation given by my right hon. Friend, there is something more to be said for the Amendment. I thank the Financial Secretary for his statement about the small holder. I think it will be a great relief. With regard to shares which are to be placed at the absolute disposal of the Treasury, there are considerable difficulties, although the right hon. Gentleman showed great skill in representing the matter as being much simpler than it really is. It must be recollected that a large number of these dollar securities have been the subject of settlements, both by will and deed of marriage, and the result is that there are often half-a-dozen people or more who have to be consulted and have to come to an agreement before it is possible for them to place their shares at the absolute disposal of the Treasury. Cases have come within my own knowledge showing the great difficulty and complexity of this matter. You may have two trustees, and one is at the front.
    Mr. MONTAGU: Look at Subsection (5).
    Sir G. RADFORD: I have seen Subsection (5), but that does not entirely dispose of the difficulty. I am dealing now with the words "at the absolute disposal of the Treasury." If there is a tenant for life, and if there are two or three trustees, and one of the trustees is at the front and the other is dead, and it is necessary under the regulations of the American company that the fact should be proved on the register of the death of the trustee before the stock can rest in the surviving trustee; before that is done—for the process may take in the present state of postage, owing to the War, several weeks—there may be a delay which is quite inevitable so far as the majority interested in the shares are concerned in placing them at the absolute disposal of the Treasury. I would beg the Chancellor of the Exchequer to give

    883
    some further attention to this difficulty, which is a considerable one, in practical dealing with many cases. When we come to Sub-section (5) there may be something to be said on this point, and that may be a better place to deal with the matter.
    Mr. MONTAGU: I have listened with great attention to what my hon. and learned Friend (Sir G. Radford) has said. He really exaggerates the position and seeks a cure which is not a cure. If the position is a difficulty in the case of an absent trustee it would equally be a difficulty if the words of my right hon. Friend (Mr. Lough) were accepted. If the hon. and learned Gentleman will look at Sub-section 5 he will see that certain arrangements are made for absent trustees. My hon. and learned Friend says that that does not dispose of the matter, because there may be delay due to difficulty of reconstruction of trusts, but if he looks at Sub-section (5) he will see in reference to the case of the reconstruction of a trust that provision is made in respect of income derived from any such securities if a person has placed the securities conditionally at the disposal of the Treasury. Suppose a person says, "I will give you these things subject to reconstruction of my trust or the assent of my trustees" and delay occurs before the assent is obtained, that is not a delay for which the person would be responsible, and he would be exempt from taxation.
    Mr. MACMASTER: I think that we should have a clearer statement as to what is meant by American dollar securities. The general impression is that this applies merely to United States securities.
    The CHAIRMAN: We are now dealing only with an Amendment to the Clause. This will arise generally when we are dealing with the Clause on the Question that the Clause be added to the Bill. It might perhaps assist the Committee if I informed them that the hon. Member for Inverness has handed in a manuscript Amendment which appears to me to deal with the subject under discussion at the moment.
    Mr. J. M. HENDERSON: Take the case of prisoners of war in Germany who hold these securities, how are you to get into communication with them? Will they be excluded?
    Sir J. JARDINE: As regards officers and men of the Fleet in distant places
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    at the present time, and officers and men in such distant places as Mesopotamia, where it takes about six weeks to send a notice out and an equal time to get it back, what is done to safeguard the position?
    Mr. STEWART: What is the position of a trust where the trustee is in America and an American, and the people in this country have been in the habit of receiving their dividends from him—they need not have the actual dividends, but they may have remittances—are they called upon to pay the seven shillings? They cannot deposit the American securities.
    Mr. MONTAGU: If my hon. Friend looks at (d) (e) and (f) of Sub-section (3) he will see that all these cases are dealt with, (d) covers completely the case of prisoners of war.
    Mr. DICKINSON: As I read the Clause the money will be taken by the State at the source, and can only be regained by the owner when he is in a position to show certain conditions which are mentioned in the various Sub-clauses. The relations of a prisoner in Germany will not be able to get back that 10 per cent, until he comes back. In the case of a trust, the trustee of which is abroad, the amount will remain in the hands of the Government, and it will be impossible to got it back until that trustee is capable of being got at. There is a provision that the Treasury may authorise, but I do not believe that the Treasury would authorise any person until they had the proper person to explain why this security was not offered. I cannot conceive that the Treasury would repay that money until the person who can alone show why it should be paid comes back and explains the position. That is one reason why I put down an Amendment later on, which I think the Chancellor of the Exchequer will accept, because I think that there are hundreds of these cases which cannot be provided for at this moment, and which we must leave to the discretion of the Treasury so that justice may be done, as otherwise there will be a great many hard cases which cannot possibly come within the four corners of the words of this Clause.
    Amendment negatived.
    Mr. DICKINSON: I beg to move, at the end of paragraph (d), in Sub-section (3), to leave out the word "and," and to insert instead thereof the words "or from

    885
    other circumstances which, in the opinion of the Treasury, justify them in allowing relief from the additional duty."
    I need not argue this Amendment, because I spoke on it yesterday, and I think the Chancellor of the Exchequer, if he has had time to consider it, will have made up his mind as to whether he can accept it. There are cases, many of which must have come to our minds yesterday and to-day, which cannot be dealt with properly under the Government proposal. There is the case of a man who, bonâ fide, does not know anything about this. I quite agree that the great majority of these cases will come to the cognisance of bankers, and that these persons will have their attention drawn by the bankers to the fact that, unless they deposit their securities they will be subject to this tax. But there is, all over the country, no small number of people who do not receive their dividends through banks at all, but possess their own bonds, and have no official knowledge whatever that this penalty is likely to be inflicted. It is extremely unfair, when a man does find out what he ought to have done and comes and says, "I will deposit the securities," for the Treasury to say, "Yes, you can deposit these securities, but we are not going to give back the money paid, because this has not been beyond your control. It has been your misfortune, quite true, but it was within your control." Then, take these cases of persons who are going to be dealt with, as I understand, by notice, and who hold under a £1,000 worth of securities. They will be tinder the impression that the Government will not accept them. The Government at the present moment, I believe, is resolved not to accept them. These people will not be able to avail themselves of the arrangements, which I do not understand, by which various bankers in the country are to collect together various clients with small amounts until they have a sufficient sum to deposit as a whole. I do not think that individuals should suffer because they did not know of that technical arrangement, and when they come before the Treasury the Treasury should, have the right to say, from every point of justice and equity, "This penalty should not be recovered from you, because this was not your fault." Take the case of shares, of which there are not a few, in the list which the Treasury will not accept.
    Mr. McKENNA: They are exempt.
    Mr. DICKINSON: Not under this Bill!
    Mr. McKENNA: Yes.
    Mr. DICKINSON: I venture to submit that they are not.
    Mr. McKENNA: You will see it in paragraph (b).
    Mr. DICKINSON: There are securities-in the special list which the Treasury will not accept.
    Mr. McKENNA: Then they are exempt.
    Mr. DICKINSON: It does not say so, but if that is the view I will not argue it. At the same time, I do not think that it detracts from the value of my suggestion that the Treasury should have wider powers than are taken at this moment to-relieve the individual from having to pay this penalty, provided that it is not his fault that the shares have not been placed at the disposal of the Treasury.
    Mr. McKENNA: My right hon. Friend' has mentioned three classes of cases of hardship. Two of these are already dealt with in the Bill. Under paragraph (b) if securities are offered to the Treasury without condition, then they are placed at the absolute disposal of the Treasury, and the income derived from these securities is not chargeable with Die tax. The first case mentioned by my right hon. Friend is one in which no remedy is provided, and my right hon. Friend I think makes out a case for it— that is the case where a person has not offered securities on account of ignorance. It is not always easy to prove that a person was not ignorant. I do not know if he suggests that the onus would be on the Treasury of proving that the person knew he would be liable to this penalty. That is the difficulty of dealing with cases of the kind. I would be very glad to meet my right hon. Friend if I could, but there is always this difficulty of proof. You have got to prove that the person knew we were willing to take the securities. How are we to prove that? I agree that it is very hard that a person should not be relieved of the tax if, bonâ fide, he did not know. But the remedy which my right hon. Friend suggests in his Amendment I think goes a little too far. I do-not know whether the Committee are willing to give these powers to the Treasury which even I myself, on behalf of the Treasury, would be very unwilling to

    887
    accept. I do not want to have any discretionary taxing power. I do not wish either myself or the officials of the Treasury or the Inland Revenue to be in a position in which anybody could come and press on us reasons why they should be relieved from taxes. Taxes ought to be settled in this House, and there ought to be no discretionary exemption by the Treasury. [HON. MEMBERS: "Hear, hear!"] I am glad the principle is accepted generally. I should be glad to meet my right hon. Friend as far as I can, and I will consider the subject before the Report stage, to see whether something can be done, and whether words such as these might meet the case, "or other circumstances which, in the opinion of the Treasury, justify them in accordance with rules laid before the House"—something of that kind, to indicate the lines on which the Treasury should proceed, so that the House would have knowledge of the line on which this additional relief was given. I will consider whether that can be done without, however, giving a promise, for, after all, we must consider how far this Amendment will have a different effect from that which we suppose. If my right hon. Friend will accept that, I shall be glad to give the matter further consideration.
    Mr. HENDERSON: I would point out that prisoners of war cannot possibly deposit their shares, which are held by Army factors and other factors. All the factors are bound to do, on the published list, is to deduct the Income Tax after the 25th July. It is a big tax which is to be deducted, and therefore they would lose so much of their income until they come back. These prisoners of war cannot be communicated with, because the officials of the internment camps would not allow it, and this would be very hard upon them, because in the meantime their banking account would be reduced by the deduction of this special tax. It would not be at all difficult for the bankers and others to point out that they cannot communicate with these persons, and therefore they need not deduct the tax.
    Mr. McKENNA: I will consider whether the point is practicable.
    Mr. HENDERSON: The case is rather a limited one, and the deduction would come hard upon some of these poor chaps who have not got too much.
    Mr. DICKINSON: In view of what has been stated by the Chancellor of the Exchequer I beg leave to withdraw my Amendment.
    Amendment, by leave, withdrawn.
    Mr. BRYCE: I beg to move, at the end of paragraph (g), to add the following paragraph:
    "(h) And in respect of the income derived from any such securities which are deposited with trustees in any country outside the United Kingdom under the provisions of any deed made in accordance with the laws of such country in any case where some of the beneficiaries are not affected by this Act or where the trustees or beneficiaries have no power of disposal or where the laws of such country prohibit the sale or pledging of such securities."
    Part of this is covered by paragraph (e), but that paragraph does not effect the purpose I have in view. Paragraph (e) says, "In respect of income derived from any such securities held, in any country outside the United Kingdom, by persons who are not domiciled in the United Kingdom, or by trustees who are prevented by the terms of their trust from placing the securities at the disposal of the Treasury, and are not entitled to the benefit of any indemnity conferred by Act of Parliament in respect of the contravention of those terms, if the securities were so held before the twenty-ninth day of May, nineteen hundred and sixteen." But there are deeds under which there is a large number of beneficiaries, and under which there is power to change the investment. Under this Clause you could not change the investment, and if you did, it could not be accepted, because it was acquired since the 29th May, 1916. Paragraph (e) does not meet their case, and covers only one particular case of trustees who are not domiciled in the United Kingdom, or of trustees who are prevented by the terms of their trust from placing the securities at the disposal of the Treasury. I do not adhere to the language of the Amendment, which I drew up hurriedly last night in order that I might have it ready for to-day, but if the Chancellor of the Exchequer will adopt the idea, or give the matter consideration before the Report stage, with a view to enlarging paragraph (e) in order to cover my point, I should be glad. I know of one case of a trust administered in the United States, under which there is a

    889
    number of beneficiaries, some in this country, and some in the United States. The trustees have got the power of alteration of investment, but they cannot alter the investment under the Clause as it stands, so far as the beneficiaries in this country are concerned.
    Mr. MONTAGU: I am very much obliged to my hon. Friend for having brought this subject forward. It is quite obvious the cases to which he refers are not dealt with by paragraph (e), and those cases deserve consideration. He will understand me when I say that the Amendment is not on the Paper, and that I have only had my attention called to it during the last two minutes, but, from the consideration I have been able to give to it, the hon. Member's Amendment strikes me as being in some respects narrower than paragraph (e), and in other respects wider.
    Mr. BRYCE: Yes.
    Mr. MONTAGU: Perhaps the hon. Member will rest content with the assurance that I will consider this matter between now and the Report stage, in the light of the observations which he has addressed to the Committee, and I will communicate with the hon. Gentleman if I see any difficulties between now and the Report stage. Perhaps the hon. Member will withdraw his Amendment for the present.
    Sir G. YOUNGER: There are great companies trading with other countries who hold a certain class of securities which are included in the list, and I think most of those securities, if deposited before a certain date in May, are allowed to be taken.
    Mr. MONTAGU: Look at paragraph (g).
    Sir G. YOUNGER: I know, and I am quite content with what the right hon. Gentleman has stated.
    Mr. BRYCE: I beg leave to withdraw my Amendment.
    Amendment, by leave, withdrawn.
    Mr. DICKINSON: I have an Amendment on the Paper which I do not, however, propose to move. In view of the fact that the date of the deposit is the 25th July, I would point out to him that it might be well to take into consideration whether the list published after the passing of the Act should not be considered the only list—because there are several lists—and it
    890
    might be taken that the first and only list was that published immediately after the passing of the Act.
    Mr. McKENNA: I will consider that point.
    Question, "That the Clause be added to the Bill," put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Limitation of Belief from Income Tax in Respect of Insurance Premiums.)
    (1) The relief given under Section fifty-four of the Income Tax Act, 1853, as amended by any subsequent enactment, shall not, as respects 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) that 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;

    (3) contracts for deferred annuities, where—

    (a) the contract is limited to the payment of an anunity 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 the relief under that Section by way of repayment of tax and the deductions from income allowed for the purposes o£ Super-tax under Sub-section (2) of Section sixty-six of the Finance (19092013;10) Act, 1910, shall be accordingly limited.
    (2) 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 made after the

    891
    22nd day of June, nineteen hundred and sixteen, and the policy or contract is surrendered, or the benefit thereof is transferred for valuable consideration (other than marriage), 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 transfer at the rates at which the relief was last given in respect of the premiums or other sums payable.
    It shall be the duty of every insurance company who take a surrender of any such policy or contract or record a transfer of any such policy or contract to give notice to the Commissioners of Inland Revenue of the particulars of any such surrender or transfer.—[[Mr, McKenna.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. McKENNA: In moving this Clause, I wish to take the opportunity of informing the Committee what has happened with regard to our proposal. After the introduction of the Resolution proposing the new charge, I had the advantage of seeing the representatives of the great insurances companies and societies in this country, and I found that while they were in complete sympathy with the object which the Government, and indeed the House, has in view in the Resolution itself, they were anxious as to the terms of the Clause, and anxious as to the powers which we propose to use. We had some discussion, and I came to the following arrangement with them, and I undertook to make this statement to the Committee of the House. I will say now that if our advisers at the Treasury can between now and the Report stage come to an arrangement with the insurance company, whereby we may have a Clause which will effect our common purpose in a way which they regard as satisfactory, I would undertake either to introduce Amendments of our Clause, or, if necessary, on Report to withdraw the Government Clause and substitute a new agreed Clause, and would invite the Committee and the House to accept that arrangement. If, on the other hand, our expert advisers and the insurance companies were unable to come to any arrangement between now and the Report stage, I should then have no alternative but to ask the House to effect the object which we have all in view by the only means
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    known to us, namely, by the Clause presented to the House. I think it would be highly desirable, indeed we all wish it, to effect the object we have in view with as little inconvenience to the companies as possible—in fact, if we can, with no inconvenience. We shall all agree that it would be most desirable that a Clause should be arrived at which would be acceptable to them as the result of our Debate. Therefore, if I may, I ask the Committee to allow us to have this Clause now on the Committee stage of the Bill, on the understanding I have announced, that we will amend it, or substitute another Clause, if another Clause can be secured by arrangement with the companies.
    Sir G. YOUNGER: Will it be necessary to recommit the Clause?
    Mr. McKENNA: If there is a new Clause, it may be necessary to recommit it.
    Mr. JONATHAN SAMUEL: I think we ought to be obliged to the Chancellor of the Exchequer for the promise he has made, but I have consulted some of the insurance companies, and I am afraid that some of the very large companies knew nothing about the deputation which waited upon the right hon. Gentleman. I would suggest to him that the following would be a very good arrangement to get out of the difficulty: The reason why this Clause has been brought in is because of the fact, as he stated, that some insurance companies had taken advantage of the very high Income Tax to issue deferred annuity policies on short loans. The right hon. Gentleman proposes in this Clause that in future no short-term policies shall be issued for at least under a period of twenty years, and that no man can benefit from these annuities or insurance or life endowment policies until he has reached the age of sixty years. This is going to be a very serious matter to insurance companies who do a very legitimate business in life and endowment policies.
    Mr. McKENNA: We are agreed as to that.
    Mr. SAMUEL: No, you have hot agreed to it, and my suggestion is this, that the remedy which the right hon. Gentleman proposes in this Clause should apply to Part III. only—that is to say, it should apply only to deferred annuities for sixty years and twenty years, and should not apply in the cases where they are doing a legitimate business in life and endowment

    893
    policies. I have taken returns out of the accounts of three very large insurance companies, one of which is doing the largest business in the country. I find that out of 922,000 policies, representing sums assured in the ordinary branch of a total of £103,000,000, there are only 4,650 policies issued under what is called deferred annuities, and representing only a sum of £151,000. One insurance company, with an income last year of no less than £3,500,000 only issued £300 of what are called deferred annuities and paid only £1,516 in 1916. To affect what is called legitimate life and endowment policies is rather a serious matter, not only for the companies who are doing that business, but for the insured persons concerned. Take the young man who takes out a policy of endowment at the age of twenty years for fifteen years or twenty years. He is in a better position then to pay the premium than at any other part of his life. He takes out a rather big policy and pays a big premium. He does not do it for investment only. He draws that money out at thirty-five, or, if he starts at twenty-five, he draws it when he reaches forty. Under the provisions of this Clause he is prevented from getting any rebates on his Income Tax in respect of the premiums because he has not reached the age of sixty. I think that is punishing the insured person when the young man or his parents are anxious to secure benefits in a legitimate way.
    I quite agree with what the Chancellor is trying to effect. I am sorry to say we have insurance companies, and he gave cases the other day, which are now taking advantage of the high Income Tax and are issuing deferred annuities and thereby avoiding, or, in other words, robbing, or trying to rob, the State of its legitimate due in the form of Income Tax. That, I believe, would be met by applying the sixty years and the twenty years to Sub-section (3) of this Clause. I am not going to move any Amendment now. I think the right hon. Gentleman has made a very fair offer, but I would ask him to amend Sub-section (2) of the Clause, and make the ages fifty, and fifteen for the period of the endowment. I have consulted some very important insurance men on this point. This would meet them. They knew nothing about the conference to which he has referred. I hope that between now and the Report stage he will consider the suggestion which I have made. If you hit the insurance companies by affecting their
    894
    business, then you lose the Income Tax upon the profits that might accrue. On the other hand, you hit the insured person very hard who has taken out an endowment policy for a period, say, of fifteen years, and upon the grounds I have mentioned I ask that the point should be considered.
    Sir H. ELVERSTON: I had intended to move some Amendments to this proposed new Clause, but in view of the appeal of the Chancellor I am not going to do so now. I would still venture to draw his attention to one or two points and to make some suggestions which I think would afford a very good solution of the difficulty which has arisen. I take it that the Treasury does not in any way want to interfere with or stop rebates of Income Tax on insurance life contracts, but that all it wishes to do is to stop the exploitaion of the Income Tax, which has been going on undoubtedly during the last two years since the Income Tax reached its present high level. I think that the plan I have suggested is far simpler and better than the one which the right hon. Gentleman proposes, and that it will achieve the object which he has in view. The Treasury, of course, has always been trying to stop this allowance or rebate on the investment side of these policies. In 1913 there was a very important case in which this point arose. The Treasury then objected to the rebates and contended that the policy in that case was primarily a contract which involved investments and compulsory investments with life insurance as a condition added as an inducement to people to enter into the contract.
    There are three ways in which the Treasury, it seems to me, could achieve this object. One would be to say that in future that no rebate beyond the 1s. or 2s. in the £, the pre-war rate of Income Tax, shall be allowed on any policy. Another way would be to adopt the system which I suggest, and that is, that the rebate shall be given in respect of any premium up to 4 per cent, of the capital sum insured, but that the part of the premium in excess of 4 per cent, would be always subject to Income Tax. The third way is the somewhat cumbersome way which the Treasury are suggesting at the present time. My hon. Friend (Mr. J. Samuel) has pointed to the hard case of the young man of twenty-five, or thereabouts, who insures so as to draw the money at the age of fifty-five. I would point out to the Treasury that the

    895
    premium rate for such a contract, at the present time, for thirty years is about £2 12s. If a man of forty takes out a contract, expiring at the age of sixty, the premium would be £4 15s., or something like that, and in that case the man of forty, on a twenty years' contract, gets the whole of the rebate, while the man of twenty-five, drawing at the age of fifty-five, on a contract which runs for thirty years, will get no rebate at all under the Treasury arrangement. The point I want to make is this, that in the case of the younger man the investment element is far smaller than it is in the case of the older man of forty, and yet, in the one case, the Treasury deny the rebate and in the other they allow it. Another very hard case which is hit under the Treasury scheme, as it stands, is that of what is known in insurance circles as "bad lives." A man, say, has a bad family history but wants to insure his life. He goes to an office, and it is quite a common practice for the office to say, "We are very sorry, you are not a good enough risk to take (in what they describe as a whole-life system), but we think that you have an average chance of seeing the age of fifty years, and we will take you on an endowment policy payable at the age of fifty years." I hope that the Treasury will take a note of these points, and I think the case I have mentioned is one which ought to be dealt with.
    Prior to the War the time when Income Tax was not so high, it was not the habit of very wealthy people to take short-term endowments, or to take out endowment policies at all to any extent. In those days the Income Tax offered no particular inducement. It was only the middle-class man who took up that form of investment, and for the ordinary middle-class man this form of investment to-day is a far more important matter than the Treasury realise. It is not an easy thing for a man who has, say, £200 per year, and who manages to save, say, £15 or £20 per year, to invest that money satisfactorily. An investment policy, an endowment policy, is practically the only channel for a ready and safe investment open to him. Therefore I do hope that the Treasury will deal very carefully with this phase of the question. If the Government would adopt the scheme I suggest, of allowing a rebate of Income Tax upon the premiums up to 4 per cent, of the capital sum which is insured, it would get rid of the necessity for the second part of the Clause and with the
    896
    necessity for dealing with the question of surrender values and of surrender values repaying Income Tax. Under the Clause a life insurance company is not to allow the surrender value without deducting therefrom the Income Tax or sending notice to the Income Tax officials that the policy has been surrendered. Is it proposed to stop life insurance companies giving loans on those policies, because a company will to-day grant a loan up to 90 per cent, of the surrender value of the policy? Therefore, under the Clause as it stands it would be quite possible for any man who really intended to discontinue the contract to go to the life office and say, "I want a loan on my policy." He would get 90 per cent, of the surrender value, and he then could tear up his policy and there would be an end of the contract so far as he was concerned, and he would actually have drawn more money than the company would have given if it had paid the surrender value. These policies form a very usual security for a man to deposit with his banker. It is particularly so with middle-class people like myself. If I want money from a banker I take a life policy to him and say, "Here is a perfectly good document; let me have a certain amount"—an overdraft or something of that sort. Bankers accept that without any consideration and without any hesitation. But here the Chancellor is going to introduce complicated arrangements like those suggested in the second part of the Clause, and he is going to make it extremely difficult for the ordinary middle-class man to deal with the only security which in nine cases out of ten he possesses. Therefore I hope that the Chancellor will not think of passing this Clause without very careful consideration and consultation with the insurance people.
    Mr. McKENNA: That is what I am having.
    Sir H. ELVERSTON: I mentioned these points lest it might be said that we had allowed them to go by default.
    5.0 P.M.
    Mr. WATSON: I would like, without repeating what the last speaker said, to express my entire agreement with the two points he made; firstly, with regard to the young person insuring at an early age on an investment policy long before it matures, but where the point of maturing will be reached under sixty years, and,

    897
    secondly, and more particularly, with regard to the class of life which the ordinary company of good standing will not accept as a whole life policy, but which it will accept on the endowment system for a fairly long period. I would like to ask the right hon. Gentleman whether, among the representatives of the insurance companies, the Scottish insurance companies are also represented?
    Mr. GLYN-JONES: I am sure the House will be glad that the right hon. Gentleman is to see the insurance, companies before this proposed provision becomes an actual Act of Parliament, but when I raised this question when the Resolution was before the House I did it without consultation with any insurance company, and I am not now' thinking of any insurance company. I want the right hon. Gentleman, however, to realise that it might well be that he could get a Clause which might be satisfactory to the insurance companies, but which would yet do a great injustice to certain insured persons. It may not be an answer at all that because the insurance companies are satisfied this proposed Clause would work fairly as between insured persons.
    Mr. McKENNA: The Clause is prospective.
    Mr. GLYN-JONES: Quite so, but the Fact that it will interfere with people who, in the future, have to make provision of this sort in no way, I think, mitigates the injustice, if injustice is done at all. The right hon. Gentleman wants to do justice to those people who, after this provision becomes law, will have to insure, and I do say that I, for one, feel a little misgiving that on the right hon. Gentleman's advice I have to agree to a Clause to-day which the right hon. Gentleman himself is not prepared with confidence to advise the House is the best provision to make for this purpose That is really what we are doing. The right hon. Gentleman says: "Pass this Clause to-day. I am not sure it is the best that could be passed, but I will talk to the insurance company before it leaves this House on the Report stage." I can only say that, although, no doubt, it is owing to lack of opportunity, it is a pity that people are not consulted before we reach the Committee stage in the House of Commons, and that we have to-day to deal with it in this more or less unsatisfactory way. What I want to ask the right hon. Gentleman is
    898
    with regard to his saying that if he could not agree with the insurance companies this Clause would have to stand.
    Mr. McKENNA: No, no!
    Mr. GLYN-JONES: With great respect, I understood the right hon. Gentleman to say that it would have to stand.
    Mr. McKENNA: I have never said that any Clause in any Rill would have to stand. I said I would introduce it in this form, and that then I should be glad to listen to any criticisms hon. Members might have to make. I did not pin myself to this Clause, nor do I do so to any Clause as I introduce it.
    Mr. GLYN-JONES: I am sorry if I misunderstood what the right hon. Gentleman said. I thought he said that if the insurance companies could suggest no better Clause he would ask the House to adopt this one. What I want to emphasise is that the very class of life that the right hon. Gentleman wants to encourage to insure, namely, the young man of poor life, cannot, if this provision stands, get the benefit which he intends them to have. I can speak from my own personal knowledge of a case where the only form of life insurance open to a young man of thirty, just married, who is anxious to make provision and is being encouraged by the Government to make provision, is a policy payable at death, or at fifty-five. I do not object to the twenty years, but to say that no policy shall have the benefit of exemption from Income Tax if it is payable before sixty years is to cut out altogether the poor life. That may be a provision to which the insurance companies themselves may not take exception. For instance, the suggestion has been made that one method would be to say that the Treasury would allow exemption only on premiums which did not exceed 4 per cent, of the capital for which the insurance is taken out. I would point out that that would at any rate be no very serious detriment to the wealthy man who can go on insuring as much as he likes at any rate at 4 per cent., but that it would interfere with the very type of person whom I think the right hon. Gentleman wants to help. I only ask him, therefore, to remember that it is not only the insurance companies whose interests have to be considered, and I know he will consider others. He has to consider all classes of insured persons, and particularly that class of life of which. I am now speaking.
    Mr. BRYCE: I will not tire the Committee by dilating on the importance of the points raised in connection with the age of the insurer of an endowment policy, and with the necessity of reducing the term. If the right hon. Gentleman keeps to the sixty years in the Bill it will make that impossible for large numbers of cases to be insured. I say that because I have had considerable experience as a director of one of the larger insurance companies, and I know that the very great bulk of these endowment policies mature at an earlier date than that, and it would be—not from the point of view of the insurance companies, because, after all, they are rich enough—a very serious detriment to a large body of most deserving insurers in this country. There was another point I wanted to raise, which I have put into a manuscript Amendment. I will read it to the House:
    "Provided always that a premium paid in connection with the life assurance policy to secure a licence to engage in the Naval or Air Services of the Crown, or to engage in the military service of the Crown outside of the United Kingdom shall not be subject to the restrictions imposed by this Section of this Act and by Section 17 of the Finance Act, 1915."
    With the enormous numbers of young men in the field now exposing themselves to many dangers, the question of insurance has become an exceedingly important one. They cannot, however, cover it at the reasonable and ordinary rates for endowment or whole-life policies. They have to pay on a life policy ten or twelve guineas, and in some even more, per cent, and the result is that if you make these restrictions and keep up as regards these policies the restrictions of Section 17 of the Finance Act, which limited to 7 per cent, of the sum assured the exemption given by the Treasury, you make it quite impossible for these people to insure their lives at all. That would mean an enormous number of people thrown on the charity of the State unprovided for. The matter is of very great importance, and I hope the Chancellor of the Exchequer will consider it in his new Clause. If plenty of notice is given of the new Clause we may have an opportunity to get in Amendments, but I would much rather the right hon. Gentleman considered that point and embodied it in his Clause.
    Mr. J. MASON: I should like also to call attention to the matter to which I am sure the right hon. Gentleman will pay attention in considering his new Clause. It is quite a common practice for people who own a life insurance policy to deposit
    900
    that, without any surrender or any permanent consignment, as collateral security for a mortgage, and the way that is done is by means of a transfer. As the Clause stands, in Sub-section (2), it seems to me that if the policy were transferred in that way as collateral security for a mortgage it would be liable to this tax, which is not of course, what the right hon. Gentleman intends. I venture to suggest that the Amendment put down in the name of the hon. Member for Brentford (Mr. Joynson-Hicks) is one which ought to be inserted in order to meet that difficulty, or that something very much like it should be put in. I venture to ask the right hon. Gentleman to bear that matter in mind.
    Sir G. RADFORD: I will not go into the grave questions that have been discussed, or the importance of the suggestions that have arisen on this Clause. With regard to the wording of the Clause, which is an amendment of the provision of the Income Tax Act of 1853, we are told at the beginning of this Section that
    "the relief given under Section 54 of the Income Tax Act, 1853, as amended by any subsequent enactment, shall not," etc.
    The words to which I want to draw attention are "any subsequent enactment." I do this in the interest not only of the public but of that small but deserving class of persons who read Acts of Parliament. I think I know what the Chancellor of the Exchequer means when he says "any subsequent enactment," and I am quite sure that he knows what he means, and it would be perfectly easy for him to insert there the names of the Acts of Parliament to which he refers, instead of putting in the words "any subsequent enactment," which are an invitation to us all to spend a happy day reading all the Statutes from the year 1853 up to the present time. I do say that it seems to be only indolence on the part of the draftsman not to have put in these words, and I appeal to the right hon. Gentleman to consider whether he cannot insert what he means in plain language on the Report stage.
    Mr. CURRIE: In a single word, I beg to suggest that there is a way of arriving at what we all seem to desire, and that is to introduce a sort of sliding scale. It seems to be obvious that some transfers should be open to a stiffer form of challenge than others, and perhaps the right hon. Gentleman will tell us whether

    901
    it is along that line that the negotiations are proceeding. I do not think, so far as I have heard anything that has been said, a case has been made out for treating with any special degree of leniency policies which are transferred for purposes of mortgage.
    Mr. McKENNA: I only rise to say that the Scottish insurance offices are included, and I thank the Committee for the reception that it has given to the proposal.
    The CHAIRMAN: There are a number of Amendments which have been handed in, and others which are on the Paper. Mr. Bryce.
    Mr. BRYCE: I have spoken on that point, and I will not consider my Amendment how.
    The CHAIRMAN: Mr. Joynson-Hicks.
    Mr. MASON: I undertook, on behalf of my hon. Friend—
    Mr. McKENNA: Perhaps the hon. Gentleman will not move this, as it may not be the final form of the Clause.
    Mr. MASON: Very well, I will not move.
    Question put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Amendment of Section 40 (3) of the Principal Act.)
    Sub-section (3) of Section forty of the principal Act (which provides amongst other things for the reference of certain matters for the decision of a board of referees), shall, where the application for such a reference is made in respect of a trade or business carried on in a controlled establishment within the meaning of Part II. of the Munitions of War Act, 1915, and relates to an accounting period during any part of which the establishment has been so controlled, and to the postponement or suspension of renewals, or repairs, or to exceptional depreciation, or obsolescence of assets, or to the necessity in connection with the present War of providing plant, have effect as though a Referee or Board of Referees appointed or designated by the Minister of Munitions for the purpose were substituted for the Board of Referees under the principal Act.
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. McKENNA: This is a Clause carrying out what I undertook to do in regard to controlled firms in relation to the Excess Profits Duty. Generally speaking, the proposal that I made did not require any amendment of the Act, but it did require an amendment of the original Act in order to transfer the jurisdiction of the Board of Referees under the Excess Profits Duty to the Board of Referees under the Munitions Act, The purpose, of this Clause, therefore, is to give to the authority under the Munitions Act the power of finally determining the amount which is to be allowed for depreciation, renewals, repairs, and all the other items contained in this Clause.
    Mr. LOUGH: Is it on the Paper?
    Mr. McKENNA: Yes, it is on the Paper, and I thought the Committee was so familiar with the arguments that we have had on two days of this week and last that it would not be necessary for me to say anything further on the subject. It is an Amendment of Section 40, Subsection (3) of the Finance Act of last year. It embodies the arrangement I undertook to give effect to with the Munitions Department in regard to controlled firms.
    Mr. J. MASON: Do I understand the right hon. Gentleman that this Board of Referees will settle the whole question as to exceptional depreciation and so forth in connection with both the Munitions Department and the Excess Profits Tax and at the same time? Is that what this Clause will do—that one Board of Referees will settle these allowances for both taxes at the same time?
    Mr. McKENNA: Perhaps I should have made the point, but I thought it was already clear to the House. Under the Excess Profits Duty there are certain allowances for renewals, depreciation, etc. Under the Munitions Act there are, in respect of controlled firms, similar allowances. Allowances are made in accordance with different rules and might not come to the same amount, and if objected to, there is an appeal to two separate authorities. Inasmuch as I have undertaken that in all these matters I shall accept the finding of the Ministry of Munitions, it became necessary to oust the jurisdiction of the Board of Referees in relation to the Excess Profits Duty and to substitute for it the jurisdiction of the Board of Referees under the Munitions Act. That is what this Clause does.
    Mr. STUART-WORTLEY: The right hon. Gentleman gave a kind of promise earlier in the stage of these discussions as to goodwill. That promise was given after this Clause had been put on the Paper. I hope that the fact that this Clause does not mention goodwill does not mean that we are not to get some concession.
    Mr. McKENNA: Oh, no! The question of goodwill would not come into this Clause. It would not come before the Board of Referees under the Excess Profits Duty, nor would it necessarily come under the Munitions Act. It might be a separate authority altogether. It will not arise until after the War. It is not necessary to include it here. The promise, of course, stands good.
    Question put, and agreed to.
    Clause read a second time, and added to the Bill.

    NEW CLAUSE.—(Assessment of Income for Super-tax.)
    The income of any individual assessable to Super-tax shall be the total income of that individual for the previous year estimated in accordance with the provisions of Section sixty-six, Sub-section (2), of the Finance (1909–10) Act, 1910, but in estimating the income of the previous year there shall be deducted therefrom the amount of Income Tax paid in respect thereof, and Section sixty-six, Sub-section (2), of the said Act shall in its application to the Super-tax for the current and any subsequent year be amended accordingly.
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. PETO: In moving the Clause which stands in my name, I desire to endeavour to induce the Chancellor of the Exchequer to remove what I regard as a very serious anomaly, particularly obvious when the Income Tax stands at 5s. in the £, namely, that in all assessments for Super-tax the taxpayer has to add back, before he can ascertain the income which is to be taxed, the amount of Income Tax which has already been deducted, and has to pay his Super-tax upon an income, a hypothetical gross income, which he never sees and never receives. If the Committee will allow me, it will be useful to read the arguments which were put forward for this method of assessment by the Minister of Munitions when he was Chancellor of the
    904
    Exchequer in 1909–10. The flights of prophecy in regard to the course of this then new Super-tax indulged in by the right hon. Gentleman seem now rather amusing. The right hon. Gentleman was challenged by the now Secretary of State for India and by other hon. Members in regard to this point. He said, dealing with the amount of Income Tax:
    "If it is this year it is in the receipts and dividends of this year, and it is 1s. 2d. If the right, hon. Gentleman asks me now at once whether it is five and a third, or five and a half, or five and four-fifths, I could not give him the figure, but there is no difficulty about it. He could turn on a clerk in his office in a moment. When the figure is discovered it will appear in the Press; everybody will know it, and all difficulty vanishes. The whole point really is this: whether it is worth our while giving away £150,000, not to redress any real anomaly or real grievance, but to get rid of a small clerical difficulty."
    There are two other short passages which I should like to read to the Committee. The present Minister of Munitions went on to say:
    "The people affected (by Super-tax) have all clerical staffs or managers to do this for them. There are very few people who have over £5,000 a year who have not got clerks or a secretary or a manager."
    A little further on the right hon. Gentleman says:
    "Men supposed only to be exceptionally well off will be notified, but you must operate within that area. Surely all men in that category can afford to keep a private secretary or agent, and if they have not got a private secretary or agent then they are men of leisure, and a little sum of this sort would not do them any harm in the world as mental exercise. It is not mental exercise that they will have to indulge in every year. Once they understand this sum it would last them for a lifetime."—[0FFICIAL REPORT, 20th September, 1909, cols. 117 and 118, Vol. XI.]
    If we turn and see the course the Super-tax, as a new tax, has taken, we find no simple little sum that will last a lifetime. The Super-tax calculation varies two or three times a year, and if the payer does not want to spend a very large fraction of his year in making calculations as to what is the exact amount required by the Chancellor of the Exchequer—if he is a wise man—he appeals to the Treasury, or Somerset House, at once, and, quite frankly, says: "It is quite impossible to make this sum up; what do you estimate to be the nearest fraction to add to the income that I have actually received in order to ascertain the hypothetical income which I have not received, and on which I am obliged to pay Super-tax?" I pursued that wise course, and my impression is that the year before last I was told it was l–17th, last year l–12th, and this year, I think, it is l–7th. Nobody maintains that that is accurate or really represents the

    905
    exact amount of income. It is a hypothetical fraction which does not presumably do undue justice to the taxpayer, or does not defraud the Treasury to any serious extent. Now, however, that the Income Tax is 5s. in the £, I do put it to the Chancellor of the Exchequer: Is it reasonable to say, as the right hon. Gentleman said on the Second Beading of the present Finance Bill, that he did not propose to alter the Super-tax, and that it would remain the same, when all the time he is taxing an income that nobody receives?
    Let me ask him to take the very simple case of a man with £6,000 a year. Five shillings in the £ will be a quarter of his income. He will receive £4,500. That is the income he has really got, yet under the present Income Tax scale it works out like this: Super-tax level now £2,500. When the Minister of Munitions was introducing the tax into the House he spoke of it as a tax for very rich men with over £5,000 a year. But now everybody who has over £2,500 a year is a Super-tax payer. Therefore, my little calculation is this: That a man with a gross income of £6,000 a year pays Income Tax of £1,500. On the first £500 over £2,500 he pays Super-tax of 10d., then he pays 1s. 2d. on the next £1,000, then Is. 6d., and on the fourth £1,000 he pays 1s. 10d. The total Super-tax he pays on the basis of having £6,000 a year, which he never receives, is £244 3s. 8d. If he pays Super-tax on an income that he actually receives, he will pay £115 0s. 4d. If you go to the higher rates of income where you get a Super-tax of Ss. 6d. in the £, if this is added to an Income Tax of 5s., the figures will be gigantic. I do not propose to take any but one simple, ordinary, average case of a man who is neither very rich nor very poor. Is it a reasonable basis that we should say that our Super-tax ranges from 10d. to 3s. 6d. when, as a matter of fact, it does nothing of the kind? It is 10d. and 3s. 6d. on the gross Income, with the Income Tax added, and is really 25 per cent. higher. Therefore, I think there is something very fraudulent in such a basis of taxation, because it tries to make out to the public and to those concerned that the tax is of a very much more moderate character than it really is.
    It is very important at the present time, when we hear from the Labour Benches appeals to the Chancellor of the Exchequer, in view of the exigencies of the situation, to provide more revenue for the
    906
    War on the lines that even the present Income Tax, Super-tax, Excess Profits Tax, the controlled establishments levy, and the like are not high enough, and that a great deal more ought to be taken, that what is taken should be accurately stated in the Act of Parliament, and that we should not depend upon a fictitious basis of assessment in order to try to make out that the Super-tax is something much less than it is. When, in addition to that, you have got such a cumbrous system of assessment, with constant changes in the rate of Income Tax—I am not complaining; it is, of course, necessary in time of war to realise that the Chancellor of the Exchequer cannot look very far ahead, and it may be necessary for him to have an Income Tax of 2s. 6d. part of the year, and then raise it to 3s. 6d. or even to 5s.—I do not, I say, complain—when we are living under a state of affairs like that, I really think we ought to have a basis of assessment that does not require you to find out exactly what Income Tax was deducted from each particular dividend. Therefore, I ask the Chancellor of the Exchequer, if he will not accept this Clause, and take whatever steps are necessary to alter the scale of Super-tax to agree with the actualities and facts of the case, instead of leaving the whole thing in a state in which nobody, by looking at the Acts of Parliament, can possibly tell what the Super-tax is unless he enters into elaborate calculations, and where he creates a wholly mistaken impression on the part of people who think that the rich are not taxed enough, by telling the public that they are taxed at the rate at which they are not really taxed at all, and which the Chancellor of the Exchequer knows is not really the real rate upon the income which they receive.
    Mr. McKENNA: There is nobody but would sympathise with the feelings of the hon. Member who has described in such forcible terms the hardship of having to pay Super-tax on money never received. There is no question, perhaps, but that people who pay Super-tax agree with the view which the hon. Member has expressed in regard to the various specified inconveniences. Having said so much, do not let us exaggerate. The hon. Gentleman said that a large part of a man's life was spent in making out accurate accounts.
    Mr. PETO: A large fraction of the year, I said.
    Mr. McKENNA: A large fraction of the year would be spent in making up the actual amount. What is actually required of him, according to the Treasury return, is to ascertain the income which he has actually received and add one-seventh to it. If he adds one-seventh the Treasury is prepared to accept the amount so returned as the true amount. That is stated in the assessment form sent to every individual who has claimed. He has only to turn to the last page and he will see how very simply this difficult operation can, in fact, be carried out.
    Mr. PETO: In justice to myself, I must say I drew a distinction between accepting the rough-and-ready method of getting over what is almost an impossible calculation. I mentioned one-seventh, which the Treasury officials give.
    Mr. McKENNA: The information may be obtained from the Treasury by anybody who is prudent enough to apply. As a matter of fact, this information is given to everybody on the assessment return itself. So much for the calculation. Now, as to the other question, whether the Super-taxpayers should only pay upon the amount of income after the deduction of ordinary Income Tax. Personally, provided they pay the same amount altogether, I have no objection as to how they pay it. The actual proposal of the hon. Gentleman would cost the Exchequer in this year something like £4,500,000. Does he really propose to let off Super-tax payers that amount?
    Sir F. BANBURYmade an observation which was inaudible in the Reporters' Gallery.
    Mr. McKENNA: I gather from the interruption of the right hon Baronet that having voted for the duties on tea and sugar, and all the other articles of general consumption, he would propose as his one object for relief of taxation the Super-taxpayers, and relieve them of £4,500,000 of taxation.
    Sir F. BANBURY: I did not propose any relief at all. What I proposed was that the tax should be fairly imposed. I say it is not fair to impose a tax upon an income which a man never receives. If the right hon. Gentleman would make the man who drinks tea pay a tax on tea which he does not drink, that is an analogy.
    Mr. McKENNA: The whole point is this: The law as it now stands treats the Super-tax as an addition to the Income Tax, consequently the two have got to be added together to see the total charge for Income Tax. It would be quite as reasonable, on the right hon. Baronet's argument, to treat every addition to the Income Tax in the manner he describes. Supposing the Income Tax is 2s. 6d. in the £, your income in the year is reduced by one-eighth, but if an additional tax of 2s. 6d. is imposed you would not pay 5s. on the whole of your income, but 2s. 6d. on the whole of your income and 2s. 6d. or seven-eighths of it because you have already paid 2s. 6d. on the whole of your income. It may be right, or it may be wrong, to treat Super-tax as an addition to Income Tax, but there is no inequity in so doing. It may be an unwise method of accounting, or it may be a wise one, but it is not inequitable. It is not at all analogous to charging a person duty on tea he has not had. There is no analogy in it at all. This particular proposal would cost the Exchequer £4,500,000, and it would be a relief, whether the right hon. Baronet intends it as a relief or not, to the Super-tax payer, who would, in fact, contribute to the cost of the State a less sum by £4,500,000, and I do not believe that any hon. Gentleman at this moment, and with these burdens upon the State, will seriously put forward such a proposal.
    Mr. PETO: I did not put forward that proposal.
    Mr. McKENNA: That is the proposal on the Paper, and I am glad the hon. Gentleman did not mean it.
    Mr. PETO: I did not say it.
    Mr. McKENNA: I hope, therefore, the hon. Member will not press this proposal any further.
    Sir F. BANBURY: I think the right hon. Gentleman knows he has a very bad case or he would not have used, if I may say so, such extremely weak arguments. No one ever suggested, when the Income Tax was raised from 2s. 6d. to 5s., that because in the previous year it had been 2s. 6d. the extra tax should only be paid on seven-eighths of the income. No one ever suggested anything of the sort. That is an alteration in the tax. Income Tax is an annual tax, and can be altered annually. What has been suggested is that this particular form of levying Super-tax is unjust, and was not intended when the tax was

    909
    imposed. I admit I am, unfortunately, a Super-tax payer, but I do not know how long I shall be; if we go on at this rate, it will not be very long. But, putting the personal element out of the question, what Super-tax payers are asked is to make a return of the income they actually receive. Having made that return, they offer no objection, at any rate at the present time, to paying a further tax upon their income, but what they do say is that they are asked to make a return of the income received and then they are asked to make a return of something they have not received.
    Mr. McKENNA: The right hon. Baronet sees the form every year. It says, "The income to be entered is your total income from all sources, estimated in the same manner as the total income from all sources is estimated for the purpose of exemption and abatement under the Income Tax Acts." That is to say, you return your total income without exemption or abatement.
    Sir F. BANBURY: But Income Tax, in the majority of cases, is deducted from the source. Out of £6,000, therefore, your total income is £4,500, and that is what you receive, and yet for the Super-tax you are asked to pay, not upon the £4,500, but upon the £6,000. It may have been, and I am not at all sure it was not, a small point when the Income Tax and Super-tax were low, but it is not so now, when both are very high. In certain cases you are taking 8s. or more from individuals, and if you add what is to be set aside for Death Duties, some people, although not millionaires, are paying 12s. in the £ out of their incomes to the State. The analogy of the tea could only arise if a man were asked to pay on tea he did not drink. I must say the right hon. Gentleman might easily make this concession.
    Mr. McKENNA: Four and a half millions!
    Sir F. BANBURY: Why not? I think it would be very fair to make that concession. If the thing is just it ought to be done, and if it is unjust it ought not to be done. Justice is not measured by the amount of money lost or gained. I was very much surprised, in the Debate on the Excess Profits Tax, to hear the right hon. Gentleman asked to agree to the proposal because he had made a bargain, and because he would not lose
    910
    much by so doing. That seems to me a very extraordinary proposal to put forward. It is not a question of what you are going, to lose or gain, or whether a bargain is made, but it is whether a tax is just or unjust. That is the only consideration which ought to influence the right hon. Gentleman.
    Sir A. MARKHAM: I would ask the Chancellor of the Exchequer whether he would not consider the desirability of letting the country know exactly what well-to-do people pay to the State? I for myself have never been able to understand why the Super-tax has been based on an income which has not been received. The right hon. Gentleman said he had no objection how the tax was paid so long as the amount derived was the same as it is now. I am not seeking to revise the amount of the Super-tax, but what I desire to know is, why should I have to make this complicated calculation? Personally, I never trouble to make a calculation, but I put down what is the actual income I receive and send it to the Income Tax Commissioners. I am not able to check them. I cannot see why you want to levy a tax on an income a man has not received. Why not increase the Super-tax so that the country should know what well-to-do people are paying? I am sure the ordinary man in the street has not the slightest idea that the tax the rich man pays to-day mounts to something like 9s. out of every sovereign received. We in the House of Commons know, but the country does not realise it. Therefore, I would ask my right hon. Friend to get back from a very bad principle, started by a predecessor, of levying Income Tax on income not actually received. I do not know what actual amount would be required to bring the tax to the same amount as to-day, but I cannot see why the tax cannot be levied on the actual income received. I do hope, before the Report stage, my right hon. Friend will give consideration to the matter, because it would simplify it. After all, the taxpayer likes to make out a return and know what he is actually paying, whereas under this complicated method he does not.
    Mr. McKENNA: It is quite clear I could not do that this year, as it would require a Resolution altering the whole rate of the Super-tax. If I understood my hon. Friend rightly, he would go a great deal further than he proposed. Of

    911
    course, I know that a number of people conceal the true income liable to Super-tax, and so avoid their due shares of the burdens of the country at the expense of others.
    Sir A. MARKHAM: I do not desire to protect fraudulent people.
    Mr. McKENNA: It is not exactly fraudulent, but they may do it under the law, because, unfortunately, now it is difficult to amend it, though, of course, it is a practice I do not wish to encourage.
    Sir A. MARKHAM: Will you tell us how to avoid the tax?
    Sir J. WALTON: Is not the real position that you ought to add the Income Tax and the Super-tax together, and those with large incomes in reality pay 8s. 6d. in the £ with gradations downwards? The suggestion I would venture to make to the Chancellor of the Exchequer is, would it not be far better to do away with the Super-tax altogether and increase the Income Tax on a fairly graduated scale? It would simplify all this difficulty of making double returns. I agree with my hon. Friend in not desiring to reduce the revenue by a single penny, but it is a great grievance and annoyance to have to work out those complicated returns twice over, first for Income Tax and then for Super-tax, whereas if you put it all on Income Tax on a properly graduated scale you would produce the same revenue, simplify the administration and collection, do away with the Super-tax Department of the State altogether, and reduce expenditure. It would, I think, simplify matters, and make them more equitable and just than the present system of duplication and of charging taxation upon income that has not actually been received.
    Mr. LYNCH: I intend to say one or two words in a democratic note. I have been amazed to hear rich men coining to this House at such a crisis to save their pockets when every class of the community is feeling the strain of the War to the utmost, and when we are approaching days during which I venture to say that this country will be tried to its very entrails. Men are being asked to sacrifice their lives, not to save themselves from the Income Tax, but to save their skins in face of the terrible fire of the enemy. Soldiers are losing their limbs and their lives, and the Chancellor of the Exchequer invites them to dispense
    912
    with butter on their bread, and at such a crisis as this the House of Commons is entertained to long speeches in defence of Mammon. Some of those speeches have been delivered in a proper spirit, like that of the hon. Member for Mansfield (Sir A. Markham), but the speech we have listened to from the Front Bench has been in quite another spirit. I hope the outcome of this Debate will be that the Chancellor of the Exchequer will take particular note of what has been said for his next Budget, and I hope that the country will also take note, for then I am sure there will be a universal wave of feeling in this regard that the back of the poor man, which has already stood most of the strain and more than his share of the burden, shall be freed, and the right hon. Gentleman will know when he wants more money that he will be able to go to these rich men.
    Mr. PETO: I had hoped that the right hon. Gentleman would be able to accept this Clause and rearrange his Super-tax to produce the same result. The right hon. Gentleman said that he did not mind how he got the money, and I concluded from that observation that he was prepared to do what I suggested, whether in this Finance Bill or the next docs not matter, so long as it is recognised that it is a most undesirable thing to have a basis of taxation which is not at all a true basis. The figure which the public assume to be the amount of the tax is not the amount at all. I hope the right hon. Gentleman will come to see that and make arrangements to put the collection of the Super-tax upon a sensible footing for the future. It is a very cheap argument to say what the right hon. Gentleman has said from the Treasury Bench to the effect that no private Member can suggest an Amendment increasing the amount of the Super-tax or any other tax in the Finance Bill. The method I have adopted is the only one that can be adopted in order to call attention to anomalies in the collection and assessment of the taxes. As for the speech of the hon. Member behind me (Mr. Lynch) I do not think it necessary to add to that kind of speech, which was evidently intended for consumption in some other place than the Committee of Ways and Means. The Chancellor of the Exchequer has not met any of the arguments which I put forward or the arguments used by the I hon. Baronet the Member for Mansfield as to the raising of taxation on a false basis, because when he says the Super-tax is at such and such a figure it is really nothing

    913
    of the kind. I hope the right hon. Gentleman will come to the conclusion that there is a great deal in the arguments we have used in favour of what I can only say is the honest policy of taxation. Before the next Finance Bill the right hon. Gentleman can very easily alter the rates of the Super-tax and the method of assessment so as to produce the same result, and he should let everybody know exactly what it is the Super-tax payers are actually paying in Income Tax and Super-tax towards the cost of the War.
    Sir A. MARKHAM: I would like to have had a reply to a remark which the Chancellor of the Exchequer seemed to direct to me with regard to the question of what basis people have to pay Super-tax upon. The Chancellor of the Exchequer said a good many people have evaded the Super-tax. I have said before that I do not pay Super-tax on anything that I can avoid. I think the Chancellor of the Exchequer directed his remark to me. I have told him in the past that I do not pay Super-tax on behalf of the mines. I pay on the income I receive, and I take it that the present Chancellor of the Exchequer agrees with his predecessor, who said that in the case of a man who disposed of his property to his children it was more in the interests of the State that the money should be divided amongst a larger number than a few. The right hon. Gentleman is perfectly well aware that a great many limited liability companies distribute only a small proportion of the total income they derive. It is quite correct for the Chancellor of the Exchequer to suggest that I was evading paying the Super-tax, but as a matter of fact, unless the Government are going to alter the whole basis on which the Super-tax is framed, it is clear that no taxpayer, according to the law as it stands, is called upon to pay Super-tax on other than the income he actually receives. If that is not so, what was the meaning of the right hon. Gentleman's answer in the concluding words of his speech?
    Sir J. D. REES: I do not know why the hon. Member for West Clare (Mr. Lynch) described his speech as having a democratic note, for his remarks seemed to me to be exceedingly irrelevant. I do not know why the Mover of this Amendment does not stick to his guns, because there can hardly be a fairer subject upon which to divide the House. I protest against the assumption that any line
    914
    taken on a question like this either is or is not democratic, and that is all claptrap. The hon. Member would argue that on this question he is serving God and the hon. Member for Devizes (Mr. Peto) is serving Mammon. That is a very rough-and-ready distinction, and quite unworthy of the House of Commons, and I protest against it. Why should not the tax be assessed in the manner desired by my hon. Friend? Where is the justice of taxing a man upon money he does not receive? When a man produces his pass-book and says this is what I have received, and I am willing to pay the amount fixed by Parliament, why, after that, is a computation to be made of the Income Tax, which is added to the amount? That is an indefensible method. You are merely taxing a man because he has a certain amount, perhaps as a result of his industry, and which he may spend mostly upon other people. I am rather sorry my hon. Friend will not stick to his guns. That is a point upon which those who most readily pay one-third of their income, and do it quite willingly, resent this particular method of adding Income Tax which they have never received to the total which they have received before another tax is put upon it. I think the broad principle of the Amendment of my hon. Friend is worthy of the attention of the Government.
    Sir A. MARKHAM: My hon. Friend near me assures me that he took the same view that I did of the interruption made by the Chancellor of the Exchequer. Consequently I asked for a reply, and I want to know what is the meaning of it. The Chancellor of the Exchequer has no right to make an insulting observation with regard to an hon. Member of this House. The right hon. Gentleman looked directly at me when he made his observation, and he said it in a manner which led my hon. Friend near me to the same conclusion. Does the right hon. Gentleman impute motives to me or not? Of course, if he does not, I apologise.
    Mr. COWAN: I think the hon. Baronet is entirely mistaken in taking the view that the Chancellor of the Exchequer insulted him.
    Mr. MONTAGU: I find myself in a position of some difficulty. I heard what the Chancellor of the Exchequer said, but I did not catch the atmosphere or the

    915
    direction in which he was looking when lie made his remarks. Unfortunately my right hon. Friend is out of the House, but he will be returning immediately.
    Mr. ROCH: I am sure we al know that the Chancellor of the Exchequer would not direct a remark of that kind, particularly to my hon. Friend. We know that the last thing the hon. Baronet would attempt to do would be to evade taxation.
    Question, "That the Clause be read a second time," put, and negatived.
    The DEPUTY-CHAIRMAN (Mr. Maclean): The next New Clause on the Paper, standing in the name of the hon. Member for Devizes (Mr. Peto)—[Allowance and Repayment of Duty in Respect of Motor Spirit Used by Ministers of Religion]—raises a question which has already been discussed and disposed of.
    Mr. PETO: It is distinctly a separate subject.
    The DEPUTY-CHAIRMAN: Of course I cannot prevent the hon. Member from moving his Clause, but I must direct attention to the fact that the whole principle has been settled, and the only difference is whether he should get relief in one way or another. The principle has been settled that ministers of religion should not get this relief, and the discussion which the hon. Member could draw the attention of the Committee to would be distinctly limited to the difference between the tax on petrol and the tax on motor cars.

    NEW CLAUSE.—(Allowance and Repayment of Duty in Respect of Motor Spirit Used by Ministers of Religion).
    For the purpose of giving ministers of religion an allowance or repayment of half the amount of Motor Spirit Duty, whether payable under Section 84 of the Finance (1909–10) Act, 1910. or of the Finance (No. 3) Act, 1915, Part I. of the Fifth Schedule to the Finance (1909#x2013l;10) Act, 1910, shall be read as if the following paragraph were added thereto, namely:—
    (6) To a motor ear kept by a minister of religion whilst it is being used by him for the purnose of his calling.—[Mr. Peto.]
    Clause brought up, and read the first time.
    Mr. PETO: I beg to move, "That the Clause be read a second time."
    6.0 P.M.
    I have no desire to make a long speech, and I am sure I shall keep within the ruling which has just been given. The right hon. Gentleman has already given relief to veterinary surgeons in respect of the Motor Licence Duty, and has put them in the same position as medical practitioners. Under that Act medical practitioners were given relief both in respect of the Motor Licence Duty and the Petrol Duty, whereas we now find that these people are all in different categories. The question whether ministers of religion should be relieved from the Motor Licence Duty was discussed in the House, but I think I am entitled to ask that they should be relieved from the Motor Spirit Duty, because in almost every case the car is only used when they are called out to minister to their parishioners. I cannot see anything that could possibly be more inadvisable, and I would go further and say unjust, than to tax them the whole Motor Spirit Duty, the same as people using their cars to go to race meetings, whilst remitting half of it in the case of doctors on the principle that they are ministering to the health of the people. I speak particularly of Roman Catholic priests. Their parishioners regard their ministrations— I refer to the last Unction—as being of more vital consequence to them than the doctor's visit which might precede death. I have, therefore, got quite a separate argument with regard to the Motor Spirit Duty. I know the right hon. Gentleman has refused to grant remission of the Motor Licence Duty, but he cannot say that he has got only one category, because as I read the Amendment the doctors are in one category by themselves exempt from half Motor Spirit Duty and Motor Licence Duty, the veterinary surgeons are exempt from half Motor Licence Duty, and the ministers of religion are not exempt from anything at all. I ask that they should be exempt from half Motor Spirit Duty, so that they shall not be charged for- all their mileage the same as people who use their petrol for race meetings and other purposes.
    Sir J. D. REES: Does my hon. Friend seriously suggest that Roman Catholic priests use motor cars?
    Mr. PETO: Certainly, and in many parts they are absolutely necessary.
    Sir J. D. REES: If the ministrations of a Roman Catholic priest are urgently required for the purpose of ministering Extreme. Unction, a car is generally provided. I should not have thought this relief very necessary for Roman Catholic priests, nor do I think that many of the clergymen of the Church of England keep motor cars.
    Mr. PETO: Certainly!
    Sir J. D. REES: My hon. Friend is very fortunate in being in such an opulent district.
    Mr. PETO: I am not speaking of Rolls-Royce cars.
    Sir J. D. REES: No, I know, but cars which cost less. I do not wish, however, to oppose anything which my hon. Friend puts forward. I thought this Clause was hardly necessary, because, in my experience, the clergymen of the Church of England, and even more Catholic priests, live in honourable poverty, which does them great credit, and they would not be able to avail themselves of the allowance which my hon. Friend proposes.
    Mr. MORTON: I hope the Chancellor of the Exchequer will reconsider this question. The Clause, I understand, would allow the remission to all ministers of religion without regard to their particular creed. I speak more especially for the Presbyterian ministers in my Constituency, where motor cars have been exceedingly useful to them in visiting and in carrying out their duties. There is a very strong feeling in the North of Scotland in regard to this matter, because there are such very long distances to be travelled between one village and another. It would be an advantage to these ministers, whose incomes are very limited indeed, if they were afforded some relief with regard to the Motor Spirit Duty. I am afraid the Chancellor of the Exchequer does not sympathise much with these ministers of the Gospel, but I hope, in the course of time, that we may induce him to do so, and I trust even now the Financial Secretary to the Treasury will be able to tell us that the matter will be reconsidered, and that something will be done to at least put these ministers of religion on the same footing as doctors and veterinary surgeons. I do not object to them having the relief, because I know they require to go long distances, but I do trust that some little relief will be given to ministers of religion with limited incomes who are anxious to visit their friends and
    918
    those who join with them in worship on every occasion required, and as frequently as possible. Without some such concession it will be impossible for them to properly visit their people.
    Mr. MALCOLM: I wish to support this new Clause, and I hope my right hon. Friend will find it possible to give it some consideration. My hon. Friend behind me seems to think that many clergymen, parish priests, and ministers of religion of various sorts, have got motor cars out of their own riches, but, of course, that is not at all true. The truth is that in the country districts ministers of religion, and especially those who have been there a long time, have been given motor cars by their parishioners, and they have really been of the greatest value to them in large and scattered parishes. One hopes that those cars will continue to be used to the advantage of the parishioners, and that their advantage will not be stultified by the expensive upkeep which the proposed motor spirit licence might involve. I noticed, reading the newspapers this afternoon, that taxi-cabs are not going to be subject to this new spirit duty. That means differential treatment against parish priests and ministers in scattered districts compared with those in towns, because those who live in towns and who are suddenly called to minister to their parishioners will take a taxi and have to pay no more for it, whereas those who live in the scattered districts will be at a considerable disadvantage by having to pay this extra spirit Licence Duty. I hope this fact will be taken into consideration by my right hon. Friend, and that he will see that these gentlemen—there cannot be a great number altogether—shall not be in any way penalised because of the particular district in which they happen to have to minister to their parishioners.
    Mr. MONTAGU: I must appeal to the Committee to come to a decision on this point. The hon. Member for Wiltshire (Mr. Peto) has discovered, very ingeniously, a way.round the ordinary rules of order. We have already discussed this question at great length, and I have made the same speed so many times that I am certainly not going to inflict it upon the House again. The hon. Member for Croydon (Mr. Malcolm) was not here yesterday. He seems to think, so far as I can judge from his speech, that this exemption refers to the new Motor Licence Duty included in our Bill yesterday. It does not refer to

    919
    that at all. That was deliberately disposed of by an Amendment most earnestly and eloquently pressed upon the House by my hon. Friend the Member for Sutherland (Mr. Morton). We agreed not to exclude them, not because of the differentiation between one district and another, but because the Committee thought that there was no ground for differentiating between ministers of religion and the general public and letting them off. We had the privilege of a convincing speech of just the right length from the right hon. Baronet the Member for the City of London (Sir F. Banbury), and I do think, with such a very large number of Clauses on the Paper, that it would be a great pity to spend time on this matter, which was really disposed of yesterday.
    Question, "That the Clause be read a second time," put, and negatived.
    The DEPUTY-CHAJRMAN: The next Clause—[Amendment of Section 5 of Finance Act, 1914], standing in the name of the hon. Member for Inverness Burghs (Mr. Bryce)—is apparently, as far as I can judge, covered by the long discussion we had upon the double Income Tax.
    Mr. BRYCE: This is only one point of it. It is really a lesser point. It does not follow because you decide to maintain a double Income Tax generally that you propose to maintain it in this particular form.
    The DEPUTY-CHAIRMAN: I am prepared to rule very strictly on this Clause that a discussion could only be allowed on the exact difference between it and the Amendment previously discussed. I allowed a free discussion in the last case, because I thought it would appeal to the general sense of the Committee, but I am sure the Committee will understand the position in which it would place itself if a free discussion were allowed here, and if, after disposing of questions upon Amendments in Committee, hon. Members were able to raise the same questions on new Clauses. Unless, therefore, I can see that this Clause has-a- real difference—I do not wish to stop the hon. Member from endeavouring to show it—I shall stop him.
    Sir F. BANBURY: I voted against the hon. Member on the last occasion when the question of double Income Tax was discussed, but I said that if this case were raised I should vote with him, and the
    920
    hon. Gentleman said that he would raise it. I venture very humbly to submit, therefore, that this is a totally different case.
    The DEPUTY-CHAIRMAN: I am prepared to hear the hon. Member on that point.
    Mr. MONTAGU: If a discussion on an Amendment to a Clause covers the whole of a topic, can an hon. Member, unless something is saved from that topic by the words incorporated in the Clause, at a subsequent stage move a Clause which is designed to cover part of the topic?
    The DEPUTY-CHAIRMAN: I am sure the right hon. Gentleman made himself quite clear to the rest of the Committee, but I did not exactly follow his rather intricate question. I simply say, on broad grounds, there has been a discussion on the general question. It is suggested that this particular point raises some smaller point within the general question which was not settled in the previous discussion. I shall listen very carefully to what is said, and shall not scruple to interrupt hon. Members if they stray beyond the particular point raised by this new Clause.
    Mr. COWAN: The point raised by the hon. Member could not have been discussed in connection with the previous Debate—
    The DEPUTY-CHAIRMAN: I will wait and hear what the hon. Member for Inverness has to say in moving it.

    NEW CLAUSE.—(Amendment of Section 5 of Finance Act, 1914.)
    Section five of the Finance Act, 1914, shall have effect as though there were inserted after the words "United Kingdom," on the second line of the Section, the words "other than India and at British Dominion, colony, or dependency beyond the seas."
    Clause brought up, and read the first time.
    Mr. BRYCE: I beg to move "That the Clause be read a second time."
    This is a proposal to return to the old precedents of the Income Tax Acts. Before the year 1914 no Income Tax was charged upon money which was not received in this country, for good and

    921
    sufficient reasons no doubt, although they did not appear to be good and sufficient reasons to ail of us. The Chancellor of the Exchequer of that day urged that it was not for the advantage of the country that people should be allowed to accumulate money abroad for the purpose of defrauding the revenue of this country of Income Tax upon moneys left abroad. That may have been a good and sufficient reason with regard to money left in a foreign country, but I do think that the House of Commons might, in the changed circumstances of those days reconsider whether it is a good policy to prevent the accumulation of moneys abroad, at any rate in the Dominions of His Majesty the King. I strongly urge that in the case of this particular levy upon money which is left in the Dominions and not brought home there should be exemptions. It appears to be quite a different case from the general case. There is a great deal to be said, no doubt, on the general ground on which the double Income Tax is supported, but it is extremely important, for instance, that money should be left in India. It is very difficult to get capital into that country. It has to be seduced there. It does not go there naturally because of the hostile attitude of the Government of India towards foreign investments. They always seem to think it a great disadvantage that capital should be introduced there, because they feared it might lead to the exploitation of the people of India.
    I do not want to say a word, especially in the presence of the hon. Member for W. Nottingham (Sir J. D. Rees) against the administration of the Indian Civil Service. I think that administration is one of the finest in the world. But I rather think that since the day when the principles of Warren Hastings' Government came into disrepute they have had an exaggerated idea of the necessity of protecting the native of India. The native does not want protecting at all in these days. He is able to look after himself remarkably well, and so far from the action of the Government of India being directed towards preventing the introduction of capital into India, it should be their business to encourage it in every way, because, while it might be an advantage to the capitalist, it would certainly be an advantage to the people of India. The tendency of the change in legislation, which took place in the year 1914, was to draw away money which
    922
    would naturally have been left in India, and to bring it back to this country because the payers of Income Tax could not afford to pay the double, tax, and the tendency will be more and more for money to be withdrawn from India when people who have been living there return to this country to pass the remainder of their days. India differs from other self-governing colonies in the respect that men cannot possibly live there to the end of their days. They have to come home; they want their children educated in this country; their health suffers if they continue to live out there except in a few favoured localities. The result is that when a man has done his work out there he invariably comes home, and, in consequence of the legislation of 1914 he brings his capital away with him. The same reasons apply to a large extent to the Colonies, but I do not want to repeat the argument which was raised the other day.
    We do ask, especially under the changed views of relationship between the great Dominions and the Mother-country, that you should in every way help the development of these regions. There is no method by which that can be better secured than by allowing money to remain out there, because the income from it would assist in the development and extension of business. The proposal I now make to return to the old principles of the Income Tax Act would help that. It is rather characteristic of the reply given by the Treasury, and by Lord St. Aldwyn, the Chancellor of the Exchequer twenty years ago, to representations made by the Colonial Institute, which was objecting to the payment for the first time of double Income Tax. Lord St. Aldwyn stated that the Lords of the Treasury were unable to reconcile the proposal before them with the leading principles of Income Tax legislation in this country. Income Tax here, as its name implied, was a tax upon income received in the United Kingdom. In this respect, according to the statements in the memorial, it differed from the Income Tax established in the Colony, which extended only to incomes earned in the country where the tax was in force. I should like to take this opportunity of correcting what the Chancellor of the Exchequer said the other day in regard to the Commonwealth tax. He declared it was a tax upon income derived from anywhere. But I have taken the trouble to look the matter up, and I shall be able, I

    923
    think, to show him that his impression on the point is incorrect, because the words of the Act are:
    "subject to the Provisions of this Act Income Tax shall be levied and paid…on all taxable incomes derived directly or indirectly by the taxpayer from sources within Australia."
    That is a clear limitation of the Income Tax to incomes derived in the Commonwealth itself, and therefore the right hon. Gentleman was wrong when he suggested it was also levied on income derived outside the Commonwealth. But I do not want to argue that point. I submit that for the development of India and of our Dominions and Colonies it is an essential thing we should return to the old principles of the Income Tax Acts, and tax only incomes earned within the United Kingdom.
    Mr. COWAN: The case put by the hon. Member for Inverness (Mr. Bryce) is a strong one, but he confined it to the individual hardship of the individual investor. I think that even a stronger case of hardship might be made out in the case of companies. Many companies trading in this country find it convenient, when carrying on a branch of business in the Dominions^ to register the business as a limited company, usually under their own name. In that case great hardship arises if the trading company or manufacturing concern in this country, having a branch, say, in Canada, should form a registered company under the laws of that Dominion, the company here holding the whole of the capital or, at any rate, a controlling interest. Since 1914 they have been obliged to pay double Income Tax not merely on the profits and dividends declared by the sub-company and brought over to this country, but they have also been obliged to pay double Income Tax on the undivided profits which are not brought home. The result is that there is a temptation not to leave the undivided profits in the Colony.
    The advantage of leaving the money in the Colony would be great because it would help in the development of business and at the same time in the development of the Colony itself. But that money is to a large extent now withdrawn, and the parent company has every inducement to bring all the profits home and divide them among the shareholders, whereas if this small Colonial preference were permitted in the case of undivided profits the money
    924
    would be allowed in many cases to remain in the Colony, and both the Colony and the company would benefit thereby. It is regrettable that, since 1914, a company desiring to develop its business in any of our British Dominions should have been discouraged doing so by being placed in exactly the same position as if they were trading in a foreign country. I do suggest that this small preference might be extended to British traders. It is not an unreasonable thing to ask that traders in our Colonies and Dominions, as against those in foreign countries, should be enabled in this way to develop their businesses by leaving their profits to accumulate there and using them for the extension of business rather than be compelled to bring them home simply in order to escape this double taxation within the Empire. If there is any hardship in the individual being required to pay a double Income Tax, that hardship is still greater in the case of a company.
    Sir J. D. REES: The hon. Member for Inverness (Mr. Bryce) need not have feared hurting the feelings of Indian Civil servants, for they regard him, I believe, as one of their patron saints and best friends. I do not agree with all that he said about: the Government of India. He did not speak harshly about it, but as he quoted Lord St. Aldwyn, perhaps I may be permitted to follow his example and site another statement by that Noble Lord, who declared that the finances of India were far better administered than those of England. The change in legislation made in 1914 was received with something like consternation in India, My hon. Friend has referred to the effect of it upon companies. That effect no doubt is very serious. It has already led to at least one very important company ceasing to operate in England in order to escape the double Income Tax, and the process will probably be repeated, to the detriment of this country and incidentally of the right hon. Gentleman's revenue. I know the right hon. Gentleman the other day declared that that was not the reason for the company removing its offices. Of course there may have been other contributory causes. Motives are always mixed, but I have no doubt that the avoidance of the payment of the double Incame Tax was the object which actuated that company in clearing out of this country. I ask him not to lose sight of that, and that as a far-sighted guardian of finance he will take it into account.

    925
    As regards companies, there can be no doubt as to the result. As regards the individual, let me take the case of an Indian or other Civil servant who comes home. He has generally, while in India, invested his extremely small savings, let us say, in a tea estate. Previously to 1914 the profits on that estate remained in India, and, perhaps, were the only provision for his eldest son. The Committee will, no doubt, remember that public servants in India are, as a rule, as poor as they are deserving. I cannot put it higher than that. Their case is an extremely hard one. Everybody who has anything invested in India has felt this grievance seriously. I can assure my right hon. Friend that it is a great grievance, and one that I am putting quite seriously, although I am not speaking in a bitter manner. It is a very great harship to individuals, as well as to companies, and it should, if possible, be corrected. My hon. Friend (Mr. Bryce) said something about native India not now standing much in need of protection, but being over-protected by the Government of India. I thoroughly agree with him, although I am not sure that the Government of India now tries to keep capital out of India. The difficulty is to get capital into India. When you get men like public servants who leave all their small savings, which in the aggregate amount to a large sum, and which help to carry on industries which British administration has introduced, it is a very great pity that they should have to pay double Income Tax, which checks that salutary process and leads to their taking their money away with them. For these reasons I beg to support the Amendment.
    Sir F. BANBURY: I supported the Government on the question whether or not there should be a double Income Tax, and I also ventured to speak in their support, but I hope now that as this is quite a different question they will be able to meet my hon. Friend (Mr. Bryce). The effect of the proposal can be stated shortly. It is, that if a man living in England has money invested in Australia— which is now, and always has been, part of the Empure—and does not bring the interest on that money over to England, he shall not be charged Income Tax on the money which remains in Australia and does not come to England. It is just that a man who has money in one part of this great Empire, who does not reside in that part, but who has his money taxed there,
    926
    should not be taxed in another part where he does reside but where he does not receive one penny in any shape or form. That is the question which I sincerely hope the right hon. Gentleman will meet. If he does that, he might fairly make the Income Tax in England payable on money received from the Colonies just the same for the Colonial as for anybody else. At present I believe there is a difference of, I think it is, 3s. 6d.
    Mr. McKENNA: That is the old rate.
    Sir F. BANBURY: Personally, I dislike all these differentiations. The right hon. Gentleman might easily go back next year to the old principle that anybody living in this country should pay Income Tax upon, the money that he receives and spends in this country. If the right hon. Gentleman makes this concession I believe it will stop the agitation with regard to the double Income Tax altogether. I shall certainly support the Amendment if it goes to a Division.
    Mr. DAVID MASON: I hope the Chancellor of the Exchequer will adhere to the existing rate. One of the main reasons for the alteration in the law was because the great insurance companies in this country were in the habit of accumulating large balances in the United States of America. They became very rich, but paid no Income Tax, by allowing their profits to accumulate over there. In 1914 the Chancellor of the Exchequer was perfectly justified in making the alteration.
    Sir F. BANBURY: This does not apply to them; it only applies to the Colonies.
    Mr. MASON: I quite agree with the right hon. Baronet, but the principle is the same. It should not be possible for institutions carrying on business in India or the Colonies. The Chancellor of the Exchequer requires all the revenue he can got from taxation, and I hope he will not go back on the principle he has introduced, but will adhere to the original law.
    Mr. STEWART: I spoke on this subject the other night and do not wish to repeat what I then said, but, as the hon. Gentleman opposite (Mr. D. Mason) made the speech he has made, I would say it is time we ought to differentiate between investments in foreign countries and those in our own Empire. It occurred to me only a half an hour ago, when I was walking round the House with a number of

    927
    wounded New Zealand and Australian soldiers, while looking at these men, some of them all tied up, with wounds in all parts of their bodies, that if one had asked any Member of this House, "Why is it you pass taxation which tends to keep your people from investing money in my country?" it would be a very difficult thing to answer. I again appeal to the Chancellor of the Exchequer with my hon. Friend the Member for Inverness (Mr. Bryce), and I was going to say the hon. Member for India but he is actually the hon. Member for East Nottingham (Sir J. D. Rees), to see if he cannot give some more favourable consideration to this matter, so that our people shall be encouraged to invest their savings and let them fructify for the benefit of our people -wherever they may be.
    Mr. MONTAGU: I must say one or two words in reply. I fail to differentiate this proposal in principle from the proposals we were discussing the other night. We have admitted that the relations between Dominion Income Tax and British Income Tax need to be adjusted, and we are anxious and willing, when opportunity offers, to confer with the representatives of the Dominions on the subject. This is part of it. I am quite sure that the suggestion of the right hon. Baronet (Sir F. Banbury) would not meet with the approval of the right hon. Gentleman on the Front Bench (Sir G. Reid), namely, that if we make this concession now, the whole question of the readjustment between the Imperial and the Dominion Income Tax might be left for ever in abeyance.
    Sir GEORGE REID: It would have one advantage, which is that this might be done now, whereas the other opportunity might never arise.
    Mr. MONTAGU: Ah! but we want this as a factor in the settlement. I would urge the Committee to leave the matter where it is now. The legislation we have already passed in this Bill does give a preference to investment in the Dominions, and not only a preference to investment in the Dominions over foreign countries, but even to a great extent a preference to investment in the Dominions over investment in Great Britain. Therefore we have already done something substantial. I venture to suggest that the complicated question of the relations between the Dominions and the
    928
    British Income Tax should be left over until the next Colonial Conference at the end of the War.
    Question, "That the Clause be read a second time," put, and negatived.
    Notice of the following had been given by Mr. NEEDHAM—

    NEW CLAUSE.—(Interest to be Allowed on Advance Payments of Income Tax and Excess Profits Duty.)
    Whenever payment are made in respect of Excess Profits Duty or Income Tax in advance of due dates interest at the rate of 5 per cent, per annum shall be allowed on such payments for the period so paid in advance of the due date.
    Clause brought up, and read the first time.
    Mr. NEEDHAM: I beg to move, "That the Clause be read a second time."
    I propose this Clause with a view to providing that interest shall be given where people pay their Income Tax or Excess Profits Duty in advance of the actual date when it is due. There are large numbers of people in the country who know perfectly well that they will have to pay Excess Profits Duty—
    Mr. McKENNA: We have dealt with the Excess Profits Duty.
    Mr. NEEDHAM: If the Chancellor of the Exchequer says that is done—
    Mr. McKENNA: It is done in the Clause in the Bill with regard to Excess Profits Duty. We have not done it in regard to Income Tax.
    Mr. NEEDHAM: The same arguments will apply to the Income Tax. At the present time on Income Tax paid in advance a discount of 2½ per cent. is given. As money is paid for now at the rate of 5 per cent., it would be to the interest of the Treasury to allow 5 per cent, on anticipated Income Tax payments. Considerable amounts have to be paid into the Treasury prior to the time when they are legally due, and if the rate of interest allowed were 5 per cent, it would cause a large number of people to pay large amounts of Income Tax prior to the legal due date. That would be an advantage to the Treasury, because it would place bankers' balances in the hands of the Treasury, which is what the Treasury want at this time.
    The CHAIRMAN: The hon. Member will notice that I have confined the Clause to the Income Tax, as we have already dealt with the Excess Profits Duty.
    Mr. McKENNA: This is one of those Amendments which, on paper, has everything to be said for it, but in practice very little. The Committee will remember that by last year's Bill we have already postponed the payment of Income Tax. The tax can now be paid in half-yearly payments, not ante-dated payments but postdated payments. The difficulty is that if we do not get an assessment we cannot receive payment until the payment is about due.
    Mr. HENDERSON: And sometimes later.
    Mr. NEEDHAM: Cannot you make an arrangement by which a man can make a deposit on account, and if he does so that there shall be a discount?
    Mr. McKENNA: We have not the staff. At the present time we are dealing with Excess Profits Duty. That can be done readily, because the cases only number some thousand. When we get to the Income Tax, however, we are not dealing with thousands of assessments but hundreds of thousands. It is quite impossible for us to enter into these arrangements on the scale my hon. Friend wishes us to do. There is already an allowance of a discount of 2½ per cent, on Income Tax paid iii advance, provided the discount is claimed at the time of payment. The amount of interest is modest, and does not tend to induce more people to offer more Income Tax in advance than we are able to deal with. If we were to offer 5 per cent, as the rate, we should be inundated with business which really we do not wish to do.
    Question put, and negatived.

    NEW CLAUSE.—(Amendment of Paragraph 7 (a) of Fourth Schedule of Finance (No. 2) Act, 1915.)
    Paragraph 7 (a) of the Fourth Schedule of the Finance (No. 2) Act, 1915, shall have effect as though there were inserted after the words "pre-war standard of profits,' on the third line of the paragraph, the words "or where the whole of the capital has been lost."
    Clause brought up, and read the first time.
    Mr. ARTHUR STRAUSS: I beg to move, "That the Clause be read a second time."
    The intention of the Clause is that where a business during the last three pre-war years has shown a loss—
    Mr. MONTAGU: I do not wish to interrupt the hon. Member, but I think I can save him some trouble. I have carefully considered the effect of the Amendment, and I am prepared to accept it subject to an alteration of the wording which I propose to give before the Report stage.
    Proposed Clause and Motion, by leave, withdrawn.

    NEW CLAUSE.—(Computation of Pre-War Standard of Profits in Certain Cases.)
    (1) The principal Act shall be read and have effect as though the following paragraph were added to Part II. of the Fourth Schedule of that Act, that is to say:—
    7. Where in the case of any trade or business in which the last pre-war trade year shall have ended before the first day of April, nineteen hundred and fourteen, it is shown to the satisfaction of the Commissioners of Inland Revenue that the profits of such trade or business between the last pre-war trade year and the fourth day of August, nineteen hundren and fourteen, were considerably larger proportionately than during the last pre-war trade year, and that in consequence thereof the pre-war standard of profits when computed on the basis of any two of the three last pre-war trade years gives an unduly low estimate of the average annual profits of the trade or business during the two years immediately prior to the War the Commissioners when computing the prewar standard of profits of the trade or business shall increase the same by such amount as appears to them reasonable in order to make the prewar standard of profits a fair estimate of the average annual profits during the two years immediately prior to the War.
    (2) Where in any such case as aforesaid the pre-war standard of profits has been computed prior to the passing of this Act, the taxpayer may, if he thinks fit, claim to have such standard computed again, and if he makes such claim the Commissioners of Inland Revenue shall recompute the

    931
    pre-war standard of profits of the trade or business in question, having regard to the paragraph added to Part II. of the Fourth Schedule to the principal Act as hereinbefore enacted.—[Mr. J. Mason.]
    Clause brought up, and read the first time.
    Mr. J. MASON: I beg to move, "That the Clause be read a second time."
    This Clause is designed to alleviate a hardship which is very fully admitted in all parts of the House. It is quite admitted that it is a great hardship that the pre-war increases in profits, that is to say, profits made before the War began and due to causes entirely independent of the War, but which owing to the pure accident of the acounting period ending, say, in August, or at at any rate within a very short time of the outbreak of the War, should be subject to the tax. We have discussed the point and it has been said that cannot be altered. I should like to quote two cases, one of a large concern and the other of an extremely small one. This larger concern had extended its business very considerably in the year 1912, and its accounting period finishes on 31st August, so that inasmuch as the accounting period only included twenty-seven days of the period of the War it is a particularly hard case because that means that eleven months and some odd days were pre-war period, but nevertheless subject to the tax. The profits for the year ending August, 1912, were £13,000 odd, for the year ending 31st August, 1913, they were £24,000, and to 31st August, 1914, £34,000—that is to say, there was a very-steady increase of profit due, of course, entirely to causes other than the War. The other case I have is a very small one, but I think for that reason a particularly hard one. It is the case of a small millinery business in the West End of London conducted by two ladies. Of course in a business of that kind personality and skill have a good deal more to do than the amount of capital involved, which is extremely small. According to the information given to me the capital is £1,200. The business apparently started only four months before the War, but its first accounting period ended shortly after the War began. I admit I do not quite understand that and I think there must be some mistake. The letter goes on to say:
    "As it opened at the busiest season of the year for that particular trade, and on the very day that an old business in the same line a few doors off closed down, it had an unusually good start, and made a big profit in the first four months."
    932
    This is, of course, a class of business which was very badly hit by the War itself, and directly the War broke out it seriously declined. Nevertheless, out of these profits which were made during the few months prior to the War, profits which it is admitted not only had nothing to do with the War but were put an end to by it, this shop is charged with payment of £593 for excess profits. If the facts are as stated in the letter it seems to me to be an extremely hard case of the incidence of the tax. It is stated that that cannot be altered, and that these pre-war profits have to be brought in because of this unfortunate accident that the accounting period ends at a particular time of the year, but I think it is admitted, in spite of that, that the object of the tax is not to tax pre-war profits. It is to eliminate the pre-war profits as far as possible. It is also, of course, admitted it must be—that we want to get the fairest standard possible for he application of this tax. My Clause would have this effect, that where the materials are available and where any firm was able to bring its standard period up to a moment nearer the outbreak of war—in this case it might be made up months later than at present it is made up—where the accounting period has hitherto been the end of August or September, and the firm is in a position to bring up its accounting period, where it has materials for that purpose—and the burden of finding materials, of course, would be on the firm itself—a new accounting period should be possible, bringing the accounting period itself for the purposes of the standard up nearly to the outbreak of the War. In that case, of course, if the first accounting period liable to the tax included a considerable amount of profits which were made prior to the War, they would have to compare with a standard which, by bringing it up nearer to the outbreak of the War, would be at a higher level, and therefore the difference between the period to be taxed and the standard period would be considerably less than it is now.
    Mr. McKENNA: It is impossible to listen to the hon. Member's arguments without realising that the Clause does in many cases inflict hardship. We have never denied that. We have always admitted that it is inherent in a temporary law of this kind that it should inflict hardship. This question was discussed at very great length last year. An Amendment, not exactly in the same form, but aiming at precisely the same object, was

    933
    moved by the hon. Member (Mr. Penne-father) and was rejected, because the House accepted the view that we must take as the basis of taxation the time when the profits are enjoyed, and not when they are earned. The moment we begin to alter a, firm's recognised business year of accounts and allow every firm to make up a new set of accounts for a new period upon figures, many of which must be hypothetical, it is almost unavoidable, when it has to take stock relating to its condition two years ago, that with every desire to do justice to the revenue it should find great difficulty in not assessing itself at rather a high standard of profit. I really would appeal to the Committee that at this stage we must adhere to our original principle. We have already under assessment for the first year of the Excess Profits Duty £21,000,000, and we have already collected. I think, not far short of £6.000,000—that is to say, we have under assessment very nearly the full amount of the revenue which we expect to obtain. I think the final figure in last year's Bill for the year in question now was £26,000,000. We should have to reopen all our assessments, and in many cases repay money which has already been collected, in support of a principle which everyone admits cannot be carried out. It is quite true you might carry it out in respect of particular firms here and there, which you may select, but you cannot carry it out generally with all the firms and say they are to be allowed to take a new year of account previous to 4th August, 1914. It could not be done. Therefore you give rise to a whole new series of inequalities, as between one class of firm and another. I think we had better adhere to the simple principle that we take the normal business year's accounts at the time to which we have referred as the time when the profits are enjoyed. That is to say, are the profits enjoyed during the War, and if they are, we submit that they are properly the subject of taxation. I appeal to the Committee to adhere to the law as it now stands, which is much the simplest on the whole, and that we do not make the change suggested by the hon. Member.
    Sir J. HARMOOD-BANNER: I am sorry the Chancellor of the Exchequer has taken such an unyielding view of the case which we have put before him. He has told us we cannot alter the principle, that the tax should be imposed on profits not earned but enjoyed during the War. But I think in some of these cases there are
    934
    means which he might take to provide a more lenient method of dealing with them. In Clause 42 of the Finance Act, 1916, there are rights of appeal by a class, but you could not make a class of many of these particular cases, and therefore you must take them individually. You cannot make a class to appeal to the Commissioners for a higher statutory percentage which will put you on a fair basis. Whilst I hope I am right in saying that the Chancellor of the Exchequer did in one case give an answer to a question and say that a class might be a single individual, yet I should like to say that in my experience the Income Tax officials do not accept that view, and I think it is a very good thing that we should have it reiterated in the House that a class may be a single individual because, to my actual knowledge, that point has been raised, and the Income Tax authorities have declined to treat a single individual as a class with rights which come under Clause 42. Then, in addition to that, there are, undoubtedly, in Clause 40, certain rights as to making Regulations, and those Regulations can be altered or amended by the Treasury to meet these special circumstances without affecting the principle which the Chancellor of the Exchequer seeks to have permanently established. The right hon. Gentleman is reported to have said:
    "The Treasury can make regulations. They can also, whenever the special circumstances are brought to their notice, make special regulations forthwith."
    7.0 p.m.
    Here we have, as the hon. Member for Windsor (Mr. J. Mason) pointed out, two or three very hard cases. One of these particularly hard cases is where a certain firm has prepared in every way to make their business a success. They have spent capital, and they have spent money in advertising, and have done everything possible to make their business a success. In the pre-war years, before the accounting period, the business has only produced a moderate turnover, or only a slightly increased turnover beyond what it paid in the previous years. Then, suddenly, the fruition of all their industry comes into existence, and they have a good return. The profits, because of their preparation, jumped from £13,000 or £20,000 up to £34,000, and all because they have sown the ground. They ploughed the fields, and made everything ready, and yet they cannot bring that into the calculation at all. They have to take simply the figures as they stand. There is no comparison

    935
    between the two years. One period is a period with the ground sown, but the ground not coming to maturity, and the other is a period where the ground is cultivated and sown, and it comes to maturity and makes a profit. There is really no comparison between these two periods, and yet because of the preparation the profits of the accounting period have to pay on a very much larger scale of excess profit because they are so much higher than in the pre-war period. Surely there can be nothing less fair than such a proposition as that. I think that the accounting period should have the benefit of services done in the pre-war period without being taxed in this way. I admit the principle that we must not alter the position which has been laid down by the Chancellor of the Exchequer in regard to the taxation of excess profits which are enjoyed, but I would appeal to him to look at the class appeals, and at the regulations which may be made by the Treasury, and see whether cases of this particular hardship, where there is no real comparison in the profits that are earned, might be met. I would like to know whether he could not make regulations which would provide for these cases. Several hard cases have been submitted to me, and I have no doubt other Members have got them. I have an Amendment lower down on the Paper which is more or less like the Amendment we are now discussing. Therefore I am dealing with the point now, and I shall not move my Amendment. I do hope that the Chancellor will look at the regulations and at the class appeals, and see if he cannot meet these extremely hard cases.
    Sir A. MARKHAM: I should like to have an answer from the Chancellor of the Exchequer on a point which has risen recently in several companies as to what is the view of the Treasury on the point of what constitutes the pre-war period for a company whose business has been continuing for less than two years. Part (II.), Sub-section (4) of Schedule 4, provides
    "Where there have not been two prewar trade years but there has been one pre-war trade year, the pre-war standard of profits shall be taken to be the profits arising from the trade or business during that year."
    Several cases have been brought to my notice. I had one case this morning where a company had been trading for seventeen
    936
    months, and the Treasury took the profits of the seventeen months instead of the profits for one year as the pre-war standard. I would like to know how the Treasury read the Act where a company have not been trading for two years, and whether they will take the one year's account, or whether they will take the average of seventeen months, as in the case I have mentioned. In regard to sowing and reaping, I should like to give a case which may astonish the House. I am not complaining, because I have always said that I think the excess profits, ought to come to the State. This is the case of a company of which I am managing director. It is a colliery company with a capital of £466,000. Very great difficulties were experienced in sinking this colliery. In 1911 a trading account was opened, but owing to the great depth of the mine, water, and other troubles, a loss was occasioned in the first two years of its operations. The output of coal in the first year, 1912, was 110,000 tons at a cost of 12s. The following year the output rose to 342,000 tons at a cost of 9s. In the following year the output was 562,000 tons at a cost of 10s. 3d., and in 1915 the output was 630,000 tons at a cost of 9s. 6d. These figures in each case are for the years ending 25th March. The profits which the company would take under the Act amount to a little more than one week's wages paid to the workmen by the mine-owners. In these periods the average price realised for the coal was, in the twelve months ending 1912, 9s. 8d.; in the succeeding year, 10s. 8d.; in 1914, 11s. 2d.; and in the year ending March, 1915, only 10s. 7d. There has been a reduced cost and a largely increased output.
    The net result on the pre-war standard gives an average of £6,000, and on that basis the company is assessed for the purpose of excess profits. The result is that the workmen are receiving at the present time about £5,000 a week in wages, or something like £250,000 a year, and the total amount of money that we receive on our capital is £6,000. Of the £466,000 which has been invested in the company, a large amount is in the form of debentures and borrowed capital. Therefore the Chancellor of the Exchequer and the country may realise that in this case practically the whole profits go to the State, and the total profit the company receives, although they are now raising about 700,000 tons of coal, amounts to about 2¼d. per ton. Here is a case where after seven

    937
    years' hard work, and having to face difficulties in connection with the mine, the proprietors have arrived at this position, and they get practically nothing at all, because the Exchequer take the lot. I should like to have an answer to my first question as to taking the average for the pre-war period, and I should like to know whether the Treasury are not bound by the Act. I think they are bound by the Act, because it says where the business has not run for two pre-war years, but for one, the pre-war standard of profits shall be the profits arising from the one pre-war trade year.
    Mr. McKENNA: I rather agree with my hon. Friend when he says that the Act confines the period to one year where the business has not run for two years, but I will make inquiries. There may be special circumstances in special cases which make the difference between the year and the two years, and provide for the intermediate period, but I will not express an opinion now.
    Sir A. MARKHAM: I received some accounts this morning, and I find that by taking the profits over the seventeen months the Exchequer lost £400 by the transaction.
    Mr. BIRD: I think it was very clearly understood throughout the country that the excess profits were to be regarded as profits that had been exclusively earned after the War had broken out. There has been no impost which has caused more injustice than this one under the Regulations which now exist. I have before me an admirable illustration of this point. A firm in Wolverhampton, named J. Marston, Limited, started a new department in their business for the manufacture of motor cycles. They were makers of ordinary cycles, but finding that there was a falling-off in the demand for what are technically known as push bicycles, they went into the motor cycle trade. They had to lay down a large quantity of very expensive machinery, and had to spend considerable sums of money in advertising. The first year was very disappointing. The second year they began to get more encouraging results, and the third year was entirely of a satisfactory character; but, unfortunately, owing to the accident that their annual balance was computed from the 31st August in 1914, there were twenty-seven days within which they came under the operation of these new Regulations. The figures are
    938
    very striking. The profits for the year ending 31st August, 1912, amounted to £13,754. For the year ending 31st August, 1913, £24,375, and for the year ending 31st August, 1914, they amounted to £34,248. Owing to the fact that they had twenty-seven days of August, 1914, within the operation of this new impost, they are to be mulcted in a very large sum for excess profits which were earned practically and entirely before the new tax came into operation. The average profits of the two pre-war years was £19,064, and the excess profit would be £14,184. The net amount payable after Income Tax deduction is provisionally £7,117.
    The result is that when the War broke out instantly trade fell away. Ever since then they have had to make very great efforts in order to recover the pre-war standard, and even now they have not yet reached it. Further than that, their works have been controlled, and they are in this difficult position, that though their works have been controlled they are not given sufficient Government business fully to occupy them and keep their men entirely on Government work. Therefore they are liable at any moment to lose some of their most valuable men, and the staff, which has been the result of the accumulation through many years of skilled men, is taken away from them without any remedy, and their position is worse than ever, notwithstanding this very large amount which has been levied for excess profits. It seems a most extraordinary principle for the Chancellor of the Exchequer to contend for that, to suit his convenience for accountancy and revenue purposes, taxpayers are to be mulcted so unjustly as this case indicates. I know hundreds of cases. The Chancellor of the Exchequer and the Financial Secretary must know. They have found some very energetic exponents of the injustice under which so many firms have been labouring. I do say that this Amendment would afford relief. The Government should do the honest, straightforward thing, and not levy taxes which were never levied by this House. I hope that further consideration will show the Chancellor of the Exchequer that it is a very bad policy to penalise manufacturers and discourage them to produce Government work and make great sacrifices in the present crisis. I hope that on the Report stage the right hon. Gentleman will consent to some Amendment on the lines proposed by the hon. Member for Windsor.
    Question put, and negatived.

    NEW CLAUSE.—(Collection of Motor Tax.)
    "The arrangements for collecting the Motor Tax through the various county council boards shall be discontinued, and in future the tax shall be collected by the officers of Inland Revenue."—[Mr. Coote.]
    Clause brought up, and read the first time.
    Mr. COOTE: I beg to move, "That the Clause be read a second time."
    In some cases where county councils can do the work and where secretaries are energetic and conscientious the Motor Tax is honestly collected. But in many parts of the country, in existing circumstances, there is no inducement to collect the tax, and there are many inducements to shrink from putting the law into force against those who do not pay, so that great hardships accrue in many cases owing to the non-collection of this tax. It would be much better if the tax were collected by the Inland Revenue or some responsible authority. There is at present no oversight by any competent authority to check the work of the county councils generally, and if the collection were in the hands of the Inland Revenue great gain would accrue to the Treasury.
    Mr. MONTAGU: The hon. Member has raised a very interesting subject, but there are considerable difficulties in accepting the proposal. The change was made in 1909, when the local authorities were asked to collect these duties. The change was referred to in the Budget Statement of the 7h May, 1908. The Prime Minister, who was then introducing his last Budget, then said—I quote from the "Parliamentary Debates":
    "The pension officer will be an Excise officer—"
    he was dealing then with old age pensions—
    "for they are the class of man best fitted for this kind of work, and we hope to come to an arrangement with the local authorities by which in consideration of our handing to them the collection and enjoyment of what are called the establishment licences, which it is now part of the duty of the Excise officers to collect, making a fair contribution, of course, out of State funds for the expense so cast upon them, these Excise officers will be set free during the necessary part of their time for the purpose of pension duty."
    Since then the Excise officers have been saddled with the work of dealing with Arm# separation allowance claims, and this moment is a very inopportune one for revising an arrangement which was come to in order that we might release Excise officers for pension work. The pension
    940
    work remains as big as ever, and they have also the separation allowances to deal with. In Ireland there were no duties on motor cars until 1910, and therefore they are newer to the work there than the local authorities in England and Scotland. But they have improved their machinery and become very efficient tax gatherers. The tax increased from £16,567 in 1912 to £36,764 in 1915. At a time when the local authorities in Ireland have become so proficient in the work, and they are doing it with such benefit, I think that it would be a great pity to take away the work from them, and I suggest therefore that the Clause be not accepted.
    Question put, and negatived.

    NEW CLAUSE.—(Drawback to be Allowed on Beer for Export on Deposit in Bond in Respect of Sugar and Glucose Used in its Manufacture.)
    "There shall be paid an additional drawback on beer under conditions to be made by the Commissioners of Customs and Excise in respect of imported sugar and glucose, and also in respect of sugar and glucose made in Great Britain and Ireland used in the brewing of beer for export on its deposit in bond according to the amount of duty paid on such sugar and glucose."—[Sir G. Younger.]
    Clause brought up, and read the first time.
    Sir G. YOUNGER: I beg to move, "That the Clause be read a second time."
    This question was discussed on the occasion of the last Budget, and the proposal was refused on the ground that it applied only to a small number of people and not to the' general body of the trade. I said at the time that that was no answer to the argument, and that in placing an Excise Duty on any article of export there should be a drawback paid. The right hon. Gentleman the Chancellor of the Exchequer has been very particular about that, even in the case of matches. This is a Clause which does not affect a very large number of people, but it is the principle which we ought to bear in mind. I am sure that the right hon. Gentleman will agree that the request which I make is not an unfair one. I do not want to elaborate the matter, and I am content to believe that the right hon. Gentleman will probably accept the Clause.
    Mr. MONTAGU: The cost to the Exchequer of this new Clause, which the hon. Baronet presses once again upon us, is something under £10,000, and if one could make a calculation as to the expenditure of energy and of his valuable time on the Clause since first he introduced it to our notice, one would find that he had commendably spent a great deal of time for a very little object. He is quite right. There is not the slightest justification for withholding this drawback. The only reason why we did withhold it was that only comparatively few brewers would be able to take advantage of it, and because of the difficulty of measuring the amount of the drawback. My right hon. Friend the Chancellor of the Exchequer promised the hon. Baronet that, if practicable, he would do it. It is practicable now, and therefore we must do it. I congratulate the hon. Baronet on the result of his efforts.
    Question put, and agreed to.
    Clause read a second time, and added to the Bill.
    The following stood in the name of Mr. MacCallum Scott.

    NEW CLAUSE.—(Deductions in Respect of Schedule A Tax in Scotland.)
    "Section thirty-four of the Finance (No. 2) Act, 1915, relating to deductions in respect of Schedule A tax in Scotland is hereby repealed."
    The CHAIRMAN: The Clause in the name of the hon. Member for Glasgow alters the incidence of the tax between landlord and tenant. If that be so, what it takes off one party it throws on to another, and it would, therefore, appear not to be in order.
    Mr. MacCALLUM SCOTT: On a point of Order. May I submit that this proposed Amendment does not involve a tax in any way? It does not increase the amount of tax which is collected by the Treasury. This Clause, No. 34, does not concern the amount of the tax which is paid. It only concerns the manner in which the person who has directly paid the tax is entitled to recoup himself, say, from his ground landlord, by deducting the amount from the rent which he is paying. Originally one was entitled to deduct from his ground landlord the amount of tax which he had paid. Clause 34 in last year's Finance Bill
    942
    alters that in Scotland, and a man is no longer entitled to deduct what he has paid. He is only entitled to deduct the amount of the tax as it stood at the beginning of the period without respect to any increase in the tax during the period. The effect is that the man who has directly paid the tax is out of pocket by that amount and the landlord is in pocket to that extent. The effect of my proposal is simply to reinstate the previous condition of affairs whereby the man who has paid the tax, as it stands, is entitled to deduct that amount from the landlord when he pays the rent.
    The CHAIRMAN: The hon. Member has very clearly stated his position. Take a particular case between the hon. Member and myself. There is a charge which certainly the Treasury is entitled to. The question is as to which of us has to bear the amount, and in what proportion. The hon. Member proposes to alter the existing law so that I should pay less and he would pay more, but I must protest against that proposal being introduced in Ways and Means. It requires a preliminary Resolution.

    NEW CLAUSE.—(Provision as to Assessment of Lands Used for Bowling.)
    It shall be lawful for any person occupying lands of an annual value not exceeding fifty pounds sterling for the purposes of the game of bowling only to elect to be assessed to the duties of Income Tax chargeable under Schedule D, and in accordance with the rules of that Schedule in lieu of assessment to the duties under Schedule B, and such election shall be signified as provided by Section eighteen of the Customs and Inland Revenue Act, 1887, provided that, in the current Income Tax year, it may be so signified at any time before the seventh day of February, nineteen hundred and seventeen.
    Clause brought up, and read the first time.
    Mr. WATSON: I beg to move, "That the Clause be read a second time."
    Bowling is very largely played in Scotland, though not so largely played in England. There are probably between four hundred and five hundred bowling clubs in Scotland. The larger part of the membership of these clubs consists of the poorer classes and the working class. The large majority of these clubs are on ground

    943
    very near their homes—that is to say, they are allowed to use ground on which a bowling green is made, or else they become holders at a nominal rent. The proposal in this Clause would not allow them to escape the tax, but would give the clubs, whose rent is covered by £50, the option which the farmer has and which was given him in 18S8 for the first time, to make their return for Income Tax either under Schedule B as occupier, or under Schedule D as a profit-making concern. I have had returns from more than half the clubs, over two hundred of them, and, broadly speaking, about three-fifths of them, or between three-fifths and three-fourths of them, made no profits at all, and in most of these cases, indeed, they are run at a loss. It is very hard in cases where a club consisting of men of the poorer class, who are allowed to use a piece of ground as a bowling green —which, after all, is a good healthy recreation—at a nominal rent of 5s. or 10s. a year, indeed it may be only 1s., that they should be assessed on the real value of the ground, it may be at £30 or £40, on which they would have to pay a very large tax, as occupiers, of 5s. in the £.
    They are not in a position to pay the tax, and the effect will be that these clubs will become extinct in a great many eases, and no revenue will accrue, as a result of it, to the Exchequer. The game of bowling will appear to the great majority of Members, perhaps, as rather an old man's game than a young man's game. Undoubtedly, however, a very large number of younger men, men of military age, do play the game, and, speaking partly from personal knowledge and also from what I have been told, there is no doubt that bowling clubs in Scotland—and I have no doubt it is the same in England—have contributed very largely to our Army, and a great many of their members are serving at the front at the present time. That in itself makes it difficult enough to keep the bowling green going, because you cannot allow a bowling green to go back, or abandon it for a year or two, without having to incur expense to again get the turf into order. For these reasons I appeal to the right hon. Gentleman to accept the suggestion in this Clause, to give this option in the case of the poorer bowling clubs, those with a rent under £50. It would only affect occupiers' taxes; where they are the owners, they would have to pay the
    944
    owners' taxes. Still, as regards the occupiers' tax, they should have the option of making a return, if they so choose, on the profits they make, which after all is fair. It is not as if they were running a rich club, or a money-making club; these clubs are purely for the purpose of recreation, so as to enable the poorer classes to enjoy a healthy game, as they do greatly enjoy this healthy game of bowling.
    Mr. CURRIE: I think my hon. Friend has made a fair and reasonable case, and I hope the Government will do something to meet it. I do not think one can imagine a better agency for maintaining the industrial output than healthy recreation, and this proposal contains a suggestion which meets that object. I hope the Financial Secretary will be able to meet the case.
    Mr. WATT: I support the Clause, which simply asks for a privilege which has already been granted to farmers for some years. These clubs have great difficulty in making ends meet, and I hope the right hon. Gentleman will give the proposal his attention and endeavour to grant what he is asked.
    Mr. MONTAGU: When I saw the Clause on the Paper I am bound to say that as a responsible politician I felt bound to put one or two arguments in answer to it. These bowling greens are valued under Schedule D on the full annual value, and it is suggested that the owner or owners should have the option of paying the tax under Schedule B instead of Schedule D. If the bowling green belonged to a private owner, whose habit and pastime it is to entertain his friends and guests at a game of bowls, he gets no income, and he is exempted from the tax altogether. In regard to these clubs it is true that possibly the income derived from the bowling greens is smaller than their annual value, but I cannot really believe that the hon. Member who is responsible for this proposal thinks that this, of all times, is the right time to give an opportunity to the State to express encouragement of the game of bowling, nor can I understand, except as regards its locality, what there is to differentiate these bowling clubs and the game of bowling from boat races, cricket, football, lawn tennis, golf, gardens, parks, or any other game or places by means of which people get health and recreation, and where the profits are small. I believe that if the Committee were to put this matter to a

    945
    Division hon. Members would find themselves in a very roomy and unpopulated Lobby.
    Sir G. YOUNGER: There is one weakness in the argument of the right hon. Gentleman. He took the case of the owner of the bowling green who, he said, will escape the taxation altogether; but I would point out that the owner has to pay Income Tax under Schedule A. This is the case of a separate bowling green on which there is a very heavy rental, and I can see no reason why the suggestion in the Amendment should not be accepted. The point of the right hon. Gentleman would have been a good one if it had been a right one, when he said that the owner would get off paying the tax, but the fact is that the owner pays under Schedule A and not under Schedule B.
    Mr. MONTAGU: I will take back that word, however, and substitute the word "occupier," and then the whole of my speech will be true.
    Question put and negatived.
    The following stood on the Paper in the name of Mr. HEWINS:—

    NEW CLAUSE.—(Assessment for Income Tax of Controlled Establishments.)
    For the purposes of assessment of Income Tax in respect of the profits of a controlled establishment the net profits of such establishment for the accounting period under this Act shall be deemed to be the amount of the net profits of such establishment, as ascertained for the purposes of the Munitions of War Act, 1915, of any accounting period or periods under that Act which expire during the currency of the accounting period under this Act.
    The CHAIRMAN: This Amendment, standing in the name of the hon. Member for Hereford would, in some cases, involve a charge, and therefore is not in order.
    Mr. J. MASON: May I point out that while the Clause, as a matter of fact, would undoubtedly raise the tax to some extent, yet, on the same basis as other taxes, there would be a reduction of charge. The hon. Gentleman will probably be induced to give us a little more information as to the incidence of this tax as it now stands—
    The CHAIRMAN: I thought the hon. Member rose to address me on the point of Order. What I stated was that it appears to me that in some cases, if we
    946
    allowed the proposed alteration in the law, it would involve a charge, and therefore the new Clause could not be moved. I can hear the hon. Member on the point of Order.
    Mr. MASON: I respectfully submit that if the Clause were accepted there would be a relief, and not an imposition, of taxation—there would be no tax on anybody. It is proposed that the allowances for depreciation, and so forth, which are made under the munitions levy and the Excess Profits Tax, should be taken into consideration in assessing the Income Tax. The point of the argument is that the existing Income Tax law specifically does not allow all the depreciations which are admitted and accepted in the case of the munitions levy and the Excess Profits Tax. Under the Income Tax law, buildings are, by its terms, not susceptible of any reduction at all, and consequently the Income Tax will have to be charged in full on all these subjects of special depreciation. I think it is most important that this should be borne in mind by the Treasury, and also by those who are now, I believe, to come to some agreement on the subject of controlled establishments. I think that the point as to the effect of the existing Income Tax laws on buildings—and by buildings I mean, technically bricks and mortar—being to differentiate it entirely from these new proposals allowing special depreciation for buildings and plant, in certain cases, should be borne very fully in mind, and taken into consideration. I would point out, further, that these three taxes, the munitions levy, the Excess Profits Duty, and the Income Tax are all based on different standards, involving different calculations, and I submit that some attempt should be made to unify those standards by bringing these three taxes as far as possible into one line.
    Mr. MONTAGU: On the point of Order. I submit that this new Clause would alter the basis of computing the Income Tax in accordance with what is done under the munitions levy. In certain cases that would obviously increase the charge, for I understand that there are certain allowances made under the munitions levy which are not made in regard to Income Tax, and that there are allowances in regard to Income Tax which are not made under the munitions levy. In a great number of cases I agree this proposal would reduce the charge, but not in all.
    Mr. PETO: On the point of Order. Can the right hon. Gentleman give any case where there is an allowance made in Income Tax assessment which would not be made in the munitions levy? That seems to be the whole point.
    The CHAIRMAN: I may say that I made some inquiry, and the conclusion I arrived at was that probably in 95 per cent, of the cases it would mean a reduction, and in a small number of cases it would mean an increase. I have suggested to hon. Members a form in which they might make the proposal, but I think as it stands it is not in order.

    NEW CLAUSE.—(Amendment of Section 38 of Finance (No. 2) Act, 1915.)
    Section thirty-eight of the Finance (No. 2) Act, 1915, shall be amended by the addition at the end of Sub-section (1) of the following proviso:—
    Provided that where in any trade or business the balance en capital account shows a loss and no dividends have been paid during the previous five years no Excess Profits Tax shall be charged.—[Mr. Haslam.]
    Clause brought up, and read the first time.
    Mr. HASLAM: I beg to move, "That the Clause be read a second time."
    The object of the Clause is to provide that no excess profits shall be charged where a business after a series of years in the capital account on balance shows a loss. It may be right in certain cases under such conditions to charge Income Tax, but I think to add Excess Profits Duty when the business has lost money over a series of years is really committing an injustice which we ought to avoid. I will take the instance of a company which, say, during the last five years, has lost £20,000 previous to the three years for which Income Tax is calculated, and for the three years suppose they made £2,000 per year and last year £4,000. On that they will be subject to Income Tax and £2,000 would be subject to excess profits, which in one calculation would amount to £l,200 and by another £600. So that the £4,000 profits would be reduced to £2,400 in one case or £1,800 in the other. That iB done at a time when the balance of loss over the series of years is about £11,000, and at a time when the company is unable to pay a dividend and when every penny of profit is being utilised in
    948
    paying off previous losses. I hope the Financial Secretary will kindly inform me whether my representation of the case is correct.
    Mr. MONTAGU: Even if what my right hon. Friend desires to do was commendable in itself to the Committee, I do not think this is the right way to do it. His Amendment only deals with dividends, so that it differentiates between companies and firms.
    Mr. HASLAM: That was not my intention.
    Mr. MONTAGU: It would not apply to firms because there are no dividends. I have, however, many other objections. A company which made great efforts to pay its preference shareholders even though it paid no dividend to the ordinary shareholders would be treated less favourably than a company without preference shares. Again, I do not quite know exactly what balance of capital account would really mean. Suppose you assume that a company exists which shows a balance on capital account of a loss of £5,000, and that during the accounting period they made a profit of £100,000, surely that is not a company which my hon. Friend would desire should escape.
    Mr. HASLAM: Certainly not.
    Mr. MONTAGU: But if during the previous five years the capital account showed a loss and no dividend had been paid then, according to the Amendment, no excess profits could be charged.
    Mr. HASLAM: I mean including the present year still shows a loss. I thought I made that clear in my speech.
    Mr. MONTAGU: My great difficulty is that I am bound to speak to the Amendment which the hon. Member has placed on the Paper. We have already made arrangements for dealing with losses in the previous Act. We have the percentage standard. We have the profits over two years, and in certain cases six years, and we have power to apply profits to the writing off of old losses, and this afternoon I accepted a new Clause from the hon. Member for Paddington, allowing for total loss of capital. There is a whole zareba of provisions for dealing with this matter.
    Mr. LOUGH: I think the right hon. Gentleman might really address himself to the point my hon. Friend raised, instead of entangling the Amendment in technical difficulties. What my hon. Friend meant

    949
    was, I think, this: If there is a balance of loss in any trade or business, and if the profit made in the accounting period is not sufficient to write off that loss, Excess Profits Duty should not be charged. I do think the first thing that ought to be done with the profits is to pay off the losses and put the company into a solid position. That is what, I understand, my hon. Friend seeks to do. The £100,000 case is not the sort of case which arises. The object of the Amendment is that no excess profits shall be charged until the business is cleared of any loss.
    Sir A. MARKHAM: How far back?
    Mr. LOUGH: That is not a relevant question. If a sufficient sum is not made to clear off the losses no charge should be made.
    Mr. MONTAGU: The Committee is asked to accept the Amendment which is on the Paper. My right hon. Friend puts on that Amendment an interpretation which it actually cannot bear. If he wishes to provide that a firm which desires to do so shall be entitled to use its profits to write off losses in the preceding years, he ought to draft an Amendment to do so. I simply refuse because it is already the law of the land. The House has deliberately refused to go back into the dark ages, but a firm may use profits in the year of account to write off losses for the three preceding years. The question was raised whether we should go back further, and the House decided that we should not. If my hon. Friend means what he says on the Paper, I submit there is nothing to be said for the Amendment, and if he means what the right hon. Gentleman says he means, then he is asking us to legislate on a thing which we have already done, and on both hypotheses there is no reason to put anything in the Bill now.
    Question, "That the Clause be read a second time," put, and negatived.
    The following Amendments stood on the Paper in the name of Mr. J. M. HENDERSON:—

    NEW CLAUSE.—(Provision as to Fixing Pre-War Standard of Profits.)
    The standard amount of profits as fixed by Section five (Part II.) of the Munitions of War Act, 1915, and the Regulations made thereunder, shall, on the application of the person owning a controlled estab-
    950
    lishment, be substituted for the pre-war standard of profits under this Act and the principal Act.

    NEW CLAUSE.—(Provision in Respect of Acceptance by Commissioners of Inland Revenue of Arrangements Made by Ministry of Munitions.)
    In computing the profits of any trade or business under Parts II. and III. of this. Act, or under Part III. of the principal Act, such deductions as are necessary to give effect to any arrangement made by the Ministry of Munitions under the Munitions of War Act, 1915, or allowances made under Section forty, Sub-section (3), of the principal Act, which would have the effect of reducing the amount of the profits of the trade or business, shall be allowed by the Commissioners of Inland Revenue both for Excess Profits Duty and Income Tax.
    The CHAIRMAN: These proposed new Clauses deal with the Munitions Act and with controlled establishments. I will hear the hon. Gentleman if he wishes to submit some new point on those subjects.
    8.0 P.M.
    Mr. HENDERSON: So far as the first proposed new Clause is concerned, the new point is to enable controlled firms to have the controlled establishments pre-war standard instead of the excess profits, standard. The excess profits standard did not come into vogue until some months after—I think it was in November—whereas the controlled establishments standard was established at the end of July. My first proposition is that the controlled establishments standard for those controlled establishments should stand instead of altering it again to the excess profits standard, which only came into vogue after they were made controlled establishments. I think that that would be in order. With regard to the second part, there is no alteration in the incidence of taxation, but if you have the Income Tax assessment on the ordinary Income Tax basis you will be doing away with all the benefit that the controlled establishments and other people get from the allowances for depreciation. The Income Tax authorities allow for depreciation only 5 per cent., 7½ per cent. 10½ per cent., or 15 per cent., according to the nature of the machinery and so forth. In regard to motor lorries, 15 per cent., and in some cases 25 per cent., may be allowed, but in ordinary cases not more than from 5 per cent, to 10 per cent.

    951
    is granted. Section 40 of the Finance (No. 2) Act of last year went a long way in this matter. It provides that
    "Where it appears to the Commissioners of Inland Revenue, on the application of a taxpayer in any particular case that any provisions of the Fourth Schedule to this Act should be modified in his case owing to a change in the constitution of a partnership, or to the postponement or suspension as a consequence of the present War, of renewals or repairs, or to exceptional depreciation or obsolescence of assets employed in the trade or business due to the present War," etc.
    A machine may be obsolescent or used up during the War. It may not necessarily be in connection with a controlled firm, because a great number of other firms are making war materials. The object of this allowance was to allow for obsolescence. Suppose £20,000 has been allowed for obsolescent machinery. The Income Tax Commissioners may allow only £5,000. If the person concerned has to pay 5s. in the £ on the higher sum, it may eat up the whole of his profits.
    The CHAIRMAN: My objection was not that the Clause involved a charge, but that the question had already been settled as far as the Committee is concerned. I do not think I can rule the Clause out of order, but, the matter having been so fully debated yesterday, I hope the hon. Member's speech will not be longer than his point of order.
    Mr. HENDERSON: I am the last man to occupy the time of the Committee needlessly. I do not think the question of the relation of the Income Tax to war depreciation has been discussed.
    The CHAIRMAN: I am speaking from recollection. But I am not disputing the hon. Member's right to move. We will take first the Clause dealing with the prewar standard of profits.
    NEW CLAUSE (Provision as to Fixing Pre-War Standard of Profits) brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. HENDERSON: I will not take up the time of the Committee by making a speech. I will simply move formally.
    Mr. MONTAGU: It is rather difficult for me to deal with these Clauses separately, because one is consequential on the other. What the hon. Member desires to achieve by the two Clauses is to alter, first, the standard, and then the allowance for depreciation. When he has done that he will have practically exempted controlled firms from the Excess Profits Tax, and then he will have succeeded in doing what the Committee yesterday decided not to do. If I am to argue as if this Clause were a separate proposition, I would say that our standard for the controlled firms has, as regards £21,000,000 of assessments, already been fixed. It would complicate matters enormously if the authorities had to go back on those assessments. As regards Income Tax, that part of the proposal has not been debated so far as I can understand it, because it was out of order in the form in which it was raised by the hon. Member for Windsor (Mr. J. Mason). The Excess Profits Tax and the munitions levy are both, let us hope, temporary expedients. They bear upon their face all the characteristics of temporary expedients. But the Income Tax has come to stay. Despite the repeated prophecies of Mr. Gladstone, we still have the Income Tax, and shall have it for a long time after the War. I do not think that in connection with the temporary and much more unscientific levy imposed by the Munitions Act, we ought to alter our Income Tax law.
    Mr. HENDERSON: This is a very grave matter, and I hope my right hon. Friend will give it his serious attention. Suppose the profits of an establishment in the matter of excess profits is £50,000. The allowances may be £50,000, but there may be a very great difference between that and the depreciation allowed by the Income Tax authorities under the Income Tax Act. The allowances made under the Excess Profits Tax Regulations, or under the munitions levy, may be more than the whole profit, and if they are disallowed a man may have no profit at all. You have only to work out a few figures to see that it is very possible for that to be so. I will not press the matter seriously now, but I will bring it up again on the Report stage. I hope that meanwhile my right hon. Friend will seriously consider the point.
    Mr. MONTAGU: By all means bring it up on the Report stage, but do not bring

    953
    it up in this form. You do not seriously mean to apply the Ministry of Munitions rules to the Income Tax.
    Mr. HENDERSON: On that understanding, I beg leave to withdraw the Clause.
    Proposed Clause and Motion, by leave, withdrawn.
    The CHAIRMAN: I think that also covers the other Clause.
    Mr. HENDERSON: Yes.

    NEW CLAUSE.—(Amendment of Section 33 (2) of Finance (No. 2) Act, 1915.)
    The provisions in Section thirty-three (2) of the Finance (No. 2) Act, 1915, which applied to firms shall be extended to apply to companies.—[Mr. Denniss.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. DENNISS: I suppose it is intended that not merely individuals and firms but also companies shall be allowed to take advantage of the provision enabling Income Tax to be paid in two instalments. I have in mind a company which pays £70,000 in Income Tax. With the Income Tax amounting to 5s. in the £, it is very often extremely inconvenient for such companies to pay it in one sum. If this beneficial provision applies to individuals or firms, why should it not apply to limited liability companies also? As a matter of fact, the wording of this Section is peculiar. There you find "persons and firms." Here you have an "individual or a firm." Therefore it is perfectly true that it cannot include companies.
    Mr. MONTAGU: That is quite true.
    Mr. DENNISS: If my Amendment is accepted it will apply to companies, because the same consideration, I think, applies to them. I know firms which are just as large as companies and who pay as much Income Tax as do limited liability companies. The difficulty in either case is in raising the money. I do not see any distinction between a firm which has to pay Income Tax of £70,000, and is allowed by this Act to pay it in two instalments of £35,000 each in January and July, and between a limited liability company which has got to do precisely the same thing. Neither do I see any difference between
    954
    that and an individual. The right hon. Gentleman promised to explain why it is that he does not propose to allow this-Section to be extended to limited liability companies, but I appeal to the Financial Secretary and to the Chancellor of the Exchequer to see that this helpful provision shall be extended to limited liability companies.
    Mr. MONTAGU: I do not know why the hon. Member for Oldham is so surprised at the wording of the Act. The wording: simply says that the concession therein granted shall be granted to individual and firms. It says "individuals" and not "persons," because it is desired to exclude from relief the very people whom the hon. Member now seeks to include. Surely there is nothing very peculiar in saying what you mean! The reasons for this peculiarity were these: Parliament last year allowed a man who was called upon to pay Income Tax to pay it in half-yearly instalments—the second half-year being postponed—in respect of an income from husbandry under Schedule B, from trade and business under Schedule D, from professions under Schedule D, from employments under Schedules D and E, and weekly wage-earners manually employed; but on no other kind of income at all, not from land, or rents, or interest, nor from anything which was taxed before receipt. The reason of that distinction is quite obvious. If you are-an individual whose business or occupation constitutes his livelihood, and there is a large increase in the rate of Income Tax, it is a hardship suddenly to have to find the whole of that Income Tax, very often at a period when the man has not yet enjoyed the whole income for which he is-taxed. With regard to a company which is assessed under Schedule D, we retain the collection in a single sum, because the individual recipient of the income from those sources gets the whole income at the same time as he pays the tax. From the point of view of the individual who derives his income from companies there is no-hardship in having to pay the whole of the Income Tax at the same time. In regard to the companies themselves, there are two objections. In the first place, it would mean, in this year, a very serious postponement of revenue for which we have not budgeted. That is the first and the least reason; but there is a much better reason—at least, I submit it is. Companies have the power to take the tax from time to time as they pay the interest to

    955
    debenture holders, and their interim dividends. They take and keep the tax, and they may keep it for many weeks and months before they pay it over to the revenue. If you allowed them to postpone part of their payment to the second half of the year, you would be merely increasing a very valuable privilege which the company now enjoys without giving any individual any compensating advantage. Therefore, I think we were wise, both from the point of view of revenue, and from that of equity, in limiting this Clause as we did, designedly, and in refusing to include what it is now asked we should include.
    Mr. DENNISS: I cannot answer the right hon. Gentleman. It may be that I had a bad case, but probably the right hon. Gentleman is right in his argument. Therefore I beg to ask leave to withdraw.
    Proposed Clause and Motion, by leave, withdrawn.
    The following stood upon the Paper in the name of Mr. DENNISS:—

    NEW CLAUSE.—(Amendment of Section 4 of Finance (New Duties) Act, 1916.)
    The provisions of the Finance (New Duties) Act, 1916, shall not apply to herb beer.
    Mr. DENNISS: The right hon. Gentle man the Financial Secretary suggested that I should put down a new Clause in relation to this matter, but I do not think he wanted me to do so all the same. It was very kind, however, for him to do it, and I am sorry that I have to bring him down from the Olympian heights of high finance to this very small matter. It is a very small matter, but it is of great importance, and for these reasons: Hon. Members will remember that very poor people who have, by reason of thrift and industry, got a small botanical herb business together, and—
    Mr. MONTAGU: I think I may save the hon. Member's time if I just explain. We are now seeking a method of differentiating herb beer scientifically from ginger beer, and all other similar beverages. If we get that definition we propose, on the Report stage, to reduce the tax on such herb beers to 2d. from 4d. That, I think, will meet the case the hon. Gentleman has in mind.

    NEW CLAUSE.—(Allowances in Case of New Trades.)
    Where it is shown to the satisfaction of the Commissioners of Inland Revenue that considerable hardship will be suffered in the case of a new trade or business commenced within five years next before the fourth day of August, nineteen hundred and fourteen, the statutory allowance of two hundred pounds shall be increased by the same percentage as the increase in the profit of the last of the three pre-war trade years bears to the average profit of the first and second of the pre-war trade years provided that such increased statutory allowance shall not in any case exceed four hundred pounds.—[Mr. Needham]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. NEEDHAM: In moving this proposed New Clause, I do so for the purpose of dealing with firms which have started business in recent years. I have in mind the case of two friends who were working for a certain firm, and whose joint salaries were about £650. They subsequently started business on their own account. In the first year they made a loss; in the second a trifling profit; in the third year a small income; and in the fourth year a bigger income. The average of their pre-war profits, so as to get a datum line, is such that the amount that they will have to find on the top of that, when the £200 is added, does not come up to the total amount of the joint salary which they were receiving before they commenced business for themselves. It does seem hard that in such a case—and there are a great many like it—to the datum line should only be added £200. The Income Tax surveyors in the localities have no discretionary power at all in the matter. They can only follow the hard and fast lines of the law. Consequently the hardship remains on the firm which has so recently started business. The attempt of this Amendment really is to give some trifling discretion, very limited in its scope, to the local Income Tax surveyor, so that a hard cose of the sort I have suggested could be met by raising the £200 allowance to a maximum, say, of not more than £400. There does not seem to be any provision in the Finance (No. 2) Act, 1915, for anything of this

    957
    kind. The Clause I suggest is really an Amendment of Clause 40, and I suppose ought really to come under Subsection (3). That Clause does attempt to deal with hard cases, and says that where special circumstances occur in dealing with excess profits they can be dealt with by Regulations. So far as I know, no Regulations have been made by the Treasury in the way I have indicated.
    Mr. CURRIE: If I could support this Clause without causing a loss of money to the Chancellor of the Exchequer I would certainly do so, as I think my hon. Friend has made a very reasonable statement and a very strong case. The difficulty, of course, is where one is to get the money. I suggest to the Chancellor of the Exchequer that really what is wanted, and perhaps we could do it another year, if we have another year of Excess Profits Tax, is better gradation. Last year, and again this year, I think he has treated professional men, lawyers and barristers, and so on, with undue leniency, and there is a class of business which suddenly finds its profits multiplied three or four times over, and which, I think, could be taxed a great deal more stiffly than 60 per cent., though, in the main, I agree with the Chancellor of the Exchequer that 60 per cent, is a fairly high rate of tax.
    Mr. MONTAGU: I do not think this is a very good Amendment, if I may say so with great respect. There are two objections. In the first place, it only deals with a growing business where the progress is even. If there were, for instance, in 1913, a year of depression from some unknown cause, although the business was obviously progressive, it would be precluded. Now I will give the better argument which, to my mind, is that this Amendment would give the most dangerous power to the Commissioners of Inland Revenue. Just think what my hon. Friend suggests:
    "Where it is shown to the satisfaction of the Commissioners of Inland Revenue that considerable hardship will be suffered."
    We have already had a case to-day where the Committee have shown this new and very gratifying confidence in the Commissioners of Inland Revenue. My mind carries me back to Debates in which they were peculiarly suspicious when the Commissioners of Inland Revenue were to go through some purely mechanical form of
    958
    making perfectly harmless assessments. To-day we have a striking instance, which must be very gratifying to the Inland Revenue, of hon. Members who have asked that they should have unfettered discretion within certain limits to dispense with taxation or to impose taxation. Those who represent the Inland Revenue in this House would be very loth to accept that responsibility, and I am certain the Inland Revenue itself would feel very reluctant to undertake it. It opens the door to all sorts of individual applications. But I need go no further, because I am perfectly certain that, on reflection, the Committee will take the view, which it always has, that the House of Commons is the proper place to impose taxation, and that the discretion in Government Departments, as my right hon. Friend said this afternoon, should be limited to the smallest degree possible.
    Mr. HENDERSON: I quite agree with what my right hon. Friend has said, but there is a case which can be made out which ought to be considered carefully in this House. Take the case, say, of two mechanics who in 1912 earned £5 a week each, and who started a new business by themselves as engineers, and who will probably be very useful to the country at this particular time. It may be a case where they are struggling to get their livelihood, and you may cut them down far less than they were earning as mechanics. That is the point that my hon. Friend would wish, I am sure, to press upon the Committee, and I would also press it. If it could be done by regulation, something, I think, might be done for men who have started as paid servants, engineers, or otherwise.
    Mr. NEEDHAM: Might I ask whether there is any regulation contemplated to deal with cases such as this one?
    Question put, and negatived.

    NEW CLAUSE.—(Exemption from Entertainments Duty.)
    Entertainments Duty shall not be charged on payments for admission to any band enclosure in a public park where the payment does not exceed one penny.—[Mr. Lough.]
    Clause brought up, and read the first time.
    Mr. LOUGH: I beg to move, "That the Clause be read a second time."

    959
    I have a small point here, but an excellent point, to submit to my right hon. Friend, and I hope he will try to meet me on it. The Clause refers to exemption from the Entertainments Duty, and it is confined to band enclosures in public parks. I do not think the House or anybody could have thought that in the public parks in London, for example, philanthropic societies, such as the National Sunday League, where they try to provide a band costing hundreds of pounds a year, but who alleviate that cost by making a charge of a penny for the enclosure, would have to pay this tax. But, to their astonishment, the Customs Regulations lay a charge in this case. If there were no enclosures there would be no charge, but if there is an enclosure, and that is the only means by which chairs can be protected or business carried on, then the Entertainments Duty is charged. That is to say, out of a penny charge towards the cost of the band, a halfpenny is taken away by the State. That makes bands in London parks totally unprofitable, and the result will be that they cannot be carried on in these bad times, because, as it is, a good deal of money is being lost, and it depends whether the Entertainments Duty is inflicted or not as to whether this slight pleasure to the working classes in the public parks in London and other places can be maintained or not. To show the anomaly, I may say that if a band plays on a pier, although there is a charge of 2d. to the pier, and a pier is an enclosed place, that is not subject to the Entertainments Duty. I can hardly believe that the Government intend that the Customs Regulations should have this effect, although I do not want to find any fault with the Customs. They have carried out duties in this most troublesome matter in a way which seems to have given great satisfaction, and, therefore, I do not want to make any attack upon them, but I do hope the Chancellor of the Exchequer, by accepting this little Clause, which is confined to the 1d., which is confined to public parks, which deals with a tax that amounts to no less than 50 per cent, of the charge, and which will banish the bands out of many public parks, will accept the Clause. If he cannot do that now, but will tell me that he will consider it between this and the Report stage, I will not take up further time.
    Mr. McKENNA: I endeavoured to give more favourable attention to this proposal, but I found it was quite impossible to distinguish in this matter between one form of entertainment and another. If we make this concession to bands, we cannot refuse it to other entertainments where 1d. is charged. There are cinemas that charge 1d. Some people like to pay 1d. to hear a band to the delight of the ear; others prefer to pay 1d. at a cinema for the delight of the eye, and we cannot make any difference between the two. If I accepted this proposal, I should subject myself to attack for not giving relief to other forms of entertainment, and I am afraid we must adhere to the tax. I know that hardship is inevitable in regard to all taxation, but if we are to get the money we must adhere to these proposals.
    Mr. LOUGH: I think I can show my right hon. Friend how easy it is to differentiate in this matter. I think the case of a band in a public park not provided by a public authority but by a private society might be allowed. I hardly think that cinemas can be brought on the same line. What I propose is really very different from all the other cases, and perhaps the right hon. Gentleman will be able to tell me that this matter will be considered on the Report stage. I do not like to press the matter now because I know the situation is rather acute when dealing with all these points, but I assure my right hon. Friend that there is no money in his proposal, and, at any rate, it will not be a matter of more than £1,000 or £2,000.
    Question put, and negatived.

    NEW CLAUSE.—(Income Tax on Unearned Incomes.)
    Income Tax shall be charged as to three shillings and sixpence on unearned incomes where it is deducted at the source and one shilling and sixpence by assessment.—[Mr. D. Mason.]
    Clause brought up, and read the first time.
    Mr. D. MASON: I beg to move, "That the Clause be read a second time."
    This Clause is merely a matter of machinery, and relates to the very severe hardship which presses upon those who have incomes from which the full amount of 5s. is deducted at the source. I am aware that the Chancellor of the Exchequer has made some concession in regard to this matter, and while he has gone

    961
    some way towards meeting this hardship he has not quite met the case, and I hope he will give this Clause further consideration and see his way to meet the case in the form of the Clause which I am moving. I do not claim that there is any magic in the 3s. 6d. which I name, but I think it ought to be done in some different way. The House will agree that it is a great hardship to those who have to pay 25 per cent, of their income when the full 5s. is deducted at the source. Many of those people are more or less not in easy circumstances, and perhaps derive their income from good securities, but they are probably living to the full amount of that income, and compelled to do so. The tax in the case of an income of £400 a year from securities would amount to £100, and this is a great hardship in respect of such incomes. I do not think I need say much more in order to commend this proposal to the Chancellor of the Exchequer. It might be argued that it would entail much extra labour, but, on the other hand, it would probably save a good deal of labour and a great deal of hardship because people have now to go to Somerset House to recover this amount, and they have to go through a great deal of trouble in order to get a repayment. If the right hon. Gentleman will give his consideration to this proposal and try to meet the case on the lines of my Clause it -will remove a great hardship.
    Mr. McKENNA: My hon. Friend's proposal in substance is that Super-tax should begin at that rate. I will take the figure he puts down on the Paper. It would affect the assessment upon earned incomes because a great many persons who have a direct assessment on account of their earnings also have a portion of unearned income, and it would affect many hundreds and thousands of assessments which we should have to make on the Super-tax basis. That would lead to very grave complications, and I am not sure that it would not be a very grave complication to the taxpayer himself, and it would enormously delay the collection by the Inland Revenue, and we could not do this during the War. I am very doubtful whether it is the proper remedy for the evil which we all recognise. It is an evil that a person should have deducted at the source taxation in excess of the amount for which he is liable, but I think we have already gone a long way to meet that case, and I am quite sure the remedy
    962
    of my hon. Friend would be troublesome not only to the Inland Revenue but to the taxpayers. All those who are familiar with the filling-up of a Super-tax return know something of the difficulties, and it would become a great hardship on these people to have to pay Super-tax. This proposal is precisely according to Super-tax rules, and it is an additional assessment made upon persons who are now assessed.
    Mr. HENDERSON: I agree that this proposal would be very difficult to carry out, but the moral attached to it is that there is a very great hardship in these people being kept from having their money. I agree that the remedy is to speed up the return, and there should be some sort of office where a man can go and get his cheque over the counter. If we can speed up the matter I think there will be very little difficulty.
    Mr. McKENNA: Perhaps I might add that the remedy which we hope to apply after the War is more upon the lines suggested by my hon. Friend who has just spoken of speeding up the repayment. We cannot do that during the War, nor can we do what the hon. Member suggests during the War. As between those two proposals, the one of speeding up, the repayment would be less troublesome on the whole to the Income Tax payer.
    Question, "That the Clause be read a second time," put, and negatived.

    NEW CLAUSE.—(Amendment of Section 40, Sub-section (3), of the Finance (No. 2) Act, 1915.)
    In Section forty, Sub-section (3), of the Finance (No. 2) Act, 1915, line 4, after "case," there shall be inserted the words "owing to the recent commencement of a business or."—[Sir F. Cawley.]
    Clause brought up, and read the first time.
    Sir F. CAWLEY: I beg to move, "That the Clause be read a second time."
    The DEPUTY-CHAIRMAN: This seems to have been covered by a discussion which has already taken place.
    Sir F. CAWLEY: It is an entirely different case.
    The DEPUTY-CHAIRMAN: I suppose the hon. Baronet was here.
    Sir F. CAWLEY: I was here when the other Amendment was moved, and I heard

    963
    all the discussion. This Clause makes a very small alteration, and it meets a case of very gross injustice which very seldom arises. If the words I propose were inserted, the Clause would read:
    "Where it appears to the Commissioners of Inland Revenue, on the application of a taxpayer in any particular case, that any provisions of the Fourth Schedule to this Act should be modified in his case, owing to the recent commencement of a business, or …, the Commissioners shall have power to allow such modifications,"
    etc. Two young men started an electrical business—
    The DEPUTY-CHAIRMAN: Surely that is the very same case.
    Sir F. CAWLEY: No, it is not the same case. The hon. Member's case was one of five years. This is a case in which no accounting period could be got at. Two young men started an electrical engineering business, and they were in business eight months when the War came. Their first yearly accounting period was November, 1914. It included four months of the War. That is the complete year that they would like to have taken as their basis. In that year they were very fortunate. They scraped together by their savings and borrowings £1,000, and they made £1,700. The Commissioners said, "We cannot make that the accounting period because it includes four months of the War." These young men said, "Will you take the first six months we were in business?" That is their only period previous to the war, and they made a profit of £1,450 or something of that kind. The Commissioners said, "Oh, no, we will not do that at all; we will take as the basis 7 per cent, on your capital, £70, and the salaries you got in the situations you occupied before the War." One of these young men had only just got out of his apprenticeship, and he got a very small salary. Their total salaries amounted to £350. That made £420 a year. These young men have worked extremely hard and have done their duty, and if they had stayed in their original situations they would have got very much higher salaries than the amounts at which they are put down in this assessment. It is very unfair, but the case might very easily be met by this Amendment which gives the Commissioners power to take the circumstances into consideration. I think that the Chan-
    964
    cellor of the Exchequer ought to accept the Amendment. It gives the Commissioners power to consider the case and to make some allowance. There would be very few such cases, and it ought to be met by some such new Clause as I have proposed.
    Mr. McKENNA: The Section which my hon. Friend desires to amend is a Section dealing with exceptional cases which could not readily be dealt with by the Statute. The particular Amendment which he proposes deals with a matter which is already regulated by the Statute.
    Sir F. CAWLEY: Where?
    Mr. McKENNA: In the original Statute. A business which is started less than three years before the War and has not the ordinary datum line is provided for by special Sections in the Statute which enable us to take a substituted datum line.
    Sir F. CAWLEY: As a matter of fact, these people made every representation they could to the Treasury, and they have been assessed on the £420 a year.
    Mr. McKENNA: I know. They have been assessed according to the existing Statute. This is a matter which is dealt with by the Statute. The hon. Member now wants to amend it by including it in an addition to a Section which deals with matters which could not be directly dealt with by the Statute and which were therefore handed over to a discretionary power of the Commissioners. If my hon. Friend wishes to deal with these cases by a new rule for a datum line, he should tell us his proposals. He should have put them forward as an Amendment to the Section which defines the datum line. But as a matter of fact, has my hon. Friend got a ease at all. I was familiar with this case before he stated it. These two young men in the last year before the War made between them £350.
    Sir F. CAWLEY: They got salaries.
    Mr. McKENNA: That was their income from their work. The amount which they receive after payment of Excess Profits Duty in their first year of business after the beginning is £1,150. That is to say, they have still left to them an income upwards of three times as much as the income which they had before the War. Of course, it is hard upon them to have to give up £550 out of their total receipts, but this is a case of two young men who are enjoying a very much larger income in the. War than they enjoyed before the

    965
    War. That is the whole principle of the tax. The question that has to be asked is, "Are these recipients of the income enjoying during the War a larger income than they enjoyed during peace? If they are, we will endeavour to tax them upon, certain lines. Upon those lines these two young men, in accordance with the Statute, are assessed upon the datum line fixed by Statute. My hon. Friend says, "I do not like these rules. I would like the Treasury, or the Commissioners of Inland Revenue, to make special rules to deal with special cases of this kind." I recommend the Committee not to ask the Commissioners of Inland Revenue to make special rules to deal with these special cases when they have been dealt with by rules of general application. The Section which my hon. Friend would amend dealt with special cases which may be briefly summarised as follows: A change in the constitution of a partnership; postponement, owing to the War, of renewals and repairs; special depreciation, owing to the War, of assets employed in a business; special classes of cases in which hardship may be found to arise in practice which might be specified in a Treasury Regulation. If my hon. Friend's case came under that last, no Amendment would be necessary.
    Sir F. CAWLEY: You have no Regulations.
    Mr. McKENNA: My hon. Friend does not ask for any, but it is not a case which should be dealt with by Regulation, because it is already dealt with by Statute. It is defined here, and I do not think, therefore, although I feel sympathy with the young men of whom he speaks, that there is a case which could be described as such a special case as to need this action.
    Sir F. CAWLEY: I do not think my right hon. Friend has dealt fairly with this matter. He has ignored the fact that these two young men were only receiving a salary of £350, and one, being a clever young man, started in business. He says, "We started in business with six months' trading before the War, and in six months we made so much. Why not make that the basis of the assessment? That we received salaries has nothing to do with it. We are in business, and there is a datum line to be taken."
    Mr. McKENNA: May I interrupt? If we were to have an Amendment of the Act fixing any period of time before the period
    966
    of the War as able to be taken for the purposes of the datum line, that would be, not by amendment of this Section, but by an amendment of the Clause which determines the datum line. Let my hon. Friend put down, on the Report stage, the Amendment he wishes for, but do not let him ask that the Treasury, or the Commissioners of Inland Revenue, should have a general power of fixing their own datum line.
    Mr. HENDERSON: The great hardship in this case is that this unfortunate datum line will continue, although it does not really represent their normal earning power. I think my hon. Friend is right, and if you could alter the datum line I would support that, because I think it is very hard that these young men should have this datum line fixed.
    Sir F. CAWLEY: I will bring in an Amendment on the Report stage.
    Proposed Clause and Motion, by leave, withdrawn.
    The DEPUTY-CHAIRMAN: The Clause standing in the name of the hon. Member for West Aberdeenshire is covered by a previous discussion.
    Mr. HENDERSON: On a point of-Order. I cannot remember the discussion.
    9.0 P.M.
    The DEPUTY-CHAIRMAN: I do not know whether the hon. Gentleman was here, but the point was clearly covered by the discussion which took place on the Clause moved by the hon. Member for Monmouth Boroughs (Mr. Haslam), and on the somewhat similar Motion standing in the name of the hon. Baronet the Member for West Denbighshire (Sir H. Roberts).
    Mr. HENDERSON: If you will pardon me, it is rather a different point altogether, and if you will allow me to explain I think you will see it. It is the case of a company who was formed some years ago, and in no single year was a profit made by the company until the year 1910. The company showed a deficiency in its balance sheet of £9,000, and it had a small nominal capital of £600. It became insolvent; the creditors met, and they found, when it reached this stage, that the shareholders' capital was lost. In 1910 a new managing director was appointed, and, with the consent of the creditors, the company was allowed to go on with its business. The trading loss was stopped almost immediately, and gradually it has gone on

    967
    until this last December's balance sheet shows that it can pay 2s. in the £, and no more.
    The DEPUTY-CHAIRMAN: It is the same point.
    Mr. HENDERSON: No; it is not quite the same. I say they should not pay any Excess Profit Tax which would make them insolvent. That is not the other case.
    The DEPUTY-CHAIRMAN: It really is. I am quite sure the hon. Member does not wish to trifle with the Committee; but it rests with me to decide whether it is the same or not, and I say, unhesitatingly, that it is.

    NEW CLAUSE.—(Amendment of 5 and 0 Geo. V., c. 89, Fourth Schedule.)
    Amendment to Section five of Part I. (Computation of Profits. of Fourth Schedule, at end, add the following proviso:
    Provided that if the Commissioners of Inland Revenue or the Board of Referees shall refuse to allow a deduction for any increase in the remuneration of directors, managers, or other persons concerned in the management of any trade or business, and the taxpayer shall be required to pay Excess Profits Duty in respect of such disallowed deduction the taxpayer shall be entitled to recover from any such director, manager, or other person the amount which he shall have paid by way of Excess Profits Duty in respect of such increase.—[Sir J. Harmoorl-Banner.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Sir J. HARMOOD-BANNER: In moving this Clause I should like to call the special attention of the House to Section 5 of the Fourth Schedule of the No. 2 Act of 1915. Experience has shown that the working of that Clause will do one of two things: Either it will cause a great leakage from the finances of the Treasury, a leakage which we ought to avoid, and a reduction of the sums it ought to receive, or it will impose a great hardship on the companies, who will have to pay Excess Profits Duty in respect of a sum they have already paid to their directors and managers. Section 5 as it stands at present says:
    "Any reduction allowed for the remuneration of directors, managers and
    968
    persons concerned in the management of the trade or business shall not, unless the Commissioners of Inland Revenue owing to any special circumstances, or to the fact that the remuneration of any managers or managing directors depends upon the profits of the trade or business, otherwise direct, exceed the sums allowed for those purposes in the last pre-war trade year, or a proportionate part thereof as the case allows, and no deduction shall be allowed in respect of any transaction or operation of any nature, where it appears, or to the extent to which it appears, that the transaction or operation has artificially reduced the amount to be taken as the amount of the profits of the trade or business for the purposes of this Act."
    I have no doubt that when that Section was passed it was expected that the amount to be dealt with under it would be of small amount—say, £500 or £1,000, or more. My personal experience, how-ever, shows a very different state of things. The arrangements made with the managers—and the War has caused very large sums to be payable—provide for, say, salary plus 10 per cent, on gross proceeds; salary plus 2½per cent, on gross receipts; salary plus 25 per cent, on profits; and the profits made in the War, and the proceeds which have been entailed by the War, amount to very large sums. I have in my own experience seen sums paid, in one case amounting to £15,000, in another to £50,000 or £60,000, and in another case amounting to nearly as much as £80.000 or £90,000 in respect to these particular arrangements. The result of the Section as it stands at present is that the Treasury have either to say they will allow that sum, in which case there will be a very large loss to the Treasury—I hope the Chancellor of the Exchequer, notwith standing my criticisms, will believe I am trying to do my best for the Treasury quite as much as trying to correct any informalities which I think may exist in the Actߞ
    Mr. McKENNA: Hear hear!
    Sir J. HARMOOD-BANNER: The Treasury will say either that they allow that amount in excess of the pre-war payment—which will mean handing over very large sums to the firm—or that they will not allow it, in which case it would come-into the profit and loss account of the company making up its profit and loss account on which to pay Excess Profits Duty. The

    969
    result will be that the firm will then have to pay on a profit and loss statement including the amount payable to other parties, so that, in effect, the company or individual will be paying in respect of the profits twice over. For instance, if the Treasury say they will allow £50,000 without Excess Profits Duty being payable, it will mean- a large loss to the Treasury, which in the interests of the Treasury I hope this Committee will not permit. If they do not allow it, as the Act stands at present, the £50,000 will remain in the profit and loss, and the firm would have to pay 50 per cent, or 60 per cent, of it. Then the man who made the bargain for the year's salary plus 10 per cent, of the gross receipts will come in and say, "You made a bargain with me, and you have to pay me my £50,000," so that the firm or company would not only have to pay 50 per cent, or 60 per cent, on the £50,000, but also would have to pay in full the manager or director with whom they made that bargain. That would be a great hardship on them. To meet the difficulty I have proposed this now Clause, which I think meets the case. It has been drawn up by a very eminent barrister and solicitor. If there is any informality about it it can be corrected on Report, I believe that the Chancellor of the Exchequer, in the goodness of his heart, when the Act of 1915 was being passed, did make some sort of suggestion which is the reason why the Treasury have been peculiarly mild and easy in dealing with payments under the Act so far. While that might be quite fair with regard to a sum of £500, £1,000, or £2,000, we should all agree that it is most improper and unfair when we come to sums exceeding £2,000, and which may reach £10,000, £15,000, £20,000, £30,000, or even £50,000.
    Mr. McKENNA: I am sure the Committee is indebted to the hon. Member for having brought this matter forward. The Committee will remember that last year, in the Debate on the appropriate Section, I was pressed to make a concession which would free from Excess Profits Duty the salaries of managers who were paid by commission. The case was represented to me as a very ordinary case of business where a man earning a salary of a few hundreds a year might have an additional amount paid to him by way of share of profits, which would perhaps add another £100, £200, or £300 a year to his income, and that it would be a great inroad upon the established customs of business if we
    970
    did not in practice allow such payments to be a charge or an expense of the business, and therefore not subject to the Excess Profits Duty. I have looked back to the Debate upon the subject, and I summarised the arguments in this way: That in these circumstances I admitted there might be some cases where the directors' payments might be small, which would seem to be a proper case for an additional allowance, and although at that time in the Debate I refused to meet hon. Members, later on in the Debate I gave way on the point, and agreed that we should retain power to say that salaries augmented in this way by a share of the profits or commission should not be charged Excess Profits Duty. What do we find? That while we think we are making a concession —I am sure the whole Committee were of the same mind as myself that it was quite reasonable and proper—in practice it means that some directors or managers are paid gigantic sums which really means that they are getting a big share of the profits. It is quite true that they have no controlling interest in the ordinary sense, but inasmuch as they have directors' or managers' contracts which give them, as in the case mentioned by the hon. Member, anything from £10,000 to £80,000 a year, it is quite clear we did not mean cases of that kind to be exempted from the Excess Profits Duty. I therefore gladly accept the Clause moved by the hon. Member, which will be supplemented in practice by the Commissioners, who will not allow as an expense of the business these heavy payments to directors and managers in consequence of a prewar contract which gives them a substantial share of the profits. We shall have to fix some limit, because I do not wish at all to withdraw from the concession made last year. We shall have to fix some limit which we will always allow as an expense of the business, but beyond that we should not propose to allow these large sums as an expense of the business. Consequently it would be necessary for the protection of the company that the Amendment of the hon. Member should be introduced into the Bill. Otherwise all the other persons interested in the company will have to pay the Excess Profits Tax out of the total of the profits, while the managers or directors, who would really be in the position of partners if it were an ordinary firm, would escape paying their share of the Excess Profits Duty. With

    971
    this explanation I hope the Committee will allow me to accept the Clause as it stands.
    Mr. COWAN: Will the right hon. Gentleman say whether the Clause refers only to remuneration by way of commission or a share of the profits, or whether it applies also to salaries or fees of directors?
    Mr. McKENNA: No; salaries do not come in here, as I understand it. I think it is expressly so stated. Of course the case we have in mind is where a director or manager is paid a share of the profits. Any new arrangement made with a manager, so that instead of receiving a salary of £1,000 a year he is to receive a salary of £80,000 a year, would be scrutinised with great severity.
    Mr. COWAN: On a pre-war contract?
    Mr. McKENNA: If it was a pre-war contract, the question would not arise.
    Sir A. MARKHAM: Assuming that a director receives remuneration by way of commission on the amount of dividends disbursed, and that he has been so paid during the pre-war period. I take, for example, say, 5 per cent. of the total dividend declared. Would that also be paid in the accounting period?
    Mr. McKENNA: Yes, it would.
    Sir A. MARKHAM: May I put the case quite clearly? I am paid, in the case of one company, 5 per cent. on the total amount of dividend distributed. I receive no remuneration whatever except that 5 per cent. I was paid that amount in the pre-war period, and I am to be paid that same amount in the accounting period.
    Mr. McKENNA: Last year, when the Committee had before them small cases of that kind, we agreed to make an allowance, and that in estimating the profits for the purpose of Excess Profits Duty the additional amount paid to the manager should be treated as an expense. We have followed that rule. We did not, and the Committee did not, intend that that rule should apply where a manager who was getting £1,000 now gets £15,000. An increase of that kind in war profits was never intended. Now we have come to the conclusion that we must fix a limit beyond which the excess earnings of a manager who is paid by percentage on the profits must not be allowed to be reckoned as an expense in the business. Suppose we
    972
    limit it to £2,000 a year—I do not say that is the figure, but I take it because it has been mentioned—and the manager gets £10,000, the £2,000 would be treated as an expense and the £8,000 as excess profit. If we did not have this Amendment of my hon. Friend, the company would pay excess profit on the whole of its profits except the £2,000 which was allowed as I expense, and therefore would pay Excess Profit Duty on the £8,000 paid to the manager, and the manager would escape paying his share.
    Mr. COWAN: He pays Income Tax.
    Mr. McKENNA: Yes, he pays Income Tax but not Excess Profit Duty. It is treating the Excess Profit Duty like the Income Tax and making him pay his share of the Excess Profits Duty.
    Sir A. MARKHAM: That is not quite my point. Assuming that the commission payable to a managing director was £2,000 before the War, and a dividend of 10 per cent, was paid before the War, and during the War a divident of 10 per cent, was also paid and the remuneration paid to the managing director is again, say, £2,000 a year, is there any addition to the tax?
    Mr. McKENNA: No.
    Mr. J. MASON: Might I ask a question? In the event of an arrangement having been made for the managing director to receive a commission and a percentage of the profits, which had nothing to do with dividends before the War, if it were not for some arrangement of this kind it would be quite possible for controlled firms which are now making very large profits to pay in commission to the managing director more than the whole profits received by the shareholders, and leave nothing at all for the shareholders and still owe the managing director money. If such an exaggerated case exists, does this mean that the company would recover from the managing director 60 per cent, of the commission they have paid him though that might well absorb the whole of the profits?
    Mr. McKENNA: Yes.
    Sir C. CORY: I understand that if a manager was paid a commission amounting to £2,000 before the War, and it runs to £10,000 a year during the War, £8,000 would not be attributed to expense. Is that fair? Surely it is an expense of the

    973
    business. Surely that is part of his salary and it ought to be debited to expenses before he estimates the excess profits of the business.
    Mr. McKENNA: My hon. Friend may disagree with it, but that is the whole point we have been discussing. The whole argument I have put to the Committee is that we should go back to the position in which we stood last year, and we limit our concession now to what it was intended to be—to cases of small increases. It was never intended to cover the ease of a man who receives for instance £80,000. That surely is an excess profit dependent upon the success of the business.
    Sir C. CORY: It is an excessive amount, but, as far as the shareholders are concerned, if they had to pay him £10,000 a year the extra £8,000 comes out of their pockets and ought to be debited as an expense of the business. Whether you collect Excess Profits Duty from the recipient is another matter.
    Mr. McKENNA: This Amendment enables us to charge it to the recipient of the profits.
    Sir C. CORY: The actual amount paid to the manager and the extra £8,000 ought to be debited to the business as an expense before the profits of the business are made up for excess profits purposes. It makes all the difference. If you take £8,000 from £20,000, it leaves £12,000 that they have to pay Excess Profits Duty on. If you do not take it, does he pay it on the whole £20,000?
    Mr. CURRIE: I should like the right hon. Gentleman to clear up another point which is, perhaps, rather a verbal one, but seems to me to carry some amount of reason. A contract of this kind might run, that So-and-so was to receive a large sum, perhaps calculated as a share of profits lint expressed as a salary. I think we are guarded on that point.
    Mr. McKENNA: I think so.
    Question, "That the Clause be read a second time," put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Annual Value of Woodlands for the Purpose of Exemption or Abatement from Income Tax under Schedule B.)
    Section twenty-seven of the Finance Act of 1896, as amended by Section twenty-two (1) of the Finance (No. 2) Act,
    974
    1915, shall be held to apply to occupiers of woodlands as well as to occupiers of land for the purpose of husbandry only.—[Mr. MacCallnm Scott.]
    Clause brought up, and read the first time.
    Mr. MacCALLUM SCOTT: I beg to move "That the Clause be read a second time."
    The occupier of land for the purposes of husbandry at present enjoys certain advantages in the matter of the assessment of annual value for purposes of exemption or abatement. The proposal of this new Clause is that that advantage should be shared by the occupiers of woodlands also. The effect of the Statute quoted as amended is that for the purpose of claiming exemption or abatement "the income arising from the occupation of land shall be taken to be the annual value, except that if any person occupying land for the purpose of husbandry shows that the profits fall short of the annual value thereof, the income arising therefrom shall be reckoned to be the actual amount of such profit." The occupier of the land for the purpose of husbandry, therefore, if he can prove that his profits during the year are less than the annual value of his land, can be assessed at the actual amount of his profit. I suggest that this might be extended to woodlands also. Woodlands, might almost be classed under husbandry for the same purpose.
    Mr. HENDERSON: I am not sure that they are not.
    Mr. MacCALLUM SCOTT: Apart from any advantage which might be enjoyed by the occupiers of woodlands if they came under this Clause, there are good and sound reasons of public policy why we should endeavour to do everything that we can to encourage and develop forestry at the present time. It is not the object of this Clause to secure that in the lean years, when no timber is cut, and when, of course, there is no income arising from the land, the occupier of the woodlands should be able to be assessed on that standard of no income and when, in the year of cutting, he has a large income from it, he should then be able to go back to annual value. If the Treasury are willing to accept this Clause, I am sure they will be able to accept it in such a form that they can prevent that.
    Mr. MONTAGU: I hope to prove to my hon. Friend that his Clause is dangerous in one respect, and that where it is not dangerous it is unnecessary. I flatter myself that I shall not take long to do that. Under Section 27 of the Finance Act, 1896, as amended by the legislation of last year, the assessment of woodlands, as well as of other land, is the full annual value of that land, except that, so far as land used for husbandry is concerned, at the end of the year you are to substitute the actual profits under Schedule D for the full annual value. What the hon. Member now seeks to do is to make that substitution of profits under Schedule D apply equally to woodlands as it docs to husbandry. If he achieved his object you would include in your concessions woodlands used for sporting purposes and woodlands used merely for the amenities of the estate, in which the profits might be very small, and which I am sure my hon. Friend would never attempt to tax according to the profits realised in a particular year. That is the part of the Clause which I submit to the Committee is dangerous. As regards the part of the Clause which deals with woodlands managed for commercial purposes, I would refer him to Section 22, Sub-section (4), of the Finance (No. 2) Act of 1915, which has already done the thing he now seeks to do. Under that woodlands managed for commercial purposes may substitute profits under Schedule D.
    Mr. MacCALLUM SCOTT: There is nothing about Schedule D.
    Sir A. MARKHAM: The occupier of woodlands has the right to be assessed under Schedule B as well as under Schedule D.
    Mr. MONTAGU: Yes, I know. Under the law as it now stands land occupied whether as woodlands or husbandry are assessed on their full annual value. Then in the case of land occupied for the purpose of husbandry—I am quoting from memory—they are allowed to substitute for the annual value at the end of the year the amount of the profits actually realised. My hon. Friend seeks to extend that concession to woodlands. My argument is, that so far as woodlands are used for sporting purposes, there is no case made out; and that in so far as they are managed on a commercial basis, with a view to the realisation of profits, the occupier has, under the Section which
    976
    I have already referred to, the right of assessment under Schedule D on the actual profits arising from the occupation of the woodlands. Therefore, in regard to woodlands managed on a commercial basis, there is no necessity for the Amendment; and so far as they are not managed on a commercial basis it is a dangerous Amendment, which ought not to be accepted.
    Mr. L. HARDY: The right hon. Gentleman has, I think, described the position perfectly correctly, but I think he has gone a little further than he ought in describing the position of woodlands in connection with other farming land, because undoubtedly it has been found that the amending Clause in the Act of last year is not nearly as full as the power that is given to land under husbandry. There are two limitations in that Clause which are acting against its operation. The first of them is, that you have to prove the commercial value, and there is no appeal from the general Commissioners in connection with the settlement of that question. It has to be done by the general Commissioners, and there is no appeal. My hon. Friend the Member for Oxford University (Mr. Prothero) has a new Clause on the Paper, which I desire to move at the end of new Clauses, dealing with that particular question. This limitation has been found to be a limitation which does affect the operation of the Clause. There is a further limitation which the right hon. Gentleman did not refer to, and that is that if an occupier of woodlands does apply under Schedule D, he can never go back so long as he is occupying those woodlands, and this has had such a serious effect that I believe in a vast number of cases people have been unwilling to take advantage of the concession given in the Budget last year, with the result that the Clause has become really of no effect. These two limitations are very serious; they do entirely differentiate the question from farm land. If the right hon. Gentleman could only see his way to make the concession wider than it is, I think it would be of very great advantage. I think everybody must acknowledge, after our experience during the last few months, that no hindrance in any way should be caused to the growth of woodlands. The Government is appealing to owners to cut down timber, and it is becoming one of the most serious things in connection with

    977
    many matters in this country, yet here we have undoubtedly a case where very great increase of taxation has been put upon woodlands. In consequence of the limitation of this concession given last year there is a very large amount of tax being put upon woodlands, seriously hindering that industry. Although I know there are objections to accepting the Amendment as it stands, I do think we ought to take this opportunity of pointing out to the right hon. Gentleman that the matter has not been satisfactorily settled, and that woodlands are being seriously prejudiced at the present time.
    Mr. MONTAGU: I am disappointed to hear what the right hon. Gentleman has said, because he will recollect that the Clause dealing with woodlands, certainly in last year's Budget, was the result of negotiations, and that that had been accepted as a fair solution of a difficult case.
    Mr. HARDY: It was accepted at the moment as a solution, but it is the difficulties which have arisen from that solution which have obliged me to raise the matter now.
    Mr. MONTAGU: I do not mean to grumble at the hon. Member for having raised it. I am only disappointed that the solution was not successful. It must be the object of every citizen of this country at the present moment to do nothing to discourage the growth of timber. Whatever happens in this War, our timber resources will be enormously depleted, and we ought to replace them, and people should not be discouraged by taxation. I do not think that this Clause will effect this object, for the reasons which I have stated. The right hon. Gentleman himself admits that he has put down a Clause in which he suggests an appeal from the General Commissioners to the Special Commissioners with regard to what are woods managed on a commercial basis. I do not think that that would do either, for the simple reason that the General Commissioners are likely to be much better judges than the Special Commissioners, and if he remembers the jealousies—proper jealousies—of the General Commissioners of the special, he will find that his suggestion that there should be an appeal from one to the other would be very hotly resented by those gentlemen who regard themselves as the citizens' representatives. My hon.
    978
    and gallant Friend the Member for Wiltshire has also got a new Clause on the Paper to do the same thing. I would make this suggestion. My hon. Friend behind me (Mr. MacCallum Scott) should withdraw his Clause, the right hon. Gentleman (Mr. Hardy) should not move his Clause, and the hon. and gallant Gentleman (Captain Bathurst) should not move his Clause, and we should reopen negotiations through the same parties as opened the original negotiations, and see if, between now and the Report stage, we cannot improve on the legislation which we passed so recently, so as to get rid of the objection to it, of which I hear now for the first time.
    Sir G. YOUNGER: While I welcome heartily the suggestion of the right hon. Gentleman, I should like to remind him that when this particular Clause was proposed last year as a solution of the difficulty, I for one said I was quite certain it would not lead to the replanting of the woods which were then being cut down. Something ought to be done to remove this difficulty of replanting which has to be faced after the War if we are to retain our stock of timber to any very large extent, and this will involve a large outlay. I am very glad to think that the right hon. Gentleman has an open mind on the subject, and that he is willing to reconsider the whole matter.
    Captain BATHURST: I would like to associate myself with the words of the hon. Baronet. I am very glad that the right hon. Gentleman is prepared to reconsider the matter on Report, after we have had some little discussion on the subject with those who are interested in it. I am sure that we cannot ask for any more. It has been my experience during the last few months to travel about the country a great deal on Government work, and I was amazed and alarmed at the enormous amount of wood, some of it by no means mature, that is being felled in every direction. And in the interest of the nation, if we want to look ahead, we ought to make taxation upon woodland as easy as possible—at any rate, to those who are prepared to plant new woodland. As it is, there is no more serious tax falling upon any class of landowner than that which falls upon the owner or occupier of woodland. I mention a typical case that has come under my observation within the last few days. It is the case of an estate in Northamptonshire. The rates, which, I

    979
    think, are not excessive, are 3s. 8d. in the £. The Land Tax amounts to 7d., the tax on woodlands under Schedule A would be us., and under Schedule B 5s., and the Super-tax is 3s. 6d. This amounts in all to 17s. 9d. in the £ on the assessable value of woodland. This may go on in the case of the younger plantation for two generations, possibly more. The cost of planting would amount to something like £5 an acre. All this, if aggregated at compound interest over the same period would represent considerably over £100. It must be evident to everyone that taxation of this sort affects seriously the position of woodlands, at any rate, in the hands of the Super-tax payer, who, after all, is the person who has the means or ought to have the means of replanting, as he has the sort of estate upon which young plantations can be made, and who ought to be encouraged to plant. As it is, no man in that position in existing circumstances, and on the present basis of taxation, could be anything other than a lunatic who would dream of replanting any such ground to-day with a view to the nation having a larger amount of timber in the days to come.
    Mr. MacCALLUM SCOTT: After what has been said, I desire to withdraw the proposed Clause.
    Sir A. MARKHAM: I do not quite understand where we are on this proposed Clause. I think that my hon. Friend referred to another Clause which the right lion. Gentleman the Member for Ashford had on the Paper.
    Mr. MONTAGU: It is in manuscript.
    Mr. HARDY: It is on the Paper in the name of the hon. Member for Oxford.
    Sir A. MARKHAM: On the question of these plantations and woodlands the value of timber has risen by about 500 per cent, during the war, and in some cases by nearly 1,000 per cent. Many of these woods were of absolutely no value at all, and would hardly pay the cost of cutting before the War. To-day they are worth very large sums of money indeed. I think that the Government are bound to have regard to the fact that this great increase in value is due entirely to the War. In the North Wales district there is an immense area of woodland sufficient to last the mines of this country for three or four years with an enormous saving to the country as a whole. Under this Amendment wood-
    980
    lands are to be specially privileged, and if the suggestion of the hon. Member for Wiltshire is accepted, the taxpayer and the Treasury are going to be very heavy losers. I do not dispute the case which the hon. and gallant Gentleman has in mind, but it must be a very exceptional one. Unless the assessment of these woodlands has been unreasonably low, I cannot conceive a case in which the figure given can arise. I have bought a very large area of woodland since the War at a price 500 per cent, higher than the value of the timber before the War. That is an experience which other people can substantiate. I am not saying that all that money goes into the pocket of the landlord, but the State loses the excess profit, and as the hon. Member well knows, not a single penny of that pays any Excess Profit Duty whatever. The owner of that woodland escapes all taxation whatever, except ordinary Income Tax. Therefore the Treasury must have regard to the fact that there is this very large increase upon which owners of these woods pay no Excess Profit Duty whatever, although the excess profits arise solely from the War.
    Colonel GRETTON: I have listened with great interest to the remarks of the hon. Member for Mansfield, and I quite understand the experience on which he has based them. Of course, he has great experience owing to his connection with collieries. Undoubtedly many plantations which are conveniently placed, and where labour is available, have been cut down freely, and very high prices have been paid for timber in that particular class of plantation. But that applies only to a very small extent.
    Sir A. MARKHAM: The supply of wood for pit timber vastly exceeds all the other timber cut for commercial purposes.
    Colonel GRETTON: I do not challenge the hon. Baronet's statement, but that does not apply to most of the timber which is grown. I offered some timber for pit-props, but the part of the country in which it was grown is not in the same position as some other parts of the country, for it happens to be at some distance, in addition to which we have no labour in the locality to which I refer to fell the timber, with the result that the colliery owners would not look at the offer, because they were not prepared to send labour into the district in order to move the timber. I had, therefore, to sell that timber at a very low price. As things

    981
    are, I am not complaining, but I only wish to point put that it is not really the case as put forward by the hon. Baronet, that the demand is limited to the supply of pit-props. There is a great deal of the timber in the country which is not affected by that demand in any way whatever. A good deal of timber has 'been cut down, and that timber has to be replaced. I do not think it will be disputed that owners of land suitable for growing timber have been growing timber, and they ought not to be discouraged in that work of afforestation which they are conducting in the national interests. I have no personal interest in this question, but I was glad to hear what the right hon. Gentleman said, that the Government is prepared to go into this case, and that where taxation presses with an undue severity that will discourage afforestation they are prepared to relieve the owners who are willing to spend money on afforestation from excess taxation. The Clause moved by the hon. Member opposite does not meet the case. As the right hon. Gentleman pointed out, there are woods where there are sporting rights which are already taxed. In other respects this Amendment does not appear to me to meet the case, and I hope he will withdraw it and allow this matter to be gone into in its widest aspect, so that afforestation may be encouraged by some relaxation of taxation.
    Captain BATHURST: I think the speech of the hon. Baronet the Member for Mansfield exemplifies extremely well the very unequal operation of the system which was brought into operation last year. The hon. Baronet is a fortunate man, because he purchased woodlands which were ripe for cutting, and at present he is perhaps making very considerable profits on those woodlands, and to my mind he has not been adequately taxed. He has selected Schedule B as the basis of his taxation.
    Sir A. MARKHAM: I do not pay under Schedule B, or Schedule D either.
    Captain BATHURST: Well, the hon. Gentleman is still more fortunate, because the profits made out of the use of wood for pit-props in his colliery are far greater than any profits passing to the owners of the raw material. My sole reason for rising at all was to emphasise the point—not from the landowner's point of view; I am sick of the prejudice which is hurled at the head of the landowner in this House—that what we want to do in future is to encourage people who have
    982
    the power and the means to do it to grow what is really a valuable national asset at the present time. My Amendment was on somewhat different lines, and perhaps I may be allowed to say what it was. I am not going to discuss the matter, but I want shortly to say that Section 22 of the Act of last year should not apply to any new or replanted woodlands of less than fifteen years' growth. I do not think the hon. Baronet would suggest that woodlands of less than fifteen years' growth ought to be taxed at the rate of 17s. 9d. in the £ for a period of something like seventy years before any value can be obtained by the owner out of such woodlands. If that be his opinion, I am quite certain that if he had his way in that opinion no owner of land suitable for the growing of timber, in such circumstances, would be such an idiot as to plant his land. The hon. Baronet suggested that 17s. 9d. is the charge on woodlands of this description, but the returns show that in a great many instances the charge is over 20s. in respect of these young plantations, which at the present time are so unfairly taxed. If the hon. Baronet can pick any holes in my figures. I should like to know what, the holes are.
    Sir A. MARKHAM: I do not understand the hon. Gentleman's argument, for I pointed out the value the owners received from their woodlands, and I called attention to the point that the large profits which have been made must be taken into account in making the assessment. What is the use of getting up and saying that hon. Members on this side of the House are only too anxious to attack landlords?
    Captain BATHURST: I did not say that.
    Sir A. MARKHAM: Or words to that effect. It is surely a legitimate argument to say that the value of these woodlands has enormously increased. Is it right to tell the House that or not? If it is right to tell the House, why should this prejudice be set up, that hon. Members on this side seem to take a delight in attacking landlords? The hon. Member opposite seems to think that we know nothing about land on this side of the House, and that all the wisdom with regard to land lies on his side. I can assure him that is not so. Many of us have experience of woodland and their management, though, perhaps, it is not so great as that of the hon. Gentleman. At the same time, I submit the House ought to take into account the high value of these woodlands. The hon.

    983
    Member for Rutland (Mr. Gretton) referred to the difficulty of getting labour, but I would point out to him that the Minister of Munitions, in order to facilitate the obtaining of labour has agreed, in the national interest, to badge all men who are engaged in wood-cutting or in producing home-grown timber.
    Sir G. YOUNGER: That depends on what they are cutting it for.
    10.0 P.M.
    Sir A. MARKHAM: They are badged where they are employed in producing home-grown timber and cutting timber, which is available for the building of ships, and in view of the steps taken by the Minister of Munitions, this labour difficulty, to which the hon. Member referred, does not exist. Again, in regard to the distance of certain woods from railways, I may inform him that the colliery owners are making arrangements to send to those districts to obtain timber, so that the two arguments of the hon. Gentleman fall to the ground.
    Mr. MacCALLUM SCOTT: The speech of the hon. Baronet has not disposed of the subject, and his reference to the high price of timber was, I think, rather irrelevant. So far as the existing timber is concerned, the amount in this country is very insignificant compared with that in other countries. What we are concerned with is to adopt some measure which will encourage the planting of fresh woodlands. However great the price of timber may be under the exceptional circumstances of the War, there is nothing in that price which would encourage anyone to plant a single acre of new timber. There were several points in the speech of the Financial Secretary to which I might reply, but I do not think there is occasion now in view of his very gratifying announcement that he is willing to reopen the whole subject. I therefore beg to withdraw the Amendment.
    Proposed new Clause and Motion, by leave, withdrawn.

    NEW CLAUSE.—(Amendment of 5 and 6 Geo. V., c. 89, Fourth Schedule.)
    Paragraph six of Part I. of the Fourth Schedule to the principal Act shall have effect as if the following proviso were added thereto:—
    Provided that, if in any case hardship arises from such combined assessment of two companies, the Commissioners may,
    984
    upon the application of the taxpayers or either of them, direct that they be assessed separately or make such other modification of this rule as to them may appear just in the circumstances, and if on any such application any applicant is dissatisfied with the decision of the Commissioners, he may require the Commissioners to refer the case to a Board of Referees, to be appointed for the purpose by the Treasury, and that Board shall consider any case so referred and have the same powers with respect thereto as the Commissioners have.—(Sir J. Harmood-Banner.]
    Clause brought up, and read the first time.
    Sir J. HARMOOD-BANNER: I beg to propose, "That the Clause be read a second time."
    Section 6 of Part I. of the Fourth Schedule of the Finance (No. 2) Act, 1915, provides, "Where any company either in its own name or that of a nominee owns the whole of the ordinary capital of any other company carrying on the same trade or business, or so much of that capital as under the general law a single shareholder can legally own, the provisions of Part III. of this Act as to Excess Profits Duty and the pre-war standard of profits shall apply as if that other company were a branch of the first-named company and the profits of the two companies shall not be separately assessed." It has been brought to my attention by the Coalowners' Association that in many cases this Clause operates very harshly, and the object of the Amendment is to enable the Government under the conditions set forth to deal with the matter.
    Mr. MONTAGU: Let us suppose that the parent company makes a profit and the subsidiary company a deficit. Since the profits or losses of both companies are paid out of the same pockets or go into the same pockets, it would be a monstrous thing if the parent company, in assessing excess profits, were not permitted to take into account the deficiencies of the subsidiary company. Similarly, if the parent company and the subsidiary company both made profits, it would be a ridiculous thing if the two companies were to be assessed on totally different standards and different bases. Let us suppose that the parent company made in pre-war years 10 per cent, and the subsidiary company 5 per cent. If they were treated separately the

    985
    parent company would probably choose to be assessed on actual profits and the subsidiary company on the percentage, standard. So I think the House was right in deciding that they should be treated as a whole. The hon. Member does not here suggest that that rule should be repealed, but once again he suggests that the Commissioners of Inland Revenue with a power of appeal should be allowed to alter the rule and therefore to alter taxation in cases of hardship. I once again protest against the desire to give to the Inland Revenue power of taxation. Such a discretion is invidious and difficult to use. What is a case of hardship? I know of no case of hardship. I would suggest a case of hardship must be a case in which some individual company finds itself being taxed and wants to try and get the best of both worlds.
    Sir A. MARKHAM: I do not think the right hon. Gentleman appreciates the significance of this Amendment. The original proposal was altered in the Committee stage, and now where the whole of the ordinary capital is held by the parent company the two companies are treated as one. In a case within my own knowledge, where a large company some two or three years ago acquired another large company, all the shareholders of the second company agreed to sell except one man, who with very few shares refused to do so. Because he refused to sell the company who acquired the interest in the second company escape taxation and are separately assessed. What the company has done is to insure that man's life, because if he were to die they would be treated as one company and assessed accordingly. As the Bill was originally drawn in 1915 that case would have been provided for, but now, because a man who holds ten shares out of a capital of £700,000 refuses to sell, the companies are treated separately. Surely that is not fair.
    Mr. MONTAGU: That is precisely an opposite case to the one dealt with in this Amendment.
    Sir A. MARKHAM: I am taking an exactly opposite view in order to call attention to the absurdity of the Act as it stands at present. I think what I have said shows that the Act wants amendment.
    Question, "That the Clause be read a second time," put, and negatived.

    NEW CLAUSE.—(Exemption from Execess Profits Duty of Businesses Carried on Under the Court.)
    In the case of any trade or business which by reason of its being unable to pay its debenture holders or creditors is being carried on by a liquidator, receiver, or trustee under the Court no Excess Profits Duty shall be levied or paid until provision has been made for payment of such unpaid debenture holders or creditors.—[Mr. J. M. Henderson.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. HENDERSON: I brought up this Clause last year, and it was accepted by my right hon. Friend, but it was thought by the authorities to be unnecessary, as they believed it to be already common law. But we are at War, and the law is in some cases uncertain. Different Departments take different views. The Excess Profits Department has entirely taken this view; other Departments depart from it. Therefore it is desirable that what we all agree to be right should go on the Statute Book.
    The CHAIRMAN: Did I understand the hon. Member to say that it was in the Act of last year?
    Mr. HENDERSON: No; I wish to have it in the Act this year. It was thought to be unnecessary last year; the draftsman thought it was already covered by the common law. I want to put it in now, so that there may be no dispute about it.
    The CHAIRMAN: I quite understand. I think it would be better if there were words referring to the Act of last year.
    Mr. MONTAGU: I take no exception tow-hat my hon. Friend has said, except when he seemed to suggest that there was some difference between the Chancellor of the Exchequer and myself in the attitude we took up last year. The difference was due to the fact that when I spoke in Committee there was on the Paper a Clause making the Excess Profits Duty a first charge upon the assets of a company or firm. That Clause was dropped in Committee, and in consequence it did not appear to the Chancellor of the Exchequer that this Clause was necessary. We did

    987
    not think it necessary then, and we do not think there is any greater necessity for it now; but if it will make my hon. Friend happy, I shall be delighted to accept it and incorporate it in the Bill, and, in deference to what the Chairman has said, to suggest any Amendment that may be necessary on the Report stage.
    Question put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Duty on Table Waters.)
    That the duty on table waters shall not be charged on milk or non-aerated distilled waters.—[Mr. Glyn-Jones.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. GLYN-JONES: This Clause is rather quaintly worded. I must apologise for the association of water and milk, but I am not casting any reflection on milk. The House in a recent Act imposed a duty in the following terms:
    "There shall as from the 1st day of May, 1916, be charged, levied, and paid upon all table waters as defined by this Section…"
    certain duties. Then it goes on to say:
    "'Table Waters' for the purposes of this Act includes any aerated waters and any beverages sold or kept for sale in bottles other than…"
    Then follow certain exceptions, which did not include milk. I pointed out at the time that beverages sold or kept in bottles did include milk, and that the best milk sold in London is sold in bottles. It is not denied that milk is a beverage or that it is sold in bottles; therefore it is a table water within the meaning of the Act. The words were deliberately adopted by the Government, although this was pointed out. I know the Chancellor of the Exchequer will say that the Board of Customs and Excise do not, in fact, make us pay 8d. a gallon on milk delivered in bottles. But that simply means that they are not carrying out the law of the land. [An HON. MEMBER: "Nonsense!"] It is not nonsense. I am sorry if the right hon. Gentleman thinks that I am wasting the time of the Committee. I leave the Committee to decide whether they think that no better
    988
    form of words can be adopted than one which includes milk when the House means table waters. As a matter of fact, as the Act stands, it says that there shall be charged on milk 8d. a gallon. With regard to distilled water the difficulty has arisen. It is, I suppose, an extremely rare thing for anybody to drink distilled water.
    Sir A. MARKHAM: I always drink it.
    Mr. GLYN-JONES: Then the hon. Baronet will perhaps agree that it is grossly unfair to add to the penalty of drinking distilled water that of having to pay 8d. a gallon for so doing. This is all very amusing to the Government no doubt, but when I am putting forward practical difficulties which occur in trade and industry I think that, at any rate, my point is deserving some consideration. At present the Board of Inland Revenue say that they do not know, and that they are considering what Regulations they shall apply to the distillers of distilled water. It is sold for use for photographic purposes, for breaking down spirits, and for use in medicine; and the distiller, when he sells it, does not know whether any of it —it is only an infinitesimal portion of it —will ever be drunk as a beverage. People who drink still water as a beverage usually take it aerated; if so, it comes within the terms of that definition. What I want to make quite clear is that distilled waters are not within this definition. There is no use in keeping still water here which it is not intended to tax. It does give rise to these difficulties, and at present pharmacists are being required to keep an account of the distilled water which they buy, or which they distil, in order to await the decision of the Board of Inland Revenue as to what tax they will have to put upon it. That surely is a state of things which the Government do not wish to continue, and I ask the House to say that what they intended to tax in the Finance Bill did not include milk or distilled water which is not aerated.
    Mr. MONTAGU: My hon. Friend seems to have some objection to going home before eleven o'clock; he is enjoying the proceedings on the Finance Bill so much that he would like to continue here. He cannot pretend to this Committee that he has been labouring under the disadvantage of paying a tax on his milk and distilled water. He never thought of this Amendment in time to put it on the Paper.

    989
    It is the result of a brain wave at the last moment: of something which has suddenly occurred to him. These new duties in the Bill do not say anything about milk or distilled water, and suddenly it came to the hon. Member that there was an omission whilst he was listening to the hon. Member opposite talking about woods and forests, or something of the kind. What is his motive? Is there a babe going short of milk because some Customs official has demanded a tax upon it? Has any hon. Member been asked to pay a tax upon his milk or upon his distilled water?
    Mr. GLYN-JONES: Distilled water!
    Mr. MONTAGU: Distilled water when it is not a beverage?
    Mr. GLYN-JONES: Yes.
    Mr. MONTAGU: Nobody, at any rate, drinks distilled water, except, perhaps, the hon. Member for Mansfield, and he probably drinks it to help him to deal with the Super-tax, and not as a table water or beverage. The hon. Member who has just spoken says we are breaking the law if we do not tax milk; therefore he wants to put into the Bill some exemption for milk. As the House knows when they passed this tax, there is nothing harder in the world than to define in any Act of Parliament what we want to tax. The definition was admittedly faulty, but we knew what the House intended to tax, and it was not milk but what the Commissioners of Customs and Excise intended to tax. Distilled water is not a beverage except when it is used for breaking down spirits, and it is a beverage when aerated and appears under the names of Salutaris or Appolinaris.
    Mr. COWAN: Still Salutaris is sold.
    Mr. MONTAGU: As a table water. Then it will be taxed. There has been no case of abuse. If you tinker with this definition, I am perfectly certain you will not improve it. I am quite convinced that if the hon. Member takes the trouble the next time he comes down here he will be able to discover some other thing that has not been included, or that should have been included or excluded, and he can put down a manuscript Amendment which will prove just as amusing to the Committee as his effort has been before the Committee to-night.
    Mr. GLYN-JONES: I am quite sure that, on reflection, the right hon. Gentleman will realise that he is treating me in a grossly unfair way. He knows perfectly well that in this matter I am speaking as the mouthpiece of a Committee set up with his knowledge and with the knowledge of the Chancellor of the Exchequer, and as representing the trade, to deal with it, and I am not raising frivolous points, as he will find out in the administration of the Act, when I tell him that letters have passed between the Committee, of which I am chairman, and the Commissioners of Customs and Excise, on this matter of distilled waters, and that they say the position is doubtful. I think he will see that, at any rate, he might have treated the matter more fairly. As a matter of fact the reason this Amendment was not put on the Paper was that the Government gave the trade distinctly to understand that no Amendments dealing with this matter could be dealt with in this Bill. Suddenly, however, thy bring in a Clause to avoid bringing in another Finance Bill, and thus we have got to put in manuscript Amendments in this way. I am quite sure that if the right hon. Gentleman had consulted his own advisers and the Commissioners themselves they would have said that this distilled water matter had given them considerable difficulty. Ho now says distilled water is not a beverage if not aerated. That is my Amendment. Why cannot he say in the Bill that distilled water non-aerated shall not pay the duty? On the Report stage I will again raise it, and put it on the Amendment Paper, so that the right hon. Gentleman shall not be taken by surprise.
    Colonel GRETTON: I tried to call the attention of the Committee and the Government to this very important point about distilled water last year. It is really a commercial matter, and I hope the Government will not treat it with contumely, but will endeavour to deal with the difficulty which has arisen. Distilled water as a beverage is particularly nasty. A very large quantity of distiled water is used in commercial processes of chemistry and so forth, and there is always this doubt. If the Government do not mean to tax it, why cannot they say so?
    Mr. MONTAGU: It is in the Bill.
    Colonel GRETTON: This difficulty has arisen in practice. The officials of the Government apparently do not understand

    991
    what the Government desire, or what the House has put in the Bill. I hope this matter will have been adjusted when we come to the Report stage. I am only asking that it should not be treated as if unworthy of consideration.
    Mr. MONTAGU: The hon. Member is quite wrong. "'Table waters ' for the purposes of this Act, includes any aerated waters other than, etc." Now distilled water used for manufacturing purposes is not an aerated water. It also includes "any beverages sold or kept for sale in bottles," and that is all it includes. Distilled water used for manufacturing purposes is not a beverage sold in bottles. The hon. Member is very angry, but there is no grievance.
    Mr. POLLOCK: Might I reinforce the argument and point out the language as it stands? Surely milk is excluded, because one of the exceptions includes other "liquors intended to be consumed only in a diluted form." I always wish to assist my right hon. Friend, and if he wishes to adhere to the terms of the Act he has obviously excluded milk.
    Mr. T. C. TAYLOR: The right hon. Gentleman has said many things about my hon. Friend, but I think he has been a little too supercilious. He knows very well my hon. Friend is bringing up a substantial point.
    Mr. MONTAGU: I did not. I deny that entirely.
    Mr. TAYLOR: Then I will try to show it is. We have just had another joke from the hon. and learned Member opposite at the expense of my hon. Friend about milk. The actual literal meaning of this Clause does include milk. That is undeniable. Over and over again cases have come into Court, and someone has said—the solicitor for the defence perhaps—"Oh, this law was never intended to include so-and-so," and the magistrate has held that he is bound by the letter of the Act. It is not for a Minister of the Crown to sneer at my hon. Friend who has tried to put the Government right, for even the Government is not always right. Therefore, I think it is not beneath the dignity of the Government to accept the Amendment put forward, I
    992
    believe in perfect good faith, and which will make literally correct what the Government say they mean.
    Question put, and negatived.

    NEW CLAUSE.—(Exemption from Taxation of Municipal Securities Issued in America.)
    Any securities issued in the United States of America by a municipal corporation, county council, or other local authority in the United Kingdom for the purpose of raising any money which they are authorised to borrow, if issued under the authority of the Treasury, shall not be liable to any taxation, present or future, except where they are held by persons domiciled in the United Kingdom or by British subjects ordinarily resident in the United Kingdom.— [Mr. Penne-father.]
    Clause brought up, and read the first time.
    Mr. PENNEFATHER: I beg to move, "That the Clause be read a second time."
    I do not think it will be necessary for me to detain the Committee at any length, because from what I have heard from a good many different quarters this New Clause meets with a great deal of approval. It is obviously to the advantage of our municipalities and county councils that they should be able to borrow money in certain circumstances, and when so authorised, in the cheapest market, which may be in America, as at the present moment I believe it is. Obviously it is in the interests of all concerned that the investments which we offer abroad should be made as attractive as possible, and it is to the advantage of this country as a whole that such investments on these terms should be permitted in the United States, because if they are consummated it will improve the rate of exchange for us in this country by improving the "trade balance between Great Britain and America. I do not think it is necessary to say anything more, and I leave it to the right hon. Gentleman to state any objections which he may have to my proposal.
    Mr. MONTAGU: I am much obliged to the hon. Member for calling attention to this very desirable change in the law, and I suggest that this Clause should be passed.
    Question, "That the Clause be read a second time," put, and agreed to.
    Clause added to the Bill.

    First Schedule.

    Sugar, etc., Part I.—Duties.

    Article.

    Customs Duty.

    Excise Duty

    £

    s.

    d.

    £

    s.

    d.

    Sugar which, when tested by the polariscope, indicates a polarisation exceeding ninety-eight
    degrees the cwt.

    0

    14

    0

    0

    11

    8

    Sugar of a polarisation not exceeding seventy-six degrees the cwt.

    0

    6

    9

    0

    5

    7

    Sugar of a polarisation—

    Exceeding 76 and not exceeding 77 the cwt.

    0

    6

    11.3

    0

    5

    9.4

    Exceeding 77 and not exceeding 78 the cwt.

    0

    7

    2.0

    0

    5

    11.6

    Exceeding 78 and not exceeding 79 the cwt.

    0

    7

    4.7

    0

    6

    1.9

    Exceeding 79 and not exceeding 80 the cwt.

    0

    7

    7.3

    0

    6

    4.1

    Exceeding 80 and not exceeding 81 the cwt.

    0

    7

    10.0

    0

    6

    6.4

    Exceeding 81 and not exceeding 82 the cwt.

    0

    8

    0.7

    0

    6

    8.6

    Exceeding 82 and not exceeding 83 the cwt.

    0

    8

    3.4

    0

    6

    10.8

    Exceeding 83 and not exceeding 84 the cwt.

    0

    8

    6.44

    0

    7

    1.4

    Exceeding 84 and not exceeding 85 the cwt.

    0

    8

    9.5

    0

    7

    3.9

    Exceeding 85 and not exceeding 86 the cwt.

    0

    9

    0.5

    0

    7

    6.4

    Exceeding 86 and not exceeding 87 the cwt.

    0

    9

    3.5

    0

    7

    8.9

    Exceeding 87 and not exceeding 88 the cwt.

    0

    9

    6.9

    0

    7

    11.7

    Exceeding 88 and not exceeding 89 the cwt.

    0

    9

    10.2

    0

    8

    2.5

    Exceeding 89 and not exceeding 90 the cwt.

    0

    10

    2.3

    0

    8

    5.9

    Exceeding 90 and not exceeding 91 the cwt.

    0

    10

    6.3

    0

    8

    9.2

    Exceeding 91 and not exceeding 92 the cwt.

    0

    10

    10.3

    0

    9

    0.6

    Exceeding 92 and not exceeding 93 the cwt.

    0

    11

    2.4

    0

    9

    4.0

    Exceeding 93 and not exceeding 94 the cwt.

    0

    11

    6.4

    0

    9

    7.3

    Exceeding 94 and not exceeding 95 the cwt.

    0

    11

    10.4

    0

    9

    10.7

    Exceeding 95 and not exceeding 96 the cwt.

    0

    12

    2.4

    0

    10

    2.0

    Exceeding 96 and not exceeding 97 the cwt.

    0

    12

    6.5

    0

    10

    5.4

    Exceeding 97 and not exceeding 98 the cwt.

    0

    12

    10.5

    0

    10

    8.8

    Molasses (except when cleared for use by a licensed distiller in the manufacture of spirits)
    and invert sugar and all other sugar and extracts from sugar which cannot be completely tested
    by the polariscope and on which duty is not specially charged by this Section—

    If containing 70 per cent, or more of sweetening matter the cwt.

    0

    8

    l0½

    0

    7

    4½

    If containing less than 70 per cent, and more than 50 per cent. of sweetening matter the
    cwt.

    0

    6

    4½

    0

    5

    3½

    If containing not more than 50 per cent, of sweetening matter the cwt.

    0

    3

    1½

    0

    2

    7½

    The amount of sweetening matter to be taken to be the total amount of cane, invert, and
    other sugar contained in the article as determined by analysis in manner directed by the
    Commissioners of Customs and Excise.

    Glucose:

    Solid the cwt.

    0

    8

    10½

    0

    8

    10½

    Liquid the cwt.

    0

    6

    4½

    0

    6

    4½

    Saccharin (including substances of a like nature or use)the oz.

    0

    4

    6

    0

    4

    6

    NOTE.—The charge under this Schedule of a specified amount of duty on a
    specified weight of any article includes a charge of a proportionately less duty on any less
    weight of any article so charged.

    *Part II.—Drawbacks and Allowances.

    (1) Customs Drawbacks under the Second Schedule or the Finance
    Act, 1901.

    £

    s.

    d.

    Drawback to be allowed to a refiner on molasses produced in Great Britain or Ireland from
    imported sugar and delivered by him to a licensed distiller for use in the manufacture of
    spirits the cwt.

    0

    3

    1½

    Other drawbacks

    According to the amount of Duty paid.

    Question, "That this be the First Schedule of the Bill," put, and agreed to.

    Second Schedule.

    Rates of Duty for Motor Car Licences.

    Horse Power.

    Duty.

    Motor cars—

    £

    s.

    d.

    Not exceeding 6½

    …

    …

    …

    4

    4

    0

    Exceeding 6½ and not exceeding 12

    …

    …

    6

    6

    0

    Exceeding 12 and not exceeding 16

    …

    …

    …

    8

    8

    0

    Exceeding 16 and not exceeding 26

    …

    …

    …

    18

    18

    0

    Exceeding 26 and not exceeding 33

    …

    …

    …

    25

    4

    0

    Exceeding 33 and not exceeding 40

    …

    …

    …

    31

    10

    0

    Exceeding 40 and not exceeding 60

    …

    …

    …

    63

    0

    0

    Exceeding 60

    …

    …

    …

    126

    0

    0

    Question, "That this be the First Schedule of the Bill," put, and negatived.

    Third Schedule.—Enactments Repealed.

    Session and Chapter.

    Short Title.

    Extent of Repeal.

    29 & 30 Vict. c. 25

    The Exchequer Bills and Bonds Act, 1866.

    Section four; and in Section twenty-six, the word "four."

    10 Edw. 7. c. 8.

    The Finance (1909–10) Act, 1910.

    Part II. of the Fifth Schedule.

    4 & 5 Geo. 5. c. 10.

    The Finance Act, 1914

    Section six.

    5 & 6 Geo. 5. c. 89.

    The Finance (No. 2) Act, 1915.

    Sections two, three, four, five and six; Sub-section (1) of Section seven, from "as from" to
    "sixteen" and from "in respect of" to "Act, and "; Sub-sections (2) and (3) of Section
    seven.

    Amendment made: Leave out

    10 Edw. 7. c. 8.

    The Finance (1909–10) Act, 1910.

    Part II. of the Fifth Schedule."

    —[Mr. Montagu.]

    Question, "That this Schedule, as amended, be the Second Schedule of the Bill," put, and agreed to.

    Bill reported as amended; to be considered upon Monday next (3rd July), and to be printed. [Bill 58.]
    The remaining Government Orders were read, and postponed.
    Whereupon Mr. SPEAKER, pursuant to the Order of the House of the 22nd February, proposed the Question, "That this House do now adjourn."
    Question put, and agreed to.
    Adjourned accordingly at Twenty-eight minutes before Eleven o'clock.

WAR.
  INCOME TAX AND SUPER-TAX PAID.
  INCOME TAX AND SUPER-TAX PAID.
  EXCESS PROFITS DUTY (WHISKY STOCKS).
  EXCESS PROFITS DUTY (WHISKY STOCKS).
DISTURBANCES IN IRELAND.
  NAVAL REPORT.
  NAVAL REPORT.
  COMPENSATION CLAIMS.
  COMPENSATION CLAIMS.
  INTERNED PRISONERS.
  INTERNED PRISONERS.
  PARCELS AND LETTERS FOR PRISONERS.
  PARCELS AND LETTERS FOR PRISONERS.
  EXECUTED PRISONER'S MONEY.
  EXECUTED PRISONER'S MONEY.
  DUBLIN CASTLE HOSPITAL.
  DUBLIN CASTLE HOSPITAL.
  TREATMENT OF PRISONERS.
  TREATMENT OF PRISONERS.
MILITARY SERVICE.
  FOREIGN SUBJECTS (CEBTIFICATES).
  FOREIGN SUBJECTS (CEBTIFICATES).
  CONSCIENTIOUS OBJECTORS.
  CONSCIENTIOUS OBJECTORS.
  RUSSIAN JEWS FOR BRITISH ARMY.
  RUSSIAN JEWS FOR BRITISH ARMY.
  EXEMPTION CERTIFICATES (REVISION).
  EXEMPTION CERTIFICATES (REVISION).
  LOCAL TRIBUNALS.
  LOCAL TRIBUNALS.
  CEREBRO-SPINAL FEVER.
  CEREBRO-SPINAL FEVER.
  MILITARY DETENTION.
  MILITARY DETENTION.
  MEN CALLED UP (MEDICAL EXAMINATION).
  MEN CALLED UP (MEDICAL EXAMINATION).
  CLAIMS COMMISSION (FRANCE).
  CLAIMS COMMISSION (FRANCE).
  CHELSEA COMMISSIONERS.
  CHELSEA COMMISSIONERS.
  CONSTITUTION.
  CONSTITUTION.
  FIELD CASHIERS (TREASURY NOTES).
  FIELD CASHIERS (TREASURY NOTES).
  HISTORICAL MANUSCRIPTS COMMISSION.
  HISTORICAL MANUSCRIPTS COMMISSION.
  INTERNMENT OF ALIENS.
  INTERNMENT OF ALIENS.
  ALIEN ENEMIES INTERNED IN BRITISH ISLANDS.
  ALIEN ENEMIES INTERNED IN BRITISH ISLANDS.
  NATURALISED BRITISH SUBJECT.
  NATURALISED BRITISH SUBJECT.
  HOUSE-TO-HOUSE COLLECTIONS.
  HOUSE-TO-HOUSE COLLECTIONS.
  WILLS IN PRISON.
  WILLS IN PRISON.
  DISCHARGED SOLDIERS (ARREARS OF PAY).
  DISCHARGED SOLDIERS (ARREARS OF PAY).
  WAR PENSIONS (LOCAL COMMITTEES).
  WAR PENSIONS (LOCAL COMMITTEES).
  BRITISH MERCHANT SHIPS INTERNED IN ENEMY PORTS.
  BRITISH MERCHANT SHIPS INTERNED IN ENEMY PORTS.
  WOMEN CLERKS, RAILWAY SERVICE.
  WOMEN CLERKS, RAILWAY SERVICE.
  GOVERNMENT WAR RISKS INSURANCE SCHEME.
  GOVERNMENT WAR RISKS INSURANCE SCHEME.
  ALIEN ENEMY FINANCIAL INSTITUTIONS.
  ALIEN ENEMY FINANCIAL INSTITUTIONS.
  NEUTRAL MAILS.
  NEUTRAL MAILS.
  Old Age Pensioners.
  Old Age Pensioners.
  Ceylon.
  Ceylon.
Preamble
The Lord Crofton—Took the Oath.
RIVER GLEN BILL. [H.L.]
Reported, with Amendments.
RHODES ESTATE BILL. [H.L.]
To be read 2a on Wednesday next.
GREAT CENTRAL AND SHEFFIELD DISTRICT RAILWAYS BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
ALEXANDRA (NEWPORT AND SOUTH WALES) DOCKS AND RAILWAY BILL.
Read 3a, and passed.
UXBRIDGE GAS BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
PLYMOUTH AND STONEHOUSE GAS BILL.
Read 3a, with the Amendments: A further Amendment made: Bill passed, and returned to the Commons.
FOLKESTONE GAS BILL.
Read 3a, with the Amendments: Further Amendments made: Bill passed, and returned to the Commons.
METROPOLITAN ELECTRIC TRAMWAYS BILL.
Read 3a, with the Amendment, and passed, and returned to the Commons.

RETURNS, REPORTS, &c.
Woods, Forests, and Land Revenues—Ninety-fourth Report of the Commissioners of His Majesty's Woods, Forests, and Land Revenues, dated 29th June, 1916:
Board of Education—Report for the year 1915 on the Victoria and Albert Museum and the Bethnal Green Museum:
Presented (by command) and ordered to lie on the Table.
India (Loans raised in India)—Return of all Loans raised in India, chargeable on the revenues of India, outstanding at the commencement of the half-year ended the 31st March, 1916, &c.:
Destructive Insects and Pests Acts, 1877 and 1907—Order, numbered D.I.P. 364, dated 19th June, 1916, declaring an area described in the Schedule thereto to be an infected area for the purpose of the American Gooseberry Mildew (Infected Areas) Order of 1915:
National Insurance Acts—The National Health Insurance (Insurance Committees, Representation of Insured Persons) Amendment Regulations (Ireland), 1916 dated 27th June, 1916:
Shops Act, 1912—Order made by the Council of the County of Surrey and confirmed by the Secretary of State for the Home Department affecting certain classes of shops in the parish of Merton:
Laid before the House (pursuant to Act) and ordered to lie on the Table.

ELECTRIC LIGHTING PROVISIONAL ORDER BILL.
  LOCAL GOVERNMENT (IRELAND) PROVISIONAL ORDER (No. 1) BILL.
  Read 3a (according to Order), and passed.
LECKY'S DIVORCE BILL. [H.L.]
Read 3a (according to Order), and passed and sent to the Commons.

THE IRISH NEGOTIATIONS.
VISCOUNT MIDLETON: My Lords, I beg to ask the noble Marquess the Leader of the House a question of which I have given him private notice—whether he is in a position to make any statement with regard to the negotiations which have been going on for a settlement of the Irish question. I would point out to your Lordships that the position is an extremely anomalous one. We have been informed in the public Press of statements made on behalf of the Government to various sections of the Irish Parties, and we have also been informed in the Press that a meeting was to have been held to-day of

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members of the House of Commons, to be addressed by a leading member of the Government, which meeting has since been put off, but at which it was understood that further statements would be made as to the intentions of the Government. It is surely an anomaly that your Lordships' House should remain in ignorance while all this by-play is going on, and that we should not be in possession of what has actually been put publicly, on the authority of the Government, before various public bodies. I would therefore ask the noble Marquess whether he is in a position to make any statement on the subject.
THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF CREWE): My Lords, the private notice of which the noble Viscount has spoken reached me only very shortly before I came down to the House, or I should have taken the liberty, also in private, to inform the noble Viscount of my opinion that he is not rendering a public service by raising this question to-day. I stated yesterday, in reply to the noble Marquess (Lord Salisbury), that I was in doubt whether it would be possible to make any statement to-day; and the noble Viscount has seen the notice in the Press, and I have no doubt has also derived information from private sources, concerning the postponement of an important meeting which was to have been held to-day. He will have seen that it was stated on authority that this step—that is to say, the postponement of the meeting at the Carlton Club—" has been necessitated by the desire of the Government to have further time for the consideration of the Irish proposals." I am bound to assume, and I do most cordially assume, that it is not the desire of the noble Viscount or of any of his friends to hamper His Majesty's Government in arriving at a solution of what clearly must be one of the most difficult and delicate problems that any Government has been called upon to consider. I would therefore appeal to noble Lords opposite, being in full possession of the facts of the position, as we know they are, not to press us further to-day, but to wait until it is possible in the public interest to make a full and complete statement of all the circumstances.
VISCOUNT MIDLETON: I quite understand the noble Marquess's position. But might I ask him whether he will undertake
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that a statement is made in this House before any body of members of the House of Commons are called together in order to be consulted by leading members of the Government upon points on which your Lordships have an equal right to be consulted.
THE MARQUESS OF CREWE: I am not quite sure that I follow the meaning of the noble Viscount's question. Is he speaking of a meeting of a section of the House of Commons or of a meeting of that House as a whole? It may fairly be assumed that when it is possible to make a statement in the House of Commons a statement will be made here also; but I am not able to speak of what any particular body of members of the House of Commons may choose to do in meeting together to consult with those with whom they are as a rule associated. But so far as the two Houses are concerned, I can say frankly that when a statement is made in another place one will also be made here.
THE MARQUESS OF SALISBURY: The difficulty with us is that we are afraid that there are great misconceptions arising in the country and in Parliament. We are afraid that in many respects public opinion is not adequately informed, and in a matter of this kind, dealing with interests of such vast magnitude, it is not possible to allow the country to remain in ignorance of what is passing. We think this the more because a certain section of persons have been much more fully informed than Parliament has been. That appears to us to be altogether disadvantageous to the public service. I do not think it would be fair to press the noble Marquess, who is always very courteous to us, to make a statement this afternoon; but in order that he may have full notice, I will read a Question which I will put, with the leave of the House, to-morrow. It runs—
To ask whether His Majesty's Government will lay before Parliament forthwith—

1. The proposals as to the Government of Ireland which were made by Mr. Lloyd George to Sir Edward Carson and Mr. Redmond for communication to their respective supporters, together with a statement as to the authority upon which these proposals were made; and

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2. The Report of Lord Hardinge's Committee relating to the circumstances which led up to the recent rebellion, and also the latest information in the possession of the Government as to the spread of disaffection in the three southern provinces of Ireland.

I propose to put that Question down, provisionally at any rate, for to-morrow.

BRITISH PRISONERS IN POLAND.
LORD GRENFELL LORD GRENFELL had the following Notice on the Paper—
To ask His Majesty's Government, with reference to the transfer of German prisoners to France and employment in that country, and the action of the German military authorities in retaliating by sending 2,000 British prisoners to Poland—(1) Has the Government now got information as to the localities where the prisoners have been sent to, and have arrangements been completed whereby these prisoners will be inspected by any representative of the American Embassy. (2) If the places where prisoners have been sent to are known to the Government, can parcels still be sent to such camps by various societies and representatives of regiments with a reasonable chance of their being received.
The noble and gallant Lord said: My Lords, the transfer of the 2,000 German prisoners to France has resulted, as we must all have expected, in brutal retaliation on the part of the Germans. Some 2,000 British prisoners have been sent by the Germans to Russian Poland, where food is scarcer than in Germany, and where, according to numerous letters which have been received, these men are suffering great privation and are being worked very hard by the Germans. Nearly all the societies which send parcels to prisoners, including those connected with the various regiments, and particularly the Society of the Red Cross, with which I am connected, have received numerous letters from these prisoners. The White Paper which has been issued gives no information as to the locality of the prisoners, but most of the letters from these unfortunate men come from Libau. It is curious that these men have been permitted for the first time to send letters openly, in which they tell us of the great sufferings they are undergoing. This no doubt is allowed so that we may know how severely our soldiers are being
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treated. I will read a portion of one letter which we have received—
"Can you possibly send out parcels and letters? We receive nothing. We are at Libau, where we are working on the railway. We get up at 4 a.m. and return from work at 6.30 p.m. We are living on practically nothing, with two thin blankets and no bed, and I can assure you it is perfect hell. We understand that this is a punishment for us on account of the brutal treatment of German prisoners in France."
I am anxious to ask the noble Lord who will reply whether there is any chance of a proper inspection of these unfortunate prisoners by the American authorities, and whether parcels, upon which they are almost entirely dependent, can be sent with a reasonable chance of being received.
THE PAYMASTER-GENERAL (LORD NEWTON): My Lords, the prisoners to whom my noble and gallant friend refers have been sent, we understand, to the two ports of Libau and Windau, though the latter has been given a new German name, which I fail to remember at the present moment. But this information is private information only. We have as yet received no reports from the American Embassy, because hitherto the officials belonging to that Embassy have not been permitted to visit the ports in question. We have received at the Foreign Office a number of private communications similar in character to that read by my noble and gallant friend. I am sorry to say that there is much reason to fear that these men are undergoing considerable hardships. At the same time I am bound to admit that I have seen one letter at all events from a man sent to one of these ports—I forget which—in which he spoke favourably of the conditions, and said that their treatment by the officers was kind.
With regard to the German prisoners of war in France, my noble and gallant friend will recollect that they were sent there some months ago at the instance of the late Secretary of State for War, and I have always imagined that he was largely actuated by the extreme reluctance which prevails here with regard to the employment of these men either by public bodies or by individuals. But that clearly did not afford any excuse for retaliation, because these German prisoners in France have, by their own admission, been treated in an extremely kind manner, and so far as I know have made no complaints whatever. These prisoners have been inspected by officials of the American Embassy in Paris, but so far

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their Report has not reached the Foreign Office. In view of the fact that these men in France are suffering from no grievance, and that they have been inspected by the American Embassy at Paris, we naturally claim that the same state of things should be instituted with regard to our prisoners who have been sent by the Germans to Russian territory, but so far the American officials have not received permission to proceed to those camps. On the 13th of this month we asked Mr. Gerard, the American Ambassador in Berlin, to endeavour to ensure that the parcels destined for or these men should arrive safely, and we have no reason to suppose that the parcels have not reached their destination. As a matter of fact it is only fair to admit—and I think it is important to take note of this—that, so far as our information goes, nearly all the parcels sent from this country to British prisoners in Germany reach their destination without fail; the percentage of parcels which do not arrive is very small. In connection with this fact I might mention that I heard recently from Mrs. Grant-Duff, with whose work noble Lords are probably well acquainted. She assures me that she has been in communication with a very large number of German commandants of prison camps, and that in almost every instance they have shown great anxiety to see that the parcels arrive safely at their destination and to co-operate with her.
As I am dealing with this question of parcels, I should like before I sit down to correct an error into which I fell upon the last occasion when I made a statement in this House with regard to prisoners. I then stated that Russian prisoners received no parcels at all. I regret very much having made that statement. I must own that I had completely forgotten for the moment that there is an organisation in this country which exists for the purpose of supplying Russian prisoners in the hands of the Germans with food, and that there is also an organisation in Switzerland for the same purpose; and I should be extremely sorry to think that I had impugned in any way the valuable work which they have done. At the same time it must be obvious to everybody that, in view of the enormous number of Russian prisoners—they amount to something like 1,250,000 in Germany alone—it is impossible to supply their needs in the way that it is possible to do so in the case of our own soldiers.

THE MAR ESTATES.
THE EARL OF MAR THE EARL OF MAR had given notice of his intention—
To call attention to his Petition, presented on the 18th May, praying for a rehearing of the Mar Estates case, and that he may be allowed his right to plead for these estates as inheritor of the historic Earldom restored in 1824 by the grace of the Crown, as anticipated by the entailing to "the nearest heirs, whether male or female," inheriting that ancient dignity in that line of female descent.
The noble Earl said: My Lords, I rise reluctantly to explain to your Lordships why I felt compelled to present a Petition to your Lordships' House on the 18th of last month. In that Petition I prayed for a rehearing of the Mar Estates case, and that I might be allowed my right to plead for these estates as inheritor of the historic Earldom restored in 1824 by the grace of the Grown, as anticipated by the entailers to "the nearest heirs, whether male or female," inheriting that ancient dignity in that line of female descent. I may observe that I shall be very pleased to send a copy of my Petition to any Peers who have not already received it. I regret very much that the Petition is so lengthy, but it was necessary to set forth the extraordinary circumstances surrounding my case. I regret to be bringing the matter forward in the midst of this dreadful war, when your Lordships are so deeply engaged with other serious questions; but it is a duty to myself and my heirs that I should do so now, in order that I should not suffer from the bar of time.
I will ask your Lordships' kind indulgence while I place before you very briefly the position. It is well known that my ancestor in 1715, through the fortunes of war, lost his estates. The estates, which were very extensive, were all confiscated and his ancient title was attainted. However, a few years after, by the grace of the Crown, a portion of the Mar estates—namely, the estates of Alloa—were allowed to be bought back by the family for the support of the ancient Earldom. This was followed not many years after—in 1824—by the restoration of my great-grandfather to the ancient dignity, he being, as stated in the Act of Parliament, "grandson and lineal representative of the attainted Earl."

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This position he held through his mother Lady Frances, which is a very important point in the position I hold. Before this restoration it was necessary that a preliminary Report should be made and presented by the Law Officers (English and Scottish) on behalf of the Crown into the line of succession conveying the dignity. The Law Officers stated, after examining the pedigree, services, etc., that the restored Earl had already enjoyed these estates through his mother Lady Frances, and he was about to be restored to the dignity as his mother's heir. Accordingly, the Act of Parliament of 1824 states in the plainest words that the Earl of Mar was, as "grandson and lineal representative of the attainted Earl," which he was through his mother, restored to the honours of Mar—and his heirs after him.
In 1739 these Mar estates at Alloa were entailed for the support of the ancient dignity by Lord Grange, who was a Lord of Session and younger brother of the attainted Earl, and he acted as trustee for the children of his elder brother, the attainted Earl, Lord Grange's eldest son Charles became heir male of the family, but be and his younger brother James were both excluded from the Mar estates by the entail by Lady Frances, the Earl's daughter and heiress of Mar. Lord Grange thus recognised the line of female descent through which every Earl has held the ancient Earldom for now nearly 1,000 years. The entail anticipating this restoration which occurred in 1824 made special provision that all "the nearest heirs, whether male or female," should be obliged to hold the Mar estates with the ancient Earldom in the event of its restoration. This event, as I have said, occurred in 1824 through female succession. I have the honour to hold that title, and in that position I fulfilled all the conditions of the entail, being exactly in the same position as heir through my mother Lady Frances as was my great-grandfather, the Earl who was restored in 1824, through his mother, and who at that time already held the Mar estates at Alloa to the exclusion of the sons of Lord Grange, the Earl's younger brother, who entailed these estates to the exclusion of himself and his heirs in favour of the nearest heirs of Lady Frances, knowing full well that she would inherit and hold the ancient Earldom should it be restored. I am her undisputed nearest heir, and so hold the ancient Earldom.
This is my grievance. I have been persistently denied my legal right, as I maintain it to be, to plead in the Courts of Law for the Mar estates at Alloa in my true legal position as Earl of Mar, although under the Restoration Act of 1824 I am exactly in the same position by birth and inheritance as my late uncle, my grandfather, and my great-grandfather, each of whom held the estates and the restored title as the nearest heirs of Lady Frances, heiress of Mar on the death of her only brother without issue in 1766. My uncle died without issue, and I am his eldest sister's only son. Lord Kellie could not claim the Mar estates as remoter heir male, being excluded in that position by the entail. Therefore he claimed them as more remote heir male of Lady Frances, through whom he can hold no dignities whatever. Lord Kellie holds the Mar title of 1875 in the line of heirs male, but is especially excluded from the estates by the entail.
I naturally made a claim for these Mar estates before the Court of Session some years ago. The Court—quite unjustly, I maintain, and in that I have been backed up by a great many Peers and by the Press—though the Court admitted that they had no jurisdiction in dignities, actually compelled my counsel to appear for me as a commoner, though that was some years after my uncle had died and I had fulfilled all the legal forms necessary on succession and had been received by this House as Earl of Mar. I had attended Her Majesty's Court for years in that position, and my wife also in her position as Countess of Mar. The Court of Session gave the decision against me, and they did so, I contend, on wrong premises, because the great point in my case, which my counsel was precluded from urging, was that these estates were entailed on the nearest heirs male or female by Lord Grange recognising the female heirship. I was then obliged to appeal before the House of Lords. I have never claimed the ancient title of Mar because I have been in possession of it all along. I appealed to the House of Lords in the hope that they would not treat me as I had been treated before, but it suited their Lordships again to deny me my legal right and insist on my appearing before your Lordships' House as a commoner. I maintain that a man cannot be a Peer and a commoner at the same time.
I submit that my right to claim the family estates in the same line in which I

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inherited the Earldom of Mar is not prejudiced by the declaratory Act of 1885. That Act was the result of a great deal of pressure put upon the Government of the day by a large number of Peers who supported my position and were very indignant indeed at the denial of my rights. This Act declared that whereas doubts may exist as to the continued existence of the ancient Earldom of Mar this Act is to remove those doubts. In the Committee on this Bill my right to the ancient dignity was traced back and my pedigree carefully examined, and it; was found that there was no weak link whatever, and that I had inherited the ancient dignity through several heiresses from at least the date of Isabel Countess of Mar in her own right in 1404. This Act declared, as I have said, that I had inherited the ancient dignity. It has suited some of my opponents to say that I had a little interest at Court and had an old title raked up for me which had not been held by any one for centuries, but that, of course, is absolutely untrue. My position was confirmed, and I was declared to be Earl of Mar at the time that the Courts wrongfully and unjustly, as I venture to say, wrote me down as a commoner.
Doubtless the noble and learned Lord, in reply to me, will say "I am afraid you cannot go on with this because the matter has been heard by the highest tribunal in the land." I am quite prepared for that statement. My answer to it is that I venture to submit that the decisions in the Court of Session and in the House of Lords were given on wrong premises altogether. Indeed, one of the noble and learned Lords who heard the Appeal said that the House had decided that Lord Kellie was Earl of Mar, and that therefore I had lost the title and Lord Kellie had gained it, and therefore the estates must go to him. But I had not lost the ancient title; I was already in possession of it. Therefore this was a misunderstanding on the part of the noble and learned Lord. I may state that I have been obliged to pay the costs of the late Lord Kellie in both the Court of Session and the House of Lords. I must impress upon your Lordships that I do not ask the House to decide the Mar estates question. I only ask to be allowed to plead for these estates in the same line in which I hold the ancient title, and to be allowed the privileges and rights enjoyed by every Peer and by every British subject of appearing in his true
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legal position, a right which has been persistently denied to me. I ask to be allowed to plead for these estates in the same line in which I hold the ancient Earldom and in which position I have sat in your Lordships' House for now upwards of thirty years.
I would defer pressing this matter at present owing to the war, but I repeat that I presented my Petition to your Lordships' House in order to avoid the bar of time, which, as Lord Halsbury once remarked, is most important. I might mention that the late Lord Cairns, whom I had the privilege of knowing, stated emphatically—and it was remarked on in this House by the late Lord Wemyss—that he felt sure there had been wrong done to me, and that he hoped the wrong would be soon rectified. Sir Erskine May, whose memory is so much respected as one of the most distinguished Constitutional lawyers of his time, insisted upon it that had the Committee of Privileges considered the Act of Parliament of 1824 which restored the title through female succession and looked at the Report of Inquiry by the Law Officers for the Crown (which Report they strangely refused to receive), these important documents would have plainly shown that Lord Kellie had no right to go on with his case and his claim to a new and unrecorded title of Mar would have been obliged at once to drop. I thank your Lordships for the kind hearing which you have given to what, I am afraid, must have been a rather dull disquisition.
THE LORD CHANCELLOR (LORD BUCKMASTER): My Lords, I am not certain from the form of the Notice which the noble Earl has put on the Paper, nor, indeed, from the form of his own observations, whether he expects any detailed reply to the matter he has raised, but I think it would be an act of courtesy to him, and I think also an act of justice to the Earl of Mar and Kellie, who is the holder of these estates, that I should make a few statements to your Lordships as to the position in which this matter stands. The noble Earl has referred to matters which, of course, are familiar to the whole of this House—the interesting and vivid part which his ancestor played in the history of this country. The matter with which we are dealing is not one of such ancient history as that. It arises in this way.

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In 1867 a claim was made and considered by the Committee of Privileges of your Lordships' House on behalf of the ancestor of the present Earl of Mar and Kellie to the title of Earl of Mar, and in 1875 the Report of the Committee was made favourable to the claimant, and your Lordships accepted that Report. It may be that the Report was imperfect. Justice does sometimes stumble, and Lord Chancellors sometimes nod. I think that your Lordships felt that there might have been some imperfection in the proceedings, because in 1885 the Act to which the noble Earl has referred was passed which confirmed him in the ancient title of Earl of Mar, far more ancient than the Earldom of Mar which had become associated with the Earldom of Mar and Kellie. Indeed, the noble Earl is to be congratulated on the fact that he is the undoubted inheritor of one of the most ancient and honourable titles in the United Kingdom.
But while this litigation was going on between the Earl of Mar and the Earl of Mar and Kellie there were proceedings in the Scottish Courts with regard to a matter less honourable and more substantial—the estates which had hitherto been associated with the Earldom. I think it was the noble Earl himself who claimed as against the possessor of the estate, the ancestor of the present Earl of Mar and Kellie, that those estates belonged to him, for the reasons he has set out before your Lordships to-day. That claim was heard by the Lord Ordinary and by the Court of Session in Scotland, and was decided by them upon the clear and distinct ground that the true construction of the deed of entail which was in dispute divorced the estates from the title, and that it was a matter of no moment at all what might be the Report of the Committee of Privileges of your Lordships' House as to the title; because whichever way that Report was made, the true construction of the deed, upon which everything depended, was in favour of the person who was in possession of the estates, the ancestor of the present Earl of Mar and Kellie. That judgment was given in 1873, and from that time onwards possession has been enjoyed of that property. It has never been assailed, and the present Earl of Mar and Kellie holds the estate with a title made authoritative and, I venture to state before your Lordships, unimpeachable by virtue of that decision.
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Now if I gather from the noble Earl's Petition aright—and I have been through it with some care—it is that decision which he seeks to challenge. I say with all respect to the House that your Lordships have at this moment nothing whatever to do with it. I cannot sec how you can possibly consider or do anything whatever to subvert, even if you desire, the judgment of the Court of Session; unless, indeed, proceedings were taken on the Judicial side of this House asking that the time, which would have expired over thirty years ago, should now be extended in order to enable that judgment to be impeached. But it would be quite impossible to imagine, after this lapse of time, that these proceedings should be reopened; and I am sure your Lordships would agree with me that it would be most unfair and unjust to the man whose ancestors for so long had been in uninterrupted and undisturbed possession of this property that the decision should be interfered with. I have entered into this matter only for this reason. I think it is possible to understand the grievance of a man who believes that a Court, with full desire to do justice, has failed to do justice to him. I am sure that the losing litigant must often have that feeling, and it is one for which everybody must have sympathy. But I feel satisfied that nothing could be more dangerous than, out of consideration and sympathy for such a position, to do anything that could impeach or impugn a title which has been held in the circumstances that I have stated, and which has been supported after solemn and careful investigation by the Courts whose real business it is to deal with such matters.
LORD JOICEY: My Lords, I have some hesitation in taking part in this discussion, particularly after the Lord Chancellor's admirable speech. But I cannot under stand the principle he lays down, that if a Court comes to a decision and afterwards fresh evidence is adduced there should be no claim made against that decision. So far as I understand the case, the decision was come to when the noble Earl was compelled to plead as a commoner; but the noble Earl having proved his claim to the ancient Earldom is in a different position. So far as I understood what was said by the noble Earl—unfortunately I could not hear much of his speech—I gathered that he considers that as the honour of the ancient Earldom—
THE LORD CHANCELLOR: The noble Lord is under an entire misapprehension. Let me read to the House what was said by the Court of Session when the decision was given—
"The right to the Peerage of Mar—a title of great antiquity—is not directly or immediately involved in this case. Nor has this Court the power of disposing of that question of Peerage succession. It must be decided by the House of Peers. We have only to deal with the pursuer's claim to the estates. At the same time it is not to be overlooked that, on the supposition that the pursuer succeeds, as we must assume that possibly he may, to the title, the effect of a judgment against him in this action would be to separate the estates from the title. It is naturally and forcibly urged that such a separation could not have been intended, and that the deed of entail on which this question turns should be so construed as to prevent that separation and to maintain the connection between the Peerage and the estates. I appreciate the force of this argument. If there were any ambiguity in the voids of destination, the argument founded on the presumption against an intention to separate the estates from the title would be appropriate. But if the words are not ambiguous, such a presumption is inappropriate and must be excluded."
LORD JOICEY: I cannot attempt to argue with the noble and learned Lord on the Woolsack. It is a question of law, and I presume I must accept this decision.
THE LORD CHANCELLOR: It is not my decision.
LORD JOICEY: At the same time it does seem to me as an ordinary layman that it is an extraordinary thing that, if fresh evidence is adduced and an injustice has been done, the injustice should not be remedied.

STATE WOOL PURCHASES.
THE DUKE OF BUCCLEUCH THE DUKE OF BUCCLEUCH had the following Question on the Paper—
To ask His Majesty's Government whether they can give any particulars of the scheme for purchasing the wool-clip, 1916.
The noble Duke said: My noble friend Lord Sandhurst was kind enough yesterday to say that if possible he would give further information on this subject to-day, and therefore I would like to ask the Question which stands in my name. Perhaps the noble Lord could also inform the House what powers the War Office had of fixing the price, and what appeal there is for those who are forced to sell if they are not satisfied with the price.
THE EARL OF LICHFIELD: My Lords, before my noble friend answers, may I be allowed to say a few words with regard to something that was said by him in the course of the debate yesterday afternoon. He stated, I think, that it was proposed to pay the farmers 30 per cent. increase on the pre-war prices of 1914. I do not know whether the noble Lord said 1913 or 1914, but I believe that in the other House the year 1914 was given. The 30 per cent. increase which the noble Lord mentioned is the first official statement of the exact amount that it is proposed to give. When he made this statement yesterday I was not in a position to get up and point out that this would involve to the farmers a lower price than they had received last year, because it was necessary to look into facts and figures. I have since done so, and there is no doubt whatever that if such a price were adhered to, namely, 30 per cent. on 1914 prices—if it were 30 per cent. on 1913 prices it would be still worse, because prices went up in 1914—it would be very detrimental to farmers. I cannot understand on what principle such a figure was settled. Surely it is not the intention to give farmers less than the market price for the wool that is being commandeered. The farmers are quite ready, if the nation wants it, to hand over their wool to the Government; they are as loyal as any other section of the population; at the same time I think they have a right to expect that they will obtain something like market prices for the goods that are commandeered.
I am able to state that the figure named by my noble friend would not produce to the farmers the same prices as they obtained last year. A rise of between 40 and 50 per cent. on the 1914 prices would be necessary to bring up the figure to the same that they obtained last year. I know it may be argued, when I talk of the market price, that it is very difficult to say what the market price is until the wool sales of this year have established it; but those sales have been done away with, so that one may say there is no market price. I contend that the only fair basis of settling the price is to take the prices of last year. If the farmers obtained last year's prices, one would feel that they were being treated fairly and justly; but anything short of last year's prices seems to me to be unfair and unreasonable.
I should like, in connection with this case of wool, to say what a great loss it is to the

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country and to agriculture that Lord Selborne has resigned the position of President of the Board of Agriculture. He has done an immense deal during the twelve months that he has been President of the Board, both for the nation and for agriculture. There never was such a difficult time for anybody who looked after the interests of agriculture. Lord Selborne has done his best to encourage farmers to grow as much food as possible on their holdings. As my noble friend the Leader of the House said last night, he (Lord Selborne) has dealt very efficiently with the difficult question of the labour on the farms and the requirements of the Army, and he has not failed frequently to go about the country and tell the farmers what he considered their duty was to the country—namely, that they were to do their very best in their respective holdings to grow as much as they possibly could; that they were, if possible, to carry on their milk cows so that the population might have plenty of milk. Generally, he has given them good advice; and where there has been a question of Regulations he has never failed to seek advice from all parties concerned, so that the conflicting needs of agriculture in the different districts might be reconciled. I hope I am not out of place in this connection in saying that it is a great misfortune that we have not got Lord Selborne now at the Board of Agriculture, because I am sure he would have done his best to see that in this case of the commandeering of wool the farmers were treated as fairly and as justly as possible.
LORD SANDHURST: My Lords, I have not with me a copy of the Defence of the Realm Act, and I must ask leave, therefore, to postpone a reply to the supplementary question which the noble Duke put to me. Your Lordships will remember that yesterday my noble friend Lord Camperdown addressed to me a specific question on one or two points which admitted of a categorical and precise answer. I came prepared with that answer and gave it. But, as often happens in this House, four or five speeches were made on the subject, to which, to my great regret, I was unable to reply. Where a variety of speeches are made on a specific question they lead to a little inconvenience; because unfortunately the official who replies is often unable to provide the additional information beyond that which is asked for in the Notice on the Paper. Therefore I am very glad to be able to-night
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to make up for my shortcomings yesterday evening.
The noble Duke asked last night why the date of June 8 was fixed. I am told that the Order forbidding the sale of the wool-clip this year was issued before any of the English wool fairs had taken place. The question of the supply of wool had been one of anxiety for some time, but it was not until the beginning of June that it was clear that there was a serious danger of a shortage in the supplies available for the military necessities of ourselves and of our Allies. As soon as the decision was taken that it was urgently necessary to safeguard English supplies, all the interests were informed. In one case only did the information arrive too late to prevent preparations from being made for an auction sale, and it is extremely regretted that this circumstance caused some inconvenience to those farmers who had made arrangements to sell their wool on that date. Where the farmers had packed their wool the trouble will not be wasted, as it will be taken over in that state as soon as the necessary arrangements are completed. Since that date negotiations with a variety of leading wool merchants, wool brokers, and farmers have taken place in regard to the methods to be adopted by the Government for the purchase of the whole clip, and it is these methods that, in reply to the question on the Paper, I shall endeavour to explain.
I may say at the outset that the matter has been discussed with the Board of Agriculture. To begin with, merchants of good standing will be employed as agents for the purchase of wool from farmers with whom they are accustomed to deal. These merchants will act under directions from district officers appointed by the Department in each of the main wool-growing areas, and will be responsible to a central executive officer in London. There will be a central advisory committee at headquarters, and a local advisory committee for each district officer in the various areas. As to organisation, the services of Colonel Wyllie have been obtained for the purpose of directing the whole of the wool purchase. I might say that before the war this gentleman aided in the management of the well-known firm of Wyllie and Company, which I believe is, if not the largest, one of the largest firms of wool merchants in the country; and he has had considerable experience of the

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wool trade in America as well as in this country. I may add, too, that he was employed in the Ordnance Department in Gallipoli and elsewhere; therefore in addition to his trade experience he has experience of handling and storing clothing, and so on.
The actual collection of the wool—this is of interest and importance—will be undertaken by the usual buyers who operate in an area, and they will be responsible for the purchase, transport, casing, packing, storage, and discharge under directions from the district officers. A central advisory committee of prominent wool merchants is being set up to advise the central executive officer at headquarters. Their assistance will be required in selecting suitable district officers, fixing a table of maximum prices, splitting or dividing up the United Kingdom into convenient areas, and advising generally in questions of policy as they arise. In the meantime five gentlemen have been asked to give preliminary advice pending the appointment of a formal committee. The Department is also in communication with the National Farmers' Union and representatives of auctioneers and manufacturing interests. Local advisory committees will be constituted in each district to advise the district officers in the selection of approved merchants. It will be arranged as far as possible that the farmer shall sell to the merchant to whom he is accustomed to sell, though no vested right of any buyer to deal with any particular farmer will be admitted; and in selecting merchants to act as buyers, only those will be considered who have warehouse accommodation and facilities for and experience in classing wool. The local advisory committee will advise on local administration generally, and will assist in disputes as to quality; and it may be desirable for this purpose to ask the Board of Agriculture to appoint farmers' representatives to these local committees.
It may be suggested that farmers have bought sheep in anticipation of the high price that they would get for their wool. I am advised in any case that at least nine-tenths of the selling value of the sheep consists in the mutton.
THE EARL OF CAMPERDOWN: Oh, no.
LORD SANDHURST: In the two years from May, 1914, to May, 1916, mutton had
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risen about 59 pet cent. in price, though in that period the price of store sheep had risen only about 29 per cent. Between February and June of this year the price of mutton had risen about 28 per cent. There is an increase of nearly 60 per cent. on the average of the past eight pre-war years, and it is therefore submitted that the increased cost of production will be compensated for. Should the farmer not be making as high a profit as he had hoped, he is in the same position as other classes of producers, who have cheerfully acquiesced in the position, and no doubt this will be the same on the part of the agricultural classes. The proposed increase of 30 per cent. above 1914 prices was fixed after careful examination of wool prices for a long period and consultation with the Board of Agriculture, wool buyers, and other interests. It should be noted that wool prices in 1914 were considerably above the average of the previous ten years. The prices proposed to be paid are in fact 60 per cent. above the average of the period 1908 to 1914. The increase in the price of English wool owing to the war varies from class to class, and this increase has been caused by the various demands for wool clothing for the Allied Armies, by shortage of shipping and the sinking of wool ships by German submarines, by the enormous increase of freight on Colonial and South American wool, by purchase by German interests in neutral countries, and by a decreased world production of wool. In dealing with manufacturing and other trade interests who supply the needs of the Armies the War Office has consistently during the past few months refused to be guided by the market price. In districts upon which there is a heavy war demand the price is practically created by the demands of the Government, and it is not regarded as reasonable to require the Government to pay an inflated price merely because, owing to war conditions, there is a shortage of supply as compared with the great demand.
It is proposed to take a census of the 1916 clip as soon as possible, and the necessary returns will need to be filled up. The district officers will then draw up the list of approved staplers or merchants, and give instructions to purchase from the farmers allotted to them. After inspection of the clip either on the farm or at the merchant's warehouse and after weighing the wool, the farmer will be entitled to

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receive 75 per cent. of the estimated value. After the wool has been cased or classed by the merchant according to the different qualities the district officers will inspect the wool, and if the estimate is confirmed the balance will be paid on the certificate of the district officer.
Then there is the question of storage, and as it is desirable to avoid congestion at Bradford and to keep up a reserve for military requirements for a longer period than usual, it will be necessary to arrange for storage in some districts. For this purpose the approved merchants will supply the accommodation required. It may be necessary for them to acquire extra premises as warehouses, and if the farmer is required to store longer than a certain period it is proposed to allow him interest from August 1 at the rate of 5 per cent. The question of distribution is not in such a mature condition that I can usefully say anything about it.
This is the main outline of the scheme of the Government. As I said yesterday, it is necessarily incomplete. It may be modified as to its details, and there are also various adjustments to be made, but I hope I may have said enough to show that the Government are availing themselves fully of expert opinion and knowledge. It is intended to publish the full scheme as soon as possible. The Department are fully alive to the need and to the advantage of simplifying the procedure so as to enable the farmer to secure prompt payment for his produce.
THE EARL OF CAMPERDOWN: My Lords, I desire to make a few remarks on the statement of the noble Lord, for which we are very much obliged to him. He commenced his speech, however, by making a statement on which I think he must have been misinformed by the Department. He said, regarding the issue of this Order by the Army Council on June 8, that it was only just before then that they had become aware that they would require the wool. He also said that it was generally known throughout the country that this action would be taken. I can assure him that that is an absolute misstatement. Of course, it is not the noble Lord's fault; it proceeds partly, I am afraid, from the ignorance of the Department. At all events I think every one will agree with me
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that the Army Council know nothing about wool, and that this is the first occasion on which they have presumed to deal with this matter, on which it seems to me they have displayed nothing but the most absolute ignorance. Surely the noble Lord does not want us to believe that it was only on June 1 that the Army Council arrived at the decision that it was necessary to take this wool. If he does, all I can say is that it shows how utterly they were wanting in foresight. I presume that the greater part of this wool is wanted for the clothing of the Army. Indeed, one sees that this is so. But though they are going to take the whole wool clip, there is a portion of the clip which they admit is not suitable for their purpose. They say that this portion of the clip will be re-sold by public auction. This shows that it is a mistake to take the whole clip. Is it not generally known that up to within about a year or two ago the authorities would not touch black face wool for any purpose; would not buy it at all? So much with regard to the statement as to their purpose, which was announced on the morning of the day when the Order was put in force. This action disorganised not merely the one auction to which the noble Lord referred. It disorganised the wool trade all over the country.
Let me deal with the way in which it is proposed to purchase this wool. The noble Lord says that wool buyers are to be divided over the country, and that they are to purchase to a large extent from the farmers with whom they have been accustomed to deal. On what terms are they to be free to purchase? The wool buyers are restricted as to the terms they are to give. They are not to give more than 30 per cent. in excess of the prices of 1914. That is not telling the buyer to go and deal; it is saying to him, "You must take the wool, but at a price not above the price fixed." The noble Lord was unable to say what are the rights which the Government have in regard to wool. What I should like the noble Lord to answer me is this. Have the Government the right, under the Defence of the Realm Act, to take away the property of any set of persons in this country, paying such price as they see fit? Have the Government, under the Defence of the Realm Act, the right to take property without giving any compensation? Of course if they have, the whole question falls; because anything the Government choose to give you is simply ex gratia on

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their part. But if that is not so, then clearly the Government have no right to fix a certain sum and say, "We will not give beyond that amount." What is the use of appointing wool buyers if you will not allow them to deal as if they were in the market? A wool buyer does not go into the market tied as to the price he is to offer; he goes in order to negotiate on the terms of the trade, whatever they may be. A wool buyer is no better than anybody else to go into the market if all that he is empowered to give is a maximum sum which has been fixed by the Government. He is not a wool buyer; he is simply a person who is carrying out the instructions of the Government.
Supposing these wool buyers carry out their transactions in the way we have been told, what does it amount to? The wool buyers will have no control whatever, and the Government have no control, over the wool that comes from abroad. If wool comes from the Cape, if it comes from Canada, even if it were to come from Germany, you have not the slightest control over the price it is to fetch; and by restricting the home producer while you are unable to touch the foreign producer you are simply fining your own producer for the benefit of the foreign producer.
The noble Lord made one or two other statements that I could not follow. They may be perfectly correct, but all I can say is that I, for one, do not understand them. We were speaking of the case of persons who had gone into sheep farming within the last twelve months. Those persons, certainly in the case of all the big sheep farms in Scotland and in England, have taken over the sheep at a valuation. And when the noble Lord tells me that the rise in store sheep has been only 29 per cent., pray on what ground does he found that? I have had personal experience which tells me that this is a most ridiculous understatement of the increase in the value of sheep. The further statement that nine-tenths of the selling value of sheep is in the increased price of mutton I believe to be entirely inaccurate. The noble Duke sitting beside me (the Duke of Buccleuch) knows about these things much more than I do; but to say that the price of the wool represents only one-tenth of the value seems to me to be an entirely incorrect statement, and I do not know on what it is founded. If it is founded on the inquiries of the Army Council, I can only say that if they do not
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know more about the rise in the price of sheep than they did about their own requirements and the wisdom of issuing this ukase suddenly on that particular morning, I am afraid I cannot attach much value to their opinion.
I was glad to hear from the noble Lord that it is intended to appoint men to value the wool who will really know something about it. But my objection is that you are not going to give them any latitude; you are going to fix the value yourselves. The noble Lord tells us that it is quite sufficient to add to the price of 1914 by 30 per cent. I believe that to be contrary to the opinion of the trade. I feel confident that if you were to ask the opinion of the trade you would find that the increased price is far more than 30 per cent. I do not think that a transaction of this magnitude, which I have shown to your Lordships is so unfair to home producers as compared with foreign producers, can go through unless there is some further inquiry made and some further opportunity of going into the facts. The extraordinary manner in which this transaction has been initiated and is being carried out by the Army Council is an additional proof of what very bad business men a great many of the Government Departments are composed.
LORD ST. AUDRIES: My Lords, I think the argument of Lord Sandhurst is a curious one. As I understand, it is this—that because the farmer is able to sell mutton to the consumer at a high price, therefore the Government are entitled to commandeer his wool at much less than the market value. This seems to me to be rather curious commercial morality, and if you carry it to its logical conclusion the Government might have the wool for nothing. The pre-war price plus 30 per cent. is not a fair price to the farmer. The price in 1914—of course, different wool sales had different prices, but I am talking about the average price of good quality wool—was 11 d. to 1s. a lb.; if you add 30 per cent. it comes to about 1s. 3d. a lb. Last year the price of wool was from 1s. 7d. to 1s. 8d. a lb.; therefore you are really depriving the farmer, for no reason of which I know, of from 4d. to 5d. a lb. of the value of his wool. I do not know whether the Government, in commandeering other materials for the war, have fixed their price at the same rate. When they

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buy timber for the purposes of the Army or Navy or when they buy coal, do they fix the pre-war price plus 30 per cent.? If they do, they are getting the materials remarkably cheap. But if they do not, why should the farmer be treated differently from the coal-owner or timber-seller? It is most unjust to the farmer.
As to the advisory committees, our experience of the local forage committees does not inspire us with hope as to how the work will be carried out. There has been one long complaint, ever since the local forage committees were instituted, that proper prices were not forthcoming and that there was immense delay. With regard to the wool question, the farmers cannot stand delay. They depend upon the money they get for their wool to pay their rents at Midsummer. And you must recollect that sheep farmers were very hard hit indeed by the snow in March. On Exmoor there were twelve feet of snow, and hundreds of lambs were killed. The result was that farmers were not able to save as much mutton for the profitable time, April and May, as they generally do. Also their clip of wool was shorter because a number of ewes and other sheep had been lost. Therefore it is essential to them to have cash as soon as they possibly can. They have to pay their rent and their rates and taxes, and they have also to pay for their labour; and these are not days in which banks are at all willing to make advances to farmers.
The whole of the scheme which the noble Lord has unfolded to us this evening is one of delay. There are to be committees of wool staplers; there are to be directors, some military and some of them in the wool trade; there are to be advisory committees—the whole thing is simply, I will not say wilfully a scheme for delay, but a scheme which involves delay. But the interests of the farmers will not allow of delay. Therefore I impress on the Government that they must, in the interests of the country, carry this scheme through as quickly as possible; and they must have the 75 per cent. advance available so as to let the farmer have cash within the next few weeks. The sooner it is done the better. If the farmers are kept hanging about for their money there will be not only great dissatisfaction amongst them but dissatisfaction as well amongst the labourers because they will not be able to get their wages.
LORD STRACHIE: May I ask my noble friend one question—namely, whether the Department will consult the Central Chamber of Agriculture as well as the National Farmers' Union. I would point out that the Central Chamber of Agriculture is more representative of agriculture as a whole than the National Farmers' Union.
LORD SANDHURST: I will convey my noble friend's wish to the Contract Department.
THE DUKE OF BUCCLEUCH: My Lords, I would like to thank my noble friend Lord Sandhurst for the great trouble he has taken in a short time to obtain the information which he has given us. I only wish I could congratulate those who have furnished him with the information as to the accuracy of it. At the Kettering Sales, where I happened to be at the time this Order was made known, nobody knew anything about it until they arrived at the market. Whether there was a sale or not, I do not know. This only shows how hopelessly ignorant the Department must be of the conditions. I believe I am right in saying that before the Order was issued the Department neither consulted the Board of Agriculture for England nor the Board of Agriculture for Scotland. I noticed that my noble friend said they were now consulting the Board of Agriculture, but I think that is only since the Order has been passed; and as far as one can see they took no steps to do anything until people began to make a fuss.
LORD SANDHURST: I beg the noble Duke's pardon. In regard to consultation with the Board of Agriculture, what I said, or intended to say, was that the proposed increase of price was fixed after careful examination of wool prices over a long period and after consultation with the Board of Agriculture, wool buyers, and other interests.
THE DUKE OF BUCCLEUCH: I beg the noble Lord's pardon. I thought that was about other questions. But let me take the question of store sheep. Take the hill farms. The hill farms in the South of Scotland and the North of England and elsewhere produce a great deal of wool, and it is said that there is no reason to give them a high price for their wool because store sheep have not risen in price

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in the same proportion as fat sheep. The whole of the sheep they sell from these farms are store sheep. Therefore they have not only lost because of the price of store sheep not rising, but they are also to be defrauded of the price of their wool. I do not say that no lambs are sold for fatting off the hill farms, but the bulk are taken away to other parts of the country for store purposes. Therefore as far as those who are most bit by the Order are concerned there is no compensating advantage at all.
I could not follow the figures given by my noble friend. It looked to me rather as if the War Office had picked out certain figures which suited their purpose. But, after all, the real point comes to this. Is it fair and right that one class in this country should be paid a price considerably below what the article that is taken from them is worth? I do not think it is disputed that this proposed 30 per cent. over 1914 prices will be very much below the present day value of the wool. I think the very least that should be offered should be the prices of 1915. It is, as Lord Camperdown pointed out, very hard that the farmers in this country should be fined whilst the growers of wool abroad will be able to get any price they can. There is an impression, it would seem, on the Army Council that cloth is made only in the neighbourhood of Bradford, but I believe there are other places throughout the country where cloth is manufactured and where they will want wool stored.
Another point to which I want to draw attention in connection with these prices is that it is well known that, because of the supposed profits on farms, the farmer has to pay treble the Income Tax that he paid before the war. Previous to the war, under Schedule B, he paid on one-third of the value; now he pays on the full value. Of course it will be said, "But he can claim under Schedule D if he does not make that." Your Lordships know that at the present time farmers are very short of labour, and unfortunately many farmers are not very good at keeping accounts, and there is a good deal of difficulty in keeping accounts to satisfy the Treasury under Schedule D. Therefore practically you may take it that farmers will have to pay on the full value under Schedule B, or three times the Income Tax that they
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paid previous to the war. If you take those matters into consideration and also the fact that the sheep sold off the great wool-producing farms are store sheep and not fat sheep, they show that the War Office have been acting under an entire misapprehension, and that it is time for them to review their attitude and give a reasonable price.
There is another grievance. Although certain societies and bodies have been mentioned as regards England, apparently no body in Scotland of any sort or kind has been consulted. Perhaps we are supposed to be rather touchy, but I think it must be admitted that Scottish farmers, both as regards stock and cultivation, know their business perhaps as well as anybody. I hope that His Majesty's Government will take this question into further consideration, because there is a great grievance. It really seems that the minimum price they can in justice offer is the price of 1915, although personally I think they ought to give from 10 to 15 per cent. over that.
LORD EMMOTT: My Lords, before this discussion closes I should like to be allowed to say one or two words on a rather broader aspect of the case which has been put before the House to-day. I do not propose to deal particularly with the case of wool, but I may perhaps express the opinion, from what I have heard this afternoon, that a case has been made out to show that the new Order was imposed without adequate inquiry having been made in regard to it. We must all agree that in present circumstances great interference with trade is inevitable. As one who has to deal every day with interference with trade, the case of this Wool Order is merely an example of very many cases that constantly come before me. When the Government interferes with the delicate machinery of trade, it almost inevitably interferes with a very heavy hand. I find myself at the War Trade Department very often in the position of having to refuse exports of commodities for which no sale appears to exist in this country. The merchants come to me and say, "What am I to do with this material? You will not let me export it. I cannot sell it here. What am I to do?" And where genuine cases of that kind exist, I must confess that I often feel great sympathy for the would-be sellers.

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My purpose to-night—it is the only purpose for which I have risen—is to make an appeal to His Majesty's Government to institute as full inquiry as possible before these new Orders are imposed. I would even beg of them to interfere as little as they can with trade. Of course, I am not for a moment contending that we must not interfere with it very greatly. We must interfere with our export trade at the present time; that is patent to all of us. With regard to all articles like wool we have complete control of the export from this country, and I do not think anybody objects to that. Nobody can complain of it. And I should like to say, of the classes in this country who are interested in trade, that speaking broadly they have been excessively loyal and have been ready to carry out every requirement of His Majesty's Government when they have seen the necessity for it. In those circumstances I appeal to His Majesty's Government to see to it that when interference is necessary it shall be made as little hurtful as possible to all interested by making as full inquiry as possible from experts in the trade before these new Orders are made. I have found that men of experience are generally ready to meet one as fully as they can, and that when one explains to them what one requires
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they are ready to advise as to how the new Order or Regulation may be made as little hurtful to the trade of the country as possible. That is all I have to say. I do beg His Majesty's Government to be most careful in these matters, and to consult experts, wherever consultation is possible, before new Orders are put into force.
LORD SANDHURST: I will, of course, represent in the proper quarter the various criticisms that have been made. But I endeavoured to make clear that the Department were availing themselves to the fullest extent of expert experience and knowledge in the various interests concerned.
THE EARL OF CAMPERDOWN: Did they do so before issuing the Order of June 8?
LORD SANDHURST: Noble Lords may rely upon it that I will faithfully convey their views to the proper quarter.
House adjourned at a quarter past Six o'clock, till To-morrow, half-past Ten o'clock.