Sitting of 18 May 1916

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

PRIVATE BUSINESS.
Provisional Order Bills (Standing Orders applicable thereto complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely:
Local Government Provisional Orders (No. 5) Bill.
Ordered, That the Bill be read a second time upon Monday next.
Alexander's Restitution Bill [Lords],
Read the third time, and passed, without Amendment.
Swansea Harbour Bill [Lords],
As amended, considered; a Clause added; Amendments made to the Bill; Bill to be read the third time.

SUPREME COURT OF JUDICATURE ACT (IRELAND), 1877.
Copy presented of Order in Council, dated 8th May, 1916, giving effect to Rules of Court [by Act]; to lie upon the Table.
COLONIAL REPORTS (ANNUAL).
Copy presented of Colonial Report, No. 884 (Gilbert and Ellice Islands Protectorate, Report for 1914–15) [by Command]; to lie upon the Table.

NAVY AND ARMY SERVICES, WAR LIKE OPERATIONS, AND OTHER EXPENDITURE ARISING OUT OF THE WAR, 1916–17 (SUPPLEMENTARY VOTE OF CREDIT).
Supplementary Estimate presented—of the Sum required to be voted for general
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Navy and Army Services, Warlike Operations, and other Expenditure arising out of the War [by Command]; referred to the Committee of Supply, and to be printed. [No. 77.]

MOTOR CAR ACTS.
Copy presented of Order by the Secretary for Scotland, dated 11th May, 1916, inter alia, partially rescinding the Motor Cars Regulation (County of Midlothian) (No. 1) Order 1905 [by Act]; to lie upon the Table.

CIVIL SERVANTS OF MILITARY AGE.
Return ordered, "showing the number of persons employed in the various Government Departments in Great Britain at the outbreak of War and on the 1st day of April, 1916; the number who have joined the Forces; and the number of Military Age remaining on the same date."—[Mr. Montagu.]
Copy presented accordingly; to lie upon the Table, and to be printed. [No. 78.]

EAST INDIA (FINANCIAL STATEMENT AND BUDGET).
Address "for Return of the Indian Financial Statement and Budget for 1916–17, and discussions thereon in the Legislative Council of the Governor-General (in continuation of Parliamentary Paper, No. 233, of Session 1914–16)."—[Colonel Yate.]
ORAL ANSWERS TO QUESTIONS.
  WAR.

    NURSES.
    Mr. GINNELLasked the Secretary of State for Foreign Affairs whether, with a view to the next Hague Conference, he will submit to neutral Governments, especially that of the United States, the conduct of Irish volunteer nurses in rendering assistance to the wounded of both

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    sides without distinction and that of the English Red Cross nurses in refusing assistance to any wounded but those of their own side, and ascertain from each neutral Government to which of those two practices it would be disposed to give its adhesion?
    The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Edward Grey): The statements in this question are, I believe, so far removed from the fact that I do not propose to answer it.

  DISTURBANCES IN IRELAND.

    ARRESTS.
    Mr. T. M. HEALYasked the Secretary of State for Foreign Affairs whether the American Embassy has brought to his notice the arrest in Dublin of an American named James M. Sullivan, who until September last was United States Consul for San Domingo; whether Mr. Sullivan was kept eight days in custody in Kilmainham Gaol without any charge being made against him and was then discharged without trial or apology; will he ascertain what explanation is offered by General Maxwell for the rigorous treatment to which this gentleman was subjected; and can the Government take any steps to prevent the imprisonment of innocent men?
    Sir E. GREY: The answer to the first part of the question is in the affirmative. The other parts of the question do not relate to matters which come within the province of the Secretary of State for Foreign Affairs, but the case brought before us by the American Embassy is being inquired into, and when I know the facts I shall, of course, communicate them to the American Ambassador and be ready to answer another question on the subject.
    Mr. WILLIAM O'BRIENasked whether Daniel Walsh, of Gaggin, Bandon, was on 8th May arrested by a military and police party without any charge stated, and has not since been heard of by his relatives; whether it is known to the local police that Daniel Walsh, who was the manager of the Cork and Kerry Creamery Company, was at no time a member of the Irish Volunteers and was a man of moderate and conciliatory politics; and whether orders will be given for his immediate release?
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): I am informed that Daniel Walsh was arrested on the date mentioned, on the charge of having in his possession ammunition and explosives, which were found at his house by the military and police who searched it. The military authorities are at present making further inquiry into his case.
    Mr. O'BRIEN: Is it not time to drop these mediaeval barbarisms, and does the right hon. Gentleman forget what the result of calling the Manchester martyrs murderers was?
    Mr. MAURICE HEALYasked the Prime Minister how many members of the Irish Volunteer organisation were in custody in Cork County Gaol up to 9th May, 1916; what were the orders given by the military authorities to the governor of the Cork County Gaol in regard to the treatment to be given to these prisoners; whether these prisoners were removed from Cork Gaol on Tuesday morning, 9th May, 1916; and, if so, where they were removed to and where they now are; how many of them have been tried; has notice been sent to the prisoners' relatives as to what has become of them; will he say why the Catholic prisoners were not allowed to attend Mass in the Cork County Gaol on Sunday, 7th May, and why was not the chaplain to the prison allowed to visit those prisoners while they were in gaol; what offence have they committed beyond being members of a Volunteer organisation which was not proclaimed illegal until the Dublin outbreak on the 24th April; were their relatives allowed to visit them; and how long were they in custody before they were allowed one hour's exercise per day?
    Mr. TENNANT: I have ascertained from Dublin that inquiry is being made into this, matter.
    Mr. MAURICE HEALYasked the Prime Minister whether the prisoners imprisoned in Cork Gaol as being Sinn Feiners, and against whom no charge has so far been preferred, were, when first arrested, kept in solitary confinement, refused exercise, and denied the visits of their friends and even of the chaplain; and whether this state of things still continues?
    Mr. TENNANT: Men in Cork Prison are allowed daily exercise as recommended by the medical authorities. Prisoners are; allowed to see their clergymen.
    Mr. MAURICE HEALY: May I point out that the right hon. Gentleman has not answered the question whether, when they were first arrested, they were kept in solitary confinement, refused exercise, and denied the visits of their friends and the chaplain; and when the right hon. Gentleman says that they are allowed exercise, does that mean that there is a differentiation between them and other prisoners, who, as I understand, are allowed exercise under a rule quite irrespective of any doctors?
    Mr. TENNANT: My information only goes so far as I have given it to the right hon. Gentleman. I cannot answer any further questions on that subject. I am informed that they are allowed exercise. Whether there is a differentiation between the ordinary exercise and the exercise ordered by the doctor I should have to inquire on the spot, which, of course, takes time.
    Mr. MAURICE HEALYasked the Prime Minister the circumstances under which a number of men were on the 2nd instant arrested in Cork, marched through the streets in the custody of armed police and soldiers, causing excitement in the city, and lodged in gaol, and afterwards on the same day discharged from custody without any charge being preferred against them; and who was responsible for this proceeding?
    Mr. TENNANT: These men were arrested as a precautionary measure, which was carried out by the military authorities under the Defence of the Realm Act.
    Mr. MAURICE HEALY: Will the right hon. Gentleman say what form of precaution involved the arrest of men at three o'clock and their release at seven o'clock the same evening?
    Mr. TENNANT: I cannot explain it— no.
    Mr. MAURICE HEALYasked the Prime Minister whether it is intended to bring the prisoners recently arrested and imprisoned in Cork Gaol as Sinn Feiners to trial; if so, when and on what charge; and by what tribunal will they be charged?
    Mr. TENNANT: I would refer the hon. Member to the written reply I gave to the hon. Member for the Harbour Division of Dublin yesterday.
    Mr. MAURICE HEALYasked the Prime Minister whether the prisoners recently arrested in Cork and the adjoining counties as being Sinn Feiners and imprisoned in Cork Gaol, or any of them, have been removed from Cork and imprisoned elsewhere; and, if so, will he say where?
    Mr. TENNANT: The prisoners in question were removed to Dublin.
    Mr. GINNELLasked whether Messrs. Eoin MacNeill, Herbert Pim, Arthur Griffith, and Walter L. Cole, uncharged prisoners, are still denied a bed, required to lie on stone flags, denied the right of private consultation with friends or counsel, and denied the right of procuring comforts from their homes; when will a charge be formulated against them; and when, where, and by what sort of tribunal are they to be tried?
    Mr. TENNANT: I am sure the hon. Gentleman will not allow his imagination to run away with him in drafting questions on these matters. Inquiries are now being made regarding the allegations in the first part of the question. The main point, however, which is raised is that contained in the last part, and on that, as I stated yesterday, I am not able at the moment to make a definite announcement. I must ask the hon. Member to recognise that the matter is one of gravity and that a properly considered decision is of more importance than a very early decision.
    Mr. GINNELL: Since this question was put on the Paper, the newspapers have published certain information with reference to Mr. MacNeill. Can the right hon. Gentleman say whether that information is, or is not, true—whether there is a trial going on or not?
    Mr. TENNANT: I have informed the House that inquiries are now being made. Clearly I cannot give the information before the inquiries are complete.
    Mr. LOUGHasked the Under-Secretary of State for War whether he can give any information as to the fate or the present whereabouts of Mr. Octavius Hardy, of 17, Belgrave Road, Rathmines, Dublin, and his nephew, Mr. Joseph Vincent Hardy, of Mount Prospect, Ballinasloe, landowner, both being well-known Unionists and Protestants, who were arrested on Easter Tuesday at 17, Belgrave Road because some old fowling pieces were found on their house being searched, and who have not since been

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    heard of by their relations; whether the authorities have since returned the old guns to 17, Belgrave Road as being of no use; and whether, nevertheless, the Messrs. Hardy are still kept in prison or have been subjected to some graver fate by the military executive?
    Mr. TENNANT: I have received a message from Ireland that inquiries are now being made into the incidents mentioned in my right hon. Friend's question.
    Mr. LOUGH: As nearly three weeks has elapsed, and the anxiety of the relatives is very great, and as the number involved is between 2,000 and 3,000, will the right hon. Gentleman kindly give particulars at an early date?
    Mr. TENNANT: I have already explained to the House the great difficulties under which I labour in this matter, and I do not think I can say more.

    TRIALS BY COURT-MARTIAL.
    Mr. GINNELLasked the Secretary for Foreign Affairs whether, with a view to the next Hague Conference, he will ascertain the opinion of neutral Governments, especially that of the United States, on the prospect of having an international convention adopted against the practice of executing wounded military prisoners, after trial and sentence by court-martial, as in the recent Irish rebellion?
    Sir E. GREY: This question, or one in exactly the same terms, was answered yesterday.
    Mr. GINNELL: It was not answered yesterday. Will the right hon. Gentleman answer Question No. 6?
    Sir E. GREY: No, Sir. I think it is really unreasonable, especially in time of war.

    POSTPONED QUESTIONS TO MINISTERS.
    Mr. W. O'BRIEN(in whose name stood Questions Nos. 9, 12, 14, and 15, relating to the disturbances in Ireland): I have been asked to postpone these questions, which have now been on the Paper for more than a (Week. Telegraphic communication is now going on, and why can we not get the information by wire, or even by post?
    Mr. TENNANT: There has been difficulty in getting the information. That is the only answer I can give. Information has been asked for, and as soon as I get it I will communicate it to my hon. Friend.
    Mr. O'BRIEN: I have received a letter from the Secretary to the Prime Minister asking me to postpone Questions Nos. 14 and 15, and I suppose the same observations apply to them?
    Mr. TENNANT: I can only inform my hon. Friend that I have received a telegram stating that the case of Dr. O'Donoghue (No. 14), who was arrested, is now being inquired into by the military authorities.
    Mr. FLAVIN: Will the right hon. Gentleman say on what grounds Dr. O'Donoghue has been arrested, and is he aware that Dr. O'Donoghue went out on Easter Monday to render medical aid to those shot down in the streets of Dublin, and while doing so was arrested by the military authorities and removed.
    Mr. TENNANT: Those are points to be inquired into, and will be borne in mind, I have no doubt, when the matter is inquired into by the military authorities.
    Mr. O'BRIEN: Is the right hon. Gentleman in a position to answer No. 15?
    Mr. TENNANT: My answer is similar to my previous one. This matter is, of course, of some complexity, as the hon. Gentleman realises. I have received a telegram which states that the incidents referred to are at present the subject of careful inquiry by the military authorities.
    Mr. O'BRIEN: Will it be the subject of very careful inquiry by the Prime Minister, who is in Cork to-day?
    Mr. TENNANT: That I cannot possibly answer.
    Mr. FLAVIN(who had given notice of Questions No. 86 and 87, relating to arrests in Ireland): If the subject is not raised on Monday I shall feel it my bounden duty to raise it on the Adjournment of the House in view of the continued detention of these innocent men in gaol.
    Mr. BYRNE(in whose name stood Questions Nos. 74, 75, 83, and 84, relating to the disturbances in Ireland) asked the Undersecretary of State for War if he is aware of the bitterness caused in Ireland owing to the delay in trying those men who are well known to be innocent—hundreds of them—who are now in Wandsworth and Knutsford gaols, and who are strictly opposed to the rising altogether? I think the right hon. Gentleman could very easily answer Question No. 75, as regards the conditions of the prisons in which Irish prisoners are detained.
    Mr. TENNANT: I quite realise the anxiety which is felt by hon. Members representing Ireland in this matter. I appreciate it very much. I should like them also to appreciate my position. I will inform the hon. Member who puts the question to me that inquiries are being made, and action is being taken where possible in the interest of all prisoners in English prisons for the release of those men who are discovered to be quite innocent.

    EXECUTION OF THOMAS KENT.
    Mr. O'BRIENasked whether consent will be given to the publication of the evidence at the field court-martial on Thomas Kent, who was executed in Cork and was refused Christian burial?
    Mr. TENNANT: The result of my inquiries in regard to this question is that I understand the military authorities do not see their way to permitting publication of the evidence. It must not, however, be taken as accepting the statement made in the last four words of the question. On this point I have no information.

    IRISH VOLUNTEERS (CORK).
    Mr. O'BRIENhad the following question on the Order Paper: To ask the Prime Minister whether he is aware that the assistant bishop of Cork-has confirmed in all essential points the particulars as to the agreement come to between the General Commanding Officer, the bishop, the Lord Mayor, and the leaders of the Irish Volunteers in Cork, on the strength of which the latter surrendered their arms to the Lord Mayor, the agreement come to by the military representative expressly stating that the military had no idea of confiscation and that, so far as the military were concerned, the arms would be returned when the crisis was over, and that if these terms were accepted there should be a general amnesty except in the case of persons found in treasonable correspondence with the enemy; whether he is aware that the bishop complains that, notwithstanding the guarantee of amnesty and of leaving the arms in the possession of the Lord Mayor, both these undertakings were broken, not, as he believes, through any fault of the Commanding Officer with whom the negotiations were conducted; whether the Government will now adopt the policy laid down by the Commanding Officer, himself an Ulster Protestant, that while in-
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    sisting upon securing that there shall be no military danger in the city he wanted no irritating or humiliating conditions; and whether the Government is aware of the bishop's further statement that he had no doubt that in these matters, too, if North and South of Ireland representatives met together, they would settle their differences in a reasonable and satisfactory manner?
    Mr. W. O'BRIEN: I think this question is postponed, but perhaps the right hon. Gentleman can, as I understand he can, say something now?
    Mr. TENNANT: I cannot give a full and clear answer, but I have received a telegram stating that careful inquiry is being made into the terms of the agreement stated to have been made by the Officer Commanding at Cork when arms were surrendered, and I hope to be able to give the hon. Member the result of the inquiry soon.

    TRADE UNION MOVEMENT.
    Mr. BYRNEhad the following question on the Order Paper: To ask the Prime Minister whether, in the event of a Committee being appointed to inquire into the circumstances which brought about the recent disturbance in Ireland, he will give representation on such Committee to the trade union movement; and if he is prepared to receive a deputation and hear their views on the cause of dissatisfaction in Ireland?
    Mr. BYRNE: All my questions on the Order Paper are, I understand, postponed by request.
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Herbert Samuel): Except No. 51, which I can answer. I would refer the hon. Member to the statement made by the Prime Minister on the 10th instant on the constitution and powers of the Commission. From it he will see that the members were chosen for their administrative and judicial experience, and not as representing particular interests. The Commission will call any witnesses whose evidence they regard as relevant and useful. The last part of the question should be addressed to the Prime Minister on his return.
    Mr. T. M. HEALY: Can the right hon. Gentleman give us any information as to whether the Commission has decided to sit in pubic or private?
    Mr. SAMUEL: No, Sir.
    Mr. BYRNE: In view of the fact that bad wages and bad housing are the principal causes of the disturbances, will not the right hon. Gentleman give the trade unionists the opportunity of giving their views on the matter to the Prime Minister?
    Mr. SAMUEL: That is a question which I suggest to the hon. Member he should defer till the return of the Prime Minister; he could then put the request for a deputation.

    PRISONERS AND THEIR RELATIVES.
    Mr. DEVLINasked the Prime Minister whether he is aware that numbers of the relatives of persons arrested in connection with the disturbances in Ireland have written to the military authorities in Dublin asking to be put in communication with their relatives who are prisoners and have been unable to obtain any satisfactory replies; and whether he will see that facilities are afforded immediately for communication between prisoners and their relatives?
    Mr. TENNANT: I will read a notice inserted in the Irish newspapers of Tuesday by the General Officer Commanding-in-Chief in Ireland, which will give to my hon. Friend the information he seeks and some additional information of public interest:

    PRISONERS IN DETENTION BARRACKS. MILITARY REGULATIONS.
    The following information regarding persons arrested in connection with the recent rebellion is announced:—
    (a) Information as regards the whereabouts of any particular prisoner can always be obtained by writing to the Provost Marshal, Richmond Barracks. In addition to this, the names and addresses of prisoners sent to England are communicated to the Press.
    (b) It is possible that persons may have been in advertently arrested who have had no connection whatever with the rebellion or with the movement which fomented it. The military authorities are most anxious that such persons should be released forthwith, and printed forms on which release may be claimed, and which are framed to facilitate a rapid investigation, have now been issued to commandants of places of detention, who have received instructions to assist any illiterate prisoner in filling up the same. The forms when completed are sent to the Provost Marshal at Richmond Bar racks. They are then carefully compared with the information in possession of the military authorities and, if the facts justify it, the release of the prisoners concerned is immediately ordered, and they are sent back to the place where they were arrested.
    Applications soliciting release of prisoners will receive consideration when the prisoner's claim is being dealt with.
    (c)Prisoners have been told that, if they desire to see their legal advisers, they should inform the commandant, who will make the necessary arrangements accordingly.

    PRISONERS IN DETENTION AT RICHMOND, ARBOUR HILL, AND KILMAINHAM.
    Prisoners may be visited on Monday, Wednesday, and Friday. Visitors must present themselves at the barracks between the hours of 10 a.m. and 11 a.m. on those days.
    PARCELS.
    Parcels for prisoners may either be delivered or sent by post. These must be clearly marked with name and home address of the prisoner, and sent c/o Commandant. All parcels are subject to inspection by the officer in charge of the prisoners.

    LETTERS.
    Letters may be written and received by prisoners."
    Mr. GINNELL: Will the right hon. Gentleman say whether that part of the Order relating to legal advice cancels the Order issued last week that there would be no legal advice allowed?
    Mr. TENNANT: I was not aware that any Order of the kind had been issued. [HON. MEMBERS: "Yes."] Obviously this Order would supersede the former.
    Mr. GINNELL: Would the right hon. Gentleman try to have it expressly superseded, so that the prisoners may be allowed to get what legal advice they desire?
    Mr. FLAVIN: May I ask how are prisoners arrested in Ireland, and those deported over here, to get at their legal advisers, especially those men who are innocent? If these men are innocent, will the Government pay the cost of their legal advisers coming across to see them?
    Mr. T. M. HEALY: Has the attention of the right hon. Gentleman been called to the fact that this official statement (exhibiting a paper) is dated 6th May, and states that prisoners arrested under martial law are not permitted to communicate with any person whatsoever? Is that to be understood?—because we do not know. Some of these prisoners arrested are Irish Conservative landlords. They are in Wake-field Gaol. How can this knowledge be brought to their notice?
    Mr. TENNANT: The notice which the hon. and learned Gentleman has read was issued on 6th May. The notice that I have read is dated 16th May—ten days later. It is not surprising that, immediately after the rebellion, such an Order was issued. The one I have just read no doubt supersedes it.
    Mr. T. M. HEALY: That is not my point. What I want to know is, how can a man in Wakefield Gaol, shut out from the newspapers—a man who is, I assume, innocent—become aware of the Order?
    Mr. TENNANT: He will have a form sent to him.
    Mr. MAURICE HEALY: Has the right hon. Gentleman seen the statement made at a meeting of the Incorporated Law Society of Ireland that where legal assistance had been engaged by friends of prisoners the authorities had refused to allow that help to be given because the prisoner himself had not retained the lawyer in question?
    Mr. TENNANT: No, Sir; I have not seen anything of the kind. I imagine no difficulty would be placed in the way of legal assistance being given to prisoners under the Order which I have just read.
    Mr. T. M. HEALY: The right hon. Gentleman yesterday, quoting the exact official words, said he was unable to give me an answer?
    Mr. TENNANT: Because then I had not received the information which I have just conveyed to the House.
    Mr. LYNCH: Will the Government entertain a proposal which would be a more satisfactory solution of the whole question—that is, a general amnesty?

    ROSSLARE AND FISHGUARD SERVICE.
    Mr. MAURICE HEALYasked the Prime Minister whether passenger traffic by the Fishguard and Rosslare service between Ireland and England has been stopped by the military authorities; and, if so, seeing that free communication between the North of Ireland and Great Britain is permitted, whether the South of Ireland, which has been equally peaceful, will now be relieved from the inconvenience from the suspension of the Rosslare and Fishguard service?
    Mr. TENNANT: The Rosslare and Fish-guard service has been reopened.

    RED CROSS SOCIETIES (ASSISTANCE TO WOUNDED).
    Mr. GINNELLasked the Under-Secretary of State for War whether he is aware that the Irish Volunteer Red Cross Society in the insurrection in Dublin rendered assistance to wounded on both English and Irish sides without distinction; that the English Red Cross Society, by direction of the English military authority, refused assistance to wounded Irish Volunteers; that the English troops fired
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    on the Irish Red Cross nurses and forced them to evacuate their headquarters, the Hibernian hotel, while under fire; and if he can give a reference to any Hague Convention supporting the English conduct in this matter as distinguished from the Irish?
    Mr. TENNANT: I have now received an answer from Ireland on this matter, and the hon. Member and Members in all parts of the House will, I am sure, be glad to learn that members of all Red Cross societies rendered valuable and impartial assistance to all wounded, whether civilians, troops, or rebels. The House will also not be surprised to learn that there is no truth in the allegations made in the question against the military authorities or the troops.

    Mr. SHEEHY-SKEFFINGTON.
    Mr. GINNELLasked the Under-Secretary of State for War whether he is aware that Mr. Sheehy-Skeffington, pacifist, when shot fatally by the military at the Dublin barrack, did not die immediately, but continued to crawl about the barrack yard in his death-agony for more than an hour, while several officers looked on amused; whether one of those officers kicked his body before life was extinct; whether, after burying his body in the barrack yard, the military visited his house, terrified his wife and child, refused to give her any information about her husband and, although he had acted as a pacifist throughout, looted his house under pretence of searching it, smashed furniture and windows, and left it a wreck as it now is; whether the promised trial of those responsible will be such as to admit oath and evidence of these facts; and what in the nature of amends will be made to widow Skeffington and her little boy?
    Mr. TENNANT: All the facts which have been reported and which have been alleged in reference to this matter are the subject of close investigation at present.
    Mr. GINNELL: Will the right hon. Gentleman say by what tribunal the investigation is carried on?
    Mr. TENNANT: It is carried on under the orders of the General Officer Commanding-in-Chief.
    Mr. GINNELL: A military tribunal.

  PRISONERS OF WAR.
  Mr. THEODORE TAYLORasked the Secretary of State for Foreign Affairs if he will state what steps the Swiss Government has taken to put into operation the recent agreement as to the transfer of British prisoners from Germany to Switzerland and German prisoners from Great Britain to Switzerland?
  Sir E. GREY: It is understood that the Swiss Government are taking all necessary steps to put the agreement referred to into operation. Arrangements are being made to intern the British prisoners of war at Chateau d'Oex. Four Swiss Medical Commissions, consisting of two medical officers each, are starting for this country on the 20th May to examine the German prisoners, and it is expected that the Swiss Medical Commission, which is to examine the British prisoners in Germany, will leave Berne on the same date.
  I should like to take this opportunity of expressing publicly the gratitude of the country and of His Majesty's Government to the Swiss Government for the cordial and ungrudging assistance which they have given from the outset towards the establishment of this scheme.
  Mr. BLISS: Are British and German prisoners being interned at Chateau d'Oex?
  Sir E. GREY: I would be glad if the hon. Member would give me notice. I imagine not, and that British prisoners will be at one place and German prisoners at another.
  Colonel YATEasked the Secretary of State for Foreign Affairs whether he has any confirmation of the death in captivity of Mr. Pettigrew, inspector in the Indo-Europeon Telegraph Department, one of the members of the Shiraz British community, held prisoner by German emissaries at Ahram, in Persia; whether Mr. Pettigrew's death was in any way accelerated by the harsh and unhealthy conditions in which the prisoners have been forced to live; and what arrangements will be made for an adequate compassionate allowance for the widow and five children dependent upon him?
  Sir E. GREY: I regret to state that Mr. Pettigrew died at Ahram on 27th April from heart disease. I have as yet no information in regard to the suggestion con-
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  tained in the second part of the question, and the arrangements referred to in the last part would seem to be for the consideration of the Secretary of State for India, to whom I have communicated my hon. and gallant Friend's suggestion.
  Colonel YATE: Can the right hon. Gentleman say whether there is any hope now of obtaining the release of those prisoners?
  Sir E. GREY: I should be glad if the hon. Member would give me notice.
  Mr. TAYLORasked the Under-Secretary of State for Foreign Affairs if he will say what steps are being taken by the War Office to bring into operation at the earliest possible moment the agreement under which British prisoners are to be transferred from Germany to Switzerland and German prisoners from Great Britain to Switzerland?
  Mr. TENNANT: In order that there may be no unavoidable delay an agreement has just been made with the German Government whereby the selection of those who are unquestionably included in the category of disabilities as justifying transport to Switzerland may be made by the medical authorities of the country where the prisoners are interned. The necessity for the majority of medical men on these selection boards being of Swiss nationality will be waived in this fresh selection. The necessary instructions have been issued.

  PEACE AND SUBMARINE WARFARE (VATICAN ACTION).
  Major-General Sir IVOR HERBERTasked the Secretary of State for Foreign Affairs whether he has any official information to the effect that the Vatican had approached one or more Powers with regard to the possibility of peace and that the Vatican have approached Germany on the subject of submarine warfare?
  Sir E. GREY: With regard to the first part of the question, Sir Henry Howard has informed us that the Vatican have been in communication with no one with regard to the possibility of peace. As to the second part of the question, we are informed from the same source that the Vatican have made representations to Germany in order to induce her to abandon submarine warfare.

  CEYLON.
  Mr. GINNELLasked the Secretary for the Colonies whether he is now in a position to state the charge, if any, on which Mr. D. B. Jayatilaka, B.A. (Oxon), a barrister of Lincoln's Inn, a temperance leader in Ceylon, was arrested and imprisoned last summer, was offered release on making a cash payment and giving security for good behaviour, imprisoned on declining to do this, and released without trial or charge when his friends, on account of his health, gave the required security; and whether, now that Sir Robert Chalmers is in Ireland, any opportunity will be afforded for testing in the Courts of this country the legality of that particular instance of his rule in Ceylon?
  The SECRETARY of STATE for the COLONIES (Mr. Bonar Law): The reply which I gave to the hon. Member's question yesterday applies also in this case.
  Mr. GINNELL: Will the right hon. Gentleman answer the last clause of the question, whether any opportunity will be afforded for testing in the Courts of this country the legality of that particular instance of his rule in Ceylon?
  Mr. BONAR LAW: I suppose any opportunities the law allows are open to the hon. Gentleman if he chooses to adopt them.
  Mr. GINNELL: May I ask whether they are open to the person aggrieved?

  MUNITIONS.

    SHELL FACTORY (EMPLOYMENT OF SOLDIERS).
    Mr. TYSON WILSONasked the Minister of Munitions whether there are from 200 to 250 soldiers employed as bricklayers, carpenters, and masons on the shell factory in course of erection at White Lund; and, if so, will he state the rate these men are being paid at.
    The PARLIAMENTARY SECRETARY to the MUNITIONS DEPARTMENT (Dr. Addison): I would refer my hon. Friend to the answer given to the hon. Member for North-East Manchester by the Financial Secretary to the War Office on 16th May, of which I am sending him a copy.
    Mr. WILSON: Is there a shortage of civil labour in this particular locality?
    Dr. ADDISON: I cannot speak as to this particular locality without notice, but there is a great shortage of civil labour of this kind.

    CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).
    Mr. PETOasked the Minister of Munitions whether he has been able to-secure any relaxation in the Regulations made by the Central Control Board (Liquor Traffic) for the county of Wilts, which operate as a practical prohibition of beer to the agricultural labourers?
    Dr. ADDISON: I am informed that the Control Board have taken steps to obtain a Report upon the working of the Order in question, and that this Report will receive careful consideration. Meanwhile, I must not be taken as accepting the hon. Member's description of the effect of the Order.
    Mr. PETO: What steps are being taken to give effect to the pledge of the Minister of Munitions that people should not suffer by any action taken by the Control Board?
    Dr. ADDISON: Perhaps the hon. Member will give me particulars of any case that he has in mind.

    DEPORTED CLYDE WORKMEN.
    Mr. THOMAS RICHARDSONasked the Minister of Munitions if he is aware that the Clyde workmen who were deported to Aberdeen have applied for employment to the following, among other firms; Henderson and Company, King Street Works; Messrs. Mackinnon and Company, Spring Gardens; Wilson and Company, Wales Street; Pirrie and Company, Union Works; J. Lewis and Company, Albert Quay; Robert Lewis, Esplanade; and Trawlers and Traders Engineering Company, Albert Quay, and in every case have been refused, notwithstanding that the Labour Exchange reports these firms as in need of skilled workmen; whether it is his intention that these men should not be able to earn any wages during their deportation; and, if not, whether he will use his influence to procure employment for these men either in State or private works?
    Dr. ADDISON: I have already been informed that the men referred to by my lion. Friend had applied for work unsuccessfully, but I had no details of the firms to which they had applied. It is certainly not the intention or desire of my right

    1637
    hon. Friend that these men should not be able to earn any wages during their deportation. If the men will give an undertaking as to good behaviour similar to that which other deported men have expressed their willingness to give, my right hon. Friend will endeavour to secure them employment, if they cannot obtain it through the ordinary channels. While the men are unemployed, allowances are being made to their families.
    Mr. THOMAS: Can the hon. Gentleman say when a charge will be preferred against these men, and when they are likely to be put on trial?
    Dr. ADDISON: These men were deported under the Defence of the Realm Act Regulations.
    Mr. THOMAS: If they were deported, obviously they were deported for a crime committed. If they committed a crime, ought they not to be tried? Then the workers would see the exact charge made against them.
    Dr. ADDISON: The reasons for their deportation were explained by the authorities to the men on the spot. Certain men were proceeded against on certain charges, and these men were not proceeded against.

  MILITARY SERVICE.
  Mr. TENNANT: This question is postponed.
  Mr. MORRELL: Can my right hon. Friend tell me whether any further recalcitrant objectors have been taken to France since this batch?
  Mr. TENNANT: I am not certain whether a company of non-combatants have gone since the seventeen were sent, but I am sure the House will be relieved to hear from the Adjutant-General that all is going very well and there is no trouble with the Non-Combatant Corps.

  MILITARY SERVICE.

    TRIBUNALS (RECORD OF DECISIONS).
    Mr. SNOWDENasked the Home Secretary if the Press Bureau has prohibited the publication of a record of decisions of the tribunals under the Military Service Act, 1916, which are not in accord with the law and the instructions, and if they have further prohibited any such record being published for the information of Members of Parliament, stating that such a record would be a criticism of the tribunals likely to cause disaffection; and if it be the policy of the Government to use the Defence of the Realm Act to shelter illegality and to encourage lawlessness?
    Mr. SAMUEL: The Press Bureau in the exercise of their discretion considered that the effect of the pamphlet would be, not merely to draw attention to alleged defects in the administration of the Military Service Act, but to stimulate resistance to its operation. Since it fell within the scope of Regulation 27 its circulation in any form could not be sanctioned.

    SURVEYOR OF TAXES DEPARTMENT.
    Captain AMERYasked the Chancellor of the Exchequer whether he is aware that the Board of Inland Revenue have refused to give permission to members of the permanent staff of the Surveyor of Taxes Department to join the Army; and whether he will take steps to arrange that, where the duties are such as can be equally well performed by those who are ineligible for military service, applications will be considered from those members who are anxious to enlist?
    The CHANCELLOR of the EXCHEQUER (Mr. McKenna): In view of the immense additional burdens thrown upon the Inland Revenue by war finance, the Board are unable to allow any further depletion of their tax surveying establishment, which is responsible for the conduct of some of the most difficult and important work in the public service.
    Captain AMERY: Is it not a fact that the lower branches of the Surveyor of Taxes Department are persons whose skill is not such that they could not well be replaced by women or older men?
    Mr. McKENNA: With the greatest respect to the hon. and gallant Gentleman, I can assure him that a very close examination has been made of the staff, and those who are responsible for it are satisfied that no further depletion can safely be made.
    Captain AMERY: Would the right hon. Gentleman be surprised if I said I have received letters from members of the staff who are certain their work can be quite easily done by women, and that they are anxious to enlist?
    Mr. McKENNA: I should be greatly surprised, and if the hon. and gallant Gentleman would forward letters I should be glad to supply him with an adequate answer.
    Mr. HOGGE: Is the right hon. Gentleman aware that heads of ordinary businesses are not given the same treatment, and their advice is not taken as to which of their staff they can dispense with?
    Mr. McKENNA: I could not agree with my hon. Friend that the necessity to the State of an ordinary business is quite in the same degree as the necessity to the State of the tax-collecting business, on which we depend for our revenue.

    TIME-EXPIRED SOLDIER'S ARREST.
    Mr. SNOWDENasked the Under-secretary of State for War if he will make immediate inquiry into the arrest of Private Dugdale, No. 26,752, 10th East Lancashires, stationed at Morgrat Camp, Wareham, who was discharged from the Army on payment in 1898, who enlisted in the King's Royal Battalion for the South African War, where he served for two years and four months with the Colours and afterwards eight years in the Reserve, and whose time expired on 6th January, 1912,but who, notwithstanding that he was excepted under the Military Service Act, was arrested under that Act on 31st March last, tried and fined 40s., and handed over to the military authorities; and will he order that the fine be refunded and the man released, and that suitable action be taken with those responsible for the arrest?
    Mr. TENNANT: Inquiry is being made.

    BORDER REGIMENT (RESERVE BATTALION LABOUR COMPANY).
    Mr. SNOWDENasked the Under-secretary of State for War whether he is aware that men attached to the Labour Company of the Reserve Battalion Border Regiment are now stationed at More-cambe who, to the number of about 300, are employed in carrying timber, wheeling bricks, and general navy work, and other work all of a non-military character, and are paid the Army rates for civil work which ought to be done by civilians at trade union rates; whether there are in this company men who have been declared by the Army doctor to be unfit for military dutiesbut who are being kept in the Army to do civilian work at Army pay; and if he will take steps to put an end to this conscription of labour for civil purposes?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): I would refer my hon. Friend to the answer which I gave on this matter to the hon. Member for North-East Manchester, last Tuesday. I am having further inquiries made into the case.

    CONSCIENTIOUS OBJECTORS
    Mr. SNOWDENasked the Under secretary of State for War if he will make inquiry into the treatment meted out to three conscientious objectors at Bettisfield Park Camp, who were forcibly stripped of their clothes and marched across the camp
    1640
    ground, one entirely naked, and also into the numerous complaints which are made about the way in which conscientious objectors are treated at Fullwood barracks, Preston, being beaten with sticks, handcuffed, kicked across the barrack yard, indecently assaulted when undressed, and subjected to filthy language?
    Mr. TENNANT: Inquiry has been ordered, and I am awaiting the result.

    ARRESTS.
    Mr. DORISasked the Under-Secretary of State for War whether he is aware that Patrick M'Cann, of Manulla, county Mayo, a migratory labourer, who came to England on 29th January, 1916, was arrested at Birkenhead on 2nd May instant, and charged at Birkenhead borough Police Court with having failed to register on 15th August, 1915, when he was at home in Ireland, and with being an absentee from His Majesty's Army on 1st March, 1916; and that the accused was convicted and fined on both charges and handed over to the military authorities, who have placed him in the Reserve Battalion, 3rd Monmouth Regiment, although evidence that he was at home in-Ireland from Christmas, 1914, to 29th January, 1916, was not disputed, and his English employer, a milk purveyor, deposed that the employment was only temporary; and will steps be taken to have the fines remitted and to have this Irish migratory labourer, who has not been ordinarily resident in Great Britain, discharged from military service?
    Mr. TENNANT: Inquiry is being made.

    CASES UNDER INVESTIGATION.
    Mr. CREANasked the Under-Secretary of State for War whether he will inquire into the case of Daniel Collins, a native of Meelon, Bandon, county Cork, who, on the occasion of one of his periodical visits to Manchester during Easter week, was drafted into the Army; whether he is aware that this man has but lately been discharged from the hospital where he was under treatment for appendicitis but could not be operated on owing to the serious condition of his heart and lungs and general low condition of health; whether he has been drafted to Naas depot, county Kildare, No. 26,818; and, being of Irish domicile, whether he will have the man immediately sent back to his home?
    Mr. TENNANT: Inquiry is being made.

    NON-COMMISSIONED OFFICERS.
    Sir CLEMENT KINLOCH-COOKEasked whether all non-commissioned officers recommended for commissions have to go to Cadet Corps no matter how long they have served in the Expeditionary Forces abroad, and, if so, whether they have to go through the full course of four months; whether they are posted to the branch of the forces or of the regiments they have applied for; and whether steps will be taken to prevent waste of time in the case of those who are fully trained already in minor duties?
    Mr. TENNANT: The answer to the first three lines of the question is in the affirmative except in the case of those who have previously served as officers or those possessing certain technical qualifications for appointment. Cadets can pass out before the full course is completed. Their wishes are met as far as possible as regards units in which they wish to serve. A syllabus is being drawn up by the General Staff with a view to fitting candidates for the duties of officers in the shortest possible time. It is not the desire of the General Staff, who are responsible for conducting the operations, that time should be wasted any more than it is that of the hon. Member.

    ROYAL ARMY MEDICAL CORPS.
    Mr. JOYNSON-HICKSasked whether instructions have been issued that the contracts of temporary officers in the Royal Army Medical Corps are not renewed unless the officers are passed fit for general service at Home and abroad; and whether officers who are quite fit for Home service could be utilised to release others or serfvice abroad?
    Mr. TENNANT: I will take the liberty' of referring my hon. Friend to the answer I gave on the 22nd February to the hon. Member for South Carnarvonshire.

    FIELD PUNISHMENT.
    Mr. ROWNTREEasked what are the various forms of field punishment authorised by the British Army, and for what offences are they given?
    Mr. TENNANT: I would refer my hon. Friend to the "Manual of Military Law," which contains full information on this subject.

    MILITARY OFFENCES.
    The following question stood on the Paper in the name of Mr. MORRELL: To
    1642
    ask the Under-Secretary of State for War where the seventeen men who were taken last week from the military prison at Harwich to Havre are now placed; whether these men, or any of them, are still refusing military service; and whether one of them, H. F. Brewster, has recently-been sentenced to twenty-eight days' field punishment, and for what offence?

  LANCE-CORPORAL J. GLYNN.
  Mr. RUPERT GWYNNEasked the Financial Secretary to the War Office whether his attention has been called to the case of Lance-Corporal J. Glynn. No. 2268, 1st N.M.D., Signal Company, Royal Engineers, who has been discharged from the Army as physically unfit for further war service; whether he is aware that Glynn was at the front since the beginning of the War until he was gas-poisoned and has been, in all, seven years in the Army, and that he is now awaiting sanatorium treatment for tuberculosis, but has been discharged without any pension or compensation; and if he will state whether it is proposed to give him more adequate treatment?
  Mr. FORSTER: This case is being considered by the Chelsea Commissioners, and I will inform my hon. Friend of the result in due course.

  FACTORY ACCIDENTS.
  Mr. MacCALLUM SCOTTasked whether the recommendation of the Retrenchment Committee to discontinue the reporting of accidents by certifying factory surgeons was made after receiving information from the Home Office as to the value of the evidence of an independent surgeon, who has examined and interrogated the injured person, in determining

  1643
  the causation of preventible factory accidents, and as to the value to an injured person of an independent and skilled opinion; and whether the Department proposes to act upon the recommendation?
  Mr. SAMUEL: The Committee took evidence from the Home Office before making their report. The question of the value of the certifying surgeons' inquiries is a matter for discussion which had better perhaps be reserved till the Bill I am proposing to introduce is before the House. Meantime, I would refer the hon. Member to the Report of the Accidents Committee of 1911.

  GERMAN RESTAURANTS.
  Mr. JOYNSON-HICKSasked the Home Secretary (1) whether the police at Scotland Yard received repeated warnings as long ago as August and September last year of the treasonable character of the Voight restaurant; why it was that it took eight months to put an end to this place; and (2) whether he has had reports made to him from the same source as the reports regarding Voight's restaurant in reference to nearly a score of other German shops and restaurants in London; and, if so, what steps he has taken or proposes to take in regard to them?
  Mr. SAMUEL: I will answer these questions together. The hon. Member is mistaken in thinking that the police have received warnings which they disregarded. The premises in question were under continual observation by the police from the outbreak of war, and were searched as early as August, 1914. It should be borne in mind that the law does not confer power to intern persons who, as in this case, are British subjects, though of German origin and naturalised, unless there is some definite ground of suspicion, supported by evidence sufficient to satisfy the judicial Advisory Committee that internment is advisable. It was not until recently that evidence was obtained on which action could be taken under the Defence of the Realm Regulations against certain of the frequenters of the place. This evidence was obtained as the result of police observation and inquiry, and was not furnished from any outside source. The allegations made to the police with regard to various other shops and restaurants have been carefully examined. Action similar to that taken in the case of Voight's restaurant
  1644
  will be taken in other cases if circumstances should arise which justify such action.

  MERCANTILE MARINE.
  Mr. HOUSTONasked the President of the Board of Trade (1) if he can state, approximately, the total deadweight carrying capacity, excluding refrigerated capacity, of all steamers of 1,500 tons net register and upwards on the British register on 31st March last or on the date of his latest returns, and the date thereof; if he can state, approximately, the deduction to be made from such total deadweight capacity for bunker coal for steamers' use on voyage; (2) whether he can state the number of British steamers interned in enemy ports and the net and gross registered tonnage of same; the number of British steamers locked up in the Baltic and the Black Sea, giving the net and gross registered tonnage of same respectively; (3) whether he can state the number of British steamers lost from all causes or removed from British register since 4th August, 1914, to the latest date for which he has returns and the date thereof, giving the net and gross registered tonnage, respectively, and the number of British steamers added to the register, exclusive of those under construction and not actually completed, during the same period, giving the net and gross registered tonnage, respectively, of the same; whether he can state if any of these steamers so added are captured or interned enemy steamers or steamers purchased from neutrals, and the numbers and nationalities, respectively, together with the net and gross registered tonnage thereof; (4) whether he can state the percentage of the total amount of foodstuffs, other than meat, which was imported into the United Kingdom in neutral vessels during the six months ending 31st March last, or, failing his having information for this period, then for the six months for which he has statistics, and the date at which the six months ended; (5) the total number of British-owned steamers of 100 tons net register and upwards registered on 31st March last, and the total net and gross registered tonnage of the same respectively, excluding steamers under construction and not actually completed; if he cannot give this information up to 31st March, then on his latest return, and the date thereof; and

  1645
  whether he can state the number of steamers between 100 tons net register and 1,000 tons net register, and the net and gross registered tonnage of the same, the number between 1,000 tons and 1,500 tons net register, and the net and gross registered tonnage of the same, the number between 1,500 tons and 2,000 tons net register, and the net and gross registered tonnage of the same, the number between 2,000 tons and 3,000 tons net register, and the net and gross registered tonnage of the same, and the number over 3,000 tons net register, and the net and gross registered tonnage of the same; (6) whether he can give the number of enemy steamers lying in British ports which are not being used for commercial purposes and their respective nationalities, and the net and gross tonnage, respectively; and (7) whether he can state the number of neutral steamers which entered British ports during the past twelve months ending 31st March, dividing the same into quarterly periods and giving the nationality and net and gross registered tonnage, respectively; and, if he cannot give this information up to 31st March, to the latest date for which he has returns, and the date thereof?
  The PRESIDENT of the BOARD of TRADE (Mr. Runciman): I will deal with the hon. Gentleman's seven questions together. I find on looking into the details that the compilation of the returns for which he asks would involve an expenditure of time and labour for which, I regret to say, the Marine Department, with a depleted staff, cannot provide at the present time, and I hope, therefore, he will not press for them in this form. Any information which he requires on any special point I will endeavour to supply if he will communicate with me.

  RESTRICTED IMPORTS (BUFFALO HORNS).
  Mr. ANDERSONasked the President of the Board of Trade whether an order has recently been issued forbidding the importation into England of buffalo horns and other materials used in the cutlery trade; whether he is aware that these materials are extensively used for the covering of knives and forks used in the Army and Navy; whether he is aware that these buffalo horns are employed to fill the corners of the ship-hold so as to pre-
  1646
  vent the cargo proper from being damaged by water; and whether steps can be taken to remove this embargo, which must increase the prices of certain classes of cutlery?
  Mr. RUNCIMAM: The importation of horns and hoofs was prohibited by a Proclamation issued on 10th May. This restriction was imposed with a view to providing space for imports more urgently required. The case of horns used for dunnage is being given special consideration.

  BRITISH FIRE PREVENTION COMMITTEE.
  Mr. JOYNSON-HICKSasked the First Lord of the Admiralty whether his attention has been drawn to Royal Naval Air Section Supply Memorandum, No. 10, 23rd March, 1916, which shows that the British Fire Prevention Committee, a self-appointed body, the moving spirit in which is Mr. Otto Sachs, a gentleman born of German parents and educated in Germany, and formerly of the Berlin Fire Brigade, is advising the Naval Air Section on matters of fire protection; if he aware that the offer of the services of the British Fire Prevention Committee was at first accepted by the Army-Council, under a misapprehension of that body's position in relation to the fire brigades, and afterwards the Army Council notified that committee that they were unable to avail themselves of its assistance; and will he say why it is necessary to consult this body when such expert advice can be obtained from the London Fire Brigade, or other properly constituted fire brigades?
  The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): The Memorandum in question was issued as a result of tests conducted in His Majesty's dockyards by the Departmental officers of the Admiralty responsible for advising in such matters, who, in their report, referred to the fact that their finding was corroborated by tests carried out independently by the British Fire Prevention Committee. I am not aware whether the statements made in the second part of the question are correct, and I suggest that this inquiry should be addressed to the War Office. My hon. Friend is mistaken in supposing that the British Fire Prevention Committee has been called upon to advise the Air Department in any way.
  Mr. JOYNSON HICKS: Is it not possible for the Admiralty, when they want advice, to go to a genuinely British concern instead of to one run by a gentleman of German origin?
  Dr. MACNAMARA: I am afraid my hon. Friend did not hear the last sentence of my reply, as it is a complete answer to the supplementary question.
  Mr. JOYNSON-HICKS: I am astonished!

  NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
  Mr. CATHCART WASONasked the Secretary to the Admiralty if his attention has been called to the case of a seaman who, after serving the Admiralty for fifteen months, was rejected as being medically unfit for further service; and will he say if he will be entitled to any pension?
  Dr. MACNAMARA: Particulars as to the man referred to have been given to me by my hon. Friend. I am having the necessary inquiries made and will communicate the result.

  EMPIRE DAY.
  Colonel YATEasked the President of the Board of Education whether he can now state what recommendations have been made by him to the local education school authorities throughout the country for the purpose of marking Empire Day, 24th May, by appropriate lectures in all schools and the observance of the day as a half-holiday for the scholars?
  The PARLIAMENTARY SECRETARY to the BOARD OF EDUCATION (Mr. Herbert Lewis)The Board of Education have communicated to local education authorities and governing bodies of State-aided schools a copy of the question asked by the hon. Member for Enfield on 11th May and of the answer thereto. The Board have no reason to believe that any further action on their part is required.
  Colonel YATE: Have the Board recommended the adoption of this, or have they in any way signified their approval of it?
  Mr. LEWIS: The Board have no authority to issue instructions.
  Colonel YATE: If the Board have no authority, can they recommend, or have they recommended, this?
  Mr. LEWIS: They have forwarded the question and answer referred to in my main answer to the local education authorities.

  POSTAL FACILITIES (SCOTLAND).
  Mr. C. WASONasked the Postmaster-General if he is aware that there are many places in the Highlands and Islands where postal deliveries are extremely curtailed; and if he will consider the possibility of having a short wire of important news sent to offices where there is only a delivery once or twice a week?
  The ASSISTANT POSTMASTER-GENERAL (Mr. Pike Pease): The postal facilities are necessarily curtailed in many of the outlying islands, but each case is considered on its merits, and the hon. Member may be assured that facilities are only curtailed where this is really necessary. I regret that the hon. Member's suggestion to supplement restricted postal facilities by a telegraphic distribution of news cannot be accepted.

  LEICESTERSHIRE AGRICULTURAL SOCIETY'S SHOW.
  Colonel YATEasked the Parliamentary Secretary to the Board of Agriculture whether permission has been refused for the Leicestershire agricultural implement makers and dealers to exhibit agricultural implements and labour-saving machinery at the forthcoming Leicestershire Agricultural Society's Show; if so, will he rescind the prohibition to exhibit?
  Dr. ADDISON: The answer to the first part is in the affirmative. I regret that it-is not possible to withdraw the prohibition, the reason for which I explained in my reply to the hon. Member for Wimbledon yesterday.

  WELSH UNIVERSITY, ABERYSTWYTH (GERMAN PROFESSOR'S PENSION).
  Mr. JOYNSON-HICKSasked the Chancellor of the Exchequer whether he is aware that Dr. Ethe, an unnaturalised German professor at the Welsh University, Aberystwyth, has recently been voted an annuity of £150 a year in the shape of retiring pension, in spite of the protest of the

  1649
  Aberystwyth Town Council; and what steps he proposes to take to prevent Government money being used for such a purpose?
  Mr. McKENNA: I have no information on this subject, but I will make inquiry through the Advisory Committee on Grants to Universities and Colleges.

  INCOME TAX (CO-OPERATIVE SOCIETIES).
  Sir J. D. REESasked the Chancellor of the Exchequer whether he has noted the increasing prosperity of co-operative societies, which the Birmingham Industrial Co-operative Society, for example, conspicuously illustrates; and whether he proposes that the profits of such societies should at last be subjected to Income Tax?
  Mr. McKENNA: The answer to the first part of the question is in the affirmative, but I am informed that the increase in the profits of the society named has been accompanied by a corresponding increase in its membership. As regards the latter part of the question I can add nothing to my previous answers on this subject.

  PHYSICIANS AND SURGEONS' CHAUFFEURS.
  Mr. BOYTONasked the Under-Secretary of State for War if he is aware of the difficulty experienced by consulting physicians and operating or consulting surgeons who devote the whole or part of their time to work at the various military hospitals in getting chauffeurs of non-military age to drive their motor cars; and if the War Office would find soldiers to drive the cars of such physicians and surgeons as may apply and be approved?
  Mr. TENNANT: It would not be possible to release soldiers for this work. I am told that women drivers have been employed in certain cases, and I suggest this is the solution of the difficulty. At the same time, may I express my warm appreciation of the valuable assistance which is being given by consulting physicians and operating or consulting surgeons at the various military hospitals.

  ALTCAR CAMP (FOOD AND SLEEPING ACCOMMODATION).
  Sir F. CAWLEYasked the Undersecretary of State for War whether he is aware that the troops at the Altcar camp are complaining of both the quality and quantity of the food supplied to them, also that the sleeping accommodation is quite inadequate; and will he state how many deaths have taken place at this camp in the Reserved Manchester Regiment since they left Southport on 19th April, and the cause of the same?
  Mr. TENNANT: I have made careful inquiry and I find that no complaints about food or about accommodation at this camp have been received. One death, the cause of which was heart failure, occurred in the 13th Reserve Battalion South Lancashire Regiment after it left Southport for Altcar, but no deaths have taken place in the Manchester battalion.

  INDEPENDENT LABOUR PARTY (SEIZURE OF PAMPHLETS).
  Mr. T. RICHARDSONasked whether it is upon his instructions that the police in various towns of the country are seizing pamphlets and other literature in the possession of secretaries of branches of the Independent Labour party; whether these pamphlets are those considered by the stipendiary magistrate at Salford to be innocuous and to contain nothing but fair political criticism and comment; and for what reason are the seizures being made?
  Mr. TENNANT: The hon. Member must know that I do not issue instructions to the police. I understand, however, that the chief constables have received instructions to obtain an order from the competent military authorities under Regulation 51, Defence of the Realm Regulations, for the seizure and destruction of certain pamphlets—nineteen in number. The contents of these pamphlets are probably well known to the hon. Member, and he will consequently realise without difficulty the reasons why they are being seized.
  Mr. RICHARDSON: Would the right hon. Gentleman reply to the last part of my question, namely, as to whether the literature referred to is the same literature which was declared by the stipendiary magistrate at Salford to be innocuous?
  Mr. SAMUEL: They were condemned by a Court in London.
  Mr. RICHARDSAON: Were they the same documents?
  Mr. SAMUEL: I do not think they were the same, but, at any rate, they were condemned by the Court in London, after a full and prolonged inquiry.
  Sir W. BYLES: Is a Court in London superior to a Court in Salford?
  Mr. SAMUEL: Of course, comparisons of this kind may be odious, but I feel bound to act in accordance with the decision of the trial which took place in London with regard to the destruction of these pamphlets.
  Mr. RAMSAY MACDONALD: Is the right hon. Gentleman aware that the magistrate who took the case in Salford is a trained lawyer, whereas the magistrate who took the case in London had no such qualification?
  Mr. SAMUEL: It was a duly constituted Court in London. As a matter of fact, the appeal was taken in respect of one only of the pamphlets and was unsuccessful.

  Haslar Hospital (Milk Supply).
  Mr. WILLIAM NICHOLSONasked the First Lord of the Admiralty if he is aware that towards the end of 1913 the Hampshire County Council inspector of weights and measures visited Haslar Hospital and took samples of 42 gallons of milk in course of delivery; that the analysis indicated that, in the case of about two-thirds of the milk, machine-skimmed milk was being supplied as new milk; that proceedings were taken before the magistrates in January, 1914, who were satisfied that an offence had been committed and imposed a substantial penalty; that at the end of 1915 the same firm were found committing a similar offence in connection with the sale of milk to the public; that in the course of subsequent proceedings it transpired that shortly after the first conviction the Admiralty had renewed the contract with the same contractors for much larger quantities of milk; that on the 20th February, 1916, the county council inspector visited the Haslar hospital and, over a delivery of milk of double the amount of that involved in the 1914 visit, a deficiency of milk fat was found;
  1652
  that proceedings were again taken and a fine imposed; that on the 26th February, 1916, a further visit was paid to the hospital and samples were again taken, and it was found that a portion of the milk supplied was deficient in milk fat to the extent of 10 per cent.; and whether he will cause a strict inquiry to be made into the question of the milk supply to Haslar hospital and to the reason why the contract for milk was renewed to the present contractors?
  Dr. MACNAMARA: The two prosecutions of this firm in January, 1914, and March, 1916, respectively, were duly brought to the notice of the Admiralty. The circumstances relating to the first were carefully investigated, and the question of striking the firm off the Admiralty list was considered, but they gave an explanation which appeared reasonably likely to be well founded, and as they had held these contracts for upwards of ten years with practically no complaints, and had laid out much money to bring their premises, and herd of cows up to the Admiralty standard conditions, it was decided to give them one more chance. They tendered lowest to Admiralty conditions in March, 1914, for a new three years' contract, and were accepted, with a warning that any future similar occurrence might lead to removal of their name from the list. No further complaint was brought to the notice of the Admiralty until the incident of 20th February, 1916, as a result of which it was decided to cancel the contract and strike the firm off the list.
  Mr. W. NICHOLSONasked the First Lord of the Admiralty whether he is aware that after proceedings against the contractor for the milk supply to Haslar hospital in 1914 the officer in charge of the hospital informed the Hampshire County Council that in future his permission should be asked in writing for their inspector to be allowed to enter the hospital for the purpose of taking samples; that on the 10th September, 1914, the Admiralty stated that they were advised that any samples which were required must be taken at the entrance gate to the hospital; and whether, in view of recent proceedings, the Admiralty will give every assistance to the county council inspectors in order to ensure that milk of the correct standard should be supplied to the hospital?
  Dr. MACNAMARA: The Admiralty is fully aware of the circumstances referred to. The hospital authorities have very efficient arrangements for supervising and analysing the milk and other food supplies, which are considered adequate to detect any defects in quality of deliveries. The Admiralty, however, welcomes any assistance which the county council inspectors are able to give in the ordinary course of their duties. The arrangements made in the correspondence referred to were intended solely to avoid any overlapping between the two authorities.

  Lerwick Explosion.
  Mr. C. WASONasked the Secretary to the Admiralty if he will request the Scottish fishery officer at Lerwick to report to him on the question of compensation to fishermen whose nets and gear were destroyed by the explosion at Lerwick wharf over a year ago; and if it has been brought to his notice that some persons have received no compensation and others have been so inadequately compensated that they are unable to prosecute their calling?
  Dr. MACNAMARA: All the claims received from fishermen in respect of damage to their nets in the explosion at Lerwick were investigated by an Admiralty officer shortly after the accident, and no reason is seen for obtaining a further report from the fishery officer now. The ex gratia grant approved by the Government was distributed among all the parsons from whom claims had been received, and no cases have been brought to my notice in which no awards were made. It is now under consideration to make a further distribution among certain fishermen to whom my hon. Friend referred in his question of the 30th March.
  Local Government Provisional Orders (No. 4) Bill,
  Reported, without Amendment [Provisional Orders confirmed]; Report to lie upon the Table.
  Bill to be read the third time upon Monday next.
  Alexandra (Newport and South Wales)
  Docks and Railway Bill,
  Reported, with Amendments; Report to lie upon the Table, and to be printed.
  Tynemouth Corporation Bill,
  Reported, with Amendments, from the Local Legislation Committee; Report to lie upon the Table, and to be printed.

  LOCAL LEGISLATION COMMITTEE.
  Special Report brought up, and read.
  Special Report to lie upon the Table, and to be printed. [No. 79.]
  Minutes of Proceedings to be printed. [No. 79.]

ORDERS OF THE DAY.

  BUSINESS OF THE HOUSE.
  Mr. STUART-WORTLEY: Can the right hon. Gentleman give us any information as to the course of business next week?
  Mr. BONAR LAW: On Monday it is proposed that Supply should be taken, and the Vote will be the Board of Agriculture;
  On Tuesday the Prime Minister will move a Vote of Credit;
  On Wednesday the Report of the Vote of Credit will be taken;
  And on Thursday the Second Reading of the Consolidated Fund Bill.
  Colonel CHURCHILL: Can the right hon. Gentleman state when the Debate promised on the Vote for the salary of the Secretary for War will be taken?
  Mr. BONAR LAW: I think it will be better to wait until Monday, when I hope the Prime Minister will be here.
  Mr. W. O'BRIEN: Can the right hon. Gentleman say whether the Prime Minister will make any statement as to the state of Ireland before he moves the Vote of Credit?
  Mr. BONAR LAW: I cannot, of course, say anything about that until the Prime Minister returns.
  Mr. O'BRIEN: Unless the statement is a satisfactory one, we shall raise the question of Ireland on the Vote of Credit.
  Mr. PRINGLE: Can the right hon. Gentleman say when an opportunity will be given for discussing the proposals of the Government for the relief of married men?
  Mr. BONAR LAW: I understand that it will be quite in order to raise that question on any of the three days given to the Vote of Credit.
  Mr. PETO: Can the right hon. Gentleman say what the effect will be if the Second Reading of the Finance Bill is not concluded to-night?
  Mr. BONAR LAW: I do not think there is any reason to anticipate that that will happen.
  Sir F. BANBURY: Can the right hon. Gentleman say what time we meet on Monday?
  Mr. BONAR LAW: I believe it is the intention to meet at 2.45 on Monday.
  Mr. HOGGE: With regard to the opportunity for discussing the Government proposals dealing with married men, as the Debate on Monday may be taken up with large matters of policy, will the right hon. Gentleman agree on Monday, after the Board of Agriculture Vote has been disposed of—it will probably only take a few hours—to move the adjournment on behalf of the Government, and thus give us an opportunity on that day for discussing the proposals of the Government dealing with married men?
  Mr. BONAR LAW: I really do not think that that is a desirable arrangement, because so many subjects can be raised on the Vote of Credit. There are three days, and I am sure it can be raised on one of those days.
  Ordered, That the Proceedings on the Finance Bill have precedence this day of the Business of Supply.—[Mr. Bonar Law.]

FINANCE BILL.
Order for Second Reading read.
Motion made, and Question proposed, "That the Bill be now read a second time."
Mr. HEWINS(indistinctly heard): The circumstances in which we are at the present time make it extremely desirable that we should give rather wider consideration to the Finance Bill of the year than we have done to other War Budgets. The mere question of raising money, while, of course, itself of the utmost importance, is yet not the only important matter connected with the Finance Bill. Our financial and economic policy, as expressed in the Budget, is a matter of the greatest interest not only to ourselves and all our fellow citizens of the Empire, but also to our Allies, and in these circumstances, and considering also that we are to have the Paris Economic Conference, I do not think it would be right just to acquiesce in the proposals of the Government and to abstain from criticism. I therefore propose to offer a few critical remarks on the Budget of the year. In doing so, I wish to make the position absolutely clear. We have reached an exceedingly

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important point in the War. People in England are rather apt to underrate the economic power of Germany, because they are in the habit of judging the German economic system by criteria which they derive from that economic system of England and the British Empire with which they are more familiar. I am sure that ray right hon. Friend on the Front Bench does not feel at all certain that you can rightly estimate the stability and the efficiency of the German economic system in that way. You may judge of the British system by standards derived from your own experience and from the circumstances with which we are here familiar, but you cannot apply the same standards to Germany. It is just as though, in a sense, you were to try to judge of the economic system of England of the seventeenth or eighteenth century by the England of to-day, because Germany is not by any means in the same stage of economic development as we are, and I am inclined to think that it will be found on experience that the German economic system, from the German point of view, shows far more elements of stability than some of our more orthodox critics in this country may suppose; at any rate, I am quite sure that there is a tendency in England to underrate the economic strength of the country with which we are at war. Germany has made great progress during the War. She has started several new industries, and she has the advantage of occupying very important economic territories which she did not occupy before. It would be a mistake, therefore, to underrate the economic power of Germany. We ought to proceed on the assumption that we have a very powerful adversary to beat; it would be safer, at any rate. That being so, it is perfectly clear that we have to study our economic proposals at the present time not merely from the old historic Treasury point of view of whether they succeed in raising a large sum of money, but you have got to consider them from the wider point of view as to how far they assist you in the prosecution of the War. I regard them as part of our economic war policy; in fact, the very presence of the Chancellor of the Exchequer on the War Council indicates that. The point is fully realised in Germany, where the German General Staff has laid it down that the economic policy is inextricably bound up with the military policy. Therefore, you must regard this
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Finance Bill, not only as a means of raising the money which is necessary to carry out certain naval and military measures we decide upon, but also from the point of view as to how far your policy itself is intrumental in the prosecution of the War, and that is a very important point of view.
We have reached a critical period. Whatever the finance may be at the end of the War, I suppose my right hon. Friend will agree with me that from now till the next Budget is a critical period. Whatever you are going to do in the prosecution of the War, you are going to lay down the general lines of it in these three months. I do not think you can possibly escape from that conclusion, and if I am right—and I believe I am—in my conclusion that we have reached the stage in the operations of the War where a little weight one way 'or the other may have an important bearing on the military as well as on the economic solution, it makes it all the more important that we should scrutinise the Finance Bill very carefully, but in that scrutiny I wish my right hon. Friend thoroughly to understand my attitude. I feel that we have reached an extremely important period when we have all got to put the best brains we have got into the common stock and see whether we can get out the best policy. I am not actuated in the least by any hostility to the Government, and still less to my right hon. Friend. It is only that I feel that at this stage we ought to cast aside our pre-conceived ideas, and by argument ascertain the best policy we can for the prosecution of the War. When you look at the Finance Bill from that point of view, I am bound to say I am disappointed with it. I had profound disappointment when I heard the Chancellor of the Exchequer make his Budget speech, not, as some of my hon. Friends on the other side of the House seem to suppose, because he did not carry out the policy with which I was supposed to be identified. Really, one has forgotten all about that sort of thing. It does not matter two straws what policy we were identified with before the War. We cannot consider it at the present time. What I did feel about the Finance Bill was that you might suppose from the character of its provisions that there were no such thing as the British Empire, and that no consideration whatever was given in the observations of the Chancellor of

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the Exchequer to the exceedingly dangerous consequences to important interests which might result from it. I am sure the House does not appreciate what has really been taking place with regard to direct and indirect taxation. In the year 1907–8 we raised from Income Tax rather more than 32 million pounds. The estimate for 1916–17 is 195 million pounds. The estimated yield of Income Tax, including Super-tax, alone for 1916–17 exceeds the total of the Exchequer receipts in 1912–13. The total of direct taxation has grown, since the year 1907–8, from 62 million pounds to no less than 321 million pounds. I may remind the House that financial experts estimated before the War the annual savings of this country at rather more than 300 million pounds, and the sum that is taken in direct taxation alone is equivalent to that amount.
Indirect taxation has not grown to anything like the same extent. The total from taxation alone has grown in that period from 129 million pounds to 457 million pounds, of which 136 million pounds is indirect taxation. The increase in indirect taxation is only 70 million pounds in the period I have taken. The ratio between direct and indirect taxation, which old-fashioned financiers like Mr. Gladstone regarded as of such very great importance, has, I am afraid, been entirely broken. At the present time direct taxation produces 70 per cent, of our tax Revenue against 48 per cent, in the year 1907–8. But that is not the end of the story. I am now going to touch upon a rather controversial economic question. I have had those figures as to taxation taken out for a long period of time. They cover, roughly speaking, the whole of the nineteenth century. Up to quite recent years there was no relation at all between the growth in direct taxation and the level of prices. If you put these figures out on curves there is simply no relation between the two. But if you take the period since 1905, when direct taxation began to increase by leaps and bounds, the curve representing the increase in direct taxation and that representing the rise in prices fluctuate together. I do not undertake to say with absolute confidence what is the nature of the relation. It is certainly not that high prices determine the high level of taxation. It was argued by a great authority in this House years ago
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—when the then Chancellor of the Exchequer was responsible for a reduction in the Military and Navy Estimates—it was argued by my Noble Friend Lord Faringdon, who was then in this House, that direct taxation had risen to such a level that you could not make the same deductions as you formerly did in regard to the relation between direct taxation and prices. I know my hon. Friends below the Gangway still believe in the old argument with regard to direct and indirect taxation. But, as far as I can see, our long financial experience has absolutely smashed those old arguments. There is not that sharp distinction between the two classes of taxation, and we are being forced by experience to the conclusion—a conclusion which ought to have been obvious—that if you are going to pay taxes you must first produce them. If you increase your taxation, whether direct or indirect, they must be dependent on the production of the country. There is no mysterious fund of income unearned from which you can pay them. The higher your tax, the more you have to produce in order to pay it, and that ought to throw some light on the kind of policy we are to adopt.
That is not, in the present circumstances, the end of the question. We have now the Excess Profits Tax. I prefer to consider that tax in a category by itself. It is not like the Income Tax, it is not indirect taxation; it is something sui generis. The Excess Profits Tax raises an enormous number of exceedingly difficult questions. I am not going to argue, of course, against the principle of the tax. I think, as far as a priori arguments go, the argument is in favour of the Excess Profits Tax. As my right hon. Friend is aware, there is a very strong feeling amongst firms, both controlled and uncontrolled, as to the consequences of the Excess Profits Tax in the form in which it is now levied. I have not heard a single objection to the principle of the tax. I have had the good fortune to be associated with many representatives of the industrial classes. Some of them are strongly opposed to the Chancellor of the Exchequer and some are strongly in his favour, but I certainly have not met a single individual who objects to the Excess Profits Tax in itself. But there is a strong and most widespread objection to the course which has been taken in regard to it. It is certainly too high. After all, you cannot

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consider a thing like that just as though it were a side issue. What is going to be the effect of this particular tax upon the industrial position of the country when the War is over? There are a great many general considerations. We are giving are enormous stimulus to the trade in the United States by our war orders, an enormous stimulus, and it is with our money that that stimulus is given. You have got an enormous difference between the number of firms engaged in certain industries before the War and the number now so engaged. There is an enormous increase in the number of firms scrapping—if I may put it in this way, the one great factor on which English trade was before the War dependent—what we may call the goodwill.
4.0 P.M.
The old markets are gone, ancient business connections are suffering, and much that went to the building up of British industry is not in the least likely to be capable of being got hold of again by the firms who are now devoting themselves heart and soul to helping the country. On these firms, who must look ahead—they have to look behind at what they have done, and have to look ahead at the future—you put this very heavy burden of the Excess Profis Tax. On the American firms you cannot put any burden. I am not quite sure, but I think that even in Germany the firms who are engaged in these operations are not subject to this sort of tax. Here you have had a vast increase in plant and machinery, and the firms I am considering have got to face the temporary loss—as I think the permanent loss—of the old markets, in the sense that they lave got to get hold of them again in times to come and cannot depend upon the old goodwill. You are doing all this in regard to our own firms, while you are not burdening firms abroad. Surely that is very hard. It is eminently a labour question. What is going to happen when the soldiers came back from the War? There will be a great cessation in the War demands. There will be these great firms who have gone in for great expansion who will be obliged to go ahead as well as they can without any Government assistance, and meanwhile you will have the labour market absolutely blocked with skilled artisans coming home in their millions from the War. Apparently you are not going to do anything to help to solve that problem. It is an exceedingly hard problem to solve. I do
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not sympathise in the least with what I think is the unfair criticism that has been levelled against one particular class of these firms, because I think that but for the patriotism and expansion of the great armament firms the country would long ago have gone to rack and ruin.
My hon. Friends know there are hundreds and hundreds of firms who have absolutely cut themselves adrift from all their old business. They have recreated and re-established their works on a new basis. They have acquired an entirely new kind of machinery and skill. They have to pay Excess Profits Tax. They cannot look, in present circumstances, to that with which they can hope to cope with what will be an exceedingly difficult position after the War. There is a certain class of firms who have built up entirely new industries. We seem disposed in this country to go on the basis at present of "Stop your industries." May I tell my right hon. Friends that quite a number of new industries have been and are being started both here and in Germany.
In these countries the new industries were possibly started because of the exceptional conditions of the War, and they are paying this heavy direct taxation. What is going to be done for those industries when the War is over? Are they going to be left to fight the battle without any kind of assistance from the Government? Take another class of firms, the controlled firms. Think of the situation there. I think I am right in saying that there was a statement in the House—the Solicitor-General will know—that there was something in the nature of a bargain between the Government and those firms when the Munitions Act was passed. The basis of assessment was determined. Now the Chancellor of the Exchequer comes along and in Clause 32 of this Bill he is going to make those firms conduct double negotiations with two authorities as to what allowances should be made. I know of firms where they have had to spend days and weeks of valuable time and ability in determining apparently such a simple question as what is the accounting period. Everybody knows how the Excess Profits Tax is working, and how, on the whole, people have tried to work it.
If you add these considerations to the general considerations I have put forward on the subject of direct taxation, I do not think there is any avoiding the

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conclusion that the Government have really tried to strain that kind of financial system too far—much too far. I feel sure that my right hon. Friend the Secretary of State for India cannot in his heart of hearts approve of putting this enormous emphasis on direct taxation. I cannot think he really accepts that as being the right thing, even during a time of war. If we go on like that and at the same time take no other measures at all to ward off the evils which will certainly follow this too great insistence upon this one particular form of taxation, many firms must face disaster when the War is over. It is the disposition in this country to induce one to recognise that there are certain governing facts in our financial position which either one must take as being facts or the facts will do a great deal to ruin him. There is too great a disposition in this country to think that this or that man's views or opinions represent the right policy and that that sort of thing really determines the financial policy. It does not. When Germany decided to go to war with this country, Germany decided by that very act that certain changes should take place in financial policy. You have only to look at the Debt Charge which is likely to result after the War. Some time ago I made a careful estimate that the revenue we should have to raise would be £300,000,000. I will confine it to £300,000,000 at the present time, although it is likely to be £450,000,000 or thereabouts after the War. You have only to look at that fact to see that a revision of your system will be insisted upon.
When we come to that part of the subject—I am most anxious not to raise any controversial issues—we find that in his speech introducing the Budget the Chancellor of the Exchequer said—I am quoting from memory, and therefore will not tie him to the exact words—the sense of what he said was that the Government had decided not to put on an extension of Import Duties because they could not provide the administrative staff which was necessary, but they had decided upon the policy of prohibition. That is a very important choice. What is the policy of prohibition? Is it successful? If it is not successful it seems to fall to the ground. I have asked the President of the Board of Trade about it, and he told me the other day in the House that, if the prohibition were fully effective,
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making allowance for the licences for the importation of goods, then, after twelve months, a saving would be made of between two and three millions of tonnage. He could not, however, tell me what saving had actually been effected. Has there been any result? I cannot see it. We have the official figures for a period during which the prohibition has been in force. It is perfectly true that here and there there are declines—I am speaking now of the official Customs figures—but there have also been increases, and it is perfectly evident that, speaking generally, this policy has broken down. It is not doing what the Government intended. This is a question of the utmost gravity, as I shall show presently. I should like to know precisely upon what grounds the Government selected this policy. Why did they do it? What sort of evidence had they? I say that this policy has broken down and has not provided what the Government intended to provide by it. Then the President of the Board of Trade informs me that no licences for importation are given except in respect of goods which have been paid for or are in course of transit. Of course, I accept what he says. It is quite obvious that to the extent to which you grant licences for importation you destroy your prohibition. I am bound to say that the impression I have derived from conversations with business men and in the business world is entirely different from what the President of the Board of Trade said. I am told, upon authority which I am bound to accept as being good business authority, that goods are coming in at the present time without licence, or permit, or anything.
Mr. J. M. ROBERTSON: Are they prohibited goods?
Mr. HEWINS: Yes, they are prohibited goods. Why is that? Because the machinery has broken down. The Chancellor of the Exchequer said that they hit upon this policy because they could not provide the administrative staff for the other policy. Why has the prohibition policy broken down? Because you cannot administer it by simply setting up a department issuing licences. Everybody knows that the whole thing is in a perfect tangle. It is causing untold inconvenience and loss and it is not restricting imports—that is to say, it is not restricting imports in any important degree. That is not the most important side of it. Unfortunately, it is quite impossible

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for me to discuss in as great detail as I should like the really important side of this policy of prohibition. It is an exceedingly dangerous policy. Here, in the complicated conditions of modern times, with all our network of treaties, with the present attitude of many neutral States—the Government know what that means—with the position of our Allies, the Government adopt an expedient which belongs to the eighteenth century. Why did they do that? When we practised this policy in former times we had not the same treaty system in force. Our treaties were then for the most part reciprocal treaties, 'but now they are "most-favoured-nation" treaties, and you are running the risk, all the time you keep this policy in being, of most serious complications. I would not say a word about that side of the case—it is so difficult and complicated—I would imitate the Government, and keep it absolutely quiet, if I could. That policy, however, does not do, because it is a matter of common talk and notoriety all through the business world that licences are being given. That is what is said, that is the common impression in the business world, and it is the common impression outside this country. That is so much the case that some people think the Government really intend to abandon the policy. I am telling the right hon. Gentleman what is the impression I gain from the business world, and I ask him to reconsider the matter. If they do that, after all, will the consequences be so very great? I do not attach any importance to this question of the administrative staff. How many people do you require to work the Excess Profits Tax? How many people do all these new taxes require? How is the right hon. Gentleman getting on with the organisation of the Cider Tax? If it is going to be successful, it requires a good many inspectors. Later on I will ask him to give me a Return showing the precise number of officials who are employed in the administration of these respective taxes.
But I should like very much to know the ground upon which it is said that you could not provide a staff for administering a different system. As to what that different system might be, that is suggested lay the War itself. I have considered the case with a good many people, and they and I think, and always have thought, that a general tariff arrangement would be far more effective in securing the end he has
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in view than a policy of prohibition. I have not the slightest doubt about it. A tariff put on for that purpose must in the nature of things be absolutely different from anything we do in peace time, and could not exist after the War came to an end. Anyhow, if you put on a tariff for war conditions pure and simple you would have to include things, and do things, which would be entirely unsuitable for times of peace. I know they say that if you do it now during the War there is a risk that it will remain afterwards. I think it is absolutely certain that whether you do it now or not, you will have to do it after the War. That is my own personal view. But still various lion. Friends of mine do not take that view, and if it is not so they will have a full opportunity at the end of the War of fighting it out. But what you do during the War for war purposes does not necessarily, and will certainly not, in my opinion, be what you would do after the War is over I suggest to the Government that they adopt that expedient. If they would do it I am quite willing to go into details, but I do not want to do so in a speech like this. I think it is most important that in connection with this Finance Bill they should make absolutely clear to the world what is their attitude with regard to the Paris Conference. It is absolutely necessary. The Conference is, in my judgment, the most important economic consultation that has ever taken place in the modern world. We hope, simply because we hope to adopt every means possible to shorten the War, that one of the results of that Conference will be agreement upon the measures which will be aimed directly at the financial position of Germany. That is what the French hope, and it is what Italy and Russia hope. But really everything depends upon the attitude of the Government here, and the intitative they the going to take. Those countries cannot determine the line they will take in ignorance of what the attitude of the Government here is upon the destinies of the British Empire. I do not think you can go into details. The War is far too big a thing to permit of it at the present stage. But is not the right hon. Gentleman prepared to take such definite steps at the present moment in connection with the Finance Bill as will declare once for all to the world that we intend to organise the British Empire and to have preferential arrangements with our Colonies? I suggest to the Government that they

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ought to make a declaration somewhat to this effect at the present moment, that they intend to adopt whole-heartedly the Resolution of the Imperial Conference which demanded that in any duties now or hereafter imposed by this country a preference should be given to the products of the Dominions and Colonies, and as a preparation to that end I think they should give a similar intimation to the world at large that they intend to turn their back upon the most-favoured-nation treatment which we have extended to all countries, because I am sure the Government do not intend to put Germany in the same position as France. They should take those two steps. I do not want details mentioned at present. I want that spirit to be in the Budget and in the Finance Bill.
I do not look for important new departures in financial policy in this Budget, because I think the Chancellor of the Exchequer is raising too much money. It is not necessary to raise so much money at present. If he had left things absolutely unaltered, he had quite enough money. If you are going to raise a large sum, I cannot understand why you do not go in for compulsory loans, or something of that kind, because if you take money compulsorily out of people's pockets by taxes to this extent it seems to me even a milder form to take it out by compulsory loan, because you at least promise to pay it back. But I think the Chancellor of the Exchequer is really going too far, and I suggest to him that he should modify some of the provisions in the way I have sketched out. I suggest that in the particulars I have mentioned the Government should modify them in a favourable direction, and that these steps should be accompanied with a declaration on the part of the Government that they will take the other steps I have mentioned. Then the right hon. Gentleman (Mr. Bonar Law) would go to Paris next month with a perfectly clear mind. I am quite sure he would find the utmost degree of co-operation from the representatives of the Allies with whom he has to consult. These matters are of the utmost importance. Whether the Government agree with the suggestions I have made or not, we have rather reached the parting of the ways. After all said and done, your finance is only a reflex of your military and naval policy. I think, and many people agree with me, that we have reached a stage in
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the War at which the turn you give to your economic policy may be an important contributory cause in determining the fortunes of war. At any rate, these considerations I have tried to put before the House are of the utmost importance, and I urge the Government, and I urge my right hon. Friend, to come to a perfectly definite, deliberate, clear, and explicit decision that, let come what may, they will not tolerate the aggressive policy of Germany as it is at present being developed, and they will go forward in that policy for organising our Imperial resources in conjunction with our Allies on which I believe in my heart all of us are set.
The SECRETARY Of STATE for INDIA (Mr. Chamberlain): It is so long since I had a Budget to defend, and my appearances in this House have been so frequent as a critic, that I feel myself in a somewhat strange position, not made the less strange when the fortunes of Debate call upon me to answer my hon. Friend, with whose ideas on fiscal questions, both in the past and at present, I have so large a measure of sympathy. There is a certain humour in the situation which will be apparent to the House and which I cannot conceal from myself. But I do not think any quarter of the House or any individual wishes to treat the Budget which we are discussing to-day as a controversial measure in the sense in which we have discussed many Budgets in the past. They would treat it rather in the admirable spirit in which my hon. Friend has treated it, as being an occasion on which all of us, without respect to party, without respect to past prejudices or opinions, should put into the common stock whatever we can to assist in framing the wisest and the soundest policy for our country at the moment. My hon. Friend said truly that the measure which we are discussing today is as much a war measure, and the policy which it seeks to carry out is as essential to success, as is any other measure, more directly military or naval in appearance, which we either have discussed or may still be called upon to discuss during the course of the War. I need not say that I entirely share the opinion of my hon. Friend, as to the importance of the financial and economic factors in this War. I agree with my hon. Friend that we should be foolish, indeed, to measure the German economic or financial system purely by the standards which were applicable to your own, or to suppose that any given set of conditions, acting upon

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their totally different economic life, would produce exactly the same effect in Germany as we might anticipate from them if they were applied here. It would be very unwise for anyone to count on the rapid economic exhaustion of Germany. It is very difficult to ascertain or to form an exact picture of the economic situation of Germany at present. I am not disposed myself to think the German Minister of Finance, or a German Minister, surveying the economic situation of his country, has as much cause to be grateful as a British Minister surveying the conditions of his own, but we should be quite wrong if, in this or any other matter relating to this War, we built our hopes of success on the weakness of the enemy instead of on our own strength.
My hon. Friend made some criticisms of the Bill, but at least he will agree with me in this, that the present condition of our finances, whether the actual measures we are taking are the best under the circumstances or not, after the unexampled strain which so many months of an unexampled war has put upon them, shows the strength of our nation and the capacity which it has acquired to bear extraordinary burdens, and gives us good hope and good assurance that we shall be able to continue this struggle for as long as may be necessary. Before I come to the detailed criticism of my hon. Friend, let me remind the House, very briefly, of what we have done. In the year before the War we raised a revenue of £200,000,000—a gigantic revenue, as it seemed to many of us, and an excessive expenditure as it seemed to some of us. We have increased that in the years of war to £500,000,000. To that extent, subject, of course, to the necessary ordinary civil expenditure, we are meeting the expenses of this great War as we go along. There is no other country which is attempting to do the same. There is no other country which could do the same—some because they have not the resources to do it, and others because the fortune of war has temporarily gone against them and they are deprived of a great part of their resources. Compare the strength, the elasticity, and the vigour shown by this effort, cheerfully borne by the nation, as my hon. Friend rightly said—cheerfully borne by every class of society in respect of that portion of the burden which falls upon them— compare it for a moment with the efforts of our German foe. It is only a few months
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ago that the German Minister of Finance was boasting that he had not added to the burden of his countrymen during the War. I think that is not perhaps an achievement to boast about. He does not now, because he has found it necessary to add to their burdens. What is the sum which he anticipates that he may perhaps get from his various taxes? A sum of £25,000,000 of additional taxation, compared with the £300,000,000 extra which, we are able to raise
My hon. Friend said that in his opinion we are raising too much money in current taxation. I will come back to an observation in respect of the wider considerations, to which my hon. Friend drew our attention. If we were overstraining our resources, I think you would see it in the reduction of the returns from the taxation. I think you would find that the estimates of the Chancellor of the Exchequer were falsified, and that the taxes did not produce the sums which he had anticipated he would get from them. Is that true? I do not want to worry the House with figures, but I will take the results in gross. I submit there is force in the argument which I am now addressing to the House, that, if you overstrain your resources, your taxes will fail to give you the results which you anticipate. Has that been the case? It has not been the case. The revenue for the years 1913…14 exceeded the estimate by £3,500,000. The revenue for the next year exceeded the estimate by £17,500,000, and the revenue for 1915…;x16, the year which has just ended, exceeded the estimate by no less than £32,000,000. So that as the struggle has proceeded, and as taxation has become heavier, the yield, instead of dropping below the estimate of the Chancellor of the Exchequer, has increased, not only positively, but relatively, in advance of the estimates which he made.
Sir F. BANBURYmade a remark which was not audible in the Reporters' Gallery.
Mr. CHAMBERLAIN: There is the wider question which my hon. Friend raised, and which the right hon. Baronet the Member for the City (Sir P. Banbury) also raises. It was an old Liberal doctrine —it is oddly reversed when such a doctrine comes from the right hon. Baronet the Member for the City—that money always fructified to the better advantage in the pockets of the taxpayer than in the pockets or bags of the Chancellor of the Exchequer. I have not the least doubt that

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this money which we are taking from the hands of our countrymen could be used to greater advantage, if there were no war, than it is now being used in the interests of the War by the Chancellor of the Exchequer. I agree that the fact that we have raised so large a sum in taxation does lead directly to the considerations which the hon. Member for Hereford (Mr. Hewins) brought to our notice, and the effect of this heavy taxation, not so much at the moment, but when peace is restored, upon the manufacturing and productive capacity of our country. Undoubtedly there is much cause for thought in that respect. Manufacturers, under the pressure of war, and in compliance with the desire which is common to us all, to direct our activities into those channels which will best help our country at a time like this, have, as my hon. Friend said, given up trade which they had built up in peace, in order to serve the needs of war. They have parted with what he rightly said was the best asset that any manufacturer can have; they have parted with the goodwill of their business; they have allowed the business to slide while they endeavour to meet the demands of war. They have in many cases, for the demands of war, had to incur special expenditure in new machinery, new plant, new buildings, and no one can fail to recognise that in so doing they have created a claim upon their countrymen for later consideration, for consideration which is no more in the interests of these manufacturers than it is in the interests of the community as a whole and of the working class section of the community in particular. We are using up capital; we cannot help it. In one form or another we are bound to do it. We are using up capital for the purposes of the War. We are laying by less capital than in ordinary circumstances would be done for the development of business, for keeping business up-to-date, and for providing us with the means to meet our competitors. We are doing that at a time when it is true a great portion of the world is in much the same position as ourselves, but when other portions of the world, happily for themselves, are saved from this struggle and are making enormous profits at the expense of the belligerents, and are able out of those profits to reorganise, to extend, and to develop their business, so as to seize the business which the preocupations of war prevent us from carrying on, and to put
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themselves in the very best position to compete with us when we can turn our attention directly to business.
We do not need to go back to any old doctrines, we do not need to revive any old shibboleths, when the world about us is so profoundly changed and modified, as the world is being changed, by the necessary conditions of this War. I do not undertake to say what is the exact measure of agreement which may be evolved among the various parties and in different quarters of the House as we come to set ourselves to the work of reconstruction after the War. I think he would be a rash man who would say at this time what are the limits of possible agreement. I do not think anyone would attempt to say what are the limits of possible agreement. Any one of us might say what at the moment appears to us to be the best policy to adopt, but what I venture to say is that any man would be rash if he attempted now to say, from some searching in the past volumes of Hansard that on this, that, or the other thing there was no possibility of coming to an agreement amongst sections who in the old days were widely apart. One thing, at least, is quite certain. There is no section in this House who believes that you can leave the work of reconstruction to chance. There is no section in the House or outside the House who would maintain that we can pursue, after our experience of this War, and in this War, a policy of complete laissez-faire, of complete laissez-aller, of freedom from all Government intereference, Government assistance, or Government help in any form. It is common ground, I think, on the part of people who were widely separated of old, that the Government must come in to help to organise, to help to support, and to see that industries—if I may use a term which has been common in the discussions on the Military Service Act, the pivotal industries—are to continue to exist in this country, and that industries which we have not got and which were vital, as we found out when this War broke out, and which we have made in some cases through direct efforts by the Government, and in other cases great efforts through private individuals, to establish, shall not again be allowed to be crushed out, but shall be maintained, at least in so far as any one of them can be shown to be necessary to the full life and vital strength of the nation.
If my hon. Friend will ponder these observations, I think he will, perhaps, be

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inclined with me to be sanguine as to the future development of our policy. I think that we have made an immense advance towards agreement. Speaking for myself, and for myself alone—I undertake to speak for no one else—as one who was intimately associated with the Tariff movement, who is tied to it, if I may say so, by my heartstrings as well as by my head, I am not at a time like this, or in the future, going to consider myself bound to the exact measures which I advocated before the War, nor even to a rigid policy which in the circumstances after the War I might consider the best. I think it would be a much greater thing to get, if we can get it, a system which any one of us might regard -as somewhat imperfect, but which would really form the basis of a national and Imperial policy for our political development hereafter. I said I could speak only for myself, but I think that, speaking in this spirit, I represent the frame of mind of my hon. Friend the Member for Hereford and of those who worked with us in the old days. We do not invite anybody to say that we were right or they were wrong. It is the last thing that any of us wish to do, either on one side or the other. But we do invite them, as we profess ourselves willing to do, to bring fresh minds to bear on fresh problems and to consider them without prejudice and without reservation. My hon. Friend thought that this Bill ought to be utilised as an opportunity for, in some manner, declaring the policy of the Government or laying down principles which the Government representatives at the Paris Conference should follow.
Mr. HEWINS: I did not expect that.
Mr. CHAMBERLAIN: It is quite true that my hon. Friend said that he did not expect any revolutionary changes in the Bill, but at the same time he had expected something in the Bill, not being a revolutionary change, which would have formed the foundation of our policy at the Paris Economic Conference and of our general Imperial policy henceforth, and he invited me to make such a declaration now. I think that our declaration had better be made at the Paris Conference rather than that we should make a declaration here, before we had consulted with our Allies, or had their proposals before us. But I can safely assure my hon. Friend that the representatives of the Government at that conference will go there unbound by any rigid school of economic thought of the one kind or the
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other; will go there unbound by any specific fiscal policy which we have adopted in this country in the past or which some of us have advocated, in order to see in what way our common interests may be best pursued and strengthened, and the fortunes of those who in this great struggle are our friends and Allies may be together increased and prospered in the future.
My hon. Friend, turning to the details of the Budget, criticised the Excess Profits Tax. He used it to maintain one of his arguments that we were getting too much in taxation. I admit frankly that the Excess Profits Tax is open to some of the criticism which he administered to it. It is a very difficult thing to say, in regard to that tax or any other tax, exactly up to what point it is wise to raise it, and at what point it becomes deleterious and objectionable. Probably in the minds of all of us a somewhat different standard would be erected. I can only say to my hon. Friend that the criticism which he uttered finds an echo on some of the benches here, and is not universally shared on the benches on which he sits, and my right hon. Friend the Chancellor of the Exchequer was pressed from those benches as well as from the benches on this side to raise the Excess Profits Tax. The right hon. Gentleman the late Civil Lord says they will be raised again. I will say again that I hope they will not yield to further pressure. In my opinion the tax has gone as high as it ought to go. If you take it any higher you do two things: you cripple industry and you discourage enterprise. It is of the first consequence to us to do neither. Excess profits are, after all, very tempting. The basis of the tax is that in a time when many people are suffering reduction of income through the War, and when we are in great need of money, an increase of profits is a fair subject for taxation. So it is, but remember that increase of profits requires an increased reserve to be laid by. It requires the investment of capital, the fortunes of which, the moment peace is declared, are wholly uncertain. All the industries in which these works are occupied cease when peace returns, and they have to choose other occupations for them. And more than that. If you take any larger proportion than you do now you discourage people from showing that enterprise in business which we need in order to develop our resources to bear the

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burdens of war which this country has got to bear. It has got to bear them now or later. My right hon. Friend opposite thinks that we are taking too much at present.
Sir F. BANBURY: I said so.
Mr. CHAMBERLAIN: I differ from him. The greater your war the greater the demand, and proportionately the greater the demand that you must make on the present, because the greater in any case the legacy of obligation you have to leave to posterity. And for all the purposes of competition and of industrial life, of which ray hon. Friend has spoken, surely it is no less important that we should limit as far as we can the great debt which we have to bear in after years than that we should not take more than is needed from the community at the present moment. Then my hon. Friend challenged again—he challenged it on the introduction of the Budget—the policy of the Government with regard to the prohibition of imports.
My hon. Friend has twice referred to the statement of my right hon. Friend the Chancellor of the Exchequer in regard to that subject. He has not succeeded in representing quite correctly what my right hon. Friend said, and I think that much of my hon. Friend's criticism arises through this misapprehension of that statement by the Chancellor of the Exchequer. Just look at what that statement was. The Chancellor of the Exchequer said:
"I have made no fresh attempt to prevent the consumption of imported luxuries by means of Customs duties. We have come to the conclusion as the result of the experience which we have already gained, that the best method of dealing with this problem is by the growing scheme of prohibition which has been applied by the Board of Trade."
The case for prohibition as put by my right hon. Friend the Chancellor of the Exchequer was not the general case which my hon. Friend the Member for Hereford attacked. It was a special case in regard to checking the importation of articles which we could and ought to do without at the present time. First of all, let us see how far I agree with my hon. Friend. I agree with him absolutely that a policy of prohibition is not a permanent policy, nor can it be permanently the basis of our policy. I agree with him that at best it is a rough and ready and rather a harsh method of dealing with the question. But how would my hon. Friend deal with it? He says by duties. If the
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duties are to be effective they must be prohibitive, and if they are prohibitive duties, what in the world is the difference, economically or administratively, between duties which prevent importation and an order which has the same result?
Mr. HEWINS: My case was that the prohibitions are not prohibitive, are not stopping them, whereas you could do it by means of a tariff.
Mr. CHAMBERLAIN: My hon. Friend' interrupts me to remind me of part of his argument to which I was just coming. My argument, so far as I venture to submit it, is that if you seek to prohibit certain articles of luxury for one reason or another, if you are to do it by duties, your duties must be prohibitive.
Mr. HEWINS: No, you reduce them.
Mr. CHAMBERLAIN: Really my hon. Friend does himself an injustice. You must do so if your object be to keep them out. That was the object of the Government—to keep them out, in order partly to check expenditure on luxuries in this country, but much more in order to set free tonnage of which there was not sufficient for all the purposes of a more urgent character for which it was required. Then I come to the argument of my hon. Friend with which I was going to deal. He says, "your prohibitions are not effective." Is he not judging a little hastily? The first Order of prohibition came into force in March. Licences were granted for goods which were already contracted for, and throughout there has been a Colonial preference which cannot be ungrateful to my hon. Friend, and which counts for a great part of the produce of the arrival of which he has heard. I venture to say that if he would have a little more patience and distinguish between the goods which were contracted for before, and the goods which are of Colonial origin he will find that these prohibitions are not so ineffective as he thinks. I admit that they raise great questions of difficulty with neutrals and sometimes with our Allies perhaps. All that is true, but all that would be equally true if we chose to adopt the other method of dealing with this particular problem and put on such duties as would keep these goods out. My hon. Friend drew rather too alarming a picture of the result of having recourse to the eighteenth century policy of prohibition. I do not quite follow his argument. He says that if you resort to prohibition in war you must resort to prohibition in peace—
Mr. HEWINS: I do not say you must. I say you did.
Mr. CHAMBERLAIN: I thought that my hon. Friend was not merely a historian in this case but also a prophet. I thought that he was not merely saying what happened in the past, but that he undertook to predict what would happen in the future.
Mr. HEWINS: History is the basis of prophecy.
5.0 P.M.
Mr. CHAMBERLAIN: Then we are agreed. His argument is that if you adopt certain prohibitions as a war measure it would be found that past experience teaches that those prohibitions will be maintained after peace is established, not, as I understand, merely as a temporary measure to tide over an interval, which might very well be, but as part of your permanent system. A little later on my hon. Friend assured those who might be suspicious of any duties that were imposed at present, that whatever duties might be established in this war period could not remain when peace is declared. I do not follow his line of argument by which he reconciles those two conclusions It does not seem to me that prohibition is any more permanent than the duty, and I confess that, if the object be the exclusion of imports, in that case, in so far as that object can be attained, I greatly prefer to proceed by direct prohibition instead of by something which is called a duty but which is, in fact, a prohibition. I was rather surprised that my hon. Friend, after listening to the Budget Debate of last year on some taxes intended to be prohibitive, does not see that those who hold the view which he and I did before the War were likely to reap all the odium of taxes which were as foreign to our system as they were to the system of the critics of those taxes. I do not think it is in the interest of a sound tariff system that we should create preposterous duties which are duties in disguise, but which are intended to be in effect absolute prohibition. I have briefly, and I hope not unreasonably, dealt with the comments made by my hon. Friend. His speeches are always interesting, and they always deserve the respectful attention of Ministers who have to follow him, or deal with the subject on which he has spoken.
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I do not like to leave my participation in the Budget Debate on any note of controversy with anyone at the present time. After all, the most striking thing about the reception of my right hon. Friend's Budget is the acceptance which it has met with in all quarters of the House, and I think in all parts of the country. We have many tasks to discharge in this War. We have to make a gigantic naval effort, and we have to make gigantic military effort; but no less important than either of these, not merely to the success of our own operations, but to the success; of our Allies, is the financial strength, the financial stability, the financial resources of this country. No one who follows, or attempts to follow the German Press, can be without knowledge that in the financial, resources of this country the Germans see a measure of the capacity for resistance of the Allied nations. I think it is satisfactory that having this great burden to bear, the spirit of our people has enabled them to sustain it with such readiness and good will, and that after nearly two years of war we should find ourselves bearing comparatively willingly a burden of taxation which would have seemed incredible to any Chancellor of the Exchequer, a comparatively few years ago, and that our financial position, instead of growing weaker, as the War goes on, grows stronger with the experience we obtain, the confidence which we acquire, and the respect that we win by the efforts we are making.
Mr. LOUGH: I think those who listened to the hon. Member for Hereford will appreciate the spirit in which he opened the Debate. In this second part of the Budget there will be profound interest taken in every part of the country, and it is very desirable that the House should rise to the occasion in considering the weighty proposals put before it. The hon. Member for Hereford, in the greater part of his speech, adopted a quite uncontroversial tone, and I am glad to be able to agree with some of the conclusions at which he arrived. With certain parts of" his speech the right hon. Gentleman (Mr. Chamberlain) has successfully dealt, and he administered to the hon. Gentleman something in the nature of mild reproof for entering upon what may be deemed controversial; he deprecated that, and said that he approached the matter in a non-controversial spirit. I desire to do so.
Mr. CHAMBERLAIN: I would remind my right hon. Friend that I directly referred to the moderate tone and temper of my hon. Friend's speech, the admirable character of which could not be resented.
Mr. LOUGH: The main part of the speech of the Member for Hereford commended itself to me, where he spoke of the large amount raised by direct taxation, but he drew a conclusion with which I do not entirely agree. He referred to the proportion between indirect and direct taxation. I do not find fault with the Chancellor of the Exchequer's proportions; they are all right; but I agree with my hon. Friend in saying that the amount raised by taxation is rather heavy to be so suddenly placed on the country—£323,000,000 in one branch of taxation, and £136,000,000 in another. My. hon. Friend complained of that, and to a certain extent I agree with him. I disapproved of his speech where he wanted prohibition to be secured by introducing a subject which I do not want to discuss at this time. There was agreement between us in deprecating the heavy taxation, but my hon. Friend went on to suggest that we ought to take a new step in our finance, and I do not think that would be a prudent step. In one sentence the hon. Member said the Chancellor of the Exchequer must admit that the old weapons had failed him, or some words like that. I do not agree with that at all. The Chancellor of the Exchequer has won most extraordinary success in raising revenue by placing burdens on the country which have not been resented, and by sticking to our old principles of taxation.
But the situation is very critical with regard to finance. Tremendous changes are being made. The Chancellor of the Exchequer will admit that fact, and it is right that this House should look at it in a broad way, before we go further with the very great steps that we are taking. I, personally, am very glad to have heard the speech which we have had from the right hon. Gentleman who has just sat down. I agree with him that if we are to win the War the most powerful weapon that this country can use is the weapon of finance. It has been the most powerful weapon we have used. Next to the splendid achievement of our Navy, which everyone always puts first, what has astonished the world and ourselves, and puzzled the enemy, is the great financial strength which this country has displayed. They see our magnificent trade carried on and
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extended under very great difficulties; they see the high wages which are paid in this; they see the good social conditions maintained in the greatest crisis through which this country has ever passed; and then, above all, in the revenue which the Chancellor of the Exchequer has raised, everybody must see that we have developed a spirit which has proved that we are perfectly invulnerable. And it is because I want these conditions to be maintained, without bringing about any controversy in this Debate, that I venture to call attention to three matters on which I hope the House of Commons may be disposed generally to agree. Our great difficulty in understanding this subject is the rapidity with which the change has been made. This is May, 1916. A year ago, in what condition were we? A year ago the demands upon the country yielded a revenue of £226,000,000. We passed over one year. Up to May, 1915, the revenue yielded was, as I have said, £226,000,000, and after a lapse of a year, what is the amount expected to be yielded from the Budget? It is expected to yield more than double that amount—more than £450,000,000. That is a terrible load to ask the country to bear in one year. To increase the burden to that extent is a very great experiment.
The right hon. Gentleman (Mr. Chamberlain) used the expression that the evidence showed that the country is bearing this burden willingly, and he gave two reasons why revenue has been produced so well, and why there is no diminution. I will give two answers to his reasons, and I hope those answers will be considered. The first is that we have only had a short experience—Heaven forbid that I should indulge in any gloomy anticipations—for it is only six months since that the first heavy burden was imposed, and we cannot tell in six months what is the effect on the country. The second answer is, that while there has been a great surplus there has also been an underestimate of revenue. I called the Chancellor of the Exchequer's attention to that matter before, and I am not going to return to it now, but I think the revenue has been underestimated, and it is in these circumstances that the surplus has been created. I am sure the House generally will agree with me in this, that to raise the revenue from £226,000,000, as it was twelve months ago, to nearly £500,000,000 is a great experiment, and that we ought to go as carefully as possible into it, lest unhappily we do grave and

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unnecessary evil to interests of great importance throughout the country. I am an advocate of taxation, but I confess, as with all good things, we may be getting too much of this good thing. Having made this general observation, I ask for a moment's consideration of one or two points in connection with this grave matter.
I want to utter a protest against having a third Finance Bill this year. It is now certain that we will have a third Finance Bill in July. We have had one in April and another in May, and we had one last September which lasted only until December. These Bills create a great deal of alarm in the country and it would be a great improvement if we could have the matter settled in one Finance Bill. The Chancellor appeared to be irritated yesterday when I asked was there to be a third Finance Bill, but surely it was not an unreasonable question! Why not put the Tea Duty and other things for one short year into this Bill, so that the important business interests in the country, which are always agitated when there is a Finance Bill, will be able to arrange to take their medicine whatever it may be, and so that they will know that there will be no change for that period? The Chancellor has been very severe on branches of trade which tried to forestall, but does he not think he is creating that by bringing in so many Budgets. The taxes are stiff, and let him make them stiffer if he likes, but let him fix them and not be constantly changing them. I think the Chancellor has overestimated his expenditure and underestimated his income very grossly last year. The result is, I think, that we do not know exactly how much the country is paying. The revenue exceeded the Estimates by £32,000,000, and the expediture was £31,000,000 short of the estimate, and thus there was a difference of £63,000,000 in a Budget which lasted for only six months.
The CHANCELLOR of the EXCHEQUER (Mr. McKenna): On how much?
Mr. LOUGH: Three or four hundred millions.
Mr. McKENNA: Nearly two thousand millions.
Mr. LOUGH: Those are only the first two items. I have got a bigger item. The Chancellor in his statement went on to say when he came to the loans this coun-
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try would have to provide there was a still greater difference. He said that the advances which had been made to the Allies and the Dominions had been overestimated to the extent of £107,000,000, so that thus the Chancellor has made a wrong estimate to the amount of £170,000,000. The Chancellor's words were:
"I return now to the account of last year's expenditure. I have already stated that the expenditure on our own services has been approximately near the Estimate, but that there has been a saving of £107,000,000 under the head of Advances to Allies and Dominions."
Mr. McKENNA: That represented the Exchequer issues. As I explained in another part of my statement, there have been loans which have not yet come through the Exchequer, and which diminish that total.
Mr. LOUGH: I will not trouble the House with the explanation which the right hon. Gentleman gave. I come now to another account in the indictment. Having told us of these differences, the Chancellor asked, "What has become of the balance?" He told us it had been, used to buy American securities. We are told that our national expenditure of last year has been used to buy American securities. Those are splendid securities, paying interest, and many of which have been sold, I believe, at a profit, and all of which are realisable; but that is not expenditure, and should not be mixed up with the expenditure of the nation. I protest against that, and I think the House ought to get a clean statement of expenditure without the mixing up of financial matters of this kind. The Chancellor said:
"The securities themselves, or the proceeds of their sale as far as they have not yet been expended, constitute a substantial asset in America with which to begin, the current year." — [OFFICIAL, REPORT, 4th April, 1916 cols. 1050 and 1051, Vol. LXXXL.]
It is not last year's expenditure, and this is, I submit, the mixing up of two years' accounts in a reprehensible way. Those securities ought to have been put to a proper and separate loan account, and the finance of last year closed up on a proper and clean basis, and this year dealt with separately. The Chancellor of the Exchequer tells me I do not understand it. I suppose I do not. I am a simple business man and the Chancellor is a lawyer. He mixes up these charges and securities with the expenditure of the country during the year, and I protest against that. I think the House has been led into great difficulty by the mixing up of these loans with the

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national expenditure. I think it is done for the sake of showing a large figure and having talk of £5,000,000 or £6,000,000 a day. It has, I believe, confused the national mind, and the Chancellor by doing so has failed a little in his duty to the House of Commons. We are only humble people in the House and not all gifted lawyers who can wriggle figures about anyhow. If we bought £70,000,000 of American securities we would open up an account for them and would not mix them up with other matters. I was going to put down an Amendment to the Budget, but I did not want to strike a controversial note. I thought, however, that the House ought to have a clean statement of the expenditure. I hope I have not put this matter in any offensive way.
I come to the next point. I believe that the Chancellor has greatly under-estimated the revenue for next year. One very Curious statement he made was that there had been forestalments belonging to the current year amounting to £7,000,000. How on earth can he include revenue which was deep down in his pocket last year and which is not revenue for this year? You may call a thing forestalment, or anything you like, but when it is money paid you ought to be very thankful you have got it, and take it and not make any very striking remarks about it. The total revenue estimated by the right hon. Gentleman for this year on the basis of existing taxation, without any one of his new taxes, he estimates in his White Paper as £426,000,000. I think they will produce nearly £500,000,000, or at any rate a great deal more. I think, for instance, the new duties included in the Act just passed will produce a much larger amount. The Chancellor estimates that he will only receive £1,600,000 additional from Customs. What is the position after six months of the high Tea and high Cocoa and Coffee Duty and that on Sugar, and hat will be the result after a year? I certainly think it is going very far to estimate that there will only be an increase of £1,600,000 produced by those duties.
Mr. McKENNA: You have forgotten your forestalments.
Mr. LOUGH: As long as the right hon. Gentleman keeps bringing in Budgets, and especially a quarter-dozen yearly, there will be plenty of forestalments, or there may be. But even allowing for forestalments, I think the Customs Duties will
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give him an increase of from £8,000,000 to £10,000,000. I believe the duty on tea, coffee, cocoa, and chicory will bring in £2,000,000 more than last year. Then there is the Tobacco Duty. At the old amount it totalled some £20,000,000, and the duty has been raised 50 per cent, by an addition of 1s. 10d. in the £. Surely it is a moderate thing to say that it will produce £5,000,000 or £6,000,000 more in a full year than in a half-year. The Chancellor estimates that he will lose £6,000,000 on spirits, but I do not know why. This country may always be trusted when things are prosperous to keep the drink bill up to a fairly level point. Therefore I do not think that £6,000,000 will be lost on spirits in the year. I put it down that on these items there has been an under-estimate of £18,000,000. I believe the Excess Profits Tax has been greatly under-estimated, and for two reasons. Remember that we are dealing with the year that will end in March, 1917, so that there will be two complete years of Excess Profits Tax. I know there is a great delay in the money coming in, but once they get started and see that they have to pay, I believe the Chancellor will get a great deal more than he has estimated. Then, last year, in the Excess Profits Tax we did not include what the Chancellor will get from controlled establishments, but that is included this year. I venture to say that from the two years, and including the controlled establishments, there will be a vastly larger amount than the £86,000,000 which the Chancellor has estimated. I think the returns from shipping are probably underestimated also, and that under these various heads the Estimates have been very seriously under-estimated.
The Chancellor made one very curious statement in his speech. He apologised for not imposing heavier taxes. That is one of the most delightful things I have ever heard from any Chancellor of the Exchequer during twenty years' experience of this House. He said that in ordinary circumstances no Chancellor of the Exchequer would apologise for not putting on heavier taxes, but he had to do so. I thought, when I heard that, "Now we are going to get off easily." But what happened? After this apology he immediately puts 1s. 6d. on the Income Tax. I think he might have spared us all that talk about the House desiring more taxes. As far as my experience goes, nobody desires more than is necessary. I think, if you correct the figures in the

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spirit of my suggestion and realise that there will be nearly £500,000,000 got without any additional burden from the country this year, the House will agree that the Chancellor of the Exchequer should have hesitated to impose such heavy burdens. Take, for instance, the Sugar Tax. It is a terrible thing to put 1½gd. per pound on sugar. The only reason given was that sugar is as dear in America as here. I do not understand that. Everything in New York costs about twice the price that we pay here. You have to pay twice as much there to get your boots blacked. When I was there I was always glad to escape paying twice as much for anything as we pay in this country.
Mr. JONATHAN SAMUEL: Why is that?
Mr. LOUGH: That is a big question, and I would rather not answer it now. Sugar is now 5¼d. granulated and 6d. loaf, and I believe we owe about 2d. of that to the manipulation of the Chancellor of the Exchequer. At any rate, he might have spared us an additional halfpenny, which, I think, would make a great difference to our industries. There is a point about the Excess Profits Tax which, I think, must be a mistake. The right hon. Gentleman told us that he would not consider in his estimates the income from the Excess Profits Tax, because it was transitory. But what does he do in his Budget? He makes the tax permanent. After arguing the tax on the basis of its lasting only a year or two years, he puts it in "until Parliament otherwise decides." I suppose that that is a mistake made by the Secretary to the Treasury. I think that in the crisis in which we are involved, the Chancellor of the Exchequer ought to pay more attention to economy in expenditure instead of piling all these heavy burdens on the country, and I believe that in the two or three respects that I have mentioned he has greatly taxed the patience of the House.
Mr. HUME-WILLIAMS: I want to call the attention of the House to that part of the Bill which enables the Government to raise money. I think it is common ground that the time is approaching when the Government will have to make fresh issues. I am not here to criticise the way in which issues have been made up to the present, or to question the fact that the Government's finance has been wise and prudent. But I do not think I am betraying any secret when I emphasise the fact that the
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strain now imposed on the financial resources of this country is increasingly heavy, and must indeed become more so, because we are at the present time the financial storehouse of certain of the Allies, if not of the world. Consequently, in conection with this forthcoming issue, I want to press upon the attention of the Government the scheme which has become known under the term "premium Bonds."I want the House to believe—I am sure they will—that those of us who have directed our attention to this question have done our utmost to formulate or, at any rate, to outline a scheme which shall be financially sound and financially acceptable to the Treasury. Just because of the element of chance which underlies the drawing of these bonds we desire to be particularly careful to bring forward only a scheme which shall be wise, prudent, and financially sound. I am sure the House will believe that we have done our best in that direction, and the names of those who support the scheme in the House, and the support which it has received outside, should, I think, be a proof of that fact.
Let me explain what a premium Bond is. A premium Bond is a Government Bond issued at a rate of interest lower than the normal rate at the time, but carrying participation in half-yearly drawings, of which the object is to pay off the Bonds at a premium. This transaction cannot legitimately be called a gamble, for this reason. The essence of a gambling transaction is that the person entering into the gamble, whether it is a bet or an ordinary lottery, gives his stake in return for the expectation of a large profit. If he wins, he gains a large amount, in respect of which he has risked his stake. If he loses, he loses all. Win or lose is the essential of the gamble, and that element is here entirely absent. A premium bond is merely an investment at a low rate of interest, carrying with it a chance—by no means an unpopular one in foreign issues —that the bond may be drawn in a shorter or longer time and paid off with a premium. Every man who invests in house property is content to take a low rate of interest in the hope that some of the houses which he is buying may sell at a large profit. Very often the accidental advent of tramways or the growth of population gives the houses a considerable profit. The man sells at that profit, but when he makes the investment he is content with the smaller rate of interest, in the hope that he may realise part of his

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investment at a profit. Indeed, every investor on the Stock Exchange surely has in view that the securities which he is buying may go up. My own personal experience is that they generally go down. But the investor undoubtedly always hopes that they will go up. If they do, it is sometimes by fortuitous circumstances over which he has no possible control, and he sells at a profit. I am sure that any Members who have had that fortunate experience would have been indeed shocked if they had been told that they had taken part in a gamble.
If there is truth in that, let me outline the class of transaction which we suggest to the Government. There appear to me to be two distinct questions involved. First, is this scheme financially sound; secondly, if it is, would such a bond be sufficiently attractive to produce a sufficient return to make it worth while to try the experiment? I frankly admit that unless those two propositions were established one could scarcely expect the Government to make this comparatively new departure. Let me take, for the purposes of this explanation, the example given in the circular which we have taken the liberty of distributing to Members of this House—a circular prepared with great care, and with the best financial assistance to be obtained in the country. I take as the unit for the purpose of argument an issue of £10,000,000. The present rate of interest for Government issues is 5 per cent. It is proposed that these £1 Exchequer bonds should bear interest at the rate of 2½ per cent., free of Income Tax. That is an advantage which I strongly press upon the Chancellor of the Exchequer, because I cannot help thinking—in fact, I know, from the correspondence which reaches me in connection with this question from all parts of the country—that the uncertainty as to Income Tax in the future is largely responsible for the fact that some of the Government issues have not been, shall we say, quite as remunerative or quite as successful as the Chancellor of the Exchequer might legitimately have hoped they would be. Two and a half per cent., free of Income Tax, has also the advantage that it means 6d. in every pound, and the coupon attached to the bond is easily calculated. Therefore, it has the great advantage of being simple and easily understood. If you take 2½ per cent, interest and compare it with the present
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5 per cent., it leaves 2½ per cent as a margin. How do we deal with that? We take 1½ per cent, and devote it to a fund out of which these bonds can be drawn. That permits of a sum of £75,000 being provided every half-year during the period of ten years—which, I think, is the time within which the bonds would probably be redeemed—for redeeming the bonds, plus-premium. That would redeem 11,380 bonds every half-year. To sum up, you would during the period of the loan provide £1,500,000 for the payment of premiums, or prizes if you like so to call them, and by the end of the term you would automatically have redeemed 227,600 bonds. So that to that extent the bonds issued would be reduced, and the scheme, from the point of view of the Treasury, certainly should be financially attractive. It is not proposed that the premiums should be upon any spectacular or any theatrical scale. It is proposed that they should range from £500 to £5. We suggest £500 for this reason: It is for a class of people to whom we hope these bonds will appeal. The amount is sufficient to buy a house, or to establish a shop, or an endowment, and every half-year, when this drawing recurs every holder of his £1 bond will not only have his 2½ per cent.—his 6d. which he gets every year for every £1 bond—but the chance of obtaining a share of the £75,000, with the payment off of his bond, and with this incidental advantage, which I do not want to emphasise by overstatement, that the whole time this issue is going on you are redeeming your bonds, you are reducing the interest, and you are reducing the amount which the State has to pay at the expiration of the term.
That then leaves us with a margin of 1 per cent., which the Chancellor of the Exchequer can deal with as he pleases. There are several ways of dealing with it. If he thinks the bonds would not be sufficiently attractive at 2½ per cent, he could put them up to 3, to come out of that extra 1 per cent., and he could arrange that all bonds at the expiration of the term should be redeemed at a small premium. That leaves a substantial margin for expenses and for incidental costs. [An HON. MEMBER: "What about Income Tax?"] One per cent, certainly would deal with the Income Tax upon this particular class of security. First, however, let me complete my present point, then I will deal with that. The bonds should be to bearer and should be purchaseable over the counter. The existing machinery could easily be utilised.

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Among the other things you would possibly get as a result of this issue is a large accretion of gold. Experience shows, for instance, in the issue of a small bond of, say of the Underground Electric Railways, that these are subscribed, against the gold reserves, out of the pockets of small shopkeepers and humble people. The Post Office could keep the bonds as at the present time they keep the Post Office savings. The simplicity of the whole issue would, we think, be a very substantial attraction.
The next point we have to establish is this? Would these bonds prove attractive? We all admit it is no good attempting an issue of this kind unless it draw and attract an amount sufficient to warrant the experiment. I think the first thing which will occur to every man is this: That the class of people to whom these bonds are likely to appeal are those who up to now have not got the habit of investment. I mean some of those people of restricted means who, up till the time of the War, never had sufficient to invest, and have not got the habit. From £3,000,000 to £4,000,000 a day is being spent on the War. I should think it was not an undue assumption to say that about £500,000 is going to the working classes of the country. It is also, I think, a fair assumption that the majority of the working classes of this country are earning 50 per cent, more than they did before the War, or, at any rate, a very large amount. I am not saying that with the least disrespect for the working classes. I yield to no one in my admiration for the work they have done for the War. But I think it is common knowledge that the increased amounts they are earning are at the present time being largely frittered away in cinemas, cheap jewellery, and the purchase of pianos. These are the people who have not yet got the habit of saving. They have got not only to be taught to save, but to be attracted into some savings of this kind. It surely should be that a bond of this kind, with its recurring chances, would attract them—at any rate, so we think, and so we are advised—in a way no other investment could or would. Why, come to think of it, supposing a workman has saved, at the end of a week, a fortnight, or a month, £5 or £10—the time is immaterial, he has got the money to invest—and the Exchequer Bond is a very doubtful form for him. There are many of the working classes making £8
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to £10 a week now, as hon. Members below the Gangway know well. A working man has got it to invest somehow. All I can say is, if I were in his place, I should think an Exchequer Bond a very dull thing. You are going to get your few shillings a year, and at some future period you may get the capital back. You have got your walls and newspapers plastered with advertisements urging people to make investments of that kind. The investment itself is not attractive. That cannot be denied. It is because it is not attractive that we seek to find something which will be attractive, and which would get back into the coffers of the Exchequer these enormous amounts which are at present passing into the pockets of the working classes.
That is, to our mind, the main argument in favour of this scheme. It is because we believe it will appeal to that class that we have taken such trouble as we have, and that we are urging an issue of this type. It will occur at once, I am sure, to hon. Members of this House the advantage that will accrue after the War if you have induced the working classes to invest some part of their earnings. Nobody can shut his eyes to the fact that after the War there must be economic trouble, labour trouble, and depressioin of trade. I hope there will not be. I have every confidence in the power of the Government to deal with questions of that kind, but it would be idle to shut our eyes to the prospect. If you can persuade the working classes to invest you have a considerable argument in favour of an easy economic adjustment of the great questions ahead. There is another great advantage in this scheme. You avoid those—speaking with all respect of the Government, and I am only speaking my own personal opinion—you avoid those awful advertisements with which our walls are plastered at the present time—those advertisements like that one referring to bad form in dress. It is a grave question whether the want of taste is in the dress or in the framing of the advertisement. All those circulars which are issued by the Chancellor of the Exchequer with reference to his 5 per cent. Exchequer Bonds would be avoided, and for this reason: every drawing is your advertisement, every prize that is won is your advertisement, every six months, and every man who has been successful, every one of the thousand odd is a walking advertisement for your scheme in the future. You do

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not need to spend money or time, you do not need to spend your energies, in advertisement.
Lastly, there is this, I think, admirable factor, that you would attract money from foreign countries. If this issue is subscribed in considerable amounts it would, as those who advise us believe, attract from abroad money which at the present time is not coming into this country. Remember that this scheme which is new here, and the contemplation of which appears to have struck with horror the hearts of some, is a commonplace abroad. In fact, to them it seems a mild imitation of their means of raising capital.
Mr. D. MASON: Where?
6.0 P.M.
Mr. HUME-WILLIAMS: The only form with which we are all familiar is the issue of the Suez Canal Bonds, one of the greatest institutions in the world, drawn half-yearly, payable with a prize, and also the Ville de Paris, made in the same way. Half the foreign issues made in this country and subscribed on the London Stock Exchange are the issues of foreign railways and foreign bonds which are bonds drawn payable at a premium, of course, a great deal smaller. Indeed, the scheme has once been in operation in this country. It has even been in operation in connection with Cape loans. There is nothing new in the system. An hon. Member inquired how about Income Tax? One of the great attractions of this scheme is that the bonds will be issued free of Income Tax. The 1 per cent. to which I have referred leaves to the Chancellor of the Exchequer an ample margin in which to pay. For this reason the whole gravamen and basis of this issue is that it will apeal to the class of people who at the present time do not pay Income Tax. What we want is that these bonds shall appeal to the working classes of this country, and do it in a form which will enable them, and enable the Treasury, to escape all the complicated machinery of application for the repayment of Income Tax which those concerned never ought to be asked to pay in the first instance. One paragraph in a letter of a general manager of one of our greatest joint stock banks in the country seems to me so admirable a summing up of this part of the scheme that I venture to read a few words to the House:
"Simplicity is the chief point. The working man and the small investor generally have been bewildered by floods of advertising matter couched
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in technical language, which those of us who have been brought up in the business have not always been able to understand. The whole scheme must be within the compass of the mind of the men to whom you are making the appeal. Two and a half per cent. interest—that is as much as I can get in the Post Office. No Income Tax—so I know where I am! And the chance of one of the large number of prizes which have got to be won by somebody. Everyone can understand that, and, what is more, carry it in his head."
Those words are not mine, but they are those of one of the highest financial authorities in the country, and so I venture to read them to the House as putting shortly the arguments which I have ventured to produce on this point. Let me deal with the objections. The first objection is that it would deplete the Savings Bank. I do not agree. I think the class of people who have been putting their money into the Savings Bank will continue to do so; but, if the worst came to the worst, and the money was taken out of the Savings Bank and put into Premium Bonds, it remains with the Exchequer, and in larger quantities and in more satisfactory amounts. Then we are told that the co-operative societies would be hit. I do not believe that either. The co-operative societies, many of them, are firmly established among the working classes of the country, managed by them, supported by them, and the class of people who support them now, in my opinion, would support them in the future. Finally, we come to the last—and what I believe in the minds of some is the main—argument against this scheme, the element of chance—
"… that power
Which erring men call chance."
You cannot eliminate chance from human life. All life is made up of chance. From our childhood we take our chances every day. We not only take our chance, but we incorporate it in our daily habits. The schoolboy who tosses which side shall go into cricket first; the grown man who draws lots with other men as to who shall go into some position, coveted or feared—the element of chance is one to which we are all accustomed. "I moreover affirm," says Montaigne, "that our wisdom itself, and wisest consultations, for the most part commit themselves to the conduct of chance." It is a chance whether a man will be born; it is a chance whether he lives; it is a chance when each of us will die. Chance rules the sternest Puritan, as it rules the most irresponsible trifler. If, indeed, there be such a thing as chance at all—
"All Nature is but art, unknown to thee;
All Chance, direction, which thou canst not see."

1701
You can no more get rid of the element of chance in your daily life, and in your daily endeavours, than you can get rid of all the primeval passions with which nature has endowed everyone, and it is because chance is an essential factor that we think, instead of scouting it, instead of turning down a scheme which is otherwise sound—I admit I must establish that—it is surely a wise thing to realise its part, to recognise it, to harness it to the yoke of your necessities, to bring it in to the purpose of the War by utilising it in connection with this issue. It would be attractive. It would be, we believe, remunerative, and if it does appeal to the working classes of the country, as we sincerely believe it will, then it is thoroughly justified, and we hope the Chancellor of the Exchequer will take it into his serious and earnest consideration.
Sir F. BANBURY: I hope the House will allow me, as one who has spent many years in the City, and one of whose occupations has been chiefly concerned with investment, to say a few words upon this subject. I will not deal with the eloquent peroration of my hon. and learned Friend. Like him, I am a great believer in chance. Chance sometimes lands us on that bench, and sometimes it keeps us unrecognised behind. I have no objection to chance, and my objections to the scheme of my hon. and learned Friend are not founded upon any question of chance or gamble. My hon. and learned Friend began by stating that house property pays a low rate of interest. I am afraid I cannot agree with my hon. and learned Friend on that point. I have always thought that house property was rather a speculative kind of investment that paid a very high rate of interest. If you take a landed estate, that is another thing, but everyone, I think, will admit that if you take what is called house property—that is, a row of houses, or anything of that sort—you could buy them in the old days to pay something like 6 per cent. or 5 per cent. at a time when first class investments were only paying 2½ or 2¾ per cent. Therefore, compared with first-class investments—and we are now dealing with a Government investment— I think I am right in saying my hon. and learned Friend started with a false assumption. It is not a very important point, and it is only worth alluding to in order to show that many of my hon. and learned Friend's statements are not absolutely correct, but are founded on a misconception. Then he says that the rate on
1702
Government Bonded Stock is now 5 per cent. As a matter of fact, it is not. The only Government Stocks which pay 5 per cent. at the present are Exchequer Bonds and Exchequer Bills. All others pay less. What the rate will be for a new Loan I do not know, and I will not venture to say.
Having made that error, my hon. and learned Friend goes on to say that his new stock is to bear the rate of 2½ per cent., that there is to be 1½ per cent. to pay the premiums or prizes, and that there is a balance of 1 per cent., which the right hon. Gentleman the Chancellor of the Exchequer, or my right hon. Friend (Mr. Chamberlain), if he were to succeed to the office again, would have to pay. Unfortunately that calculation is entirely based on an error, because my hon. and learned Friend has forgotten that when he talks about 5 per cent., even supposing it is correct, he has got to deduct Income Tax, which is 1¼ per cent. at the present rate, and, therefore, Exchequer Bonds pay 3¾ per cent., so that the margin of my hon. and learned Friend disappears at once. He is using 2½ per cent. for interest and 1½ per cent. for premiums, and by a simple calculation l½ and 2½ make 4. Now, I have shown that the highest rate of interest at the present moment paid by any Government security is only 3¾ per cent., and, therefore, there is at once a deficiency of J per cent. before you get to the ¼ per cent. with which you are to regale ourselves. Therefore, I think, to begin with, the financial elements of the scheme have not been thought out.
Then my hon. and learned Friend puts a very great value upon the fact that these premium bonds are to return 2½ per cent. free of Income Tax. Later on in his speech he said that the people to whom these bonds were to appeal were to be the working classes. There was some little difference of opinion between my hon. and learned Friend and some hon. Members opposite as to what the earnings of the working classes are at the present moment. I will not go into that, but, at any rate, I do not think hon. Members opposite will disagree with me if I say that many are not within the Income Tax limit, and a good many are within the very small late of Income Tax which is payable upon an income of, say, £200 a year, and, therefore, they would not be attracted by a rate of interest free of Income Tax, for in no case would they pay Income Tax. It seems to me that there again the attraction, or the supposed

1703
attraction, of this scheme proposed by my hon. and learned Friend falls to the ground. My hon. and learned Friend says that this scheme is going to appeal to the working classes, and that in addition it is going to be a very great source of profit to the State in a time of war. Just let my hon. and learned Friend consider. This has got to come out of the savings of the working classes, not the past savings, but the future savings.
Mr. HUME-WILLIAMS: It will induce them to save.
Sir F. BANBURY: Then the money is to come from the savings which they will be induced to make by my hon. and learned Friend's scheme in the years to come. How long is that going to take? I appeal again to hon. Members below the Gangway. I really do not know what the income of the ordinary working man at the present moment is. I believe it is very high, but say that it is £3 a week.
Mr. WARDLE: Do you want to know what the Great Northern Savings Bank shows?
Sir F. BANBURY: I do not know at the moment, but I shall be pleased to find out. Take it at £2 a week, and I do not think, taken all round, that is too high. That is only £100 a year, and how much a year is going to be saved out of that? If you take the amount that is going to be saved out of that a year, and multiply it by the number of working men who are in that position, you will find at the end of the year it will come to a much smaller amount than might be supposed. But is the working man going to do this? Last week someone—I do not know who he was—sent me a Birmingham paper about something. I think I ventured to make a few remarks in this House, and somebody in the Birmingham paper criticised me. I was not very much interested in that, but I was extremely interested in the account of an interview which had taken place between Mr. Neville Chamberlain and some representative of the trade unions in Birmingham, and also some worthy Birmingham citizens. There was a proposal made there—a different proposal from that of my hon. and learned Friend—but a proposal to attract the savings of the working classes. At any rate, two gentlemen moved and seconded that this was a good scheme, and that it would have the support of the working classes in
1704
the town. What happened? The representatives of the trade unions at once said that they would have nothing whatever to do with it. They said the working classes cannot save because they have nothing to save with.
Mr. CHAMBERLAIN: My right hon. Friend is an old Parliamentary hand, and he ought not to believe everything he reads.
Sir F. BANBURY: I am not arguing whether the scheme was good or bad, but, at any rate, the representatives of the trade unions did not approve of it, the resolution was withdrawn, and the meeting ended in nothing. I was almost inclined to believe everything that came from Birmingham, but this was not an expression of opinion by a paper but simply a statement of fact. It was the report of what took place at a certain meeting at which a resolution was proposed, which was not supported by the representatives of the trade unions. I have the paper containing the report which I have saved, and I shall be very pleased to show it to the Secretary of State for India. [An HON. MEMBER: "What was the scheme?"] That is not the point. It was stated that the working classes cannot save because they have nothing to save with. Remember that this scheme would not appeal to anybody else. It would not appeal to trustees, because beneficiaries would not allow them to invest at a small rate of interest to receive a prize which would go to the State. My hon. and learned Friend (Mr. Hume-Williams) would know, if he had had any dealings in the City in this sort of investment, that trustees are the great supporters of Government securities,. and they would be cut out.
My hon. Friend says these securities have to be deposited as bonds in the Post Office. We are always very loath to take the custody of bonds because they carry a great deal of risk. The safe may be broken into or a bomb may be dropped from a Zeppelin, and we do not like to take the risk. Does my hon. Friend mean that these bonds are to be deposited at the Post Office in London and in our great towns? How can the Post Office undertake the custody of these bonds. At any rate, it would be very risky, and I do not think it is possible. I do not believe that a, scheme of that kind would attract money from abroad, and I think the Chancellor of the Exchequer will agree with me when I say that there is not much money abroad

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to attract. The right hon. Gentleman has already advanced £450,000,000 to foreign countries, and I do not think it is at all likely that they will be attracted here by a bond at 2½ per cent. with a small premium. The hon. and learned Member for the Bassetlaw Division said that after the War there will be depression, and it will be a good thing that these working men should have these investments. When the War is over and there is depression they will want to sell those bonds. Supposing they are out of work and have £50 invested in my hon. and learned Friend's premium bonds, and they have to sell them, because they are out of work and have to pay rent and other expenses. They may make a loss, and then where will be their prize? I think this scheme is unsound in all its essentials. If my hon. and learned Friend invests in one of these securities, he will find it is not equivalent to a premium, because he will have to hold his bond, and if he keeps it fifty years he will get par for it.
During the introduction of the Budget I asked the right hon. Gentleman if he would give me some information as to the manner in which the Income Tax on the working classes had been levied; and what success had attended it. The right hon. Gentleman told me that the proper time to do that was on the Second Reading of this Bill, but I hope he will not forget it now. I see that we are going to have three Finance Bills, and I rather agree with the right hon. Gentleman the Member for Islington (Mr. Lough), that three Finance Bills are rather a big dose, and I hope we are not going to have any more. With regard to present taxation, my right hon. Friend said that there was an old Liberal saying that "Money fructified in the pockets of the taxpayers more than it fructified in the pockets of the Chancellor of the Exchequer," and with that doctrine I thoroughly agree. When we are taking large sums out of the pockets of the taxpayers, and a very small class of taxpayers, I do think it would be better if that sum was left to fructify in the pockets of the taxpayers for financing businesses, because we cannot find all this expenditure and the money for our Allies unless our businesses continue prosperous, for businesses are the backbone of our national success and our capital should not be taken in the very heavy taxation which is being imposed at the present moment. That is really a question which deserves very serious consideration. We are doing all
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this for the benefit of posterity, and posterity ought to bear a share of the burden.
I have been asked to request the right hon. Gentleman to consider the position of the poor people with £200 or £300 a year who live abroad for the sake of their health. The Minister of Munitions, some three or four years ago, brought in a Clause which taxed these poor people, although their money does not come to England, and they do not have the protection of our laws and our society, and yet they are compelled to pay Income Tax. Now comes the 5s. tax on unearned incomes, and it is a very heavy burden on those people living abroad on a small income, in many cases for reasons of health. I promised that I would draw the attention of the right hon. Gentleman to that point, and I hope he will give it his consideration. Representations have also been made to me as to the hardship entailed upon people with small unearned incomes of £200 or £300, who will have 5s. deducted at the source. They have to wait for a year before they can get the money back again. It is quite true that in a year's time the matter rights itself, but to a person with £200 a year to have £50 stopped all at once, it is a very serious matter. I admit it is a difficult question to deal with, but I hope the right hon. Gentleman will give it his kind consideration. I quite agree with the right hon. Gentleman the Member for Islington that in all probability the revenue has been underestimated. I hope I have not touched upon anything controversial, but I cannot help asking the right hon. Gentleman to consider the question of the Land Valuation Department once more. I know I have brought this subject forward on many occasions, but we are all anxious on this matter, and finance plays a great part in this War.
Sir CHARLES HENRY: Hon. Members must have been extremely gratified to have heard the right hon. Baronet who has just spoken oppose this scheme in the interests of the working classes, for he is certainly establishing himself in a new rÔle when he takes the working classes under his special charge.
Sir F. BANBURY: I do not oppose this scheme in the interests of the working classes, and I should be glad to see them save money. I oppose it because I do not think the working classes would use it, and because I think it is unsound.
Sir C. HENRY: We heard a great deal from the right hon. Baronet about this scheme not being in the interests of the working classes, but we heard very little about it being unsound. The working classes are asked to invest their money in this scheme during the time they are receiving good wages, and the right hon. Baronet says that when the War is over there will be depression, and the working classes will be forced to sell their securities. In the interests of the working classes, I think it is desirable that there should be some sound investment in which they can place their savings, so that when the time of depression comes they may have something to sell. Then the right hon. Baronet objected because my hon. and learned Friend stated that one of the suggestions was that these bonds might be deposited at the Post Office. It would not be obligatory upon investors to deposit them at the Post Office, but small people who made small investments and had no means of custody would have the facilities of the Post Office, and for the life of me I cannot see any objection. The next point of the right hon. Baronet was that the 5 per cent. Exchequer Bonds with the present rate of Income Tax only gave 3¾ per cent. Is he of the opinion that the Income Tax will always remain at 5s., because unless he believes that his argument cannot be substantiated. Another point he took was that there would be no money coming from abroad, and he instanced the case that we were lending money to our Allies. That is quite true, but there are other countries. May I remind him of the United States of America, Scandinavia, and Holland, who have plenty of available money, and I am quite certain that the argument of my hon. and learned Friend was good that an issue of this kind would be attractive to those countries.
The scheme adumbrated by my hon. and learned Friend has been supported—I do not think I am exaggerating—by the greatest financial experts in the City of London, by bankers and those who are used to the handling of financial enterprises. It has been supported by the London Chamber of Commerce, and I only received this morning the report of a committee which was fully in accord with the issue of premium bonds. The opposition to this scheme comes, I will not say from the Government, but from some Members of the Government, and I am at a loss to
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understand why they are so antagonistic to this reasonable proposal. It must be a matter of common agreement that every effort should be made to induce the working classes to save under present conditions, and I do not think I am stating anything which is not correct when I say that up to the present the Government have singularly failed.
The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): Oh, no!
Sir C. HENRY: The scheme specially proposed for the working classes is that which is known as the "Pound for fifteen-and-sixpence" scheme. It has been advertised throughout the length and breadth of the land—I shall be very interested to know what it has cost the Government to advertise and bring the scheme before the public—and I asked the Chancellor of the Exchequer what was the amount which had been subscribed. It has been in operation for about three or four months, and he told me that the amount of cash so far subscribed was £2,100,000. I asked a supplementary question whether he was satisfied with the response, and I think I suggested that it should be withdrawn in favour of some other scheme. He told me the response was excellent. I would be no party, and I am certain those who have co-operated with my hon. and learned Friend and myself in bringing forward this proposal would be no party to any scheme which gave such barren results. During my hon. and learned Friend's speech the Chancellor of the Exchequer said, "What about the Income Tax?" That scheme is also free of Income Tax. It is a 5 per cent. scheme free of Income Tax. I wish to draw the attention of the right hon. Baronet to the fact that the Government have already been a party to an issue free of Income Tax which pays 5 per cent.
Sir F. BANBURY: In America.
Sir C. HENRY: No, in this country. The right hon. Baronet when he walks about the streets of London certainly does not keep his eyes open. The Government is running it all they can, and for that reason I cannot see the strength of the objection of my right hon. Friend to a scheme that would be free of Income Tax.
Sir J. WALTON: They have neglected to make it known that it is free of Income Tax.
Sir C. HENRY: It says distinctly that it is free of Income Tax.
Mr. RAWLINSON: It is only for sums up to £200.
Sir C. HENRY: What are the real objections of the Government to the scheme of my hon. and learned Friend? Hon. Members and myself have asked different questions. The first objection, the Chancellor of the Exchequer told us, was that it was against existing Statutes. That was a very lame excuse for not considering this proposal. If it is against existing Statutes, then the Government themselves have been responsible for sanctioning a premium issue scheme on a similar basis, in which the redemption has been dealt with by drawings within the space of ten years. I have brought to the attention of my right hon. Friend a prospectus which was issued under the sanction of the Treasury, and outside that the right hon. Baronet knows perfectly well that scheme upon scheme and prospectus upon prospectus were issued before the War in which drawings were made at a substantial price over the issue price. The right hon. Baronet said, "Yes, but they have the option of purchase below par or below the price at which they were to be drawn." That is true of some issues that have been made, but some issues have been made without that provision. The Chancellor of the Exchequer also said it was opposed on moral grounds. If he will forgive me for saying so, it is impossible to imagine a more fatuous objection. This is no lottery. Let me remind the House that similar schemes were resorted to in this country to finance previous wars, and to say because it has a speculative element about it or because there is a chance about it, that it should be condemned and not considered is, in my opinion, not meeting the situation in the manner in which it should be met. I do not want to go into small details, but when it comes to taking part or participating in schemes of a gambling character, the Government themselves, let me remind the House, are today interested in horse-racing. In this very Finance Bill they are getting revenue from race meetings. Therefore, because this issue has a certain speculative character, it should not be condemned. The Government must recognise the temperament of the English people. They do want not so much a gamble, but some potential element besides safe interest. This scheme offers safe interest, but it also offers some inducement that there may be some increment of capital. Surely there can be no objection to that. The
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well-to-do investor has a selection of investments from which he can make his choice, and I believe I am right in saying that the former clients of the right hon. Baronet the Member for the City of London used to make their investments, partly in securities where the interest was safe, and partly in schemes which were more or less of a speculative character.
Sir F.BANBURYindicated dissent.
Sir C. HENRY: Oh, yes, the right hon. Baronet must have forgotten.
Sir F. BANBURY: Not anything that I had to do with. Some people do it.
Sir C. HENRY: And I would not have been surprised if the right hon. Baronet had done it.
Sir F. BANBURY: No.
Sir C. HENRY: And what is applicable to the ordinary investor should be applicable to the wage earner who only has his £o or £10 to invest. If the Government are really desirous of securing the savings of the working classes or of inducing the working classes to save they must adopt a scheme of the character adumbrated by my hon. and learned Friend. Let me refer to the origin, or one of the sources of the origin, of the scheme. I have here the Report of the War Savings Committee in which this question of bonus or premium bonds was dealt with. I have taken the trouble to find out, as far as I have been able, what was the opinion of the different members of the Committee who framed that Report, and I do not think I am wrong in stating that the majority were in favour of the issue of premium bonds. Why was it not pursued? Let me read this paragraph to the House:
"Bonus bonds would probably be a very attractive form of investment, and very considerable sums might be obtained by an issue of this character, but, on the other hand, objection would not improbably be taken by a section of the community to any proposal in which an element of chance is involved, and as opinion on the Committee was somewhat sharply divided we are not able to make recommendations on this subject."
We all know that any proposal in which there is the element of chance will meet with some opposition, but the people who object to investing in a security in which there is any element of chance are not obliged to do so; they can resort to the 15s. 6d. issue or to the 5 per cent. Exchequer Bonds. There is, however, a large class of the working classes. I venture to say a majority, which desires an investment of a speculative character, and it is useless for the Government to brush

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this proposal aside if they are really anxious to attract the working classes to invest and to induce them to put aside a small fund in the shape of a nest-egg when the War is over and the demand for labour is not so great. I do ask the Government not to be obstinate in this matter. This is a practical proposal and can only be objected to for the reasons given by the War Savings Committee. My hon. and learned Friend said, and said rightly, that similar schemes had been adopted in other countries. [An HON. MEMBER: "By Governments?"] Yes, by Governments, by municipalities, as set forth in the report given by the London Chamber of Commerce—[Sir F. BANBURY: "By Greece"!]—including France. If the Government make up their mind not to have this issue, they will be shutting the door to a form of investment which a large number of people demand. There is a considerable mass of opinion that unless you do a thing like this you will not be successful in obtaining the savings of the working classes. Therefore, I do urge on the Government not to be obstinate merely because my right hon. Friend the Chancellor of the Exchequer has said that he will not have anything to do with this scheme. I urge them to look upon the proposal in the manner it has been brought forward by my hon. and learned Friend, and to bear in mind that it is not a wild-cat scheme, but to give it due consideration, and, if possible, bring it forward in a concrete manner.
Major Sir E. COATES: I desire to support the hon. and learned Gentleman who delivered the first speech on this subject this evening. I was also very much struck by a good many words which fell from the lips of the Secretary of State for India (Mr. Chamberlain), and especially with the words
"We must bring fresh minds to fresh problems."
We must bring fresh minds to fresh problems. It is true we have possibly no recent precedent for the issue of premium bonds which is now being suggested to the House of Commons. But we are creating, and have been creating during the past twenty-two months, precedents which none of us would have thought possible two years ago. We have had in the City of London, in the first place, the Government guaranteeing bankers' bills amounting in the aggregate to many hundreds of millions sterling. We had a moratorium for loans, and many other things. We
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have had in our Budget the Excess Profits Tax, and we have had many other things which none of us would have thought of two years ago. The right hon. Baronet the Member for the City of London (Sir F. Banbury), in his speech, to which I listened with a great deal of interest, hardly, I am afraid, brought a fresh mind to bear on this fresh problem. I agree with him that very possibly the policy of premium bonds may not be what he and others would call high finance. But if he will allow me to say so, I do consider it common-sense finance.
What we have to consider to-day are two great problems. We hear right and left, and we are told in the newspapers, of the large amount of money which is, at the present time, passing into the hands of the working classes. On the other hand, we hear there are many extravagancies being produced by the possession of that money. Surely it behoves us in the House of Commons, who are supposed to direct the affairs of the nation, to see whether we cannot by some action here induce thrift amongst the working classes, and in some way stop this terrible extravagance, and guide the expenditure in a channel which may be of real good to the nation in its present necessity.
Something has been said with regard to the element of chance, and speculation. I consider that one of the great traits in the British character is the sporting trait, the sporting element. Wherever you go all over the world you will find it has been the sporting trait in the British character which has really created the British Empire. What about our business men? You have only to look at the past history of this country, and you will be forced to confess that it has been by the adventure of money belonging to commercial and financial men that this great Empire has been built up. How have many of the railways and the industries in our Colonies been created? Simply by the adventure of money by our big commercial houses, members of which could never be pointed out as speculators. But there are speculators and speculators, and I maintain that commercial men in their everyday life are more or less speculators. We hon. Members here speculate when we go to the electors We do not know whether they will return us or not, and we speculate to the extent of our election expenses whether or not we may adorn this Assembly.

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There is one point to which I should like to draw the attention of the Financial Secretary, because I gather from a remark which I have heard fall that the Government are opposed to this question of premium bonds. I know that the Government have to a great extent been able to maintain exchange between this country and the United States of America by the fact that they have been in a position to purchase from owners in this country a large amount of American securities, which have been shipped to America and have thus steadied the exchange. I wonder whether the Financial Secretary realises how these securities first came over to this country. They came in this way. Go back to the year 1870. I am old enough to do that. That was a time when the United States were being permeated with railways. That huge country was being opened up by railways, and those railway undertakings were financed mostly by financial backers on this side of the Atlantic. America herself, although she had all that she required from a natural point of view, had not the wherewithal— the money—with which to build these railways, and they were built mostly by money from this country and from Europe. In doing that, of those who invested their money some lost and some gained. A man, as hon. Members know full well, may be a speculator in the best sense of the word, or he may be an adventurer, but as he grows older he realises that the money he has made as an adventurer should be utilised in some proper investments, and these investments he keeps until his hair grows white. That has been the case with regard to these railways in America. I know, personally, that enormous sums of money were sent over in those years to America. Bonuses were given to bankers, they were given bonds which were a first charge on the railways, and they were given shares as bonuses, and now the bonds and shares have proved to be useful to us in this terrible War, arid they have been utilised by the Government in order to maintain the exchange between ourselves and the United States.
Next I come to the question of the sporting instinct. Here are we in the House of Commons and in the country appealing to the sporting instincts of our soldiers in the trenches. You know what splendid sporting instincts they have shown in this terrible War. Why not defer to those sporting instincts by giving them an opportunity of having, if you like to call it so,
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a sporting investment? They are defending your gold and your territory. Why not give them an opportunity of having some of that geld which they are defending? We heard mentioned just now of the savings banks, and the possibility that these premium bonds might in some way or other interfere with them. The interest paid by these banks is 2½ per cent. Are you, because you have got the money of the investors in these banks at 2½ per cent., while you are giving rich people nearly 5 per cent. for their money, are you going to insist that those people to whom you are giving 2½ per cent., shall not get a larger rate of interest if it is possible to enable them to do so? Reference has been made to the 15s. 6d. Exchequer Bond. What a poor show it is after all the advertisements which have been issued. What about the dignity of those advertisements which are displayed all over the country? The return has been a paltry £2,100,000 in money. It is perfectly ridiculous to persist in this.
In my opinion we must, in the first place, realise that a lot of money is required by this country. We have been told in the papers only recently that we have got Treasury Bills out to the extent of £700,000,000. They are short-dated bills. They will have to be met, or they will have to be renewed. There is thus a debt of £700,000,000 already against this country. How are the bills to be treated? Will you bring out a loan? It is true that if you issue a new War Loan these 4½ per cent. Exchequer Bonds will have an opportunity of going into the new loan. But that will not give you fresh money. What we are out for is to liquidate our debts and to get fresh money. That is the problem before this House. First of all, you have to liquidate these £700,000,000 Will you get that £700,000,000 in your new-loan? Certainly not. There are many businesses in this country which, owing to the War, are unable to utilise their working capital. They have made losses in other directions, and the least these men can do, in order to save what little they have left, owing to the terrible War, is to put their liquid working capital into the very best security they can have where it will be always liquid. That liquid capital is now being used in the £700,000,000 Treasury Bills. Are the bankers going to give you the sum you want in the new loan? With all the desire and good will in the world, I question whether you will get one-third of the new loan from them.

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7.0 P.M.
But, even if you get your £700,000,000, you are only paying your liabilities, and you have still to look forward to raising a large sum of money. The Chancellor of the Exchequer has sunk his financial borehole right down to the strata of the commercial man. He has tapped that strata. He may not have dried it up, but he has tapped it very severely, and I say to the right hon. Gentleman that the proper thing now to do is for him to realise that he has to sink that financial bore-hole deeper into another strata, so as to touch the working classes, and give them an opportunity of having their stake in the country. These people do not appreciate what interest on money means. You can say to them, "It is true you have saved money. If you have an extra sovereign to spare, which in the ordinary way you would speculate in horse or dog racing, or in cinemas, here we are in this great national crisis. You can still keep your sporting instinct alive, and at the same time retain your capital." When the time comes, as we all know it will come, when the War is over, and there is industrial trouble, the men who have not saved money will look back with tears to the time when money was passing through their hands, and when they failed to take the opportunity to lay it aside. I say it is our duty to hold out the right hand of fellowship to the poorer members of the community, and give them an opportunity of an investment which they can understand. They do not understand these Exchequer Bonds, I say advisedly, and you ought to give them something which they do understand. My hon. and learned Friend has propounded a scheme which, I say advisedly, although it may have its faults, has the basis of something which will be of great benefit and interest to the working classes. I beg the Chancellor of the Exchequer not to turn it down, but to realise that although he may not yet have reached his last sheet anchor we have a long way ahead of us and he ought to prepare for i. Do not let us have a policy of "wait and see." Let us have a policy of "try," then we can wait and see what the result is. Let us try this scheme and see what the result will be.
There have been ample precedents in this matter in the financial history of this country. I have here something which I did not know until a short time ago and which some may not have heard
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of before. This country has had many State Lotteries in the past—real lotteries and gambles. This is not a gamble. A man puts his money down and it comes back to him whenever he wants it, while he has the opportunity of getting the various advantages which have been explained to the House by my hon. and learned Friend. One of the earliest instances of a British State Lottery occurred in 1751, when there was an issue of £2,100,000 Three per Cents., accompanied by a £700,000 lottery and 70,000 tickets of 10s. each. In 1857 there was another loan of £3,000,000, again in Three per Cents., supported by a tontine lottery. During the American Revolution, a British loan of £6,000,000 was brought out in London in 1778, and, in order to float it, several special inducements had to be offered. For every £100 paid the subscriber received, first, £100 in 3 per cent. stock, secondly, an annuity of £2 10s. for either thirty years or for life, and for every £500 paid he received four tickets of £10 each in a £1,180,000 lottery. In 1789 there was a great tontine loan in which the subscribers were divided into six classes, according to their ages, those up to twenty getting £4 3s. a year for every £100 subscribed, those up to thirty getting a little more, and so on up to the class over sixty years of age, who received £5 12s. a year. In this case the lapses in each class increased the individual shares of the survivors so rapidly that the last man might get so much as £1,000 a year for his £100.
There is just one other precedent I should like to bring to the notice of the House, that is the great Imperial building, the British Museum, which was built and started as a result of a lottery loan. In 1753, in order to purchase the Hans Sloane collection, the Harleian Manuscripts, and other things, the Government of the day issued a Loan with 100,000 shares, charging £3 each for hem No one was allowed to have more than twenty shares, making about £300,000 altogether that was received. What did the Government do? They gave prizes, one of £10,000, one of £5,000, two of £2,000, ten of £1,000, fifteen of £500, 130 of £100, 1,000 of £20 and 3,000 of £10. They gave the first bond that was drawn £200 and the last bond £300. What was the result to the Government? They took £300,000 out of the pockets of the investors, the men who trusted the Government. They also created as trustees the

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then Archbishop of Canterbury, the Chancellor of the Exchequer, and I think the other great man was the Lord Chancellor. They took £300,000 from the public and distributed £100,000, the result being that they got £200,000 with which to build the British Museum. The British Museum is a standing monument to a real, old-fashioned lottery of the finest description. I have not the pleasure of seeing the Chancellor of the Exchequer in his place, but I see the Financial Secretary to the Treasury, who is always so willing to listen to anything, and I know he is especially kind to me. This suggestion may be against his principles, because he may say that it is to be opposed on moral grounds. I have tried to show that there is no moral ground on which it should be opposed. I honestly believe that it will appeal to the working classes. So far as I am concerned, I have taken this matter up and spoken this afternoon, not only because I believe it will give him £100,000,000 or £200,000,000, which it will do, but because it will induce thrift, so that when we come to the end of this War people may have been induced to make an investment of this kind, if the Government will only give them an opportunity of doing so.
Mr. WARDLEI am not going to follow all the ramifications of this Debate with regard to premium bonds, but there are one or two things about the Debate which have interested me, and upon which I ought to say a word or two. All the speakers have attempted to justify the issue of premium bonds as being in the interests of the working classes of this country, and I suppose, incidentally of course, in the interests of the State. I am not going to take exception to the interest that has been shown in the working classes by all the hon. Gentlemen who have spoken. I think that is to their credit, but I am not so sure that it is in the real interest of the working classes in the long run that this proposal is put forward. The hon. and learned Member who introduced this subject gave as a panrygric in his peroration on the element of chance. I will not attempt to pose as a Puritan, or to say that there is no reason at all why the working classes should not have a chance, but in my opinion the whole basis of civilisation rests upon reducing chance to the smallest possible dimensions. I do not say you can eliminate it from life. You cannot, but as a trade unionist I have always
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tried to persuade the working men of this country that they should try to eliminate chance from their life as much as possible, and that if they cannot eliminate it they should insure against it. That has been my principle. I am not going to say in these days, when fashions are changing and principles are toppling over each other, that we in this country may not have to come to the question of premium bonds. I am not going to pre-judge the question. I know there are large numbers of the working classes who would be delighted to have an opportunity of investing in premium bonds, but personally I would not, at this stage of the proceedings at any rate, advice them to do so, and I certainly could not take upon myself the responsibility of saying that I am in favour of premium bonds, or that I could advise the working classes of the country to take up so speculative an investment.
There are many aspects of this question. The right hon. Baronet (Sir F. Banbury), when he referred to the Birmingham incident, was partly right and partly wrong. Although some, not all, of the working classes are earning larger sums and the weekly income of the family is bigger than it was before, it must not be forgotten that side by side with that increased earning has come an increased expenditure which is very much higher, in many cases, than the increased earnings, so that the question of saving for these people is almost an impossible one. It is not true to say that all the representatives of trade unions in all quarters of the country, because they happened to be born in Birmingham, have taken up the attitude of which the right hon. Baronet spoke. In many cases the representatives of trade unions in various towns have advised the working classes to take part in saving, and to take up the War Savings Certificates, and a strong representation has been made by many of their leaders asking them to take up the bonds which have so often been referred to this evening. I dare say it is perfectly true that that issue has not met with the success which was hoped for it, and that even yet there is a shyness on the part of the working classes with regard to the question of saving, which we all deplore. I was struck by the desire of the last speaker that they should have something when the War is over upon which to fall back. We who more directly represent

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the working classes have not failed to tell them that they have to look forward to a future in which the pinch may come, and that if they have an opportunity to save now, and if the weekly income is of the character that has been described and there is a margin, they should put by that margin. But let me say quite frankly that I would rather see them put it in a safe investment, with a reasonable rate of interest, than I would ask them to put it in any speculative investment. [An HON. MEMBER: "This is a reasonable rate of interest!"] It is not a reasonable rate, as the present rate of interest goes. I do not see why they should not have the advantage of a higher and better rate as well as anyone else. There is one point which I am rather surprised the right hon. Baronet did not make. I want to ask the House seriously to consider—not that I am much interested in these matters myself—what the effect upon our credit in the world would be if we were reduced to the expedient of raising a Loan by this means. In my opinion, it would be very serious. That would make me have to consider this question exceedingly carefully in the interests of the nation as well as of the working classes before I consent to giving up long-cherished principles with regard to this matter.
There is another aspect of the case. It is perfectly true that there is a large number of workers who do riot save, have never formed the habit of saving, and know nothing about investing. But that is not universally true. I come from the North of England, where the habit of thrift and the habit of saving and even the habit of investing is very strongly marked. In the little Yorkshire town whore I used to live, out of about 40,000 inhabitants there were 7,000 members of the local co-operative stores, and if you reckon off the children and the old people it leaves more than the representative householders of the place number. That means that every one of these people was in the habit of saving and of attempting to invest. That is a fairly general characteristic of certain parts of the North of England, and, although they do not get large sums invested and never get very rich as the result of their investment, they always have an idea behind their minds that they shall have something put by for a rainy day, something which will assist them should evil times come. It is because so
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many of them have these investments already fixed—they are either buying their own houses or are attempting in some way or another to save—that they have not the money now to indulge in buying War Loan and stock which has been put upon the market. I am not going to close my eyes to the fact that the future may have all kinds of things in store for us. I am not going to say what we may be driven to do in this War yet. I only want to make my position perfectly clear that on principle, and looking at the thing as I see it at present, I do not think the time has come when we should consider this proposal as a practical one for the working classes of the country.
I have so far been very much in agreement with the right hon. Baronet (Sir F. Banbury). I am afraid I must part company with him with regard to the general proposals of this Finance Bill. I do not agree that the Government are raising or are attempting to raise too much by taxation. I am still a little old-fashioned. I do not believe in borrowing any more than you can possibly help. I was always brought up to it. In my private life at home my parents taught me that borrowing was a very bad thing, and I believe it. If you do not borrow you do not need to pay back. That is the first element of it, and it shows the soundness of the parental advice. The State is no better. If the State can do without borrowing, or in so far as it can do without borrowing, it ought to do without it. and if we lived on our income and paid for this War as much as is possible, I believe that after the War the recovery would be infinitely greater than it can possibly be by borrowing large sums of money, as represented by the present proposals of the Budget. After all, there was some truth in the old-fashioned way of living and the old adages which we learnt when we were young. I think there is too much borrowing. It would be a great deal better if the Government attempted by this Finance Bill to raise far more than they are doing at present. The right hon. Gentleman (Mr. Montagu) suggested some time ago that it was advisable in his opinion that at least half the income of private individuals ought at this time to go to the State. I think that is probably a very large demand, but I do not see why we should not attempt to raise a far larger sum. In my opinion it would be sounder finance, and although it makes

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a bigger demand upon the present generation, it is one which ought to be made. The right hon. Baronet said posterity ought to pay for a large part of the War. Posterity has had nothing to do with making the War.
Mr. TICKLER: It will reap the benefit.
Mr. WARDLE: Posterity will reap some of the benefit, as posterity always has reaped the benefit from all changes and wars of the. past, if you like, but the present generation is responsible for the War and it ought to do its share towards the War, and I think that share ought to be a very much bigger one than is attempted to be raised by this Bill. You have to consider these things in relation one to the other. We have passed through this House a Bill compulsorily making men go into the Army Lo fight for their country. I know that you also have compulsory taxation. You take a certain proportion of the wealth and the income of the people of the country for the financing of this War, but the relation between the two does not strike the imagination. The sacrifice which the soldier is called upon to make is far greater than that asked of the man who has to part with part of his income, even though it be 5s. in the £, and there is a growing feeling, intensified again and again by the passing of this compulsory measure, demanding that a bigger proportion of the wealth of the country should be mobilised for the service of the nation in order to win this War, and mobilised at once. I do not think there is anyone in the House who knows me who will deny that I am absolutely heart and soul and everything I possess in favour of winning this War, and so far as I have had influence I have tried to make others see how vital and how necessary, in the interests not only of posterity but of the present living generation, it is chat we should get this War finished satisfactorily and as soon as possible. If it be necesary to mobilise the men, the munitions, the factories and the businesses of the country in order to win it, it is equally necessary to mobilise the wealth of the country, and the Chancellor of the Exchequer, bold as he may think he has been and bold as some people certainly think he has been, might have gone even further than he has, and if he had gone further he would have done a great deal more to bring the end of the War nearer, to bring that sense of equality and sacrifice closer, and to have made a feeling
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in this country which would have enabled us all to be more united even than we are at present in securing a final victory.
The same thing applies on the question of excess profits. Some of the things which are read in the newspapers are most astounding, and they have a tremendous effect upon the working classes. They are becoming more educated, and although they cannot think in millions they do wonder what is happening when they see a return like that of the White Star Line the other day, where, after excess profits had all been paid and enormous sums put to reserve, a dividend of 65 per cent. was paid to the shareholders. Such premium bonds have certainly never come in the way of the working classes. I do not think anybody can wonder that, when they read about these wonderful profits and know at the same time that the effect of them and the reason for them is the increased cost of living which is imposed upon them, it should have a most deleterious effect, as it has had, upon the minds of the workers of the country. When they realise what this War is costing day by day in money, when we realise that we have somehow or another to get £1,825,000,000 to pay for the War, the proposals in this Bill are not sufficient, and we ought to have taken a bolder leap than we have, and we ought at least to have raised the Income Tax to 7s. 6d or 10s. in the £. I, for one, so far as I pay Income Tax, would cheerfully do that in order that we may make that equality of sacrifice of which so much has been said.
Mr. MACKINDER: I have listened with the very greatest interest to what has been said by the hon. Member, and if I differ from him in certain respects it is not in any matter of ultimate motive but simply because I doubt whether the means which he is advocating will attain his end. I agreed with him especially in two things. I agreed with him that any sacrifice which we here make, because we are over military age, or for any other reason, is as nothing compared with the sacrifice made by the men in the trenches. Therefore, so far as mercy for individuals is concerned, I do not feel in a very merciful mood, and any of the criticisms which I have to offer will be merely because I think that in the long run there are wiser measures perhaps than those which are advocated by my hon. Friend for the attainment of his own end. The other point on which I agreed with him very strongly was in connection with the dividends which

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are being paid by some successful concerns at the present time. One is almost tempted to use very strong language in connection with the wisdom, to say the least of it, of what has occurred in several instances lately. I am fully aware that in the case of some companies now they have made considerable profits, but before the War they had considerable losses, and it may be only a restoring of the balance as between losses before the War and profits now that they should to some extent reap a reward at the present time. But there is no need to divide it among their shareholders. It may be that in certain cases—in the case of shipping concerns I think it markedly is so—that it is so much in the national interest that they should be strong financially after the War that we should allow them the right to some reward from the present position, because they are in competition with neutral shipowners. Whatever the profits made by British owners, the profits made by neutral shipowners at the present time are far larger. They have not got to pay war taxes, their expenses for running are smaller, and they are able to obtain higher freights, for one reason because they are not liable to be commandeered. Therefore, we have to face the fact that our supremacy in merchant shipping on the ocean is threatened, and will be very seriously threatened after the War, and not least threatened by the enormous resources which are being piled up at the present time by the neutral shipping companies. We have to remember that the ocean is no territorial region. On the ocean you must and always will have free competition. You have to face the fact that our merchant shipping, which has been one of the very strongest weapons which this country has had in this great struggle, has been developed in that free competition, and it is necessary for us to stand behind that shipping at all costs in order to maintain the position in the future. But when a company divides its profits among its shareholders, it is throwing away any advantage of strength for the future which in the national interests it ought to preserve. Therefore, I have the strongest sympathy with the hon. Gentleman in his views in this respect, and I think it is tempting Providence, to say no more of it, to divide these enormous dividends at the present time. I could not agree with the hon. Gentleman, however, when he went further.
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I want to say something which goes back to the first speeches that were made in this Debate. The right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain), in replying to the observations of the hon. Member for Hereford (Mr. Hewins), referred to the difference between our position and that of Germany. He agreed with the hon. Member for Hereford that we must not measure the German financial and economic strength by the criteria that we are accustomed to apply to our own system. When he went on to discuss the fact that Germany is borrowing and is not paying for the War out of present revenue, whereas we are attempting to pay, at any rate, a portion of the War expenses out of present revenue, there was a little confusion of thought. What the hon. Member for Hereford meant was that the resources of Germany—not the fiscal or financial, but the economic resources of Germany—at the present time are far larger than many people in this country think. The economic resources of a country are something quite different from the financial resources of its Government, though in the long run, of course, you cannot have a weak economic position and a strong position of the Government. This is a question of bookkeeping. The War has to be paid for this year, entirely this year, and out of the produce of this year, in our several countries, and the question between us is one of settlement as to who shall bear the expense and how it shall be borne. The enormous sum of £2,000,000,000 has been raised by this country, either by taxation or by loan. That £2,000,000,000 is used in the purchase of munitions and food, and the other requirements of those who fight and those who support the fighting. Therefore, when we compare the resources of this country with those of Germany we are thinking of that £2,000,000,000, and not thinking of the revenues of the two countries or what they raise in taxation or in loans. We are thinking absolutely of their resources for the purpose of maintaining millions of troops and large numbers of ships and all the other paraphernalia of war. That is a totally different question from the question of the policy of raising taxation or raising loans.
The first point I would make in regard to this question of raising taxation or raising loans relates to borrowing. The hon. Gentleman (Mr. Wardle) said that he was brought up in an old-fashioned school and told not to borrow,

1725
and he would never have the trouble of repaying. But we are in a position in which we must borrow, and borrow largely, and in which a question of £50,000,000 more or less of borrowing is not a vital matter as compared with the dislocation of the machinery of the country for producing wealth. Therefore, I do express the hope that the Chancellor of the Exchequer will not levy one penny more in the shape of taxation in the country at the present time than is absolutely necessary. In the absolute necessity, of course, I include the necessity of maintaining our national credit. I include also the consideration that if you borrow you must provide a sufficient income both to pay the interest on your debt and to provide a sinking fund and also to provide a margin. What about the margin? I recognise that after the War there will be a fall in the yield of certain of our taxes, and that that fall will be exceedingly difficult to make good then, in a time possibly of distress. Therefore we ought to provide so much by taxation at the present time as will not only enable the country to pay its way according to the peace standard, but will enable it to pay the interest on its debt, to provide a reasonable sinking fund, and also provide for that fall in the yield of taxation, in order that we may be left with a balancing revenue after the immediate adjustment which follows on the War.
That bears on a minor point which was made by the right hon. Gentleman. He suggested that taxation had not gone too far at the present time in view of the fact that the yield of the taxes was not diminishing, but, on the other hand, increasing. Apparently the taxes were being borne with relative ease. But we must not forget that some of our taxes, and some of the most important—the Income Tax to wit, which finds nearly half our revenue—are raised by percentages, percentages of values, which values in trade ultimately depend upon prices. Therefore, a mere rise in values automatically tends to give to that percentage which is taken in the form of taxation a greater and, as things are, a steadily increasing amount. The actual quantity of goods made and consumed and imported is probably rather less than greater, certainly not very much greater, if we take everything into account, if we take necessaries and luxuries together, but the values have enormously increased, and automatically the yield by percentage of
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the taxation is also increased. Under these circumstances I am not very much impressed with the fact that our taxes are steadily yielding more. I am not very much impressed with that as evidence that the taxation is at the present time not excessive. When it is said that we in this generation, who are responsible for the War, ought to bear our share of the cost, let it not be forgotten that, quite independently of what the tax-gatherer does, the dislocation of trade at the present time is spreading ruin in many quarters, is piling expense upon all, even upon those who make profits in other ways, and that the waste in this country, due to what I have described as dislocation of the whole machinery of peace, must amount to a sum extending, in all probability, to scores of millions of pounds, and possibly even to larger sums than that. Therefore, as to the burden which those who are fighting this War should carry, there is an enormous burden for us to bear in war time, and I suggest that we must be very careful not to attempt to interfere with the economic machinery of the country more than is absolutely necessary in view of that fact.
After all, what we want to hand on to posterity is this country as a going concern. The wealth of this country rests mainly on the country as a going concern. It is the wealth-producing value of all your plant and of your men in the country which really constitutes the wealth of this country. The least possible damage that you can inflict upon this delicate, complicated, huge machinery, which constitutes the industrial and economic system of this country, the better you are doing your duty towards posterity, because you are handing on to them a great asset which is in your keeping and for which you are fighting, but which you can easily destroy, and which to them will be worth much more than a mere £50,000,000 or a £100,000,000 at the cost of damaging as going concerns many of the wealth producing companies and firms in this country. I have said this especially because of the Excess Profits Tax. I know it is easy to point to enormous profits that are made in certain cases, and you can easily persuade many people that you ought to extract 90 or even 100 per cent. of these excess profits. On that point I want to say this: At the end of this War what this country will need more than anything else is working capital. We shall have an enormous number of people seeking employment, because some of the

1727
women will not go out of employment at once, and there will be all those who come from the Army to find employment for, and there will be many also discharged from munitions works who will be thrown on the labour market. Further, this country will have an enormous plant. In certain respects the Minister of Munitions at the present moment is the greatest master of industry in this country. He has an enormous new plant in many respects. He is a great owner, for instance, of machine tools in the national factories, many of them imported from America. This country in many respects will be equipped with machinery as it has never been before. Therefore we shall have machinery and the men seeking employment. The one thing that will be necessary will be working capital—capital to modify the machinery to useful peaceful purposes, capital to set your works going before you can get in the payments for what you produce. Working capital will be wanted in thousands of ways. At that very time the temptation in the City of London to lend the money which it extracts from all parts of the country on the international market, in foreign international trade, will be very great. The pressure to do it will be very great. What we shall require is precisely that money.
What money usually goes into industries? Not, as a rule, any large quantity of money that is acquired by staid people in the South of England. A few shares, usually wild-cat shares, may be bought by them, but the money that keeps the industries in the North going is what I may call money that is already in the industrial fund. If you want some thousands of pounds to put into a new factory, where do you go for it? Not to the City of London. You go to a manufacturer in your own neighbourhood, probably, who understands manufacturing, can take your measure and can trust or not trust the man he sees at the head of that business. He will not put his money into 3 or 5 per cents. in London, but into that which will yield to him the return of a risky enterprise, trusting to his own judgment, because he has that enterprise in his neighbourhood and can watch it. There is in this country what I may call a fund of industrial capital. It is not an accurate term, but speaking roughly that is the case. At the present time what is happening to the working capital of our industrial concerns? Half of those industrial con-
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cerns are practically stopped or are working at very low pressure and losing money. When peace comes they will want money to set themselves going again in order to re-establish their trade. It may be perfectly true that the other half, having been adapted to munitions purposes, are making money. The money made by those people is likely money, not to be left in the banks to be lent in international trade, but the most likely money to be lent to those industries the restoration of which would be vital to us at the moment of peace. Therefore I feel that we must exercise great caution in extracting the profits we are making in war time from the men who have made them and know how to make them.
Of course, if we consider the profits spent by many of the people—I will not say on riotious living, but on living which ought not to be in war time—that is another question. But all the profits that can remain in the care and keeping of industrial magnates and great companies at the present time will be of inestimable value after the War, because these men, having the money, the power, the knowledge, the experience, the position and the opportunity, are the very men who will be able to step in, as no Government officials can possibly do, to restore with wisdom and enterprise those industries which have been so damaged by the necessities of the War. Therefore I look with great fear on the extraction of these profits unduly from those who can make the best use of them for the purposes of the State. I believe that at present, for the purpose of supporting the credit of the nation, we are raising probably a little more money than we need. Naturally the Chancellor of the Exchequer must be cautious. He must have a margin in case of the failure of some of his taxation at the end of the War. But is it not possible to earmark the money that comes from the Excess Profits Tax, and to say that that money, if the exigencies of the War do not force us to use it in the future, shall be treated as a fund in the hands of the State for the purpose of setting going industry after the war?
The whole financial system of the Chancellor of the Exchequer is constructed, so far as I can see, without taking into account the Excess Profits Tax. He realises that that tax will fail him after the War. Therefore he is bound to provide all the interest for his debts and the sinking fund, and so on, irrespective of the

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revenue from the Excess Profits Tax. But if we can follow the principle of providing a permanent revenue which would cover the interest on capital expenditure incurred during the War, but falling on the future, then it would be an immense service at the end of the War that there should be available a large fund taken from industries, a fund running to a £100,000,000, not in the hands of bankers in the City of London, who, following the rules of their trade, must necessarily use that money, not in the way that we as a nation require, but in the hands of the State, and the State, acting through trusts on the Canadian principle, for instance, would be able to lend the money again which was taken from industry to industry, though not necessarily, of course, to the same firm. It would be possible to utilise those very brains which have made that money for the purpose of helping the State in re-equipping with working capital the industries whose working capital would have been depleted.
I would suggest that the proceeds of the Excess Profits Tax should not be treated as ordinary revenue, but should be regarded as taken exceptionally and with the agreement of the vast mass of people from our industries, taut also as being earmarked to go back into industries, since the fact is that the profit has been made by the one-half of our industries owing to this War, while the other half of our industries have been half ruined by this War. Let us restore the equilibrium by using in that way that money. That is the chief thing that I wanted to say, because at the present time all of us are bound to throw our thought into the common store, though the sole effect may foe only to excite criticism, but that criticism itself may probably suggest something else. The only other point is a rather kindred one. I think it is deeply to be regretted that the method of levying money from the controlled establishments is not similar in principle to the method by which you raise Excess Profits Tax. At the present moment enormous sums are being wasted in this country owing to the fact that masters in controlled establishments, which are making larger profits than before the War, have no motive whatever to exercise that close economy upon which the success of every industrial concern depends. All the industrial concerns controlled are being run at the present time steadily more and more, month by month, as men
1730
feel the relaxation of the pressure of possible bankruptcy, on the same sort of principle as a Government Department. You are asked to produce certain things, and you produce them. You have no motive whatever in producing them at the least possible cost. You are allowed to have an income, which income is based on a prewar income, whereas if you even got a small percentage as a reward for exercising ordinary business care you would save the country a great deal of money. I know it will be answered that you can have your Government auditors and so on working, but the thing is far more insidious than that. At the present time great firms are continually requiring coal, for instance, and are ready to pay the collieries practically any price they ask without bargaining closely. They are making friends with the colliery proprietors. They feel that later on a certain colliery can do them a very good turn in sending them coal, remembering what they did during the War. Coal is being bought at extravagant prices because these people know that they have made all the money they are allowed to take under the Munitions Act, and they may as well spend a little more on their expenses and make friends as exercise control over the last shilling in prices. I do feel that, while the Minister of Munitions must retain financial control of controlled establishments, the principle upon which the money levied from those controlled establishments is levied ought to be identical with the Excess Profits Tax. It ought to depend on a system of percentage on what is made now and not a percentage on what was made before the War.
8.0 P.M.
I do not quite agree with the right hon. Gentleman the Member for West Birmingham in this, that we can consider simply the financial conditions imposed upon us now by the War and shut out the arrangements of the future. Confidence is of the essence of business enterprise. Enterprise is necessary in order to stem the torrent that is turned against us at the present time. Enterprise is being damaged among your commercial men, and especially among your masters of industry at the present time by the fact that as the War lingers on more and more uncertainties are coming into the financial position. You are asking them to spend money. They do not know where they will be after the War in respect of competition with other countries. You cannot wait to see indefinitely, as the War goes on, what is

1731
going to be your policy after the War. You cannot follow your policy after the War in all its details. But you have to face the fact that in certain respects you must begin to build your financial system in order that those who have to carry on during the War may be able to frame their policy, to think ahead and so be able to meet the tremendous difficulties and crises which will be upon them, at the end of the War. Let us never forget that the things that we have done well in this War have been the things that we thought out carefully before the War. The insurance of our shipping, the transport of our Army to France, and certain other things were thought out carefully before the War. You must think out now, and you must let your great business men think out now what is to be their position after the War. If the Government tell them always, "We will make no decisions now with regard to what is to happen afterwards," they will throw them back into a helpless position, into a position that will become increasingly more helpless, and bring about greater and greater confusion in the whole method of carrying on their business. I do most earnestly ask the Chancellor of the Exchequer that he will not follow the advice given to him in certain quarters to increase his Excess Profits Tax. I do ask him, if possible, to provide funds which will give confidence to manufacturers, who will see that the Government have available for their industries money of which they had robbed them during war time. I do ask further, that, if possible, the right hon. Gentleman will come to some arrangement with the Ministry of Munitions, whereby controlled establishments may have some motive for not being wasteful of what are now, far more than at any other time, the national assets of this country.
Mr. T. WILSON: I was hoping that the hon. Member who has just sat down would give some expression of opinion with regard to the suggestion of the hon. and learned Member for Bassetlaw (Mr. Hume-Williams) on the question of premium bonds. I think I am absolutely correct in stating that the Committee which was appointed to deal with the question of war savings has given us to understand that it is absolutely necessary that some of the big wages earned by the working classes of the country must be got hold of by the Government; and the reason why we are
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discussing this scheme for getting money arises from a division of opinion in regard to premium bonds. When the Committee sat and considered the question of premium bonds, I was surprised to find that some Members of the House, and a large number outside the House, thought that if they bought premium bonds their capital, would be lost if they were not successful. A large number of people to whom I spoke held that opinion. The capital would not. be lost. It would be invested; and, therefore, it should be made quite clear that while there is an element of chance in connection with the prizes on premium bonds, the money invested is returnable with the interest due upon it. I think it should be made quite clear that, so far from the money invested being lost, it is not lost at all, and is returned to those who invested it. In regard to the question of making a deduction from wages, mentioned as an alternative to premium bonds, I venture to say that neither the Chancellor of the Exchequer nor anyone else dare suggest compulsory deduction from wages unless they go further and make compulsory deduction from the highest salaries. The working men would not stand it, and I would not blame them for not standing it.
In connection with the Report of the Montague Committee, we are told that their recommendations were of some value, but I am not quite certain whether they were of any great value or not. They recommended that two Committees should be set up with the object of devising schemes whereby the people, and particularly the working classes of the country, might be induced to invest their money in War Certificates or in Exchequer Bonds. That was put forth as an inducement to the working classes to save. I agree with, what my hon. Friend the Member for Stockport said with regard to the working men and women in the North of England. In Lancashire and in Yorkshire a very large number of working men and women, of those two counties save considerable sums of money yearly; they save it week by week, and the greater part of their savings are put into co-operative stores, and those stores, in turn, invest the money in War Loans. To that extent working men and women are investing their money with the Government. I am very doubtful whether any scheme devised by the two Committees set up on the recommendation of the Montague Committee really grasped the best way of dealing with the question. The two

1733
Committees have been merged into one, and I repeat that I am very doubtful that they have really grasped the best method of getting at the means of the working classes. I am very much afraid that the National War Savings Committee is itself setting an extremely bad example in regard to economy.
I am very much inclined to think that there has been a very poor return for the money spent on large posters inviting the people to save—posters which are seen particularly in London. I would rather myself see the Chancellor of the Exchequer put heavy taxation on pleasure motor cars rather than that these appeals should be made by posters. In many instances these pleasure motor cars can be seen going through all the large towns of the United Kingdom. Instead of appealing to the people by means of these posters, it should be made an offence, with punishment, that anyone should dress extravagantly or live extravagantly, or use costly pleasure motor cars, and in that way you would get at the root of the matter. Meetings have been held under the auspices of the War Savings Committee, and the result of the meetings held ten and twelve months ago has been such that I should have thought it would have prevented the National War Savings Committee from entering into another campaign with regard to war savings. The game is not worth the candle. With regard to premium bonds, I will just mention, speaking of the working classes, that those who saved before the War from the wages they were earning will continue to save from the wages they earn during the War in larger amounts now than before the War.
People who did not save before the War will not to any large extent save now, because of the issue of these War Certificates, 20s. for 15s. 6d., or in Exchequer Bonds. These inducements will not affect them. There is not that element of chance —the chance of winning large or small prizes—arising from the investment of money in War Certificates or in Exchequer Bonds. We are told that the Montague Committee's object was to get money. I do not suppose that they were advised to get it honestly but that they must get it; I do not for a moment suppose the advice went that far, but I imagine that they were told the money must be got somehow. I would point out, in regard to taxing the earnings of men and women who are making high wages, that I know to be absolutely the fact what the hon. Mem-
1734
ber for Stockport said with regard to a large number of men and women, that though they are making higher wages in consequence of the War they are not able to save because the high cost of living absorbs their extra earnings. I believe that if the scheme of issuing premium bonds were adopted it would create, a spirit of thrift in the minds of the people who are not saving at the present time. We are told it is a gamble. It is not a gamble.
Attention called to the fact that forty Members were not present; House counted, and forty Members being found present—
Mr. WILSON(continuing): I was saying that by the issue of premium bonds we should induce the men and women in the country to save money by investing in those bonds. The fact that prizes of large and small value were attached to the bonds would, I believe, appeal to a large number of these people in a way that no other schemes could appeal to them. I do hope the Government will give a favourable consideration to the proposal that has been made by one of the hon. Members for Nottingham. If that were done, a large amount of money would be obtained. The answer given yesterday with regard to the number of tickets sold was not very satisfactory—only some £2,100,000. I venture to say that if a scheme of issuing premium bonds were adopted, it would bring in a very large amount of money, probably £150,000,000.
Mr. McKENNA: Oh!
Mr. WILSON: I am not speaking of the working classes alone, for I believe the people of the Colonies and of the States would also buy these bonds. If the scheme were adopted on the lines which are in operation in France, these bonds would be negotiable; there would be no loss practically on the sale of bonds of this kind—at least, I believe that is the experience in France. While speaking about France, let me say this, that the issue of these bonds has inculcated a strong spirit of thrift among French working men and women. When a child is born very often the father buys one of these bonds, and it is of great use when the child reaches age, and forms the dot in the case of the girl for her marriage. It has been said that these bonds would inculcate a spirit of gambling, but I think that any such possibility would be far more than counteracted by the spirit of thrift which would

1735
be created. I am satisfied that this is the only possible way of getting any large percentage of the extra earnings of the working classes. I do not think the Government need hesitate in the matter at all. We are not living in normal times. What has taken place in connection with newspaper competitions and football coupons and other kinds of competitions shows that large sums of money can be obtained. The money in those competitions is absolutely lost to those who do not win prizes, but in the case of premium bonds the money would be returned in a certain period with quarterly drawings, or in some cases every six weeks. There is no immorality in bonds of this kind, and you would get a fairly large amount of the money you are asking for. There is a very poor chance from the efforts of the War Savings Committee of getting in any large amounts. So far as I know, there is no great objection by any section of the community to premium bonds.
I have spoken to a large number of working men, and they have expressed themselves in favour of these bonds. Some of the leaders of the trade union movement believe it is the only possible way of getting in a large amount of money and of inducing people to save who can do so. In Lancashire and Yorkshire people are getting 4£ and sometimes 5 per cent. at the present time by putting their money in co-operative societies. There is no inducement to put their money in War Loans. In the society they can get it out in a week or a fortnight, or sometimes in a day. I am satisfied that the premium bonds would be the means of inducing people to invest permanently. I think the right hon. Gentleman might do something more also with regard to getting more money by direct taxation. I suggest that he should take all the profits over and above the Excess Profits Tax and invest the money for the people who made the profits. I am not saying that he should take all the money in taxes, but he should obtain more from those making money out of the necessities of the nation. We read of coal in Newcastle being £3 per ton, and the working man who gets 3s. per ton for getting it wonders sometimes whether the Government is doing all that it might to secure from the profits that are being made out of the necessities of the nation the amount they ought to receive. I hope the right hon. Gentleman will give further consideration to the advisability
1736
of taking a larger amount, either by way of loan, or by way of taxes from the very large profits now being made by steamship companies, munition works, and by other industries which are making what is necessary for the carrying on of the War. I join with everybody in the hope that we shall bring the War to an early and successful conclusion. I do not quite agree with my hon. Friend the Member for Stock-port (Mr. Wardle) that this generation is responsible for the War. The present generation in Germany may be, but in this country it is not responsible for it. Therefore he is not quite accurate in asking that the present generation should pay more than its share of the cost of the War. I know that the right hon. Gentleman will see to it that the present generation pays its share. I want to see him getting as much money as possible without having to resort to harsher means. I do not want to see a compulsory loan, particularly on wage earnings. I believe the working classes would resent that, and that it would give rise to sullenness and discontent, which would be a national calamity.
Sir CLIFFORD CORY: The hon. and learned Gentleman who introduced the subject of premium bonds said he thought most Members were in sympathy with their issue. I for my part am opposed to premium bonds for several reasons. In the first place, I very much doubt whether they would bring in a very large amount of money, and, secondly, although I do not want on puritanical grounds to oppose them, on the ground of the immorality of gambling, yet I think it is an undesirable state of things to set up in this country. I remember when I was in Spain and Portugal years ago there were weekly lotteries, and sometimes they were held two or three times a week. Tickets, or portions of tickets, could be bought for 2½d., and what was the effect? One saw peasants coming in from the country districts buying these bits of paper and lists with numbers of the lotteries, and they were always in a state of excitement and ferment when they saw that some person, say, in Barcelona had drawn a prize of £20,000, or someone in some other place had drawn a large prize of some kind. That always induced them to buy those wretched little lottery tickets, and instead of settling down to their work, they were always living in a state of excitement and leaving it. It is said that premium bonds are not gambling. That may be true in the sense

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that you do not risk your capital, but you are certainly gambling with part of the interest. Instead of the 5 per cent. which the Government are offering, in some cases free of Income Tax, those who invest in premium bonds would only get 2½ per cent. or 2¾ per cent. Therefore, if it is not gambling with capital it is gambling with interest. They are called premium bonds, but I fail to see where the premium conies in, since instead of premium the interest is at a discount. The hon. and learned Gentleman who introduced the proposal said that the prizes would range from £500 to £5, and that very likely the man who won the £500 would invest it in a house or shop, or something of that kind. My experience in life is that money that is come by easily generally goes very easily. We all know how men who perhaps have a bit of a flutter and are lucky feel when they receive a lot of money in that way. It goes very easily, and I think we should find that the prize drawers in these bonds would act very much in the same way.
The hon. and learned Member said that the scheme would appeal to those who have not the habit of investment. Possibly it would appeal to the gambling section of the community, but those who have the gambling instinct are relatively a very small number. The number of people who habitually bet or gamble is relatively very small. Even of those who go to races, a large number do not bet at all, and some of those who bet only put on a small sum. If these bonds" were introduced, instead of creating a spirit of thrift, it would create a spirit of gambling. The hon. and learned Member also said that the speculative element of these bonds would attract money from abroad. But you have lotteries of every kind abroad, and those who want to speculate are much more likely to put their money in them. The hon. Baronet the Member for Mid-Shropshire (Sir C. Henry) said that the scheme was supported by bankers and all sorts of men in the City, who thought that the working classes would take up these bonds to a large extent. I have had conversations with gentlemen representing Labour in this House, and that does not seem to be their view. I have been in contact with Labour all my life, and from my knowledge of working men I do not think they would take up these bonds. The working man is not such a fool as to invest his money in something that will bring him in only 2½ per cent. when he
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can get 5 per cent. in something else. I am sure that those who did not draw prizes when they found they got only 2½ per cent. would be very discontented indeed. The hon. Baronet said that the Government were already promoting gambling because they were going in for horse-racing. Surely the ownership of racehorses does not necessarily mean gambling. Horse-racing does not necessarily involve gambling. Gambling is one of the drawbacks which often come in the train of horse-racing.
The hon. Member behind me (Mr. Tyson Wilson) did not think it desirable to introduce any scheme of compulsion in regard to the wage-earners, and he thought that if such a scheme were introduced it should include also those who earn salaries. I have all along been opposed to the Excess Profits Tax, not because I do not acknowledge that the money must be got somehow, but because I think it is not the best way of getting it. I should much prefer direct taxation, such as Income Tax and Super-tax. I consider that the excess profits should be reserved in order to develop businesses and to get back trade after the War is over. We have the Admiralty now bringing forward a scheme by which it is proposed to release every month 60,000 tons of requisitioned shipping in order that it may go to the States and load coal for the River Plate, because it is not thought that it will be possible to release the same amount of coal in this country as in the past. That may be necessary, but it means that you are going to drive to the American producer of coal markets which are now held by the English producer. After the War is over, in order to recover those markets, you will certainly have to undercut the American coal producer. You will probably have to sell your coal at a considerable loss. If all the excess profits are taken from the concerns in this country during the War, I do not see how they can hope to recover their markets after the War. The same thing applies with regard to steamers. I deprecate the large dividends which have been paid. I think it would be much wiser to nurse the profits and keep them until after the War. In all the companies with which I am associated I discourage any large dividends, and persuade them as far as I can to put the money to reserve until it is required.
But if you have an Excess Profits Tax you have a good excuse for asking wage-

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earners to do something towards raising the money required to carry on the War. While not necessarily taking the excess wages of the wage-earners, you might introduce into the Finance Bill a Clause providing that of the excess wages earned by the labouring classes 60 per cent. should be invested in War Loan or some other Government issue, which they should not be at liberty to sell until after the War. They would still have in their hands 40 per cent. of their excess wages with which to meet the extra cost of living during the War. I do not pledge myself to 60 per cent.; it is open to discussion whether it should be 60, 50, or 40 per cent.; but in the interests of the country some percentage of the excess wages as compared with the pre-war standard should be invested in that way. It would be a benefit not only to the country—although the benefit in that respect would be enormous—but also to the working classes themselves, because they will no doubt find after the War that wages will be greatly reduced, they may even have difficulty in getting employment at all, and if they have something of this kind to fall back on it will be the greatest possible boon to them. I trust the Chancellor of the Exchequer will take his courage in his hands and deal with the question in this way. Even hon. Members representing labour are not opposed to it. The only thing they fear is that there may be a certain amount of opposition to it. They do not all think that. I believe that if the Government did something of this sort the wage earners themselves would in the long run be most grateful to them. I should be quite prepared to recommend that increased salaries should be dealt with in the same way. I hope the Chancellor of the Exchequer will give his attention to this proposal.
Mr. COOTE: In all parts of the House there is the greatest sympathy and support for the financial proposals before us. We are all agreed that we must be prepared to give our last man and our last pound before we allow our flag to be torn down. There are, however, some matters in the Finance Bill to which I should like to draw the attention of the Chancellor of the Exchequer with a view to their adjustment. Some of them are in his favour, and some are small grievances which, I think, might be remedied. The first has reference to the Motor Tax,
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especially as it applies to Ireland. I understand that the motors are registered in each county, and the county council is responsible for collecting the tax. But in many counties in Ireland the tax is not collected. Motors are registered, but year after year they work away and no tax is paid for them, until it has become a standing joke that if you wish to evade the tax you must register your motor in some county far distant from where you live, pay the tax for the first year, and after that you can work away and there is no one to look after you. The county in which you are registered does not bother about collecting the tax. It is apparent on the face of it that the reason why this leakage takes place is that the secretary of the county council is the secretary of the local authority that collects the tax, and there are many varying interests which make it rather difficult for him to press for the payment of the tax in certain quarters. We find, however, in councils where we have a fearless and conscientious secretary, backed up by a business council, the taxes are collected and honestly collected, while in other counties in Ireland the reverse is the case. The tax is not collected, and hundreds of pounds are lost. That is not as it ought to be. We are all anxious to raise, legitimately and properly, as much money as we can, and this source of raising money ought to be applied equally and fairly. If I might suggest it to the Chancellor, to obviate this difficulty, it would be much better if this tax, instead of being collected by the secretary of the county council, was collected by the local revenue officer, like the gun licences, assisted by the local constabulary, who, if a motor car was registered in one county and operated in another, could trace it and see that it paid the tax.
There is another question which the Chancellor might consider: there is no tax on motor vans that are used by the retail or wholesale traders. These vans come from the large towns and some cities, and they distribute their merchandise over three or four counties. They compete with the smaller traders, and they pay no tax for the roads over which they travel. They are terribly destructive of these roads, and the local authority have no redress. They compete with the railway and canal traffic, and with the traders who have the upkeep of these roads in the various counties. It is unfair that they should pay

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no tax, and I desire to call attention to this potential source of revenue. These are sources by which the right hon. Gentleman may a little improve the revenue. I want to appeal to him on behalf of a section of the community which will be hit very hard by this extra tax, and that is the clergyman, who, as is known, in many parts of Ireland and some parts of the North of Scotland have not very large incomes. They have to travel over a wide area, and I plead that they should have the same consideration with reference to this tax as is now given to medical men. I also would ask for the same consideration as the medical men get for the veterinary surgeons, but I plead very strongly for the clergymen. Some of these have only incomes of £150, and their incomes generally range from £150 to £300. Some have small motor cars the better to enable them to cover their parishes, so as to be able to do their work more effectively. Their incomes do not increase. There is no chance in their lives. They are simply tied down to a certain income, very little indeed, and hardly able to keep their homes together, and it will be a great hardship if they do not at least get the same consideration that is accorded to medical men.
There is another little trouble that I wish to bring before the Chancellor of the Exchequer, and that is the years of selection which the Finance Act gives to the manufacturers in Ireland for which to select the two years average on which is to be the fixed profit. I understand that in Ireland, with the exception of the area of Dublin, three years is the retrospective time. I plead that the Chancellor will give us six years. The three trade years laid down in the Act have been most trying and most troublesome to Irish manufacturers. For reasons which are known to the House trade has been terribly depressed in those years, not through any act of the manufacturers who have been trying to pioneer trade in the country, to help on trade generally in trying circumstances, and to provide capital in a country which has money in its banks, but which calls upon Heaven to save it, and will not take that money out of the banks! Those manufacturers have acted as pioneers and endeavoured to create industries where there was no employment before. They have considered the interests of the poor people, and the needs of the country. I hold that they deserve the sympathy of this House and of their
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country. I think you should allow the manufacturers to select from the six years so to get over this very trying period. That was a period when there was an awful pall hanging over the country. Men did not know what was going to happen next. The purchasing community, especially the Irish community, did not purchase and lived, so to speak, from hand to mouth until they saw what was to become of things. It was under conditions like this that the woollen trade had to exist. These men were terribly hit during these three years. The Woollen Association of Ireland have made representations to their Members with a view to their trying to get the six years instead of the three, and they will feel satisfied if the Chancellor of the Exchequer can grant this privilege. I think I have shown to the right hon. Gentleman sources from which the revenue can be legitimately increased. I have tried to show him some of the difficulties under which the manufacturing community labour. I have tried to plead for the clergyman, and for the veterinary surgeon. These are matters which are very important to those affected. They are not very big nor grave, and will not affect things very much one way or the other. But the concessions will satisfy those concerned, and make the Finance Act more popular than if what I have asked is not conceded.
Sir NORVAL HELME: In the past century the commercial interests of this country have been applied through successive generations to building up the great position which we occupy throughout the world. It is satisfactory to know that at the present time, when such great demands are made upon the Exchequer for the purposes of supporting the War, to which the nation has given its ready assent, and which is one in defence of liberty and freedom, that the commercial classes of this country are endeavouring to the utmost of their power to support the Government in raising the funds by which to pay this terrific expenditure. About a fortnight ago a number of hon. Members of this House went across to Paris and there met in an informal conference members of the commercial committees of the Allied Powers, representatives from those Parliaments, and we had the opportunity of discussing various interests affecting the present and the future. We desired, as far as possible, to endeavour if we could to understand how best to

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secure the development of business after the victory is won which will end this un fortunate War. We discussed with the members of those Parliaments the conditions at the present time in regard to their ability to pay their share in prosecuting the War. In the conversations we had with those representative men—many of them ex-Ministers of the different Powers—they expressed the same opinion which had been come to by those of us who are associated in the informal commercial Committee of this House when as a Sub-Committee we had gone into the question of the industrial and commercial interests of this country. That opinion we had ventured to put before the Prime Minister when about three or four weeks ago he had given us the opportunity of calling his attention to what we believed to be the very serious position in which we should find ourselves if the plans of the Chancellor of the Exchequer for the in gathering were interfered with by the destruction of the commerce of the country, which is so necessary to maintain our financial position. Two Members representing the other side of the House and two from this side had the pleasure of discussing this important question with the Prime Minister, and we ventured to say that, in the opinion of us, not as individuals but as reported to us from the great centres of production throughout the country, we were approaching the danger point when, if large numbers of men were called from the occupations in which they had been engaged in the coal mining, in the great iron and other Industries, in shipbuilding, and in the textile manufactories, we felt that it was necessary that we should ask for the careful consideration of the different Departments of the Government so that they together might work with one aim and object to win this War. The various Departments in the Government understand each for themselves the immediate subjects that come within their Department. The Army, the Navy, the Board of Trade, and the Exchequer, each of them had for the moment to look at these questions from their own standpoint, and then in the Cabinet the opinion of the whole is concentrated and the policy of the country is developed. In the official document that was issued in December last the notes issued by the Director-General of Recruiting and signed by Lord Derby—
Mr. DEPUTY-SPEAKER (Mr. Whitley): I was a little afraid that this was a speech for the Military Service Bill. We must not deal with recruiting now. We are dealing with the Second Reading of the Finance Bill.
Sir N. HELME: I, of course, obey your ruling. But the point we have before us now is how to sustain the revenue of the country, and therefore, as the Chancellor of the Exchequer requires taxation, and it is necessary that the manufactories of the country shall be maintained, I venture to submit that it is in order to ask that these considerations shall apply. We have, in the document to which I was venturing to allude, the importance of finance mentioned, and in it I read that success in war depends upon money as well as upon men and munitions. In this connection our trade is of the utmost value. There is a primâ facie case made that men in various trades shall be continued in their industries in order to support the financial interests of the country, and it is for this purpose that I venture to rise, because this House is practically unanimous, and represents the great and prevailing opinion in the country, that the Government shall have, and is worthy of, the confidence of this House, and we are called upon to provide the money. Therefore I think it may be perhaps regarded as in order if I venture to urge that the Government must have regard to the future as well as the present in respect to this great question of sustaining manufactories—
Mr. DEPUTY-SPEAKER: I am afraid if I permitted it that it would wholly divert the Debate into a wrong channel. The hon. Member presumably was not here during the last five or six days in which the House has been sitting, because we have had frequent Debates on that very question as between the interests of trade and the interests of the Army, and I could not allow that to develop on the present occasion.
Sir N. HELME: I had the pleasure of attending in the days that are past, but, at the same time, one is not always fortunate in catching the Speaker's eye or being able to join in the Debate. But for the moment we are engaged in the consideration of the question of the great financial means by which this War may be continued, and I venture, on behalf of the commercial classes who have communicated with us, to urge that the demands of the Chancellor of the Exchequer can

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only be met if we continue the business which will provide the money—first, to support the workers through the wages that they earn, and, secondly, to provide profits so that not only shall there be capital available but that there shall be income with which to find the means that are required. But I have no wish whatever to contest the point with the Chair. I simply rise for the purpose of urging that, in the interests of the country, the Government should have regard to the possibility of a long-continued war, and that each Ally might be requested and required to render its best service to the joint cause we have in doing our utmost to carry the War to a successful issue. I desire in these few words to urge that there shall be such an arrangement between the Departments of the State that the equilibrium shall not be destroyed and thus render derelict many of the concerns that have been for years built up with care and industry, and are now necessary to support the export trade of the country. We must maintain—that is admitted on all sides, and the Government never fail to recognise that there must be—a supply of exports in order to finance this War, and I venture to urge that the Government in its various Departments should so see to it that in pushing one interest of the State others are not damaged, but that the country may be able to continue its great commercial history, and in the future develop still further the success which has attended its efforts.
Colonel GRETTON: No one will dispute the contention of the hon. Member who has just sat down, that the industries of the country should be maintained in order to pay for the War. I will not follow his arguments, because it is not necessary to do so on the Bill before us to-night. Earlier in the evening larger considerations were put forward, and the Debate, unfortunately, developed into the channel of premium bonds. The Government are, I think, in this dilemma—they desire obviously to attract contributions to finance the War from those in receipt of weekly wages, and they were obliged to confess that the figures they have produced show that their efforts have not been adequate to the needs or to what they desired. The reason is quite clear. Anyone who has any acquaintance with the question of investing the savings of the wage earners knows perfectly well that the first thing required is to be able to realise your capital at short notice. The question of interest in
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these cases is not of the same consideration as being able to realise your capital. The premium bonds are of this character. I know you must get the subscriptions, to a certain extent, but the popularity of these bonds will soon wear off directly it is discovered that the rate of interest is low and that a portion of the capital is liable to disappear on realisation. The Government will have to try again to bring forward some scheme to enable small investors in their loans to realise their capital more quickly without depreciation.
9.0 P.M.
I believe that the hon. Member for Hereford (Mr. Hewins) was perfectly right in his main contention, that the Government have not yet adequately considered what provision they are going to make for the finance necessary to end the War, and for financing this country and building up its prosperity and industry when the War is over. War conditions are artificial, and you have a kind of artificial prosperity now which, at the end of the War, ends in a very deep depression. There is no indication that the Government have the slightest realisation of these facts in the Budget that they have produced. They base their finance on the principle of getting as much of the national income as they can collect, and at the same time they require huge loans to raise the national capital. Consequently they are tapping both sources equally heavily and to an enormous degree. That process cannot last. We are providing the manufacturers under war conditions who are earning profits the means of putting by savings which will enable them to face the depression which must result in many industries at the end of the War. I would like to give an illustration of what I mean. Take the glass bottle industry. It so happens that that industry has been for a considerable number of years prior to the War very largely in German hands, and this country has never produced a sufficient quantity of glass bottles to meet the various requirements of industries. The consequence has been that a huge combine was set up in Germany, huge works were erected, fortified by certain machinery of which they gained control, and they were able to resort to measures which brought pressure to bear upon the bottle manufacturers of this country and forced them into the combine. There is now a great shortage of glass bottles, and at the end of the War you must relapse into the same condition as before the War and submit to the domination of Germany or America

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or Holland, or perhaps a combination of all three, who will again come down to your bottle manufacturers and in the same way force up the price of bottles in this country to any level which the Trust chooses to dictate. What is the remedy? You can put down furnaces now slowly, but at a great cost, and you could in this way make provision for the day when peace will come. The same thing applies to many other trades. If you make this provision you have to pay for the cost of construction under war conditions, and consequently the cost would be very much higher for the work than five years ago, before the War. What are you going to do? If you begin to erect your works, instead of taking six months it will take nine months, at a high price, and at the end of that time you will have works erected at an extravagant cost with the certainty that you will have plenty of bottles from Germany waiting for the time when the English markets will be open again. What are the Government going to do in a position like that, which applies to many other industries in which German competition used to be the controlling factor, and in regard to which the provision of supplies in this country is not adequate to our needs. Are you going to open your markets, or are you going to supply the wants and needs of this country by your own industries? Are you going to go to the foreign countries for articles which you can produce yourselves, if the Government will take measures to ensure that the production may be done under commercial conditions which will enable the industries to continue after peace? You will want all these industries, because trade is going to be greatly disturbed after the War, and it will not relapse at once into the old conditions.
There is no indication that the Government have any idea of facts such as those. Our Allies realise these matters, and they know that at the end of the War all these questions will be raised, and you will again have German competition, because there are large accumulations in Germany waiting to be exported at any price to enable money to be obtained for them and sent to Germany. You will also have competition with those countries which are now absorbing the wealth of the world from the belligerents, owing to the fact that they have been able to keep out of the War up
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to now. Those cases have to be met. The only indication of the Government policy has been their policy of prohibition. I am sorry to have to refer to the expression "Free Trade policy," which has been the subject of controversy in the past; but, if this is Free Trade, then it comes to this that the highest expression of Free Trade during war time is either total prohibition or limited prohibition. The Government have adopted a policy of prohibition, and I regret that the Secretary of State for India in the speech which he delivered did not meet that question quite frankly and fully. He talked of the total prohibition of luxuries. There may be something in that, but that is not the main question. The Government have gone very much beyond the total prohibition of luxuries in prohibiting the importation of certain articles except upon the issue of licences. What is the result? Every one of those licences which is issued by the Government for the importation of a prohibited article in that Proclamation breaks some fifty-four commercial treaties, and of course there is the greatest danger of difficulty and friction arising with foreign countries who are now our Allies owing to this fact. The whole policy of commercial treaties was embodied in the Most-Favoured-Nation Clause, and whenever you issue a licence to anybody to import something, you violate that Clause.
Is that the policy the Government intend to pursue after the War, or are they going to revert to their so-called policy of Free Trade all round, including Free Trade with Germany as before the War? We ought to have some indication of their policy, because commercial men and traders of all descriptions want to know what they have got to do. There is at present the greatest doubt and apprehension in many quarters, and the Government have not given us a glimmer of light except this policy of prohibition, which every sane man knows must break down after the War, and which in war time cannot work altogether. It is the most unsatisfactory, unscientific, and ineffective policy that could possibly be adopted for limiting the imports into this country. I do not want to enter upon matters of controversy, but I have been obliged to mention that one point about Free Trade, because hon. Gentlemen who do not agree with any change in our policy pin themselves on the doctrine which has been described as Free Trade. We ought to have some definite indication whether that

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policy is still to be adhered to, or whether the Government is prepared to meet the occasion as it arises, and face conditions, new and entirely different, to which the old principles, so-called, are no longer applicable.
I do know from communications I have received from many sources that our position in this matter is of the most vital importance to our Allies. We all know what it means to our own Colonies, and we know what is their line of policy. They want this question reopened with the most open mind, and they want it considered on lines very different from those on which it has been considered of late years. They will be delighted to go into it. What are they told? They are told to-day by the Secretary of State for India, as we have heard before, though it has never been publicly announced, that the Government are not going into the Paris Conference to discuss matters with our Allies with any policy or definite views but they are going on a fishing expedition, or an expedition of investigation. According to the Secretary of State for India, they have no proposals to make, but are going to hear what the others have to propose to them. Have they not investigated these things? Do they not know the facts already? They ought to know them, or, at any rate, most of them. If they go there without a policy, it means that they are going to inform themselves, that there is going to be great delay, and that this state of doubt is going to be continued. These matters want clearing up, and unless they are cleared up, so far as one can learn from recent indications, the effect in future years on those who are now struggling together and fighting together, and who will undoubtedly if they stay together save the civilisation of the world from the most serious assault ever made upon it in modern times, may lie very disastrous. There is great danger that the bonds may be broken down by want of sympathetic consideration of these vital matters, in regard to which we expected to find some indication or guidance, but in regard to which darkness, uncertainty, and indecision, so far as this Budget is concerned, still continue. I look with the greatest apprehension on our present position in this matter, a matter most vital to ourselves and to our Allies. There is no indication that the Government is yet alive to the urgency of the question.
Mr. NEEDHAM: The hon. Gentleman opposite (Mr. Gretton) seems to me to be against the policy of the total prohibition
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of articles which are not essential to vital industries for the carrying on of this War. I understand that he would allow articles to come in on certain terms. We are prohibited from going into controversial matters, and I will not develop it further, but I am in hearty sympathy with the Government in insisting upon the prohibition of articles unless they are absolutely essential for winning this War. One of the main reasons is that it saves us having to find money to buy articles which we do not need in order to win the War, and therefore lessens the burden of maintaining the exchange between this and other countries. Another reason bound up with that of maintaining the exchange is that there is a shortage of shipping space, and the more articles you bring into this country that are not necessary the more you add to the cost of foodstuffs and the articles the people must have, and undoubtedly also very considerably to the cost of the War. After all, who is the chief buyer at the present time? The Government, of course, and the Government, in piling up the bill, has to turn to the taxpayers, and the taxpayers have to pay the extra costs which are swollen by any importation of goods which are not absolutely essential.
The hon. Gentleman spoke about the artificiality of our greatest prosperity. In that I am entirely in agreement with him. I think it is one of the gravest misfortunes of this country that it has not more widely understood that the prosperity is only apparent and not real. What we are doing to-day is to spend the whole of our capital. We are in the position of a man who is having a good time, only to find himself at the end of two or three years without any capital and a whole string of debts around his neck. That is the condition in which we shall find ourselves after the termination of this War. Individuals who have credits at the bank will be better off, but nationally we are going to be poorer to the extent of that debt which is accumulating with such rapidity at the present moment.
That brings me to the Finance Bill. I am entirely in agreement with the determination of the Chancellor of the Exchequer to raise a considerable amount of money by direct taxation. It is difficult to know exactly where the danger point is, but he would be almost wise to run to that point in increasing his calls on the purses of the people in the matter of direct taxation, because it has the advantage of

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diminishing unnecessary expenditure on the part of the individual, and the immense advantage of paying off a distinct and definite portion of the cost of the War as the War proceeds. That brings me to the subject of premium bonds. I am totally opposed to those bonds. I have only risen because one of my colleagues on the Committee spoke in their favour. The hon. Baronet the Member for the Wellington Division (Sir C. Henry), speaking in favour of premium bonds, said, to my astonishment, that Governments in Europe had issued such bonds. I asked him which Governments, and he handed over a certain paper to me. But I have been unable to find any recent example of any European Government issuing lottery bonds. Incidentally may I remark that the Members who have supported this project have not seemed to like the word "lottery"? They have carefully used the phrase "premium bonds," or "bonus bonds," but I think they ought not to object to the word "lottery." They have also attempted to keep out the word "gambling." I am going to point out that the hon. Baronet the Member for Wellington had no authority to support his claim regarding European Governments. What he might have done was to have said that the City of Paris Municipality, in 1871, issued a 3 per cent. loan, and he might have finished up by saying that, in 1870, Turkey issued a loan, and those are the last examples I can find. I cannot conceive that these hon. Members who are supporting lottery bonds are willing to rely upon examples of that kind.
It seems to me extraordinary that hon. Members should think it necessary to appeal to the gambling instinct—or to the sporting instinct—rather than to the instinct of patriotism of our people to find money for this War. They are not doing their countrymen justice when they say that the only way in which we can obtain money from them is by appealing to their sporting instinct. That seems to me a very unfair suggestion to make. My main reason for objecting to lottery bonds is that I cannot conceive it would help the credit of this Government if it were known to the world at large that we were prospectively so hard up that we had to offer lottery bonds in order to attract money for the prosecution of this War. Supporters of this scheme, many of whom I know and respect very highly, have not attempted to meet that point. They have
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made other points. The hon. Baronet who spoke last on the subject, the Member for St. Ives (Sir C. Cory), referred to his experiences in Spain and Portugal. But the information given to me by men who have lived in the Argentine and other countries where lottery bonds have been issued, and who have had experience of the effect of such bonds on the people among whom they have lived, are not to be found supporting this project.
May I pass to another part of the discussion as to in what other manner we can find money for the War. I would like to see the Exchequer Bonds reduced to a smaller denomination than at present. The smallest is now £5, and a great number of these have been issued. But I cannot see why bonds should not be issued at a unit of £1. The system is now in full working order. The Treasury have a splendid organisation through the Post Office, and I believe bonds at units of £1, bearing interest of 5 per cent. per annum, payable half-yearly, the bonds to be deposited with the Post Office, would be taken up quite readily and would materially help us in finding money. May I, with regard to the Exchequer Bonds generally, urged what I have previously put before the Chancellor of the Exchequer in the shape of questions, that, instead of having these bonds issued and payable on the 1st December, 1920, he might offer them for varying lengths of time which would be attractive to various people of various temperaments? I do not see why he should not more fully develop this system and offer bonds payable in three years, four years, five years, six years, seven years, eight years, or even ten years—certain seven or eight years—and let them fall due in the anniversary year of their issue. This would give an opportunity to all persons of choosing dates most convenient to themselves. They would appeal to a wider class of people than they do at the moment when you have only one fixed date.
The right hon. Gentleman, in answer to one question, said that, as far as he knew, the public had not indicated that they were dissatisfied with the present bond issue. I was not surprised at the answer. But I should have been very much surprised indeed if the Chancellor of the Exchequer had told me that any member of the public had taken the trouble to write to him and say that he was dissatisfied. It is for the right hon. Gentleman to offer his wares in such a form as will attract a much larger number of customers

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than they do at present. The other point is that the Chancellor of the Exchequer should make much greater use of the branches of the joint stock banks. I have suggested to him, in the form of a question, that he should make it clear that the head offices of the banks were acting as agents for the Bank of England, and then the 9,000 branch managers of the various banks in the United Kingdom would become, instead of mere passive receivers or channels for the passage of money, active distributors of War Loan Stock, and people would know that when they applied to any branch office, instead of having to wait for several weeks as at present, they could at once get the stock. The right hon. Gentleman should also bear in mind what would be the psychological effect of this on the minds of branch managers throughout the country. They would feel that their head offices were much more keenly interested than they are at the present time, and they would act as distributing agents much more effectually than is the case now. A great deal more money could be raised in that way.
I hope the Chancellor of the Exchequer will not have to deal with any such subject as a "next loan." The phrase "next loan" has been used frequently during this Debate. I do not like the idea of a next loan. My belief is that if the Chancellor of the Exchequer would develop the system of day-to-day borrowing and renewing in the same way as the municipalities carry it out, the whole of the money that is required for the prosecution of this War could be obtained. It is not in the interests of the bankers that there should be a next loan. It is notorious that in connection with the last loan a considerable sum had to be taken up by the banks. The hon. Member for Hereford (Mr. Hewins) made the point that the banks were going to be put in such a position that they would not be able to finance trade. It would be an added misfortune if a next loan came off and the banks had to take up a considerable sum, because that would again be to the prejudice of trade, which we all desire to subsidise to the utmost extent. I would ask the Chancellor of the Exchequer to be good enough to make some slight alterations in the method of issuing Exchequer Bonds. If he does he will find there will toe such an inflow of money that no next loan of a. spectacular character will be
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needed, and that he will be able to carry on the War not merely for ourselves, but find money for the Allies also.
Sir J. HARMOOD-BANNER: The last speaker is among the few Members of the House who are opposed to premium bonds. So far we have only had the hon. Baronet the Member for the City of London (Sir F. Banbury) and one of the Labour Members against the proposal. Those of us who are on the Committee dealing with this scheme have every reason to be gratified with the success of our suggestion. The suggestions made by the hon. Member who has just spoken are very much like bringing down a 100-ton hammer on a tenpenny nail. They do not provide the money that is wanted for the Exchequer. Look, for instance, at the £1 for 15s. 6d.! What has it produced? Not a half day's expenditure, despite all the advertisements and labour and the nuisance we have seen on the walls for so long. We should find his other suggestions would give exactly the same result. The reason why I and others have come to the conclusion that premium bonds are necessary is that we are absolutely satisfied that before the end of the War we must do our best to see that there are plenty of savings in the hands of the working classes. That was clearly shown by the hon. Member for Westhoughton (Mr. Tyson Wilson). He put it so clearly that I do not intend to pursue the matter further. It is quite clear that Labour accepted that position, and that, so far as they are concerned, they will give us all the assistance in their power. There are three reasons urged why we should not adopt this scheme. The first is that of conscience. I am rather inclined to think from the reception the Chancellor of the Exchequer gave to the speech of the hon. Baronet the Member for St. Ives (Sir C. Cory) that it is conscience which stands between him and his agreeing to issuing premium bonds.
Sir F. BANBURY: No, it is commonsense.
Sir J. HARMOOD-BANNER: Of course, the question of conscience is accompanied by the question whether it is good for the people that they should have these bonds, and whether it would interfere with their habits and character. The experience of the past has shown that it would not have that effect at all. What about the building societies, where you

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put in your money and wait for a draw until you are able to get anything out? What about the numerous bonds which are drawn yearly? I happen to be a trustee for debenture holders, and every year I take a handle and whizz round a tin box, take out some numbers and settle the question whether a man holding a 4 per cent bond is to be paid off at 105, or is to retain that bond with interest at 4 per cent. Probably that 4 per cent. bond is worth only £75 or £80.
Mr. D. MASON: You do not suggest that that is an analogy to the present proposal?
Sir J.HARMOOD-BANNER: I do, certainly. You buy a bond for so much money, and you have a draw to see who is to have a handsome return and who is to have nothing at all. It is quite as good a parallel as that given by the hon. Baronet the Member for St. Ives, who said there was no gambling in watching a horse race and seeing whether your horse came in and you won £5, or whether it came in last and you won nothing. There is a good deal of gambling about that. The question really is, is it necessary that the people of this country should have savings at the end of the War t We have tried every possible way up to the present time and we are left with only two alternatives, that of making the bonds productive, or of raising the money forcibly. To make the bonds productive you must have something of this kind. There can be nothing against them except conscience or the question of morals. I have seen many of the principal bankers, merchants, and principal business men in the City of London, and none of them, except a few extreme men, took the view that it was a matter of conscience. We could arrange the premium bonds in such a way that a man could not lose his money. He holds his bond until he get his money back. The last speaker said that there was no such thing as a premium bond at a premium. I happened to meet a distinguished Belgian banker last night, who told me that in Belgium they have a 4 per cent. bond with premiums drawn every year. This bond is a little different from the usual premium bond because there is no interest paid on it. It gets 100 francs for the first year, 104 for the second year, and 108 for the third year, which is the equivalent of interest. There is a pre-
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mium drawn on that Belgian bond every year. There is direct evidence of a case of a premium bond of this nature which is being used, but no one thinks it wrong as a matter of conscience, except a few people in this country. The question arises, shall we get money out of these bonds? We shall get the advantage of getting the working classes to save, which we have found impossible under all the schemes of the Government up to the present time. Money boxes and all these attractions, what have they done? They have produced pennies not pounds, and are just as destitute of use as they were on the day they were suggested. We want the working classes to put in good sums. That they are getting good money we all know. A colliery manager told me that an adjoining colliery offered some of his men £1 a day if they would go away and work for them. I have seen wages. lists in other works where the men are getting £8 and £12 a week. Could not those men save something? A head gardener who gets 35s. a week challenged me to come and look at his house and at that of his brother-in-law, who was getting £12 a week, and I should find greater comfort in every way in the 35s. house. That shows there is a margin for saving, and we must get hold of these savings. Surely conscience is not going to stop us. Conscience is a good thing, but even the Treasury Bench knows a little about gambling in certain ways. Inquiries show that the whole House is not quite devoid of peccadilloes in this respect. At any rate, there we are. None of us can say it is a wrong thing to go in for bonds of this description. I can answer for this, that workmen, clerks, and merchants have come to me and said, "When are you going to get those premium bonds? We are going to have some of them at once." They were not men whose conscience would have allowed them to stray from doing what was right.
I will say no more about it, as it has been so well put by previous speakers, including the hon. Member (Mr. Tyson Wilson), who has put in the clearest way that Labour will support it, but I should like to go on to another subject and to ask the Chancellor of the Exchequer whether he is on speaking terms with the Minister of Munitions. It is a very important question. On 2nd April, when he brought in his Budget, he mentioned

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certain proposals in reference to controlled establishments. They were very alarming. There are something like 3,000 establishments doing duty for the country. I wrote to the Minister of Munitions asking him to let me see him, but he said the point was still under consideration. I read to-day that we have not got further than this, that the Inland Revenue and the Ministry of Munitions have consulted as to how far they can treat the assessments under the two Acts, the Munitions Act and the Finance Act, on a common basis. We have heard of Cabinet disagreements, and we know that Ministers do not always see eye to eye, but here are two Ministers in the Cabinet who have had this subject under discussion all this time, and they cannot settle how they are to treat fairly and honestly the controlled establishments with which they are dealing. That is a great discredit to the Cabinet. They ought not, at any rate, to let the Treasury try to get the better of the Minister of Munitions or the Minister of Munitions to get the better of the Treasury. They ought to look honestly and squarely towards the interest of the nation and the interest of the firms with which they are concerned, and come to some joint agreement without trying to drive and to push firms into a position in which it is difficult for them to carry on their trade. Before the Munitions of War Act was passed all these firms agreed to come in and do their best so as to meet the requirements of the working classes. They submitted to giving up twenty per cent. of their profits on the pre-war standard. They submitted to be put at a distinct disadvantage compared with any foreign firms which were getting orders pari passu with them, they submitted to everything for the good of the nation, and now the Chancellor of the Exchequer says, "We are going to give you double taxation," and he foreshadows it most clearly in his Budget. "We are going to get you with Excess Profits Tax, and we are going to get you with munitions." I know negotiations are going on and are not yet finished. Differences have so far arisen that I have seen a document, which has come to me in a business way, stating that if the Chancellor of the Exchequer makes some of these controlled establishments pay money which the Minister of Munitions does not think they ought to pay, the Minister of Munitions will repay them the money. We ought not to be
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dealt with under two Acts. Let us be taxed as one. Let the agreements—that is a sine qua non—under which the Minister of Munitions has induced controlled works to spend huge sums of money be honestly respected. If you are going to take 60 per cent. of excess profits, after all the other duties, and also break all the contracts you have made in regard to expenditure on plant, the first thing the Minister of Munitions ought to do is to say, "I have made these contracts with firms which are ready to help the country, and if they are pressed further I shall resign the high office which I occupy."
There is just one other thing, because I want to help the Chancellor of the Exchequer to get some money. It is a very great pity that in the last Act he did not include everyone in the Excess Profits Tax. There are men earning enormous sums of money in commissions, from £40,000 to £100,000, of which under this Bill the Chancellor of the Exchequer will get no part at all, or, if he gets it, will only get it by making the controlled firms pay, and will leave them to bear the double burden of having to pay these enormous commissions to people employed by them and also to pay the Exchequer. If they have omitted to include them they are omitting a very large sum of money. They ought undoubtedly to bring all firms under the Excess Profits Tax. Everyone ought to come in. It is the only way to do it. Reverting to the question of premium bonds, I cannot for the life of me see how I am immoral in conscience or in intent, or that those who support me are immoral, when we advocate such bonds. I think that they are the sole way in which we shall ever get the labouring classes, out of their excessive wages, to find money towards the War. The hon. Member for St. Ives mentions another alternative, in regard to which I agree with him. There is the alternative of taking a portion of the excess wages and giving Exchequer Bonds for them. This method and the premium bonds are the two alternatives. We must have either a forced loan such as that, or a premium bond which is attractive. I prefer the attractive form, but, if the Chancellor of the Exchequer cannot agree to adopt premium bonds, I do not say that I will not support the hon. Member for St. Ives in his suggestion.
Mr. McKENNA: The Debate has ranged over a very wide field, and to me, at any

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rate, it has been of the very greatest interest. We have devoted, perhaps, a great deal of time to the discussion of the premium bond question, but, quite apart from that, subjects of the very greatest importance have been raised and ventilated. My hon. Friend (Sir J. Harmood-Banner) dealt with the question of the relations between the munitions levy and the Excess Profits Tax. He considered the relations between the levy and the tax were so dubious that he doubted whether the Minister of Munitions and myself could be on speaking terms. I am happy to be able to assure him that not only are we on speaking terms, but that we have talked together, either directly or vicariously, so frequently upon this subject that I hope we have come to arrangements which may prove administratively satisfactory. I quite recognise that there is an apparent divergence of principle between the levy and the tax, but, looking to the history of the dates, I do not see how that divergence could possibly have been avoided. The House will remember that the Munitions Act was introduced as a necessary and urgent measure, in order to deal, not primarily with the question of employers profits, but with the conditions of labour. The nation was determined to increase and to accelerate the output of munitions, and the House of Commons gave great powers to the Minister to help him in his work. The provisions of the Munitions Act gave to the employers of labour certain advantages not enjoyed by other employers, and imposed upon labour certain restrictions to which other outside classes of labour were not subject. It was then stated, as one of the grounds for the munitions levy, that where the workmen were to be placed under these special restrictions which inured to the benefit of the employer, the employer's profits must be subject to a special levy or charge.
An HON. MEMBER: A tax.
Mr. McKENNA: Not a tax. A special levy or charge, or otherwise the workmen could not be expected to enter into a bargain under which they alone were to pay and the employer alone was to receive. I really think that that, so far as I can recollect, is a fair statement of the history of the case. The point was raised in this House whether it was a tax, by an hon. and ingenious Member, who addressed a question either to Mr.
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Speaker or to the Chairman of Ways and Means, whether this levy was not a tax and ought therefore to have been introduced under a Resolution of the House. The decision was against that view. The decision was that this was not a tax at all, but that it was a bargain. A Bill, I think, was introduced early in July, and very quickly became law. That was a Bill embodying the special bargain. How did that restrict the power or authority of the State to levy a tax of general application? What is the history of the Excess Profits Tax? If my memory is right, I was appointed to my present office on 27th May of last year. Immediately afterwards, in the first week of June. I had to go to Nice to conclude financial arrangements with the Italian Minister of Finance. On the way back from Nice my right hon. Friend and I, in. the train, drafted the outlines of the Excess Profits Tax, and on 16th or 17th June the announcement was made in this House that it was our intention to introduce a tax of that nature. Therefore, before this bargain was entered into, it was notorious, and public notice was given of our intention to introduce an Excess Profits Tax, which must obviously be of general application. We could not introduce it earlier than we did, in the month of September, because in the months of May, June, and July, I had still to carry through the May Budget of my predecessor, which was not a taxing Budget. At the earliest moment after we had concluded my predecessor's Budget, the non-taxing Budget, I introduced the taxing Budget of September, and incorporated in it the Excess Profits Tax. Can it be suggested that it would be proper for controlled firms to come off better under the munitions levy than they do under the Excess Profits Tax? Can it be suggested that they should? I understand it is not suggested that a controlled firm should come off better under the munitions levy than under the Excess Profits Tax. It could not be right, because in the case of the munitions levy the controlled firm gets an advantage out of the Act, for which he pays with the levy, whereas all other firms get no advantage in return for the Excess Profits Tax. It is quite clear, therefore, that no controlled firm can expect to be better off under the munitions levy than under the Excess Profits Tax. What is it that we do under the Bill? What we do under the Bill is this, that

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where a controlled firm is better off under the munitions levy than under the Excess Profits Tax, it shall make up the difference.
Mr. J. M. HENDERSONmade a remark which was inaudible in the Reporters' Gallery.
Mr. McKENNA: My hon. Friend says that in no case is a firm worse off under the Excess Profits Tax than under the munitions levy. If that is the case no firm would be affected by the Excess Profits Tax.
Mr. PETO: They will all have to do twice the accounting work.
Mr. McKENNA: I am dealing now with the question of payment. I will come to the question of accounts. If any controlled firm pays more under the munitions levy than it would have to pay under the Excess Profits Tax, it will have to pay nothing under the Excess Profits Tax.
Mr. HENDERSON: Why should it pay more?
Mr. McKENNA: Because it is getting the advantage.
Mr. HENDERSON: Why should the other firm have—
Mr. McKENNA: Would my hon. Friend explain his point?
Mr. HENDERSON: Of course I would like to have the opportunity of answering the right hon. Gentleman.
Mr. McKENNA: If my right hon. Friend wishes, he can answer afterwards, but if he desires to do so why answer me now? If he wishes to answer me now, I will sit down. I am quite willing if he wishes that he should address the House now. As regards payment, it is common ground that where a controlled firm would get off with less payment under the munitions levy than under the Excess Profits Tax, the difference ought to be paid by the controlled firm. A controlled firm which gets an advantage under the Munitions Act ought not to pay less than a firm which is not controlled. That is the first point. The second point is this: The Excess Profits Tax dates back to the year 1914, and every single controlled firm in the country will have settled its datum line and will have made up all its accounts on the basis of the Excess Profits Tax for the first year of taxation before it became a controlled firm. Therefore the whole accounting was a known fact to the controlled firm before
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the time when this bargain with the Ministry of Munitions was entered into. How can you escape—I put the question in this firm to the controlled firm—from the necessity of making up your books on the basis of the Excess Profits Tax? The Excess Profits Tax basis is the same basis as the Income Tax basis. It is the same period of accounting. It is the same method of accounting, though it is quite true that different allowances are made under the Excess Profits Tax and under the Income Tax, but so far as their datum line is concerned, and so far as keeping accounts are concerned, the controlled firms are bound, for Income Tax purposes, to make up their books in a way in which it is necessary for them to make them up for the purposes of the Excess Profits Tax, and all that was true before the Munitions Act was introduced, and continued true ever since. That is my second point. If a firm fulfils the bargain entered into with the Ministry of Munitions, at the time of the Act, and in return for which it got certain advantages, the controlled firm must make up its books at two different periods and for two different purposes. The Income Tax basis is essential, and cannot be avoided. Consequently, if it keeps its bargain under the Munitions Act, it must make up its books in the two-ways. That is my second point, that the difficulty of the double accounting is inherent in the Munitions Act and cannot be got over.
10.0 P.M.
The third point is this: The hon. Baronet who spoke last suggested that the munitions levy should be absorbed in the Excess Profits Duty, and that there should be only a single tax. I think that I understood him correctly in that respect. So far as I am concerned I have nothing to do with the munitions levy, except to receive the money. My hon. Friend behind me (Mr. Henderson) says that the munitions levy is far more severe that the Excess Profits Tax. I have received representations to the contrary. I have received a great many deputations on the subject, and I have been told that the Excess Profits Tax will prove, in the working out, more heavy than the munitions levy. I cannot say until I have seen the figures of the two. I can only deal with the law as it now stands, but assuming that my hon. Friend behind me is right, and that the munitions levy is the heavier of the two, I do not know whether controlled firms will expect to get out of the bargain which

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they have made with the Ministry of Munitions in return for which they receive certain advantages. I quite agree, and my right hon. Friend the Minister of Munitions quite agrees, that it is a great hardship on those firms to have to make up their accounts twice over. In these times, when there is such pressure of work and such shortage of labour, the hardship is peculiarly severe. For my part, I will go a very long way to assist firms in getting out of the difficulty, but I am sure that every hon. Member in this House will agree that I ought not to ask the House to go the length of discharging controlled firms from the liability they are under in respect of the Excess Profits Tax when every other firm in the country is liable to pay.
As regards the conversation between my right hon. Friend and myself, I have been able, after consultation with my advisers, to meet one very strong case that has been put forward. The case arose out of the question of the allowance for depreciation. Very large numbers of controlled firms have been called upon by the Ministry of Munitions to put new capital into their business for the purpose of erecting machinery for the special purpose of making munitions of war. The firms in that case very naturally expect that the allowance for depreciation of that machinery during the War will cover their own capital loss on the machinery, which will have to be written down to a comparatively small figure after the War. I have agreed that in the case of controlled firms we will take the depreciation allowance which is either agreed between the Ministry and the controlled firm or which is awarded by the Board of Referees set up by the Ministry of Munitions, and I think that that arrangement meets the whole case on that part of the subject put forward by my hon. Friend the Member for Liverpool.
Sir J. HARMOOD-BANNER: I beg to thank the right hon. Gentleman.
Mr. McKENNA: I think that that covers all the special arrangements made and all those cases where there are no special arrangments, but where there has been an expectation that an arrangement of that kind will be made. It is only right to say that in making this arrangement with my right hon. Friend we are not doing more for controlled firms than we think it right to do for other firms also, and we shall
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certainly give in our Excess Profits Duty an allowance for special rates of depreciation of machinery for the special purpose of the War or for other reasons which will not have the usual value after the War which it would otherwise be expected to have. I think I have said all I have to say on the subject of the munitions levy, and the divergent principle of the Excess Profits Tax. Let me turn to the question of premium bonds. I hope there may be common ground between the advocates and opponents of premium bonds on certain points, so as to clear the field for discussion. I think it is common ground on what is called premium bonds that there is no gamble in the capital; I think there is equally common ground that there is a gamble in the interest. There is no question about those two propositions. I think it must also be common ground that if we drop the name of premium bonds and call them by the name known to the law, we would call them lottery bonds, and why not call them by that name?
Mr. BUTCHER: May I ask my right hon. Friend what he means by a gamble in the interest? The interest is fixed, and so long as the bond is undrawn the holder gets the interest on his capital.
Mr. McKENNA: My hon. Friend the Member for St. Ives, in his excellent speech, quite understood what is meant by a gamble in interest, or, if he heard the explanation given on the point, he will see that there is a gamble in interest. The owner of the bond is assumed to receive 5 per cent. He does not get 5 per cent. paid to him; he gets 2½ per cent. paid down, and he gambles with the other 2½ per cent. If he is lucky on the £1 bond he will draw £500. That is a gamble. I do not want to mince matters, but personally I do not like these bonds. It may not be a gamble in capital, but I do say it is a gamble in interest, and I think it is a lottery bond. I have noticed that everyone who has spoken in support of this bond has described it as a war measure. My hon. Friend the Member for West-houghton (Mr. Tyson Wilson) said of course no one would suggest this in normal times. Why not? If it is a proper proceeding, why not suggest it in normal times?
Mr. T. WILSON: Would the right hon. Gentleman recommend Conscription in normal times?
Mr. McKENNA: Conscription is not immoral.
Mr. WILSON: This is not immoral.
Mr. McKENNA: Then why not have it in normal times?
Mr. WILSON: Why not have Conscription in normal times?
Mr. McKENNA: Conscription is, I think, inexpedient in normal times, and I think not beneficial to the State. But if this is a good way of raising money and is not immoral, why should it be restricted to the time of War? The real reason is that it is so much immoral that it is thought the end justifies the means, if the hon. Member will forgive me for saying so.
Mr. WILSON: I want the Government to say that.
Mr. McKENNA: Let us get to the plain facts. My hon. Friend thinks it is not a good thing in itself, but in time of war he thinks the amount of harm is so very little that the end justifies the means. He sets up the balance of the scale, and we have a little grain of immorality on the one side and a heavy weight of profit on the other, and the weight of profit is so much greater than the immorality that it weighs it down, and he is willing to do that. The hon. and learned Member who introduced the subject gave us a very forcible peroration, beautifully expressed, from which I gathered that chance was so universal and so normal a condition of our lives that we should all be thoroughly justified in investing our savings in gambling saloons. But I do not think so. Although it is quite true that chance enters into nearly every condition of our lives, although it is perfectly true that an immense amount of our business cannot be carried out without a gamble—although that is the condition of a large part of our lives, yet I do not think that gambling is a good thing, and I do not think it is wise of the State to encourage people to look 'for making a living without working for it. It is quite true that a great many people succeed in making a living without working for it. It is quite true that a large number of other people would like to be in the same position. Is it the duty of the Government to encourage people in that line of thought? My hon. Friend says that if you can get what is so absolutely necessary for the purposes of the War, someone said £150,000,000, it is
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worth while. I must look to what I am likely to get. Is it worth while for what I am likely to get? What are we getting now? What do you think we would get under this scheme, and what are we likely to lose under it? Since last July we have obtained from small investments through the Post Office £62,000,000. There have been small withdrawals from the Post Office, particularly at the time of the investment in War Loans, amounting to £4,000,000, so that we have a net investment of between £67,000,000 and £58,000,000 since last July—in ten months very nearly £6,000,000 a month.
Sir C. HENRY: Will my right hon. Friend say the amount of the savings bank deposits withdrawn?
Mr. McKENNA: Yes, the withdrawals are about £4,000,000. Of course that financially does not anything like represent the whole of the investments of the working classes in War Stock. Their chief medium of investment is through the building society, or the co-operative store, or other societies, and these societies of all kinds have invested a very large amount in Treasury Bills, Exchequer Bonds, and War Loan, so that it is quite fair to say that the investment of these classes, who do not invest through the stockbroker or banker, and who invest sums of £5, are today very large. We have had estimates of what we should get by the issue of premium bonds—one Member suggested £150,000,000 and another £200,000,000, but neither told us in what period it was expected to get those sums. I should very much doubt myself whether they would get anything more than what they are getting now. I do not dogmatise on this subject. It is possible that the lottery bond would be attractive to a certain number of people, and you might get a few more millions in the course of the year; you might get £10,000,000 or an additional £15,000,000 in the course of the year; I do not think you would get more, because I do not think the money is there. Is it worth while paying the price and taking the risk? Is it worth my while taking the risk of a new class of investors—persons only attracted by a gamble, and who say they will go in for these premium bonds as there are high prizes to win? I am bound to say that if I were going to have a lottery I should not have such a jejune affair as that suggested by my hon. and

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learned Friend where the maximum prize would be £500. If I were going in for a gamble I would have a prize of £50,000.
An HON. MEMBER: You would get a lot of money in the House for that.
Mr. McKENNA: I would induce a large number of people to come and take, perhaps, a million of those bonds. I am already getting more than £1,000,000 per week directly in small sums. A speculator of this kind in a gamble of this kind is not a person who is a real investor. If a more attractive gamble comes along which he wants to take, he will immediately sell. These people are holders, they are not investors, and I should have a constant dribble of these premium bonds on the market, which would affect my whole credit. Now we are maintaining our credit, and I very much doubt whether the House would be well advised m insisting upon a new venture of this kind. I do not believe there is money in it, and I am quite sure it is not a good example for the State to set. It would be very unwise for the House of Commons to deprive itself now of the power hereafter of preaching not merely to the working classes, but to the wealthier classes, that they ought not to look to the profits of gambling. I would very much prefer to continue upon the lines upon which we have acted hitherto. I would like to say this also upon the subject. A good deal has been said, both now and at other times, upon the lines that the working classes throughout the country are wasting their money and are living with a degree of luxury which is particularly unbecoming in the middle of a great war, but, so far as I can judge by any of the ordinary tests, that charge, as a general charge, is not true. It is perfectly true that individuals earning very high wages are spending larger sums than they ought to spend, and it is perfectly true that those individuals are more numerous than any one of us likes to see, but it is not true of the working classes as a whole. Take this one simple test of extravagance—the consumption of meat. In spite of the high wages that are being generally earned now, so far from there being an increase in the consumption of meat by the civil population of the country, there has been a decrease. [An HON. MEMBER: "What about the price?"] The price has gone up, it is quite true, but we are told wages have gone up also very considerably, and
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I am not sure, taking the population all through, that the margin of wages has not gone up quite as much as the margin of price.
Sir C. CORY: What about the number of men out of the country?
Mr. McKENNA: I said the civil population, apart from the Army.
Sir C. CORY: The civil population has very much decreased by the number of men gone to the Army.
Mr. McKENNA: I hope my hon. Friend will not think that such an obvious idea did not occur to me also. In estimating the consumption I should certainly have taken the consumption per head. All that being allowed for, the evidence goes to show that the actual consumption of meat is not increasing, but rather diminishing.
Mr. RAWLINSON: Where can we get the statistics?
Mr. McKENNA: I got them from the Board of Trade, and if my hon. and learned Friend applies to the same source he will get the same figures. It is naturally a subject of daily interest to us, and I have been extremely interested to discover that, as regards meat, notwithstanding diminished supplies, there is no indication of shortage, because there is a diminishing consumption.
Mr. LEIF JONES: There has been a decided effort to get people to economise.
Mr. McKENNA: There has been a very decided effort, and, notwithstanding what has been said by persons of great weight in the country, it has been very considerably effected by advertisements.
Sir J. WALTON: And higher prices.
Mr. McKENNA: Perhaps my hon. Friend will excuse my arguing that point. I do not think it is fair to make a general charge of extravagance against the working classes as a whole. According to my observation, if you take the working classes through, they are behaving very much in the same way as every other class in the country. The wealthier classes, as a whole, are showing great patriotism, great self-denial, and great willingness to pay taxes. The same is true of the working classes as a whole. You get individuals amongst the wealthier classes—quite enough often to make a very disagreeable display—but those who denounce the extravagance of the upper classes on motor

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cars and luxuries in restaurants are not doing them justice. If you take them through, there has Been an enormous reduction in personal expenditure, and a very great and successful effort to cut down the luxurious enjoyments of the individual family. That is true of the upper classes as a whole, and it is also true of the working classes as a whole. It would be absolutely impossible for this nation to make this financial effort if it were untrue. You cannot raise in taxation £500,000,000 in a single year and £1,300,000,000 in loans except from the economy of the people, and that economy must be general, running through the whole nation. We must not be misled by the painful examples that we see here and there into thinking that those examples represent the general practice of the people.
I would return, for a moment, to the speech of the hon. Member for Hereford (Mr. Hewins). He was answered by my right hon. Friend opposite (Mr. Lough), who claimed that the present power of the nation to raise revenue is a triumph for tour fiscal policy. Although I share my right hon. Friend's views on the fiscal policy of this country, I think he went too far in that statement. It is not just, and would not be just, to claim for ourselves, as a proof of the advantages of the system which we advocate, all the results which may be due to other causes. I regard this, the power to raise this gigantic revenue, primarily not as a fiscal, but as a moral triumph. It is only by the willingness of the people to pay that it is possible to raise these great sums. If other nations were as willing as this nation to pay they, too, could raise great sums for the cost of the War. It depends upon the moral power of the people. Whatever else may be said of this nation, in our power to submit to bear taxation, I think we have shown a moral strength of that which none of the other belligerents have yet proved themselves capable. I am entitled, I think, to speak with some feeling upon this subject, because the raising of this revenue undoubtedly causes great hardship to very large classes of people. I hope my hon. Friends will not think that because I am unable to meet them on every case they raise that I do not, therefore, recognise the truth and justice of many of the arguments they use. We cannot raise these sums without hardship. I only hope that while we cannot avoid afflicting individual hardship we do not at the same time do
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permanent injury to the productive power of the country.
There is very great force in the argument used by those who are opposed to an increase in the Excess Profits Tax. I can assure the House that I have been very reluctant to increase the rate of charge from 50 per cent. to 60 per cent. The force of the argument lies in this great fact, which we cannot ignore: that a very large part of the income of the successful employer and the successful firm in one year becomes the capital of the next, and that, when you take from the successful employer the excess profits you are taking it from the man who has proved himself the most capable of using it in the development of national industry. I am always oppressed in my own mind with that argument, and I hope my hon. Friends below the Gangway, who do not see in 60 per cent. excess profits a sufficient charge, will remember if they destroy capital in the hands of those who can best use it, that in the long run they will prove the worst friends of labour. I believe we are now taking the maximum amount that the trade and industry of the country can be called upon to bear. I, can only be grateful that this House and the country have been willing to accept the taxes. Those who speak lightly of these burdens really do not know what they mean in industry. They are truly heavy. Personally I feel very strongly that in going the lengths I have felt bound to go in the present emergency I have gone to the extreme point of safety. I shall have, of course, during the Committee stage of the Bill, the opportunity of dealing with some of the other points which have been raised more properly belonging to the Committee stage. Income Tax has been touched upon, and the heaviness of the charge of 5s. in the £ deducted at the source. We shall do our best to meet the grievance, for I admit it is a grievance. It may not have been a grievance which was felt when the duty was 1s. in the £, but it becomes a severe grievance when the duty is 5s. in the £. I think on the Committee stage I shall be able to explain that we have met the grievance. As I understand, the objection now is that, whereas 5s. in the £ is deducted quarterly from the dividends received, the repayment only takes place at the end of the year, and consequently the taxpayer may be left out of 2s. in the £ for the whole of that year.
Mr. HENDERSON: Nine months.
Mr. McKENNA: Yes, for nine months. We propose to meet that which, I think, is one of the strongest cases we have to meet in the Bill. We propose to meet that by making the. repayment half-yearly. Will the House remember what that will mean? The taxpayer will begin the year from now on with the repayment from the last year, and he will get the next repayment at the end of six months, so that the taxpayer will be really better off as regards repayment during the first year, and in the second year will get repayment at six months instead of at the close of that year. There is also a modification of the rates which I shall have to propose to the House bringing the earned and unearned income more into proportion, so that unearned small incomes will get an advantage. I hope the House will believe me when I say that, since we last discussed the Bill, my right hon. Friend and I have devoted most of our time in going through the arguments and endeavouring to see, in consultation with the officials, how far we can meet every case raised, and I hope in the Committee stage we shall be able to give a satisfactory account of our work.
Mr. PETO: I think the right hon. Gentleman has shown the House at any rate one thing, and that is in the short time we have had to discuss the Second Beading of this almost unique Finance Bill the House has really devoted itself, except in the opening speeches, to a very small section indeed of the many problems this Bill presents. The Chancellor of the Exchequer's speech was almost entirely confined to two questions—to replying to that part of the Debate which has occupied so large a part of the time of the House on the premium bond question, and on one important question, which was dealt with only, as it were, as a side issue of this Finance Bill, the relation of the Excess Profits Tax payer and the taxpayer who pays as a controlled establishment to the Ministry of Munitions. I do not propose to deal at all with the question of premium bonds, but I should like to say something with regard to that part of the Chancellor of the Exchequer's speech in which he dealt with the question of excess profits and the controlled establishments. He gave three reasons why it was necessary to apply this double process of taxation and double process of accountancy, which will undoubtedly work a very great hardship and a great loss of time, which can be ill-afforded at the present time. He said, in the first instance,
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that he was bound to apply this double method because the levy which was paid by a controlled establishment was not a tax. It was part of a bargain that was made for advantages received. I could not help being reminded, when the Chancellor of the Exchequer brought forward that argument, of the fact that he is a member of the legal profession. I do not think anyone else, certainly no member of the business community, would see any very great difference in principle in paying 80 per cent. of their excess profits from one point of view and paying 60 per cent. from another point of view, and it would be poor consolation to be told that it was a levy in one case and a tax in the other. That may appeal to some hon Members, but not to business people as a whole. The right hon. Gentleman said it was necessary to have Clause 32 in the Finance Bill, which I regard as one of the greatest blots in the Bill. It means a great waste of energy that might be better employed. It is said that there was a bargain made whereby the employer gained some advantages from Labour, and, in consideration of that, made a certain return to the State. Does the Chancellor of the Exchequer maintain that employers who were engaged in munition works feel that they have such an advantage in the control of labour that it was worth their while to pay 80 per cent. of their excess profits above a cerain datum level because of the control of labour which the Munitions Act gave them? I do not think that can be seriously contended. I would remind the Chancellor of the Exchequer of another bargain that in every case when an establishment came under the control of the Ministry of Munitions every question with regard to new machinery, plant, and extensions necessary to increase the output, turnover, and so forth was to be taken into consideration by the only Department that can go into it and make a bargain. Now the Chancellor of the Exchequer proposes to put that bargain on one side in every case where it happens—
Attention called to the fact that forty Members were not present; House counted, and forty Members being found present—
Mr. PETO(continuing): The Chancellor of the Exchequer said that there was no hardship in this matter of accountancy, because the Excess Profits Tax was known to employers and the business community before the controlled establishments were

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introduced. That argument applies only to the first year. In the case of the right hon. Gentleman's proposal he contended that every year, however long this tax may last, firms will be liable to an investigation whether they will be liable to be taxed under one Department or under another Department. It seems to me that the object of the Chancellor of the Exchequer would be absolutely met if either to one Department of the State or the other the appropriate tax, as I prefer to call it, is paid. Surely the Chancellor of the Exchequer can trust the late Chancellor of the Exchequer not to make any immoral bargain with any particular controlled firm and to extract from them whatever in the interests of the State is the maximum that ought to be paid. It certainly seems to me a very curious state of affairs if the Chancellor of the Exchequer should now come along and say, although a certain number of firms, now, I believe, nearly 3,000, are really in respect of their whole business arrangements under the control of the Minister of Munitions, a Minister who was only lately a successful money extracting Chancellor of the Exchequer, yet he must have his own control and the accounts of the firms must pass a double scrutiny. Really, it might well be left to the Minister of Munitions to make his bargain with the controlled firm and not have any other Minister to dispute and upset that bargain.
I want to question altogether whether this Budget is really a clever and effective instrument designed for the special purpose of meeting the needs of the country best at the present moment. I listened to the speech of the Secretary of State for India (Mr. Chamberlain) with a great deal of interest to see how he would defend the Budget from that point of view. I heard a very able speech—it really was not needed—in praise of the taxpayer and of the country generally, but I cannot say that I heard any praise or even any defence of the Budget proposals as a whole. The right hon. Gentleman said that the proof that the Budget was successful was the fact that the taxable capacity of the country had kept up to such a wonderful extent, and he showed that the Chancellor of the Exchequer had derived in three successful years an increasingly larger margin of revenue than that which he had estimated. The right hon. Gentleman the Member for Islington, following him, questioned very much these estimates; and he showed in a few items,
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Although I could not agree with every one, that there had been an underestimate, and he calculated on the whole that there had been something like an underestimate of £80,000,000. It is very easy to have a surplus if you only estimate low enough. But it is a, very weak argument for an ex-Chancellor of the Exchequer to bring forward that the revenue-yielding capacity of the country has proved to have been more than maintained under the stress of war because we have had increasing surpluses.
I regretted very much the defence the right hon. Gentleman made of the entire absence from this Budget of any attempt to lay the foundation of an Imperial system or any system such as would tend to help our Allies in recovering after the War. He told us the reasons why he thought it not desirable that this Finance Bill should have any particular fiscal complexion, and he said that as far as he was concerned he thought everyone would have to go a long way towards the opposite camp in meeting views which were different to those held before the War with regard to the question of tariff as being part of the regular means of collecting revenue. I think it is quite unnecessary for anyone who has strongly held the tariff view in the past to make any approach to the other view, because I believe the country as a whole have entirely come to the conclusion that it will be essential from the point of view of revenue, quite apart from any other reason, to adopt tariff as one of the principal revenue-collecting means in the future. That being so, why should we hear from an ex-Chancellor of the Exchequer—from the right hon. Gentleman the Secretary of State for India, considering his close personal the to the founder of the whole of this Imperial system, which has now proved to be so absolutely essential, and demanded by every part of the Empire—that he intends to go a long way to meet the opposite view as soon as this War has terminated?
The only argument which has been put forward for not including tariff as part of the system of this Budget is that there would not be the start necessary for its collection. If that holds good as regards a general tariff, surely where there is a will there is a way, and if it had been the intention of the Government to go as far as it could in satisfying the legitimate demands of the Dominions and in satisfying the aspirations of our Allies and trying

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as far as possible to make that alliance paramount and put it on an economic basis, surely they could have done something to show in this Finance Bill that they intended to protect those vital industries of the country of which we have found ourselves practically bereft and which are so badly needed in this War. I refer to such things as the glass industry, and particularly optical glass, dyes and soaps, which yield glycerine as a byproduct, which is so much required. It would have required no great addition to the Customs staff to meet such an extension of tariffs as that. Of course, there are other things which from the point of view of economy ought not to have been left out—cocoa, hops, and so on. It is really very difficult to understand what argument could be put forward for leaving them out and having no tax upon them. I do not want to go into figures at this time of night, but I must say, having mentioned cocoa, it is an extraordinary thing, considering it is only three or four years since we abolished the difference in duty between the manufactured article and the raw material, and that the only effect was to put £50,000 a year into the pockets of a foreign chocolate combine, that the Chancellor of the Exchequer, knowing well the figures regarding the importation of these luxuries, should have had a flat-rate duty in his Finance Bill raised upon the raw material only, with no additional duty on the manufactured article. I will only give the House the figures of the imports from one country. From Switzerland in 1913 we imported only 96,000 cwts,. in 1914 it was slightly less, 92,000 cwts., and in 1915 it was 205,000 cwts. With all that amount of money going out for an article, every pound of which we could produce in this country, employing mainly female labour, we find the Chancellor of the Exchequer adhering to the full Free Trade theory that it is only proper to put a tax upon the raw material and that there is something wrong in dealing with this question, with which, from another point of view, he wants to deal, by the imposition of a tariff.
There does not appear to be any attempt in this Finance Bill to give effect to what should be the mainsprings of the policy of statesmanship at the present time—firstly, the strengthening of the alliance by which we hope and intend to beat down the opposition of the enemy, and, secondly, the
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consolidation of the Empire. If hon. Members say that measures which should tend directly towards the progress of the War are still more necessary, I say there is nothing in this Bill, so far as I can see, which tends even indirectly to defeat the enemy. This vast amount of money is being raised really in the clumsiest way. It is very easy, if you only put large new taxes upon the profits made by industry in this country, taxing them directly, to say that you can raise a certain sum of money, even this £500,000,000. But there is no attempt to raise that money in such a way as to benefit any single industry in this country, or to place any industry in this country, or the countries of our Allies, or in any of the Dominions of the Empire, in a position superior to that same industry if it were carried on in the country of the enemy.
I want to give one example of what I mean as to the extension of direct taxation and the Income Tax. What does the Chancellor of the Exchequer do with regard to the income from investments in the Dominions? All he does in Clause 28 is to say that he will not raise it to more than what is approximately the maximum tax, 3s. 6d. in the £, upon the proceeds of investments in the Dominions, and that if there is any Income Tax in the Dominions which brings the total Income Tax on a particular investment above 3s. 6d. in the £, he will adjust the difference. That is not meeting the question at all. The Dominions have a right to regard, and I am given to understand that they do so regard, profits made in their territory as a source from which fresh capital will flow into other investments, because they are saved and reinvested in that particular Dominion. Beyond that, it is a proper subject for taxation within the Dominion itself. Far from giving any preference in that matter to investments in the Dominions, the Chancellor of the Exchequer only says that he will not make it a positive premium against such an investment if the total Income Tax would be more than the maximum that would be charged in this country.
I do not believe the attempt to grade the Income Tax down to the smaller incomes is really working. I cannot believe that it is the intention of the Chancellor of the Exchequer really to distribute the Income Tax over all classes in the country who earn more than £2 10s. a week, when we find the gigantic profits of co-operative societies left untaxed and the advantages

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given to them as against the small trader. I should like very much to hear—and I hope we shall hear when we come to that part of the Bill in Committee—what is the practical result of this attempt to tax down to £130 a year and to collect Income Tax on the higher wages of the wage earners. I am very sceptical as to how the Treasury are able to follow and to tax the wages which are paid on piece work in such trades as where you get a gang of platers or riggers working at one of our ports and earning an altogether fluctuating but very large rate of pay for individual contracts. I should also like to hear how the profits of such people as cattle dealers and the like—quite small people—are going to be brought in to pay Income Tax. The whole justification of bringing the Income Tax level down is that there is no longer the same distinction between direct and indirect taxation.
11.0 P.M.
There is one question which the Chancellor of the Exchequer did not touch on, because it had not been mentioned in Debate before, and that is the question of collecting Super-tax upon the gross income instead of upon the net. Now Income Tax is up to 5s. in the £ on incomes which are liable to Super-tax it is really an absurdity to say that you are going to collect Super-tax upon gross income instead of upon the only income that ever reaches the taxpayer's pocket. If you take an income of £6,000 a year gross all that remains after paying 5s. Income Tax—all that ever reaches the taxpayer at all—is £4,500 a year, and on that particular income—I have had it worked out —the Super-tax on the basis on which it is at present collected would be £244 3s. 8d. a year, whereas all that is really due on the income actually received by the taxpayer is £115 0s. 4d. I think there is absolutely no justification for that, and I hope that we shall be able to get that part, at any rate, of the Income Tax amended in Committee. I know the argument put forward at the time Super-tax was first adopted in the 1909–10 Budget of the immense amount of trouble involved to the taxpayer were met by the Minister of Munitions, who was then Chancellor of the Exchequer, in this way. He said:
"Surely all men in that category can afford to keep a private secretary or agent. If they do not keep a private secretary or agent they are men of leisure and a little sum of that sort will not do them any harm in the world as a mental exercise. It is not a mental exercise that they will have to indulge in every year, because they understand this sum will last them a lifetime."
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At that time the Income Tax was 1s. 2d. in the £, and it is evident that the Minister of Munitions did not anticipate frequent variations in the amount of Income Tax which would involve a very frequent alteration in the calculation that has to be made. But now the Income Tax has reached the level of 5s. in the £ it is really not a question of the trouble of making a calculation, but that you are pretending to collect Income Tax and Super-tax at a rate which is not really the rate that you are taking from the taxpayer and not anything near it. I do not think that is either fair or honest, and I hope that part of the Bill will be altered in the future.
Mr. J. M. HENDERSON: The Chancellor of the Exchequer has made a very clever, astute argument for Clause 32 of his Bill. I raised a point of Order on 1st July, 1915, when the Minister of Munitions brought in his Bill for munitions of war. I said that this was a tax. The decision is well worth reading, and I desire to recall it to the attention of my right hon. Friend, because the Chairman of Ways and Means was very careful in what he said. He said:
"I think it may be looked at in this way: That the State proposes to give to certain establishments orders for war materials, and the limitation of the profit to be obtained by means of these orders is what in Committee of Supply we call an Appropriation-in-Aid—that "is to say, that any amount beyond a certain produce shall come back to His Majesty's Government. That, I think, is the correct way of looking at the procedure of this Clause."—[OFFICAL REPORT, 1st July. 1915, col. 2005, Vol. LXXII.]
Then he went on to say:
"It is in the nature of a bargain or contract."
Are you going to keep to the bargain? Are you going to suggest that the Government is done in watertight compartments, and that one branch of the Government can make a levy and another branch can levy a tax? The thing is monstrous. Is there any other branch of the Government that can make a levy? Only you, the Treasury, can make a levy. You, the Chancellor of the Exchequer, are the only one entitled to make a levy. What is the use of splitting hairs? I hope to convince my right hon. Friend. It will not be the first time I have convinced him. He says he is not breaking a bargain. Then it is the Minister of Munitions' bargain, and he must support it. The right hon. Gentleman says lie is not in conflict with the Minister of Munitions. Let me show him exactly where the unfairness of the bargain lies.

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You say to one man who has been successful, "You have made a lot of money. You shall only have 20 per cent. I am going to take the rest: if it is 80, 100, or up to 150 per cent." To the man who has not been so fortunate you say, "Under no circumstances shall you get more than 20 per cent., but if you are an uncontrolled establishment you will get 40 per cent." Then you go on to say to the man who has not been so fortunate through one cause or another—and I shall be glad to show my right hon. Friend that there are a great many causes which have militated against making profits in controlled establishments—"I will hold to the bargain with the successful man, but you will not get your 20 per cent. I am going to get 60 per cent. of your 20 per cent." Is that right?
Mr. McKENNA: Yes.
Mr. HENDERSON: I am surprised that a Minister of the State suggests that such a disgraceful transaction as that is right. It is the most unjust proposal that has ever been made, because you are departing from the bargain made by another Cabinet Minister.
Mr. McKENNA: A bargain was made with the Minister of Munitions that, in respect of controlled firms, all profits in excess of 20 per cent. over the standard line should be paid as a munitions levy. That bargain does not in any way deprive the Exchequer or deprive this House of its power of taxation of controlled firms. The bargain did not at all limit the power of taxation.
Mr. HENDERSON: You are going to suggest that the Treasury has one pocket for a levy and another pocket for a tax. [HON. MEMBERS: "Divide!"] I do not want to keep the House, but this is a very important matter—much more important than hon. Members realise.
Mr. McKENNA: It is a Committee point.
Mr. HENDERSON: I am quite willing to treat it as a Committee point, but I do not want it to be prejudiced by no answer having been made to your statement. What I say shortly is that it was a bargain made by one of the Cabinet Ministers, and the Treasury must stand by that bargain, or, in the alternative, this is what I recommend to the Minister of
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Munitions—that he should make an exact same levy upon all traders in the same way. If you can come to that I am quite sure that the controlled firms will agree, but to make one tax of that kind so grossly unfair is a thing which I am quite sure the House, when it understands it, will not sanction.
Sir JOSEPH WALTON: I had intended drawing attention to various inequalities in the levying of the Incomer Tax, but in view of the late hour I will defer raising those questions until the Committee stage of the Bill. There are one or two points on which I should have liked to hear some statement from the Chancellor of the Exchequer to-night. The total deficit for the two years ending 31st March next is £2,545,000,000, though we have raised and are raising this year the gigantic sum of £502,000,000 taxation towards this £2,545,000,000. We were told that there was a £600,000,000 Loan, and a £50,000,000 American Loan, and we also know that £202,000,000 has been raised by Exchequer Bonds. That is a total of £852,000,000, leaving in respect of the deficits of the two years, including the present year, £1,693,000,000 to be raised. Towards that by temporary borrowings we have got £648,500,000, but those are to be repaid in three, six, nine, or twelve months; and what I urge upon the special attention of the Chancellor of the Exchequer is that the time has more than come when this huge deficit, which we are quite able to meet and deal with, should be dealt with in a permanent fashion. I hope that at no very distant time a War Loan may be again issued, say, at 4 per cent. free of Income Tax, which would, I believe, be subscribed by the people of the nation as a whole. We know that in France 5 per cent. is being paid free of Income Tax. We know that for the greater part of the £648,000,000 Treasury Bills 5¼ per cent. is being paid, and that to the small investor in the shape of war savings certificates 5 per cent. free of Income Tax is already being paid. Looking at the whole financial situation of the country and to the enormous expenditure this year of £1,825,000,000 and the possible prolongation of the War, my fear is that if the Chancellor of the Exchequer defers issuing a loan he may have to pay a higher rate of interest than he would obtain the money for to-day. A loan should have been issued undoubtedly before the increase of the Income Tax to 5s. in the £ was announced.

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Another point I would press upon the Chancellor of the Exchequer is that I regret that, in the course of his speech today, we heard nothing of retrenchment in expenditure. Certain Committees were appointed. The Chancellor of the Exchequer is the custodian of the public purse. He it is who ought to supervise and control expenditure in every Government Department. He told us that he cannot possibly in the present abnormal conditions do that as regards the Army, the Navy, and the Ministry of Munitions expenditure; but at any rate I should have hoped that he would have reported to the House what retrenchment had been effected by the Committees specially appointed as Retrenchment Committees in connection both with the Army and the Navy and the Ministry of Munitions. It would have been of the greatest interest if the Chancellor of the Exchequer could have reported to the House to-night that those Committees had done most effective work, and that he had the strongest possible ground for saying that in future we should get better value for our money. We also consider that the Chancellor of the Exchequer has not done as much as he might have done to reduce the abnormal amount of imports as compared with exports. They are going on at the rate of £700,000,000 a year, and that is one of the most serious financial aspects that we have to consider. Though I am a Free Trader, I could wish that the importation of everything not required for our national life and the prosecution of the War had been stopped either by prohibition or by putting on a severe import duty as a War tax for the period of the War only. I think more might have been done in the taxation of expensive clothing. We know the extravagance of many women in this country at a time when economy ought
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to be practised. They wear furs feathers of a most expensive description. What I do say is that if sheepskins keep our Tommies warm at the front they ought to be good enough for the women of England and to save this huge waste of money for furs on which we see a, greater expenditure in our streets than ever. I rejoice to know that the Chancellor of the Exchequer had so encouraging a statement to make to us to-night and that he gave in his speech every indication that he is prepared to consider in Committee every question we desire to raise, and that he will do all in his power not only to secure more equal incidence of taxation, but also to redress every injustice involved in his Budget proposals. On the whole I support those proposals warmly, and I trust that in Committee we may obtain adjustments and concessions which will make it an all-round fair and equitable Budget.
Question put, and agreed to.
Bill read a second time, and committed to a Committee of the Whole House for Monday next (22nd May).
The remaining Orders were read, and postponed.
Whereupon Mr. SPEAKER, pursuant to the Order of the House of 22nd February, proposed the Question, "That this House do now adjourn."
Question put, and agreed to.
Adjourned accordingly at Fifteen minutes after Eleven o'clock, till Monday next, 22ud May, pursuant to the Order of the House of the 22ndt. February last.

WAR.
  MILITARY SERVICE.
    NON-COMBATANT CORPS.
    NON-COMBATANT CORPS.
    ALLOCATION OF MEN CALLED UP.
    ALLOCATION OF MEN CALLED UP.
    LOCAL TRIBUNALS.
    LOCAL TRIBUNALS.
DISTURBANCES IN IRELAND.
  COURTS-MARTIAL.
  COURTS-MARTIAL.
  ARTIFICIAL LIMBS FOR DISABLED SOLDIERS.
  ARTIFICIAL LIMBS FOR DISABLED SOLDIERS.
MUNITIONS.
  MANUFACTURE IN IRELAND.
  MANUFACTURE IN IRELAND.
  DISTRIBUTION OF BADGES.
  DISTRIBUTION OF BADGES.
  UNEARNED INCOMES (TAXES).
  UNEARNED INCOMES (TAXES).
  ACCUMULATING PROFITS.
  ACCUMULATING PROFITS.
  TRAVELLERS' CLUB.
  TRAVELLERS' CLUB.
  LADIES' DRESS MATERIALS.
  LADIES' DRESS MATERIALS.
  MARKET GARDENING (BASKETS FROM HOLLAND).
  MARKET GARDENING (BASKETS FROM HOLLAND).
  WIMBLEDON WAR AGRICULTURAL COMMITTEE.
  WIMBLEDON WAR AGRICULTURAL COMMITTEE.
  Police Protection (Evicted Tenant).
  Police Protection (Evicted Tenant).
GORE'S DIVORCE BILL. [H.L.]
A Bill intituled, An Act to dissolve the marriage of Reginald Edward Gore with the Honourable Nellie Viola Castalia Florence Gore (commonly called Lady Viola Gore) his now wife, and to enable him to marry again, and for other purposes: Presented (on Petition) and a copy of the Proceedings in, and the Decree of the High Court of Justice in Ireland, King's Bench Division (Matrimonial): Delivered (on Oath): Bill read la, and to be read 2a on Tuesday the 27th of June next: The usual Orders made.

IRVINE'S DIVORCE BILL. [H.L.]
Committed to a Committee of the Whole House on Tuesday next.
THE LORD CHANCELLOR THE LORD CHANCELLOR acquainted the House, That the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that the further Standing Orders applicable to the following Bill have been complied with:
Folkestone Gas.
Also the Certificate that no Standing Orders are applicable to the following Bill:
Local Government (Ireland) Provisional Order (No.1).
And also the Certificate that the Standing Orders applicable to the following Bill have been complied with:
Electric Lighting Provisional Order.
The same were ordered to lie on the Table.

CITY OF DUBLIN STEAM PACKET COMPANY BILL.
  FERNDALE GAS BILL. [H.L.]
  Committee to meet on Monday next.

CARDIFF RAILWAY BILL.
HORNSEY GAS BILL. [H.L.]
SOUTH METROPOLITAN GAS BILL.
MUNICIPAL CORPORATIONS (BUXTON SCHEME CONFIRMATION) BILL.[H.L.]
Committee to meet on Monday next.

ELECTRIC LIGHTING PROVISIONAL ORDER BILL.
To be read 2a on Tuesday next (The Lord Stanmore).
LOCAL GOVERNMENT (IRELAND) PROVISIONAL ORDER (No.1) BILL.
To be read 2a on Tuesday next (The Viscount Allendale).
PLYMOUTH AND STONEHOUSE GAS BILL.
Reported, with Amendments.
YEADON WATER BILL. [H.L.]
Reported from the Select Committee, with Amendments.

RETURNS, REPORTS, &c.
Colonies (Annual)—No. 884. Gilbert and Ellice Islands Protectorate. (Report for 1914–1915):
Highlands and Islands (Medical Service) Grant Act, 1913—Second Report of the Highlands and Islands Medical Service Board for the year ended 31st December 1915:
Presented (by command) and ordered to lie on the Table.
Irish Universities Act, 1908—Statute VII. of the National University of Ireland:
Supreme Court of Judicature Act (Ireland), 1877—Order in Council dated 8th May 1916, giving effect to Rules of Court:
Shops Act, 1912—Order by the Secretary for Scotland, dated 16th May 1916, under the Act, affecting a certain class of shops in the Burgh of Ayr:
Motor Car Act, 1903—Order by the Secretary for Scotland, dated 11th May 1916, inter alia partially rescinding the Motor Cars Regulations (County of Midlothian) (No.1) Order, 1905:
Laid before the House (pursuant to Act) and ordered to lie on the Table.

EARL OF MAR.
Petition of; praying for a re-hearing of his right to the estates of Mar; read, and ordered to lie on the Table.
COLONIAL BANK BILL.
Returned from the Commons, with the Amendments, agreed to.
HOUSE OF LORDS REFRESHMENT ROOMS.
Select Committee to meet on Wednesday next, at half-past Three o'clock

MILITARY SERVICE BILL.
[SECOND READING.]
Order of the Day for the Second Reading read.
LORD SANDHURST: My Lords, I have to ask you to give a Second Reading to this Bill. Your Lordships know that it is my duty, on behalf of my noble friend the Secretary of State for War, from time to time to give such information appertaining to his Department as your Lordships require. That is always a pleasure, especially if I can think that the information which I give is of a satisfactory character. But I confess that coming from my tranquil office [that of Lord Chamberlain] with the light and pleasant duties that it entails, it is a very great change for me to find myself placed in charge of a Bill of this importance and of so far-reaching a character. Indeed, I think I should have had nervousness in accepting the injunction of my noble friend beside me to take charge of this Bill had not many years in your Lordships' House shown me the patience and generosity which you extend to an official in my position.
The object of this Bill is to continue and amend the Military Service Act of this year, which is described throughout this Bill as "the principal Act." It creates, I need hardly say, a vast change in our national life. It changes by order, as it were, our civilian population into a military population; at any rate, that is my view. It is directly, of course, due to the war. I see on the Benches opposite the noble Viscount, Lord Milner, who made an interesting speech the other day on the subject of compulsory service. The noble Viscount has been a lifelong supporter of National Service on those lines. I have no doubt that there are many noble Lords opposite and also behind me who hold the same opinion; but my view, owing to my political upbringing, has generally been opposed to that line of action. Strange though it may appear, but so it is, some of my friends have now and then inquired of me what line I should pursue if a Bill for compulsory service was brought before Parliament by the Government of the day. My answer was as simple as I think it was obvious. It was that the circumstances, owing to the war, are entirely changed; and that if the Prime Minister of a great Party, whichever it might be, came to Parliament and on the responsibility of the Government suggested
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such a course, I could not conceive that it would be the duty of anybody but, waiving aside his previous convictions, to give the proposal his whole hearted and unstinted support. During the last twenty months many illusions have been shattered. Our preconceived views in many directions have gone by the board; and any notions that we may have entertained of the chivalry of our principal opponents have shared the same fate. Our own soldiers and sailors retain their sense of chivalry, but, my Lords, they and the nation are none the less but more than ever determined to carry this struggle to the one and only issue; and this is the root and basis of this Bill.
My noble friend behind me, in the Secret Session, gave your Lordships a large number of facts and figures. Naturally, I do not propose to take you through those facts and figures again; but perhaps I may touch upon the salient features which have led us to the position in which we are today. Your Lordships will remember that when the Secretary of State for War asked for his first 100,000 men, he obtained them in three weeks. That was after the first 500,000 had been voted. On September 2, 1914, the second 500,000 were voted, and recruiting went on at such a rate that the Secretary of State obtained 33,000 men in one day. It was a splendid response to my noble friend's appeal. The second 1,000,000 was asked for in Parliament by the Prime Minister in November, 1914, and of those the Secretary of State in May asked the country for 300,000. Then in August of last year the Registration Act became operative. Your Lordships will remember that the object of that Act was to show the total of the manhood and the womanhood of the country within certain ages, their occupations and domicile, and steps were taken to issue what was known as the pink form, the object of which was to place at the disposal of the recruiting authorities these particulars as regards every man between the ages of 18 and 41. But about a month after this there was observed by the recruiting authorities to be a certain falling off in the number of recruits, which to them was very disquieting.
Then the noble Earl, Lord Derby, came to the assistance of the country. Lord Derby had been, as he has told us on many occasions, an emphatic supporter of National Service; but he laboured wholeheartedly, braving much criticism latterly,

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to get the very last ounce, if I may use the term, out of the voluntary system. The necessary demands for men were forumlated by the Labour Recruitment Committee, who said that about 30,000 recruits per week was the number required; and I might mention here the great part which many of the Labour leaders have played throughout this business. Your Lordships will remember the Group System instituted by Lord Derby—separate groups, according to ages, for single men and married men. Then, however, the numbers of unmarried men coming forward disappointed. It was determined that more than a negligible quantity were wanting, and it was found necessary to resort to legislation to secure that all unmarried men between the ages of 18 and 41 should be under the obligation to serve.
Owing to one cause or another, the number of unmarried men required had not been realised. An enormous number of married men, however, had come patriotically forward under the Derby Scheme and attested, but it was soon perceived from the ordinary channels of information that there was a general feeling of unfairness amongst many of these married men. Complaints were made that they had not been properly treated; indeed, that some had been tricked into attestation. Many married men who had come forward patriotically said there were others in the same position who were quite as well able and at liberty to come forward but had not done so, and it was asked why one man should be taken and another left. Indeed, there was a great deal said about the noble Earl's pledge. The question of the pledge as well worn. I do not propose to labour it or further to refer to it, except to say that we all know the noble Earl, and we can be confident that if he makes pledges they are not to be broken, or even, if I may use the term, bent. This was the state of affairs when the Government brought in their Bill in another place which was withdrawn. I hope that in the rapid sketch which I have given the chronological sequence of events is correct.
I venture to think, my Lords, that it was shown by the various and many channels of information—not only in that section of the Press which we have been accustomed to see strongly associated with the compulsory system of service but in other directions—that in regard to universal service public opinion had very materially
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developed and hardened, and further, as occurs in other matters when ultimately a question which may have been perhaps bristling with difficulties is after the fullest consideration firmly gripped and tackled and a direct line given, that the objections had disappeared. It is observable that perspective which, under a piecemeal plan, might have got awry, rights itself as the view of the whole principle commends itself to the population; and this, to my mind, has proved to be the case with the proposals under discussion if we may judge by the Divisions which took place on the Second Reading of this Bill in the other House.
In regard to the general question of compulsion, there is an old saying that "there is nothing new under the sun." I may be misled, but I apprehend that this simple phrase applies to the matter under discussion, because through long centuries, as your Lordships know very well, there have been by various Statutes systems of compulsion. Indeed, I believe that some of those enactments are still on the Statute Book. In some of those cases the period of compulsion has not been between 18 and 41 years of age, but between 17 and 55; indeed, I think that in the reign of Henry II. there was a Statute which enacted that every man should from the age of 17 join in sabbatical practice for archery. That might be said only to occur in cases where we were protecting our shores. Well, we are engaged now in preparing and perfecting a system of protection of our shores. More than that, our fighting takes us to a frontier which is of the utmost importance; and at the same time we are engaged in a struggle for great principles and for freedom, in which I submit every one should take his part. I consider very respectfully that it is hardly useful now to discuss whether, if this measure had been brought in months ago, it would have met with the same general support which I venture to think it receives at present. Some, no doubt, hold that it would have obtained that support. On the other hand, some—and I associate myself with them—think that the Government managed to choose the psychological moment which secured the greatest possible amount of support and at the same time maintained the national unity.
If your Lordships will bear with me, I propose to take you through a few of the

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more salient clauses of the Bill. Clause 1 is an extension of Section 1 of the principal Act. That section brought within its operation unmarried men then between the ages of 18 and 41, subject, of course, to exemptions which still hold good except where expressly modified by the Bill. This Bill provides that all men, married and single, who have attained the age of 18 and have not attained the age of 41 years, shall, subject to exceptions, within thirty days of the passing of the Bill be deemed enlisted and transferred to the Reserve. There is liberty, of course, for them within the thirty days to apply for exemption; and from the Reserve they will by degrees be drafted off to the units for which they are intended. And men who do not wish to be recruited as conscripts can, during those thirty days, offer themselves for enlistment.
Clause 2 refers to men now serving whose time would otherwise expire. The Army Act provides for extension of one year for men who have served for twelve years. This clause provides, in the cases of those men, an extension not exceeding the duration of the war, and therefore enables them to be retained until the end of the war. But the man who has served twelve years and has reached the age of 41 is under the old Act, and his services will not be extended beyond the one year. I may tell your Lordships that bounties will be given to men whose time has expired since the outbreak of the war. Bounties to men, the depôts of whose units are in the United Kingdom, who, having become time-expired since the outbreak of the war, are now recalled to or retained in the Service, will be given on the following general lines: Men of short service—e.g., Territorials, Special Reserve, £15; men of thirteen years' service or upwards, £20; men of twenty-two years' service or upwards, £25. I trust the House will consider that these bounties are on a fairly generous scale. As regards men retained in the Service, the bounty may be drawn as to one-third in cash, the balance being paid, with interest at the rate of 5 per cent., on the man's death or discharge from the Service.
Clause 3 (1) refers to men already discharged before the war. Very many of these men have rejoined, and they shall be restored to the rank held before the termination of military service; and they have, if they wish to exercise it, the right
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of appeal to Tribunals like any other recruit. By the Schedule of the principal Act they were excepted. The second subsection of this clause has to do with medical examinations, about which we have heard a great deal. It enables the Army Council to review medical certificates. By the First Schedule men who had offered for enlistment and been rejected after August 15, 1915, were exempt, but we have heard a great deal of the unsatisfactory nature and the inadequacy of the medical examination. Owing to this knowledge and also to the fact that there are now instituted variety grades in which men can be usefully employed in the Army according to their grade of fitness, the Army Council need the power to review the certificates and medically to re-examine these men rejected subsequent to August 15 last year. I may add—this is for the convenience of these men, because it is obviously necessary that they should know where they are—that facilities will be given in all areas for men who wish to know how they stand to be medically examined by the medical board of the area in which they reside, provided reasonable notice is given and arrangements are made with the recruiting officer for an appointment by each individual man.
Clause 4 is a machinery clause, the purpose of which is to reduce re-applications and obstruction in regard to Tribunals and to produce finality in results. By the principal Act, a man seeking exemption could go to the Local Tribunal, then to the Appeal Tribunal, and then, if he wanted further to vary the decision, he could go back to the Local Tribunal and back again to the Appeal Tribunal. In some cases this is being done The object of this clause is, if I may use the term, to short circuit these proceedings. I will give your Lordships an example of what I mean. A man gets an exemption from, say, the Westminster Local Tribunal for two months. He appeals to the London Tribunal, who reduce the exemption to one month. He then returns forthwith to the Local Tribunal for a further variation, then to the Appeal Tribunal again, and so on. It is proposed by this clause that the man shall not go back to the Local Tribunal, but shall go direct to the Appeal Tribunal and make out his case again if he wishes to have the decision varied. Then we provide a convenience for some of these men. At present, having gone to an Appeal Tribunal, a man, if he requires further consideration, must

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to back to the same Tribunal which gave the former decision. It is now provided in this Bill that, after he has been to the Local Tribunal, say, in Northumberland, and has been to the County Appeal Tribunal in Northumberland, and then migrates to Kent or Hertfordshire, the man can apply to have his case heard by the Appeal Tribunal of the county in which he happens to be resident. Arrangements to carry this out will be made by Regulation under Order in Council.
I do not think it necessary to go through all the clauses of the Bill at this stage. Clause 11 contains a useful power. It practically enables a man who is now in military employment, who has learned drill, musketry, and discipline, to be released so as to take up civil life if it is considered that he can be more usefully employed as an expert workman than in the ranks; but he would, of course, be available as a trained soldier in case of emergency. Your Lordships will probably flank that I have gone fully enough into tie individual clauses of the Bill at this stage, and I do not think I should be justified in taxing your patience in that respect at greater length.
Last night the noble Lord on the Cross Bench (Lord Courtney) asked me whether I could at this stage give the House some indication of Government Amendments, and I promised that I would endeavour to meet his wishes. There are only two Government Amendments, beyond verbal and drafting ones. One of those is to make quite clear what we thought was clear in the principal Act. The intention of that measure was explained by my noble friend Lord Lansdowne in the Committee stage, when he said that it was designed that a Tribunal could give total exemption to a conscientious objector. A great many people thought that this was already clear, but I understand that some legal authorities have raised a doubt, and therefore an Amendment will be inserted to place the matter beyond doubt. The other Amendment is as regards doctors, and is to facilitate the task of the Army Council in getting the large numbers of doctors with the least inconvenience to the needs of the civil population. The main idea is to take advantage of a Committee sitting at the War Office known as the Central War Medical Committee, which is in touch with local committees in every county. Appeals for exemption other than those of conscientious objectors will be treated by this
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Committee in conjunction with those of the counties. That is a sketch of the two Government Amendments other than the verbal and drafting ones.
As I foresaw when I began my speech, your Lordships have been extremely kind and patient with me and I have only a few sentences further to say. One is a personal reminiscence and the other a reminiscence well within the recollection of your Lordships' House. The personal reminiscence which I venture to put before you is this. My father was a soldier, and served his country for forty years out of a short life of fifty-six. I had the great advantage of taking a trip with him in 1873 over some of the battle fields of France after the Franco-Prussian War, and he had been endeavouring to explain to me the system by which France and Germany filled their armies, and—I think it was at Gravelotte—he stopped in his walk (I remember it as if it had been yesterday) and said, "If you live long enough it is just possible, in view of these great Continental Armies, that you may one day see compulsory service at home." I venture with great respect to say that that day has now come.
The other reminiscence refers to a short speech, welcomed from all parts of the House, by a noble and gallant friend of us all, General the Earl of Cavan. It was a very short and very soldierlike speech, a very manly and modest speech—epithets which apply notably to two points in my noble friend's character. You will recollect that he said, in effect, "The spirit of the troops is splendid; but they want to be assured that all capable men at home will take their part, as we are trying to do out at the Front." I venture respectfully to say that the final stage of this Bill will be the message that you will send to those gallant men. In thanking your Lordships once more for the attention with which you have listened to my remarks, I have only to add that I believe that your passing this Bill will be one more proof to those gallant Frenchmen at Verdun and to all our Allies of the constancy and the determination of our countrymen in the war. The Bill having passed the House of Commons by the large majorities that we remember, which shows to my mind that it has at its back the support of the vast majority of our countrymen, it is with complete confidence that I ask your Lordships to read it a second time.
Moved, That the Bill be now read 2a.—(Lord Sandhurst.)
THE MARQUESS OF SALISBURY: My Lords, I hope the noble Lord who has just sat down will allow me very respectfully to congratulate him upon the way in which he has introduced this Bill to your Lordships' notice. He told us that it was the first time he had introduced a Bill of great importance. I am certain that none of us who listened to him would have guessed that such was the case. There was a clearness in his explanation and a carefulness in his method of dealing with the subject which one would have imagined only came from long practice. I admire not only, if I may say so, the noble Lord's manner, but the great serenity with which he dealt with the subject, the great confidence which he expressed that there could not be two opinions anywhere that this Bill is required. My mind went back to a short time before Easter, when I hardly think that every one would have endorsed with quite so much confidence the observation of the noble Lord. I remember a speech of my noble friend Lord Milner, which was listened to in gloomy silence by the Front Bench opposite. We remember what took place—the adjournments and further adjournments, the rumoured splits in the Cabinet, the negotiations, the proceedings of the President of the Board of Education, the national disasters which were adumbrated, the awful things which were going to occur if my noble friend pressed his Motion. There was an abortive attempt to produce a compromise. I think it saw the light for about two hours, and then disappeared. Then it was found, as my noble friend said just now, that if the country was properly approached everybody would be agreed about this Bill. There was no public commotion concerning it. The railings of Hyde Park were not torn down. There was no adverse vote by a Trade Union Congress or even by a Trade Council anywhere. What was the reason? It was this, that for the first time in their career the Government took the people into their confidence. They told them the facts, just a little truth; a touch of truth was all that was required, just faith in the people, faith as a grain of mustard seed, and it appeared there were no difficulties. All the anxious days and sleepless nights which my right hon. and noble friends spent were all spent in vain; and we have my noble friend who has just sat down telling us that all that was required was firmness and a direct lead, and the country followed suit immediately. We do not want to press these matters now.
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We are very glad that the Government have arrived at the conclusion at which my noble friend has arrived—that the vast mass of the people of this country are unanimous in supporting the principle of this Bill.
I do not propose, further than this, to discuss the principle of the Bill. It is settled; it is res judicata. The general principle of the Bill—namely, that universal service for all who have not a reasonable excuse and who are within the military ages should be compulsory—is agreed in view of the gravity of the war in which we are engaged. I shall follow the example of the noble Lord opposite and discuss one or two of the details of the Bill. We desire to co-operate with the Government in passing the Bill through as quickly as possible. Therefore the time at our disposal for the remaining stages is likely to be brief. Consequently your Lordships Will excuse me if I refer, even on the Second Reading, to one or two matters of detail. The great thing is to make the Bill as fair and equitable as possible. The noble Lord who has just sat down told us that arrangements had been made under which medical examination should be readily accessible to all recruits under the Bill.
LORD SANDHURST: I was referring to men who had been rejected since August 15, 1915.
THE MARQUESS OF SALISBURY: Then I misunderstood the noble Lord. But let me say a word about the medical examinations. I hope that the Government will consider the possibility of multiplying the stations at which medical examinations can take place. It has reached me from my own county that considerable hardship arises because recruits have to travel, not to any town in the county, but as far off as Bedford in order to go through the examination. If the man is accepted, that does not matter; but if he is rejected the fact that he has had to travel to Bedford would seem to involve considerable loss of time for him and therefore a certain amount of hardship. I suggest that the Government should consider the possibility of multiplying the examination stations, so that each of the principal towns in Hertfordshire, for example, should have a visit from the necessary medical board or medical officer at suitable times.
May I say, in passing, that I was rather sorry that my noble friend, at a particular moment in his speech, broke off the very clear exposition which he was giving of the

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clauses and said he thought it unnecessary to go through them all. There are one or two clauses which certainly interest us very much, in particular Clause 6. Clause 6 has undergone considerable change since the Bill was first submitted to the House of Commons. I must say I think that if we are going to have this Bill at all, it ought to be equitable and effective. If a man receives a certain postponement of his calling up to the Colours, that postponement should be a reasonable and not a long one. Consequently I was very glad that when this Bill was introduced into the House of Commons the period of grace which follows postponement was reduced by the Government from two months, as it stands in the principal Act, to two weeks as it stood in this Bill as it was put upon the Table of the House of Commons. That appeared to be a thoroughly sound and wholesome change in the law. Why should a man have two months? If the Tribunal think he ought to have a long period, let them say so. Why should he have two months' grace as of right after any postponement which the Tribunal might give him? But that clause has not remained in its pristine condition. It has undergone a change, and we now find that very large sections of recruits have had the two months' grace restored to them. I submit that this is making the Bill ineffective, and it is also making it inequitable. You have no right to pick out a certain class of recruits and say that they are to have this period of grace. Let the House understand that those are cases where, ex hypothesi, the men are held to be recruitable; they are no longer required for work of national importance or for work under the Munitions Act. If they are recruitable, they ought to be in the same position as any other subject of the King; they ought not to be in a privileged position. For my part I see no reason whatever for the change; it is one of great importance affecting a large number of recruits, and was inserted when the Bill was passing through the House of Commons. I should be glad if the Government could tell us, before the proceedings close this evening, what the defence is for this change.
One other point of a similar kind. It does not appear actually on the face of the Bill, but in the proceedings in the House of Commons a certain pledge was given by the President of the Local Government Board in respect of persons termed to be the heads of businesses. An Amendment
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was moved in another place that heads of businesses under certain conditions should be exempt, and one of those vague pledges to which all Ministers are prone was given across the floor of the House. It was that what was not to be put into the Bill might subsequently be done by Regulation. In the first place, what does this pledge amount to? Are the Government pledged to give exemption, by Regulation, to all heads of businesses who come under the limitation suggested? If so, they may be making a serious infringement in their Bill. They may be removing from the purview of the Bill, and therefore from service in the Army, a very large class of men. In the second place, I should like to ask whether the President of the Local Government Board has power to make such Regulations. I do not believe he has. He certainly has power under the principal Act to make Regulations and to give instructions in order to obtain uniformity in administration, but I do not think he has any right to give instructions which I modify substantially the effect of the provisions of the Statute, and I shall be glad to have some explanation from the Government on that point.
I had hoped that there would be some proposal foreshadowed by the noble Lord for an Amendment dealing with the cases where County Appeal Tribunals, if I may use such a phrase, unreasonably refuse to grant leave of appeal to the Central Tribunal. I speak on this subject with great diffidence because, being a member of the Central Tribunal, it may seem as if I were trying to exalt the office which I most inadequately hold. But I ventuie to put this before your Lordships as a very important matter. Unless all accounts which reach us are untrue, there have been a considerable number of cases in which the power of the Appeal Tribunal to refuse leave for further appeal has been unreasonably and almost vexatiously exercised. I notice that my noble friend Lord Bryce assents to that. I believe it to have had a very serious effect in the case of a great many agricultural districts, in which men have been taken unreasonably from the farms, and any further appeal to put the matter right has been refused. Occasionally the same difficulty has arisen in the case of that much-discussed person the conscientious objector. I do not wish to discuss this afternoon the general case of the conscientious objector, whether he ought to be recognised or not. That is

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already settled in the existing Act. But assuming that provisions for his relief are to be admitted, it is evident that they must be equitably administered. Anything in the nature of unfairness even to so low a person, if I may use such a phrase, as a conscientious objector, must be avoided; and if it be true, as I am told it is, that certain Appeal Tribunals have refused to allow the conscientious objector a further leave to appeal when they themselves are dealing out to him the scantiest justice, then I say an Amendment in the Bill before your Lordships is absolutely required. There ought to be some means by which a vexatious or unreasonable refusal of an Appeal Tribunal to allow an appeal to the Central Tribunal could be set right.
The last point I should like to suggest to your Lordships is this, and I come to it because it arises out of the case of the conscientious objector which I have just mentioned. Your Lordships may be perhaps surprised that I dwell so long on the conscientious objector, but the greater part of the work of the Central Tribunal consists in dealing with these persons, and therefore the matter is constantly before us. Now in the case where the conscientious objector is not given relief—I am assuming that he is not entitled to relief, that his conscientious objection is not sufficiently deep and well-founded to justify his being accorded relief—or in the case where a mistake has been made and although his conscience is really quite sincere yet he has been refused relief, what happens? He is compulsorily recruited into the Army; he is then guilty of a gross crime in the form of insubordination and is brought before a Court Martial and punished. All those things are quite necessary if the man is to be put into the Army. If it is held that the conscientious objection is not sound, or not sufficiently sound, then no doubt if the man disobeys he must be punished. But your Lordships have seen that considerable scandals arise in consequence. There was a debate in this House the other night, initiated by the right rev. Prelate the Bishop of Oxford, which I think made some impression on the House; and there has been a great deal of correspondence in the public Press. I do not suggest that such a man should not be punished, but I do suggest to your Lordships that it would be wise, if possible, to avoid the scandals which have taken place. And in seeking for a remedy it has occurred to me that, after all, the crime which the man has committed is not so much a crime
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against the Army as a crime against the community. Your Lordships are aware that in the principal Act this distinction is recognised, and where a question arises as to whether a man ought; or ought not to have joined, the issue has to be tried by a civil Court—it is held, that is to say, that it is not a matter for a military tribunal but a matter for a civil tribunal to decide. I cannot go quite so far as that in the case of a man who is punished for insubordination, for an offence arising out of a conscientious objection or an alleged conscientious objection, because the man is already in the Army and must be, I presume, tried by Court-Martial. But I suggest that when it comes to punishing him he should not be incarcerated in a military but in a civil prison. That may appear to be a distinction which does not amount to very much on the face of it, but it does amount to a great deal. I am not saying a word against the administration of military prisons. I have no doubt they are well administered. At any rate, the one with which I am acquainted is well administered. But a military prison is part of the Army. The prisoner, when he is in the military prison, does not escape any of the military incidents which are the very root and cause of his insubordination. He has to be dressed in military clothes; he has to go through military drill, and, if he refuses in the first instance, of course he goes on refusing to the end of the chapter. But if he is transferred to a civil prison he will be punished just as severely as, indeed more severely than, he would be in the military prison, but all those disabilities disappear. He has committed his crime against the community; the community punishes him in the ordinary way in a civil prison, and he becomes amenable to all the punishment that obtains in a civil prison; but he is outside the Army altogether, and there is no scope for those scandals which I think are so deplorable and do so much harm to the Army and the whole system of recruiting. I suggest to the Government that some change should be made in the Bill by which the slight alteration which I have suggested in administration can be brought about.
I apologise for having detained your Lordships so long on these details, for I realise that they are not quite germane to a Second Reading discussion; but I have done so because of the brief opportunity of discussion given before the Bill passes into law. I earnestly hope that the

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further discussion of the Bill may be of a perfectly business-like character, and that we may all co-operate in bringing this long-deferred but much required reform into operation as soon as may be.
LORD PARMOOR: My Lords, I entirely agree with the noble Marquess that the principle of this Bill may be regarded as res judicata. It has become inevitable in present conditions that we should have a Bill of this character. All I desire to do is, in accordance with what the noble Marquess said just now, to make it equitable and effective with regard to what to my mind is a very important particular—I mean the case of the conscientious objector. The policy of this Bill is that it is neither wise nor just to attempt to force a man to do an act which in truth and sincerity he believes to be opposed to his religious faith, or wrong, or immoral. I am sorry that the term "conscientious objection" has been introduced into the Bill at all. I think it has been used unfairly and for matters of prejudice as regards the persons whom the Bill is intended to protect but whom I do not think it does protect either equitably or effectively at the present time. In order to remove any prejudice—and I think there is a good deal of prejudice on this point—I might, perhaps, read to your Lordships what was said by one who was greatly respected in this House, Lord Roberts, upon this very point; and I read it in order to summarise what I think is a just attitude to take with regard to this difficult question. Lord Roberts said—
"If you penetrate deep enough into the depths of human nature you will unfailingly reach a stratum which is impervious to discipline or any other influence from outside. The strongest manifestation of this truth lies in what men call conscience—an innate sense of right and wrong which neither reason nor man-made law can affect. It is useless to invoke the authority of the Constitution, to raise fine points of law, or to threaten pains and penalties. Such things matter not one jot when men's consciences are aroused."
That is a statement made by a great soldier and inreference to military duties, and I quote it because I think it states quite shortly the essence and reality of the difficulty.
By tradition in this country what is called a conscientious objection has always been regarded as safeguarded. The only compulsion of old days was in the Ballot Acts for the Militia, and in those Acts there was a provision safeguarding the conscientious objector of those days, who was the Quaker, and safeguarding him in a perfectly simple and easy form. Instead of the many difficulties associated with in-
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quiries before the Local Tribunals, about which I desire to say a few words in a moment, all that was necessary was that the person seeking immunity should, on the testimony of two reputable householders, as they were called, be certified to have a conscientious objection. That was accepted as a matter of course, and no further inquiry was made. The result was that there was never any of the friction which has arisen as regards conscientious. objectors at the present time; and, as far as I am aware, no difficulty ever arose in the adjustment and application of those Acts.
You may deal with this difficulty in the tolerant way proposed in the present Bill—I admit that I am entirely in favour of the policy of the present Bill in this respect—or you may do what is the quintessence of the military spirit, of what we call Prussianism or Germanism; you may say that the only test the military requirement, and that all ideas of humanity, morality, and religion must be put on one side where that test becomes the paramount one for national conduct. I think that would be a mistake in itself; and if any of your Lordships desire to see a principle of that kind adopted, I would instance the 1912 Conscription Act of France, where all exemptions were taken away except that of physical unfitness, to show that you do not get rid of the difficulty by not giving an opportunity of exemption. That has been found in the French Army during the present war. It is a great mistake to suppose that you get rid of the difficulty by disregarding the conscientious objector and sending him to the Front under the conditions which apply to the conscript armies of the Continent.
What I wish to ask is whether we cannot put the policy which has been adopted on a more equitable and effective basis. That is really the question with which we are concerned at the present moment. First of all, how have the difficulties arisen? I think they have arisen from two causes. In the first place, from the unfortunate tendency of modern legislation to be pushed through without sufficient definite instructions to the persons who have to carry out the intentions of the Legislature. The Local Tribunals have been working admittedly in a very large number of cases without a knowledge of their powers or of the jurisdiction which they are called upon to exercise. That is a very important matter. I noticed what the noble Lord said who introduced the Bill, that it would

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be made clear that total exemptions could be given. I think he is quite right when he says that the original Act did allow such exemptions to be given; on the other hand, the Act was so indefinite that I believe practically the mass of the 2,000 Local Tribunals have been exercising their powers under a total misapprehension of what the Legislature intended. At least, they have either done that, or, if they knew what their powers were, they have acted illegally.
THE EARL OF DERBY: In very few cases.
LORD PARMOOR: I will not enter into a controversy upon that, but I think there are a good many cases. In the second place, I think the Local Tribunals themselves have been unfortunately constituted. I should be the last person to attempt a general indictment against all the Local Tribunals, but they have been constituted in a most haphazard manner and have had given to them one of the most difficult questions which you could possibly place before any body—namely, whether a conscientious objector is sincere and true, or whether the objector is merely making a pretence of his conscience, in which case in my opinion no penalty is too severe for the person who takes an attitude of that kind.
Assuming that the present Local Tribunals are to be maintained—although, as I say, I wish they had been set up on a quite different basis—I think the only question which should be left to them is the question of fact, Yes or No—Is the particular individual a conscientious objector or not? That is quite enough, and it is a very difficult problem for any Tribunal to deal with. Let me assume for the moment that the question is answered in the affirmative and that the man who claims exemption is in truth and in sincerity and reality a man who has an innate sense of right which he maintains against the State requirement. What is the proper thing to do in those circumstances? Why cannot such conscientious objectors be sent to a Central Committee, founded on the basis of what we call the Pelham Committee but with somewhat different powers, in order that they may be dealt with fairly and equitably and all on the same basis? One of the difficulties which undoubtedly causes friction and trouble is the great inequality with which these cases are dealt with by the various Tribunals. If all these men who are held to have conscientious obje-
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tions went before one Central Tribunal they could be all dealt with equitably in one way—either they might have total exemption, or they might be dealt with on the basis of what is called non-combatant service, or on the basis of national services which are not even remotely connected with warlike purposes. If you were to do that as regards men who are bona fide conscientious objectors, I think you would take away every possible ground of complaint. I put it to the noble Lord opposite (Lord Sandhurst) whether it is not of great importance, if possible, to take away grounds of complaint in a matter of this kind. When you want national unity in every possible direction, I take a serious view of allowing an irritating sore of this kind to go on; whereas by a proper system you could deal with what is at the present time an immediate and pressing necessity. As to the other alternative, if the Tribunal says that the conscientious objector is nothing but a sham, I believe you would get much better results by his being allowed to have one appeal to a responsible body in whose decisions all people would have confidence and for whose decisions all people would have respect.
THE EARL OF DERBYindicated dissent.
LORD PARMOOR: Although the noble Earl shakes his head I doubt whether he would disagree with this, that a very large body of opinion in this country, rightly or wrongly, regards the decisions of the Tribunals given on this point as wholly unsatisfactory. Instead of dealing with the question Yes or No, there have been metaphysical discussions from the chairman of the Tribunals as to the meaning of conscience, and sometimes inquiries into complicated and difficult problems connected with religious dogmas. Let us get rid of that once for all. Only the other day I saw the case of a conscientious objector, a Quaker. He had come back from serving with the Quaker ambulance section abroad. There was no doubt that he was a Quaker, and evidence was given as to that. Yet he was cross-examined as to his political opinions. He said "I am not here to be cross-examined on those topics." But the Tribunal pursued questions as to whether he was a Socialist, a Radical, or what his political opinions were, and having thoroughly cross-examined him on that they refused exemption, although on the admitted facts he was a Quaker and entitled to exemption. If the only question before

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the Tribunal had been, as it ought to have been, whether he was a conscientious objector or not, they must have answered in the affirmative.
I entirely agree with what the noble Marquess said as regards substituting the civil for the military prison, and I do so not only from the point of view of the conscientious objector but because I think it is unfair in a time of great stress like the present to shunt these difficulties from the civil authorities and place them upon the shoulders of men the whole of whose time ought to be given to great national objects. In the same way, by sending these men to France you only postpone the difficulty. You make the difficulty acute at the wrong moment, and in the wrong place. I think the only object of any man at the present time is to unify and consolidate national influence and national effort in every possible direction, and a great step, in my opinion, would be taken towards getting unity of effort and unity of purpose by making the provision intended to be for the benefit of the conscientious objector one which can be utilised in an equitable and effective manner.
THE EARL OF MEATH: My Lords, I have for so many years, in this House and out side, advocated the adoption of some system of compulsory military training that I hope your Lordships will not expect any apology from me for intervening in this debate with the object of according a hearty welcome to the Military Service Bill. It is a measure which I have longed for, and one which I believe will place the British Empire for many years outside danger.
It is now twenty-six years since, in 1890—and later in 1891—impressed by the military weakness of the British Empire and firmly convinced that the day would come when we should find ourselves at war with one or more of the great military Powers of Europe, I introduced into your Lordships' House a Bill—which I hoped would be a stage towards such a measure as this—to make military training compulsory in all Government schools. I am still in hopes that such a Bill may become law before I die. In 1899, in this House, I alluded to the immense extent of our land frontiers. I had difficulty in finding that out. I could not get the information by going to the Government Offices, and had to employ a professional to make the calcu-
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lation. Our land frontiers amount to some 29,740 miles, the longest of any Power in the world—more than three times as great as the next longest frontier belonging to any civilised Power, namely, that of Russia, which is about 9,550 miles. Our frontiers are conterminous with those of sixteen Sovereign States. It is very difficult to realise that. On the occasion of which I am speaking I said in this House—
"We have become a great Continental Power. Our military organisation has not kept pace with our necessities—a fact which is more widely recognised every day by experts. It is now almost an established axiom that, strong though our Navy is, we could not hope to terminate a great conflict with a European Power without the employment of military force, and that force at present falls far short of the nation's needs."
Then occurred the Boer War, which opened the eyes of many to the military weakness of this country. After that war I again raised a debate in this House on military defence. In that debate (in 1903) I remarked—
"I wish to urge my countrymen seriously to consider the most important question of national defence. Let them realise that the British Empire is no longer a sea-girt State which can trust for its defence to an all-powerful Navy, but that it now possesses the most extensive land frontiers of any Power in the world. Let them honestly ask themselves whether, under present conditions, Great Britain could reasonably hope to issue victoriously should she unfortunately be at war, say, with two or three of the Great Powers which could bring into the field from 7,000,000 to 11,000,000 trained fighting men as opposed to the 500,000 which, including volunteers, constitute the entire military force of the British Empire."
As we all know, those figures are below the mark.
In 1905 I again raised the question, and said that it seemed to me that no individual who had given attention to the subject of the defence of the Empire could arrive at any other conclusion than that it would be impossible, were we at war with a first class Power, to come out successfully with the form of military service which we then had. I continued—
"We have an ever-increasing Empire with extensive land frontiers, and I am afraid there are many who do not appreciate the extent of these frontiers. For so long in our history were we an island kingdom that we got accustomed to think that we still are more or less an island Empire. But is that the fact? It is anything but the fact. If we look into the matter we find that our Empire has extensive frontiers conterminous with the United States, France, Germany, Russia, Spain, Portugal, Holland, Belgium, Italy, Turkey, China, Persia, Siam, Mexico, Venezuela, and Guatemala."
Our recent experiences have, alas! proved the truth of those words.

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After so many years of mental anxiety in regard to the security of our beloved country, it is natural to welcome with a sense of great relief the Bill which His Majesty's Government have to-day presented for your Lordships' acceptance. If this Bill should become law many of us will feel for the first time that the power of the British Empire will be commensurate with its vast responsibilities. We may hope that never again shall panics, frequent panics, as we have had in past years, lead to unrest and to hurried legislation. As long as the sixty or seventy millions of white subjects of the King were exempt from the primary duty of citizenship—namely, the defence of the country which guaranteed their liberty and freedom—so long was it impossible for the State to call upon the 350 millions of coloured subjects of the King to assist in the common defence in a manner commensurate with their numbers. When once equal sacrifice is demanded of all white British subjects it becomes possible for the Empire to utilise to the full its immense resources of men, material, and money. Whereas it was impossible formerly, as long as any white men held back from danger, to say to our gallant and loyal coloured fellow-subjects in the (lay of battle "Go on," now we can confidently cry "Come on," as we set them the example of a universal, willing self-sacrifice.
I need not remind your Lordships how patriotically, eloquently, and unceasingly the late gallant and illustrious Field Marshal, Earl Roberts (who used to sit on the corner of the Front Cross Bench) devoted himself to his work of rousing his fellow-subjects to a sense of national danger, and how he founded the National Service League, with which he incorporated a small organisation called the Lads Drill Association. We must all acknowledge that events have amply justified his action. He told us that our ordeal was at hand. That ordeal came sooner than I think even he expected. We are in the midst of it to-day. We refused to listen to his appeals. I do not think I am exaggerating when I say that had we listened this awful war would probably never have overtaken us, or, if it had, it would have found us prepared, and would assuredly have ended in our favour many months ago. We have had to do in twenty months what Germany has been at work on for over twenty years—
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with all the waste which unorganised energy always entails. Thousands of lives and millions of money have been squandered, and a huge debt raised which will keep generations of British men and women impoverished for years to come. All this has occurred to avoid what? To enable a few slackers to avoid the performance of the first duty of a citizen—the defence of the State which safeguards his life, his home, his freedom, his liberty, the honour of his womenkind, and the possession of all those things which make life worth living to civilised man.
After all, the force of circumstances had already compelled the Government to swallow half the noxious dose which they so much dreaded. By a recent Act, of which this is an amendment, they have compelled the single men to take up arms in defence of the country; but they exempted the married men. This anomaly is now to be set right. It is quite proper that the single men should be first summoned to the Colours, but the commonest intelligence can see that the great national need is to bring victory to our arms with the least possible delay, and that the larger the numbers of men who can be found for the Army and Navy, agriculture, munition making, ship-building, and export work, the quicker will peace come, and the less will be the inevitable loss of life and treasure to the country.
Half measures are always weak measures. A firm believer for years in the value of universal military service, I am now more persuaded of its need than ever. I am thankful to see that our self-governing Colonies have recognised the need—they recognised it even quicker than we did. It is needed not only for its value as a military measure of defence, but even more, I venture to say, for the uplifting of the nation in soul, mind, and body. Let us remember that it is not universal military training which has been the cause of the present unnecessary war, but the unscrupulous, brutal, autocratic Government with which the German people are cursed. Universal military training in a democratic country like ours would increase our desire to avoid unnecessary wars, as each individual man of fighting age would, under that system, know that his vote in favour of war might mean a vote in favour of his own death or mutilation, or if he were above fighting age, would affect the lives

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of those of his family or relatives who would have to take their places in the ranks of the Army. At present under the voluntary system the coward can by his voice and vote send the patriotic hero to his death and remain comfortably at home, enjoying the extra sweets of life which fall to his lot through the death or mutilation of his professional or trade rival or business competitor. Such a system is destructive of a nation's soul. It offers a premium on selfishness.
My Lords, it is only by self-sacrifice and unselfishness that either individuals or nations can gain their souls, and enjoy the glorious satisfaction engendered by the consciousness of duty honestly and faithfully performed. The times are dangerous. The future of the British Empire and of civilisation is at stake. We are faced by powerful nations who are yet undefeated. If the war is to be won we must not be content with half measures but must throw into the struggle every ounce of strength which we possess; and the passage into law of the Bill now before the House will, I verily believe, materially conduce to this happy and much to be desired result. May I respectfully hope that the Bill will be passed unanimously. When it becomes an Act I believe it will be the precursor of a sure victory and the harbinger of a glorious peace.
LORD ORANMORE AND BROWNE: My Lords, if I intervene for a minute or two in this debate it is only to express my regret that it has been impossible to extend the operation of this Bill to Ireland, though I quite recognise that this could not be in view of the attitude taken up by Mr. Redmond and the other members of the Nationalist Party. Personally I think that a modified Compulsion Bill applicable only so far as to provide the necessary soldiers to fill the gaps owing to casualties in Irish regiments would not have met with much opposition in Ireland, particularly if supported, as all popular measures in Ireland have been, by meetings held every Sunday in every village after Mass, presided over by the village priest and supported by the Member of Parliament and the prominent local politicians.
But if Irishmen are not to incur the burden of conscription which seems to be cheerfully borne by their fellow-countrymen in this country, I think I have a right in
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asking His Majesty's Government for an assurance that the task of recruiting, which is already so difficult in Ireland, shall not be made still more difficult by the competition of Government Departments who offer single men of military age in Ireland civil employment. During the months of March and April an agent of the Government went about in Ireland asking men of military age to join munition works. They were offered wages up to £3 a week, and were told that they were guaranteed not to be taken for military service. I know that in my district no fewer than between 200 and 300 men were taken within one week. Quite lately posters have been stuck up in the various towns asking men to come to this country and help the farmers, and again there has been the assurance that they would not be called upon to join the Colours. I know how anxious my noble friend the President of the Board of Agriculture is that everything should be done to assist agriculture in this country, but I do not think he would approve of young Englishmen being taken from the farms and sent to the trenches in order that their places should be taken by Irishmen who are not willing to enlist. Lastly, in the West of Ireland the Congested Districts Board are at work, just as gaily as in the piping times of peace, building cottages, scrapping grass farms, and employing every young labourer they can find at wages much above those generally given in the district. I do not think it is fair, when we can only rely in Ireland upon voluntary recruiting as a means of obtaining soldiers, that the Government should offer these counter attractions and thus make even more difficult than it already is the task of obtaining soldiers in that country.
Every Irishman must be very proud of the gallant deeds that have been performed by Irish regiments in this war. But when we again read of a brave charge by an Irish regiment some of us, I think, may be inclined to hang our heads when we reflect that very possibly half of that Irish regiment consists of Englishmen and Scotsmen who have been drafted into it because sufficient Irishmen could not be found to fill the gaps. I know it would be no good during the Committee stage of this Bill in this House to suggest any Amendment dealing with Ireland. Otherwise I should be very much inclined to move one giving power to every county council in Ireland, should it

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think fit, to use the Militia Ballot for the purpose of obtaining as many men as, according to the population of the county, would provide a quota necessary to make up the gaps owing to casualties in Irish regiments. This would have the great merit of being purely voluntary, and also the merit—not a small one in Ireland—of there being absolute freedom from English dictation. Were such an Amendment inserted in this Bill I believe it would be at once taken advantage of by a certain number of Irish county councils, and that before long the remainder would follow suit. Ireland would then be saved the discredit of having failed to support during this war those gallant sons of hers who have fought so bravely and who have given their lives for England and the Empire.
THE EARL OF DERBY: My Lords, I am sure your Lordships will recognise that I have a certain amount of difficulty in addressing the House on this particular Bill. I have to recognise my subordinate position to the noble and gallant Field-Marshal and the War Office, and at the same time to exercise the privilege that I have in this House of criticising as well as supporting any Bill. Any criticism that I may make to-day on this Bill is not for the purpose of in any way destroying the Bill or hampering His Majesty's Government, but of making suggestions as to some form of alteration that may be of material advantage to the working of the Bill. I would also, if I might, deal with one or two of the criticisms which have been made and have come before me in my capacity at the War Office, and with which, therefore, your Lordships will perhaps think me competent to deal.
The noble Marquess (Lord Salisbury) and the noble and learned Lord (Lord Parmoor) have both spoken with regard to the conscientious objector. The noble Marquess has proposed that the conscientious objector who is sent into the Army and then punished for insubordination by imprisonment should be sent to a civil prison. I entirely disagree with and should oppose any such proposal. When such a man is in the Army he is not a conscientious objector. He has put forward a plea that he is a conscientious objector and that plea has been rejected by the Tribunals to whom he has submitted it. Therefore when he is in the Army he is a soldier on exactly the same footing as every other recruit; he is made to go into
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the Army, and should be treated under military law by the military and detained under military law. I am perfectly certain that if any attempt is made to depart from that procedure it will be subversive of military discipline. Lord Parmoor does not think very highly of the Local Tribunals. I do not know what the noble and learned Lord would have substituted for them. He criticises without any constructive policy. To a certain extent I am responsible for the idea of the formation of these Tribunals. They were formed on most democratic lines, from those who have been elected by the people to an office, and I think it may be said as a general rule that they very accurately carry out the wishes of the people of their localities. The noble and learned Lord will, I think, find that his condemnation of these Tribunals is not one which is held by many people.
A short time ago we were discussing a proposal by which this, the final stage of recruiting for the Army, could have taken the form of a voluntary effort amongst the unattested married men instead of the present proposal. That proposal would have given us, if it had been successful, 200,000 men. From the point of view of administration I do not hesitate to say that that would have been far easier work for Army officials than the present system. It would have meant 200,000 men in the ranks by voluntary enlistment—no question of Tribunals, or of appeals—and beginning their training earlier than they can do at the present moment. But if it was to be successful, we must not only get the 200,000—and I will deal with that number in a minute—but this must also be taken as a complete substitution for compulsion in that it should allow the State to impose other legislation with regard to the Territorials and time-expired men. The House of Commons was not willing to agree to that, and the whole of the proposal, therefore, fell to the ground; and we are now finishing in this House the last stage in the recruiting for this war. I confess that I am glad to see the end, because I think that by this Bill you are going to do away with all charges of unfairness. You are now at all events making an attempt to compel everybody in this country to play his part in the war. I say an "attempt," because I would ask your Lordships to understand that by the passing of this Bill you do not get over all the difficulties of getting the men actually into the ranks;

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and I want to ask the Government whether anything can be done in the way of amendment to do away with some of the difficulties with which those who are connected with the duty of bringing these men to the Colours are confronted.
Let me first of all say that labour in this country is not the inexhaustible well that some people think it is, and when people talk gaily of huge numbers I can only say that they can know very little of the facts of the case. Two hundred thousand was named as being the number of men who could have been found under the proposal made some three weeks ago. I venture to think that this is very nearly the figure that we may get under this Bill. Two distinctly different statements were made on the subject by two of His Majesty's Ministers. Mr. Lloyd George said he thought 200,000 too small a number to expect. Mr. Henderson said he thought 200,000 was about the number we might expect. As a matter of fact, I think they were both right. Mr. Lloyd George was speaking from a figure which has been materially decreased since it was written in the Report I made in December. He calculated on there being 1,100,000 unattested married men, but since that date a great many of those men have attested and are now in the attested groups. There fore from the remnant I think that 200,000 men is not far wrong as a guess at the figure we may obtain. Now 200,000 is not sufficient for our requirements. The great bulk of men who we are going to get to the Colours is not from the unattested married men, but from the gradual combing out, or raking out, whichever you like to call it, of the men who are already under the Act which brought single men to the Colours.
Before I bring to your Lordships' notice some of the difficulties in getting these men to the Colours, may I deal with one question that the noble Marquess (Lord Salisbury) raised. He asked for medical boards to be established in all the towns in Hertfordshire. Does he realise that this means establishing hoards in all the towns throughout England, Scotland, and Wales. If he presses that, I am perfectly certain that Sir Alfred Keogh would be only too grateful to him if he could tell him from where he is to get the doctors. There is at the moment the greatest difficulty in keeping the present hoards staffed properly with doctors, and to extend their numbers to any large extent would, I am certain, be impossible.
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Now for the difficulties of getting men to the Colours. One I wish to mention to His Majesty's Government, because I am certain that if it is brought to their cognisance they will do something to remedy it. It is one that has been touched on by Lord Oranmore—namely, the competition between Government Departments and the Army in the securing of men. I wish to give a concrete case to show how far this is carried. This was a letter received by me yesterday from a Labour Member who has done almost more than anybody else to help in recruiting. He writes telling me of a certain unmarried man who went into a shell factory apparently with the intention of evading military service. It was eventually arranged for his work to be done by a woman, and accordingly he was to be discharged in the next batch. But meanwhile—on May 9—the inspector for the district under the Ministry of Munitions informed the military authorities that this young man, who was no longer needed for munitions, had just received from the Civil Service Commissioners an appointment as clerk to a surveyor of taxes. These appointments appear to me indefensible at the present time. If the Government Offices set such an example, how can you expect private employers to play up to the Government? I hope that this will be brought to the notice of those concerned, and that some general order will be issued that men of serviceable age who have been combed out for service in the Army are not taken on and given exemption in other Government Departments.
Another difficulty will be caused by the clause in this Bill to which my noble friend Lord Salisbury alluded—Clause 6, which gives a man two months exemption. There are two sides to this question, and it is only fair that we should look at both of them. There is not the slightest doubt but that what the noble Marquess said is perfectly true. This does create an enormous difficulty to the Army in getting these men. A man who is found not to be indispensable and is therefore liable for service has two months in which to look about for other work before the Army can get him, with the result that it is almost impossible to keep in touch with him. That is a difficulty to the Army. Now let me put the difficulty that I know the Government must have in dealing with this matter. This clause is known as the Industrial Compulsion Clause. Rightly or

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wrongly, there is no doubt that a large section of labour in this country look with alarm at what they think is something approaching industrial compulsion, and it is sought in this Bill to guard against it. There are two forms of industrial compulsion which I think your Lordships will agree ought to be provided against. There is the industrial compulsion by which an employer, who has an objection to some of his men who may have given trouble in times of peace by being agitators or having in some other way offended him, takes this opportunity of turning them out of the works and saying to the Army, "You can take them." That is a form of industrial compulsion which I think most unfair, and which we all ought to guard against. There is another form. In the dilution of labour that has been going on for the past few months skilled men have been induced to move from one locality to another to go into works really for instructional purposes, to be foremen to teach others to do munition work. In time those who are taught, even the women, become as skilled as the skilled men, and then the employer may wish to get rid of the men who have sacrificed themselves to assist him in his work and submit them to military service. That, again, is a thing that ought to be guarded against.
But this particular clause goes far beyond that. It protects those men whom, of my own personal knowledge, I know the Labour Members wish particularly not to protect, and those are the men who have gone into munition works for the simple purpose of escaping military service and for no other reason. Nobody wants to protect them. But unfortunately this clause does protect them. I have had something to do with the negotiations with regard to this particular clause. I hope that some words may be found to deal with this difficulty, but I honestly confess that at the moment I cannot suggest any words which would do what we all want to do—namely, protect the men who ought to be protected, and not protect the men whom none of us want to protect. I hope it may be possible to find some Amendment or some method of administration by which we may arrive at the desired object.
I will pass to another, and I think almost the greatest difficulty. That is the question of men in munition works who are eligible
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for military service and who are, in the opinion of the various localities in which they are working, only shirking by being in those works. That has given rise to more trouble with regard to recruiting than anything else. You have grocers, pawnbrokers' assistants, all classes of men going into munition works and securing exemption; and it is the fact of their so securing exemption, although not skilled, that gives rise to so much irritation. To be perfectly fair, I quite recognise the difficulty that Mr. Lloyd George, as Minister of Munitions, has had in getting sufficient labour. Indeed, I think he would say that he has not even now sufficient labour. Hence his reluctance to part with any of these men. Arrangements are being made by means of a Committee to de-badge these men and secure them for military service. But I should be deceiving your Lordships if I did not tell you that these methods of de-badging are excessively slow; and if we are to wait for that system to work itself out coupled with two months exemption, we shall not get the men as rapidly as is desired. I should like, I candidly confess, to see the Resolution that was proposed in the House of Commons, even if in a modified form, put into this Bill. That Resolution, which received a very large amount of support in the House of Commons, was to the effect that every man whether in a certified occupation or in munition works should go before a Tribunal and have his case decided. That received support in the House of Commons, and I think it would be very popular outside. But there were difficulties in the way which prevented His Majesty's Government accepting it. I was more in hopes yesterday than I am to-day that some arrangement could be come to by which clear cases of shirkers could be dealt with by Local Tribunals without all the machinery that necessitates reference to the Ministry of Munitions, and I have put down an Amendment for the Committee stage which at all events will give an opportunity for discussion on this question, and, I hope, for some arrangement being arrived at. But I can assure His Majesty's Government that I have not put it down in any spirit of opposition to the Bill, and that I most certainly should not press it to such an extent as in any way to militate against the rapid passage of the Bill.
There is one other matter which I should like to mention, although it is

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rather outside the scope of the Bill—namely, the question, not of the amount of financial assistance that is going to be given, but of the method. I venture to think it is very desirable that His Majesty's Government should consider whether it would not be possible to co-ordinate more the work of the Tribunals and that of the barristers who are to form the Courts for allocating the amount of financial assistance to be given. I will tell you why. I am perfectly certain that the present system, however good it may be from the Treasury point of view of control, is going to make the getting of these recruits a more lengthy business than it otherwise would have been. Consider what it means. A man comes before a Local Tribunal. He pleads for exemption on the ground that to go into the Service would mean absolute ruin to him. What does the Tribunal do? The Tribunal says, "Very well; we will postpone your case until after you have been before the barrister who decides these questions." These particular Courts, when set up, will not have the right to decide the questions even then. They have to be referred to London, with the barrister's recommendations, for settlement there. Therefore this man is going to be put back until London has settled the hundreds of thousands of cases of requests for financial assistance. I hope that the Government will see some way of bringing into closer touch the Tribunals that deal with the men's ordinary appeals and these bodies that deal with their financial appeals, because I am perfectly certain that the financial bodies will get an enormous amount of help from the ordinary Tribunals. The ordinary Tribunals, being composed of inhabitants of the place, knowing probably the men intimately, would be able to give information with regard to the cost of living and the effect that service would have on the men which could not be obtained in any other way. I therefore respectfully suggest to His Majesty's Government that they should consider whether there is not some way by which the work of these two bodies could be co-ordinated. I am certain it would save time, and in the long run would be found less costly to the State.
I have pointed out, not objections to the Bill—I can have no objections to the Bill—but I have pointed out some of diffi-
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culties with regard to the administration of the Bill, and I hope His Majesty's Government will accept my assurance that I have put them forward not in any cavilling spirit but with a sincere wish to make the Bill a thoroughly workable measure, so as to give us the men quickly and to give them to the Army with as little dislocation of industrial life as is possible. We are writing the last page of the recruiting campaign to-day and the end of the voluntary system, but I think we ought to pay some tribute to those who under the voluntary system have come forward in their hundreds of thousands without being waited for. I venture to think that no country has ever at any time in its history shown such a splendid response to the Colours as the first eighteen months of this war showed.
Some people say, "We ought to have had this a year ago. We ought to have had it ten years ago." A year ago I do not know whether you would have had it passed with as little friction as I believe you will have it passed now. Perhaps it may be because I was personally connected with it that I say so, but I cannot help thinking that the recruiting campaign of last autumn did much to bring people to realise what the requirements of the State were. I am not one of those who want to overrate the opposition of Labour in this country to a compulsory system; on the other hand, I do not wish to underrate it. There was undoubtedly some months ago strong opposition on the part of many, an opposition which has been overcome because they have been brought face to face with the realities of the situation. They have been told what the necessity of the situation is, and by their contact through that big recruiting campaign with the people they have found that there are men—though they ought to serve, and should be made to serve—whom nothing except compulsion will ever bring to the Colours. This Bill will pass with the consent of practically the whole of the country. It comes as the fulfilment of that pledge of the Prime Minister which we ought all to bear in mind when thinking of this war—the pledge which he made in his Guildhall speech, pledging this country to their last man and to their last shilling; and though it has not come to the last shilling, I hope this Bill will give the last man to the Colours who can be taken without interfering unduly with industrial life.
THE MARQUESS OF LANSDOWNE: My Lords, the reception accorded to this Bill has been so friendly and the criticism passed upon it so reasonable that I hope not to have to trouble your Lordships with very many remarks at this stage of its consideration. My noble friend Lord Salisbury would have been more than human had he not commenced his very effective speech by twitting us, not I think in a very unfriendly tone, owing to the fact that this proposal comes to him somewhat in the guise of a belated one. My noble friend made the old suggestion that if we had only known our own minds rather sooner, if we had only exhibited a little more firmness, we might have had this measure a long time ago. I profoundly disagree with my noble friend's theory. I quite admit that a Government entirely free to deal as it pleased with this great question, embarking upon an effort of the kind in which this country has embarked and with a clean slate to work upon, would be justified in enforcing at the very outset what the noble Viscount below the Gangway properly calls the universal obligation of every citizen of the country to serve. But we must look upon these questions as practical people, and I at any rate hold very strongly that it has not been until the present time that we could have adopted with any prospect of success the course which we have adopted.
THE EARL OF DERBY: Hear, hear.
THE MARQUESS OF LANSDOWNE: The responsibilities of those who sit on this Bench obviously date from the time when the Coalition Government was formed. If when that Government was formed we had attempted to make it a condition of our adhesion that a measure of compulsion should be resorted to no Coalition would have been possible. In my view a Coalition which did not include the representatives of the Labour Party would have been of very little value, and at that time, beyond all question, organised Labour was solid against compulsion. Well, could we at some earlier moment after the Coalition have obtained the acceptance of a compulsory measure? Will my noble friend consider what the position was during the first few months which followed the formation of the Coalition Government? My noble friend Lord Derby gave, I thought, a correct summary of the events. At that moment
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the great voluntary movement was going breast high. My noble and gallant friend behind me (Lord Kitchener) was in favour of that movement. He was not then—I do not think I misrepresent him—in favour of resorting to compulsion. He had just asked for a fresh levy of 300,000 recruits. We had no machinery in existence by which compulsion could have been put in operation. It was not until the month of July that the National Registration Bill was put upon the Statute Book. Then came the historical appeal made by my noble friend opposite (Lord Derby), an appeal which drew upon him much well-deserved commendation and a good deal of ill-deserved criticism. It was the Derby Appeal which led to the Prime Minister's pledge, and it was the Prime Minister's pledge which led to the Bill which in the month of January of this year became law, under which we took compulsory powers as against the unmarried men. I believe that throughout that time we might as well have cried for the moon as for compulsion. I am inclined to put it in this way. In the middle of January, after a great deal of sustained effort, we who were in favour of some measure of compulsion succeeded in capturing the first line of trenches, and the first line of trenches only. After that, evidence gradually accumulated that even under the new Act we were not going to get the men whom the military authorities required; and that led to the—I think it has been so called, and it is an appropriate word—abortive Bill which made a brief appearance in the foreground of our political life not many days ago. That Bill would have got us the men we wanted, but it would have got them under conditions which were obviously unfair and which attracted to the proposals a great deal of perfectly reasonable criticism. My impression is that it was the exhibition of that Bill that brought compulsion really within our reach, and if that Bill had not been produced it is extremely doubtful whether, even now, we should be in a position to ask Parliament for compulsory powers. It was well put by my noble friend Lord Sandhurst, that all this time there had been a gradual hardening of public opinion and that the psychological moment was only really reached within a very few days, or at any rate a very few weeks, ago.
I dare say I may be told that this recital is not a very attractive illustration of the

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results of a Coalition Government. It seems to me that too many of us forget that a Coalition Government is a Coalition Government, and that a Coalition Government means giving and taking, and compromises, and a reluctance—I think a reasonable reluctance—to fight over again the old political battles in a newly-formed Cabinet. May I give the House a very homely parallel illustrating my meaning? I once knew of a case where a lady and a gentleman married, the lady being a widow and the gentleman a widower. Both of them had children. In due time further children were born of this new union. Some years afterwards a visitor to the house heard a great uproar on the stairs and appealed to his hostess for an explanation. She said, "Oh, that is his children fighting my children and our children trying to keep the peace." That is rather what happens behind the scenes in a coalition. There are proposals which are obviously of a Conservative origin, others winch are obviously of a Liberal origin, and there are yet others of a mixed parentage. It is the latter class of proposals which are intended to keep the peace, and which occasionally have rather a bad time of it in trying to do so.
I wish to say two or three words with regard to a point which was dealt with by Lord Oranmore. My noble friend asked us why it was that we had excluded Ireland from the operation of this Bill. We excluded it from the operation of the January Bill, and I then endeavoured to state the reasons why we had taken this course. The same reasons, I think, apply still. It is quite true that you may urge that logically the fact that universal campulsion has been introduced somewhat alters the case, but the practical difficulties seem to me to remain the same. They are, briefly recapitulated, these. The success of our recruiting measures in this country depends upon the operations of those Tribunals which my noble friend Lord Derby appropriately referred to just now as being essentially democratic Tribunals. I venture to maintain that in Ireland we have no materials from which Tribunals of that kind could be formed. If you were to resort, let us say, to resident magistrates and officials of that kind you would have a wholly different Court to go to, and the people of Ireland would be able to complain—and I think rightly—that they were not being treated in the same way as the people of this country.
LORD ORANMORE AND BROWNE: I did not suggest that this Bill could be applied to Ireland. I quite realise that it cannot. I only said that I hoped the Government would give directions that counter attractions might not be offered, such as joining munition works, to render recruiting in Ireland still more difficult.
THE MARQUESS OF LANSDOWNE: I am mach obliged for my noble friend's explanation. I will not press that point further, except perhaps to say that at this particular moment, when the nerves of all classes of the community in all parts of Ireland are very highly strung, it would be to my mind the height of madness to introduce a new cause of contention into that unfortunate country.
May I say, on the general question, that I regard this Bill as a very great advance upon the Bill of last month. Not that I believe that it will get us many more men than the last Bill would have got, or that it will get them much more quickly. The old difficulties, the difficulties of time, which have always, as my noble friend knows, rather clogged and impeded the operations of recruiting, will exist under this Bill as they would under the other Bill, and we have to reckon with them. But to my mind the great advantage that this Bill enjoys is that from the moment that you frankly admit the principle of universal military obligation you make it infinitely easier to deal with the kind of hard cases which are sure to arise, and which arise under this Bill as they arose under the abortive Bill—I mean such cases as that of the time-expired man, who finds that his liability is extended beyond the limits of the contract into which he has entered; or, again, the case—particularly shocking at first sight to many of us—of the transfer of the Territorial from one corps to another, or even to a Regular unit.
I will say a few words with regard to one or two of the points of detail which were raised by my noble friend Lord Salisbury and one or two others. He apologised for his inquiries on the ground that they may not be considered germane at this stage of the Bill. I feel sure that I only express the feeling of the House when I say that the points he raised seemed to us extremely germane, and that we are glad to be warned in time of the importance which he and

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others attach to them. My noble friend Lord Derby dealt with the suggestion that under Clause 3, subsection (2), we might multiply stations to which men might apply for medical examination. I think there are practical difficulties in the way of a wholesale carrying out of that proposal, for the reason that there is a great dearth of doctors and that the proposal would involve a very heavy tax upon the powers of the doctors who are available. But we do feel that it would be very hard that those men who, beyond all question, are not in a condition to be recalled to the Service, should be kept in suspense a day longer than is necessary; and I hope we may be able to find some means by which they shall be given an opportunity of getting themselves relieved from that suspense within as short a limit of time as possible.
Then my noble friend referred to Clause 6 of the Bill. I frankly admit that I find the problem which confronts us in Clause 6 an extremely difficult one to handle. But I will say this about it. This clause is inspired by a desire to treat as respectfully as possible the intense suspicion with which in the working classes any proposal which bears the slightest resemblance to what is commonly called industrial compulsion is regarded, and I am quite sure it is a vital necessity that this misgiving should be respected and that we should keep well on the right side of the line whenever we have to deal with the point. This clause was prepared upon the assumption that, so far as men already engaged on work of national importance are concerned, it was not unreasonable to leave them where they are now with the full two months period of grace. The Government, as my noble friend knows, are taking steps to weed out from such employment any men who are not really required.
THE MARQUESS OF SALISBURY: They will all have two months grace, every one of them, under this clause—I mean the ones you are weeding out.
THE MARQUESS OF LANSDOWNE: Yes; but a great many of them are gone already. At any rate, we apprehend that the large majority of these men are likely to remain in their present employment, and that the question would not be likely to arise in their case. In the case, on the other hand, of the men who are in work not
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of national importance and who have had a short exemption given them for a special purpose, the curtailment of the period from two months to two weeks will afford a very material relief to a difficulty which is a real one, and which the military authorities have constantly encountered owing to the long interval between the moment when these men cease to be employed and the moment when they can be called upon for military service. But I admit that the clause is a very difficult one, and we shall be quite ready to consider it at a future stage if any one can provide us with a formula which will meet the requirements of the case. My noble friend Lord Derby, who has an expert knowledge of these questions to which few of us, if any, can pretend, admitted quite frankly that he himself was not prepared with a form of words.
THE MARQUESS OF SALISBURY: Not yet.
THE MARQUESS OF LANSDOWNE: Perhaps he will produce one for our consideration in good time. Then there is the question of the action to be taken to deal with cases in which the Appeal Tribunals have obviously made a serious mistake in refusing leave to an applicant to appeal from their decision—what my noble friend called vexatious refusal of appeal. I wish to be very careful not to admit that these erroneous decisions are of common occurrence.
THE MARQUESS OF SALISBURY: Hear, hear.
THE MARQUESS OF LANSDOWNE: There is general testimony that upon the whole these Tribunals are doing their work extremely well, and they are probably doing their work better and better as time goes on—for this among other reasons, that the Central Appeal Tribunal is circulating statements of typical difficult cases which go to the Appeal Tribunals and greatly assist them in standardising their decisions. But I admit that there probably are cases in which the Appeal Tribunal may have gone astray, and nothing would please me more than to provide a means of remedying the injustice, if injustice has been done. But I urge upon my noble friend that upon the other hand we must be extremely careful about taking any

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step which will open too wide a door through which every applicant who is dissatisfied with the finding of the Appeal Tribunal could carry his case to the Central Tribunal. One result of any action of the kind would be that the Central Tribunal would be absolutely swamped with appeals. There can be no doubt about it. It has gallantly struggled with the great mass of appeals with which it has had to deal, but I am quite sure that if the word went forth that wholesale appeals were to be permitted to every discontented litigant the Central Tribunal would break down. I am sure my noble friend realises that this is not by any means an imaginary danger.
THE MARQUESS OF SALISBURY: Hear, hear.
THE MARQUESS OF LANSDOWNE: I ventured the other day—and I think my noble friend Lord Sandhurst said something of the same kind—to state, in regard to this matter, that we were prepared to go at any rate this far in meeting the point. Where a particular ease appears to call for reconsideration for substantial reasons, and reasons urged by a substantial authority—I rather insist upon that, because there is a great difference between that and allowing the man himself to come forward—in all such cases the President of the Local Government Board is ready to send particulars of the case to the Tribunal by which it was tried for the observations of that Tribunal. My right hon. friend is prepared to go even further, and, if it seems necessary, to call for the production of the evidence so that it may be examined; and if, after such examination, he is satisfied that there is a prima facie reason to suppose that the case has been improperly decided, he will then reserve to himself the power of asking the Tribunal to re-hear the case. That is only a bald outline—
LORD COURTNEY OF PENWITH: May I ask the noble Marquess to indicate what kind of authority he means by a "substantial authority"?
THE MARQUESS OF LANSDOWNE: I mean, for example, a local Council or some reputable persons who were able to bring forward a substantial proof that an injustice had been done. I was going to say that obviously the procedure to be followed will require a good deal of examination, and I am only able to give to my noble friend
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what I described as a bald outline of the kind of procedure that we have in view.
The only other point upon which I think I might say a word is the complaint as to the treatment of conscientious objectors who have been handed over to the charge of the military authorities. It is urged that such men ought not to be treated by disciplinary methods, and that some other mode of dealing with them should be found. Let me remind the House that no case of this kind can arise except where a man has been twice before a Tribunal, once before the Local Tribunal and the second time before the Appeal Tribunal. The man, therefore, is technically not recognised as a conscientious objector at all. He is a soldier, and as such he is handed over to the military authorities. But we all must realise that there are great difficulties in the treatment of the conscientious objector.
LORD COURTNEY OF PENWITH: Hear, hear.
THE MARQUESS OF LANSDOWNE: There are innumerable varieties of them, and it is extremely difficult to distinguish between one variety and another. In the first place, there is this inherent difficulty in the case, that we expect the Tribunals to do what no Human Tribunal can do, which is to fathom the interior of a man's conscience and determine whether he is a conscientious objector or a fraudulent objector. I am prepared to admit that, although these men are not technically any longer conscientious objectors, there may be cases where it is necessary to handle them with a certain amount of discrimination. I have discussed this point with my noble and gallant friend behind me (Lord Kitchener) and I am able to say that he has under consideration a scheme, which for obvious reasons I prefer not to describe in detail, which will, I think, go far in the direction of meeting the criticism made by my noble friend.
There are no doubt other points, but they can probably best be reserved for discussion at the Committee stage of the Bill. All I need now do is to thank your Lordships for your reception of the Bill, and to join in the hope which has been expressed that it may mark a thoroughly satisfactory ending of a very long and difficult controversy.
VISCOUNT BRYCE: My Lords, most of what I had intended to say has been anticipated by preceding speakers, but after what has been just said by the noble Marquess I wish to say one or two words with regard to civil and military prisons and conscientious objectors. This is an extraordinarily difficult question, and I think that the argument which Lord Derby used in reply to what was said by the noble Marquess opposite (Lord Salisbury) does not quite meet the case. It is not a case of getting local opinion; it is not a case of a democratic Tribunal; it is a case of investigating what, as was just said by the noble Marquess (Lord Lansdowne), is an extremely difficult question. To determine whether what a man says is genuinely his conscientious feeling or whether he is only using it as a cloak to hide his cowardice or laziness is a question for a judicial mind, and one not suited to Tribunals such as have been constituted to deal with these cases. I admit the Local Tribunal is well constituted for some purposes. It knows local conditions, and the nature of employment in the locality; but it is not fitted to decide a psychological question of great intricacy and difficulty.
It is a matter of common knowledge that there exists a good deal of irritation. I was glad to hear what was said by the noble Marquess, that the cases in which the Local Tribunals have gone wrong are comparatively few. Of course, the cases in which the decisions commend themselves to every body in the locality are not mentioned; it is only the decisions that are supposed to be hard of which we hear. At the same time there can be no doubt that there does exist in many parts of the country, certainly in the Universities, from which I have had many representations, a good deal of discontent with the way in which the Tribunals have dealt with these cases. One must remember that although there are many shams and many "cranks," still there is a residuum of people who have an honest conviction that it would be wrong to take the action which a soldier's life requires. Something very true and very germane to the point was said by a Member in another place, I think Lord Hugh Cecil. He said that you must remember in these cases that you are asking a man to do that which he thinks is wrong, and it is a very strong thing to impose upon anybody the doing of what he thinks is morally wrong.
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I need hardly say that I have not, and I do not suppose any of your Lordships have, any belief that those conscientious objectors who think they find in the Bible a distinct prohibition against the work of a soldier are right. We think that they interpret the Scriptures wrongly. At the same time we know that many good men have held such an opinion, and we know that there is something shocking to ourselves in the idea of a clergyman engaging actually in warfare. That was felt in the Middle Ages. We know that the tribute paid to it by the brother of William the Conqueror was that he carried on war not with a battleaxe but with a mace, thereby smashing skulls instead of cutting arteries. We must be prepared for a certain number of people to push what they think are their consciences to extreme lengths. We have always been in this country a highly individualistic people, and the existence of a certain number of "cranks," if you like to call them so, or people who push their conscientious sentiments to an extreme point, is the penalty we have to pay for having always given a great liberty of freedom to the individual. We do not want to push that to extremes. At the same time, we do not want to ignore it and deny that there are a considerable number of people to whose conscientious feeling some consideration should be given. These Local Tribunals are not well fitted for that kind of work, and I think it is much to be desired that some more general indication of the lines they ought to follow should come from the Central Tribunal. Therefore I was extremely glad to hear what the noble Marquess said, that there is to be an attempt at standardisation which will give more light than they seem to possess to the Local Tribunals as to the course they ought to follow.
I come now to the question of civil and military prisons. Shortly, the argument put forward by the noble Marquess opposite was to this effect—that the offence, although committed by the man after he had been drafted into military service, is not in the natural sense of the word a military offence. It is an offence against the State. He refuses to obey the State law, and therefore there does seem to be a rational reason why he should be treated as a civilian prisoner rather than as a military prisoner. It has been suggested that such a one might even be punished by the deprivation of some of his civil rights—the right to vote, for instance;

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but that might not be thought by some to be sufficient punishment for an offence of this kind.
Then we want to relieve the military authorities as far as we can of the odium which may attach to those who are dealing with these men who take objection on conscientious grounds. I would far rather see it thrown upon the civil authorities, because it is a civil obligation which is imposed. There is another point to bear in mind. We are anxious that this Bill should be carried through with the least possible amount of friction and irritation. We have arrived at the conclusion that there is no alternative except to adopt a measure of this kind, and so we are discussing this question, which has excited so much passion and feeling elsewhere, in an atmosphere of unprecedented serenity. As the noble Marquess observed, we are anxious that this serenity should spread through the country, and that there should be as little as possible of grievance at any rate in conection with the operation of the Act. We do not want to create any fissure in that unanimity which the nation, with scarcely an exception, feels in the necessity for prosecuting this war to a successful issue. It has beenfor us a great asset to have had this unanimity of feeling, and anything we can do to preserve it by avoiding friction and irritation will be well done. We shall gain more in that way than we should lose by here and there somebody not being brought into the Army who might have been brought in. At any rate, we would wish to feel that everything that can be done to soften the process has been done. Therefore I welcome, as many would I am sure, what was said by the noble Marquess (Lord Lansdowne) just now with regard to the possibility of having a further method of dealing with cases in which the Tribunals may not have given satisfaction. If the noble Marquess could indicate a little more than he has done what he means by a "substantial authority" it would be a good thing. Does he mean, for instance, that if such a body as a College of one of the Universities was to certify that one of its body who has made a conscientious objection was known by them to be a man who would not make it from cowardice or to evade his duty, that would be a "substantial authority"? Or would a body of reputable citizens in the locality who have known the man himself and have a respect for his character be accepted as being entitled to
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offer a representation of that sort? Anything that can be done in that line would probably have a considerable effect in allaying the apprehension and irritation which exist.
EARL RUSSELL: My Lords, I should be sorry to appear to say anything that might suggest that I take a different view from your Lordships as to the main principles of this war, because that is not so. But as to the principles of this particular Bill I remain unconvinced and I stand where I did, not being prepared to admit that it is necessary, and, in any event, not admitting that it is desirable. To my mind, it remains a Prussian victory against this country that we should have been brought to resort to compulsion, and it presents a tarnish on our magnificent voluntary effort. But I need not trouble your Lordships to-night with any theoretical objections of that character; the time has passed for that. It is not many months since I said the same thing in your Lordships' House. I might not have expected to have to say it again so soon, and I might not have expected it on the authority of the Prime Minister himself. For I find in Hansard on January 12 that the Prime Minister, answering a previous speaker in another place, said—
"My right hon. friend fears, I am sure quite genuinely and honestly, that if this Bill is carried it may be used as a precedent, or as a starting point, for the adoption of something in the nature of general compulsion. I have no such fear."
That was only four months ago, and to-day we find a measure of general compulsion before your Lordships' House.
But there are one or two practical matters that I think might with advantage be considered. Your Lordships have heard a good deal from other speakers—so much that I think it need not be enlarged upon—as to the effect of the irritation in administration which is produced by the conscientious objector. The noble Lord who introduced the Bill suggested that we should throw away our previous convictions. Well, the conscientious objector is a person who refuses to throw away his previous convictions, and he becomes very difficult for the authorities to deal with for that reason. The noble Earl opposite suggested that when a Tribunal had decided that the man had not a conscientious objection he ceased to be a conscientious objector; he ceased to be a civilian, and became a soldier This

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may be a perfectly correct legal statement, but, as the noble Viscount who has just sat down said, it does not accord with the facts, and you are causing an unfortunate irritation from the point of view of national unity. I therefore welcome very much the announcement made by the noble Marquess (Lord Lansdowne) that some better method of dealing with these cases is to be found. I think the tactless attitude which has been adopted towards them may, perhaps, account for some of the trouble that has taken place. In a prosecution at the Mansion House yesterday I heard Brigadier-General Childs give evidence, and he is reported in The Times to have said that "all disciplinary cases in which conscientious objectors were concerned came before him." Also—which is not reported in The Times—in cross-examination, in answer to the question "Do you know any Quakers?" he said "I am happy to say I do not." In view of the history of Quakers in this country, I think that such an answer in a public Court by a man who occupies an important position and is responsible for the discipline of conscientious objectors may intensify the unfortunate feeling that is growing up.
I should like to ask—though perhaps this is hardly the time to do it—why or with what advantage to the Army conscientious objectors have been sent to France. It is said that seventeen of them have been sent there. It is hardly likely that they will encourage our troops. I heard it stated yesterday by counsel for the Crown—what I believe to be perfectly true—that every man of this kind is a centre of disaffection and does distinct harm to the military unit with which he is associated. I hardly think it will improve the morale of the troops with whom these men come into contact. However, I do not believe it is the intention of the military authorities to get rid of them by quietly shooting them when they get to the Front. But I ask, What gain has the sending of these men to France been to the Army or to the country?
I will give your Lordships an instance as to the kind of decision given by the Tribunals. A man appealed to an Appeal Tribunal against non-combatant service, and said he would not take life at the bidding of any man. He was ordered full service. If the Tribunal were convinced he was lying, well and good. But short of that, what is the sense of ordering
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full service for a man who makes this statement and who, from his subsequent conduct, may show that he meant it? I was glad to hear an appeal coming from a much more influential quarter than my own—namely, from the noble Marquess opposite—with regard to the conscientious objector and his treatment. Those of us who are anxious to preserve as far as possible national unity, those of us who are anxious to win this war, those of us who are anxious not to raise any feeling against the military and not to put the military in the position of inflicting punishment on unwilling slaves to whom every form of military duty is abhorrent, are anxious to do what we can to close up this running sore in the body politic. The number of conscientious objectors is not large. Why cannot the wit of the Government be exercised to devise some measure of dealing with them without their being subjected to what they are bound to object to at every stage? As the noble Marquess said, because it is military at each stage you have the same objection taken by the same men for the same reason. I hope we shall see an end of that which is rather foolish, and which I think, if persisted in, might go some way to destroy the great enthusiasm for this war, the great enthusiasm for the noble principles for which we are fighting, which we do not want to lose in this country while fighting another country to uphold them.
LORD HINDLIP: My Lords, may I be allowed to join in the general welcome extended by your Lordships' House to this Bill? My object in intervening in this debate is more or less for the purpose of extracting a little information particularly from one Department, and at this late hour I will confine myself to that. The Notice issued by the Board of Agriculture on April 26 seems to me to be extremely fair, but I would like to ask whether it is the latest Notice that has been issued and whether it is likely to remain in force for some time. It is, as I have said, a very fair Notice, but I should like to know whether it is going to be acted upon generally, whether it is going to be more or less read into the Bill. The noble Earl the President of the Board of Agriculture went down to Worcester a short time ago, and, if he will allow me to say so, made a most inspiring speech from the point of view of agriculture. He rated everybody, I think very properly and very fairly.

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I received this morning a letter which does not fill one with confidence as to what is going to happen to the farmer. This is the case of a man farming 150 acres who was starred last year. Notwithstanding that, he was called up two days ago, and was told by the recruiting officer that his star was obsolete and that it Was too late to appeal. I understand he has since found out that he is able to appeal, and he is doing so. But this, I believe, has caused an uncomfortable feeling in the man's district. I should like to think that all the Tribunals receive the Notices, the Notices approved not only by the Board of Agriculture but by the War Office. As to the Tribunals, I am inclined to agree with the noble and learned Lord, Lord Parmoor, as against Lord Derby. Some Tribunals seem to be more warlike than the War Office; others the reverse. But there seems to me to be a kind of babel of instructions issued by the Departments. The Board of Agriculture's representative gets his orders from the Board of Agriculture, and I imagine he is supposed to attend every meeting of the Tribunal in his district; the War Office representative gets his instructions from the War Office; and the Tribunals, I understand, have themselves Various instructions from the Local Government Board.
The question will arise in many parts of the country as to market gardeners and small holders. I noticed in the paper the other day that a man who a noble Lord on this side of the House considered should be exempt for the purpose of growing food was not thought a proper subject for exemption by the Local Tribunal. Personally I should be more inclined to take the opinion of the noble Earl opposite (Lord Selborne) on that point than that of the Local Tribunal. Could we not have a definition of some kind as to what constitutes a market gardener or small holder to be exempted under this Bill? It is an intricate question, and some very difficult cases will come up. Is there any difference now between the position of the married men who attested under the belief that it was necessary to attest in order to be able to appeal—I mean men who were in certified occupations—is there any difference between them and the men who did not attest? In the Board of Agriculture Notice the attested married men in certain cases are able to be exempted by the recruiting officer without reference
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to the Tribunal, but I fancy that most of the Tribunals are rather standing on their dignity and insisting on all attested men appearing before them. I do not know whether that is because the fact is so well known that the registration was badly done, or because they wish everybody to come within their purview. For what my opinion is worth, I am sure that under the Board of Agriculture Notice all the men are taken away from the land who can be spared. Beyond that I am very doubtful whether you can take more. As far as women are concerned, they are doing a great deal. They can do a great deal more, although they can never do as much in this country within the next year or two as is being done by the women in other countries. On this question of women workers, I noticed that Mr. Lloyd George the other day gave the percentage in Germany as 80, in France as 60, and in England as only 8. I do not know on what these percentages were worked out, but it is obvious that with this great difference in the German proportion and our own we cannot expect as much work done in this way in England as is being done abroad.
I do not wish to detain your Lordships longer. I notice that the noble Earl made a remark the other day that some people thought food came down like manna from Heaven. I am glad to think that he has found some people who are under the impression that food is produced by Heavenly intervention. In my opinion a great number of people appear to think that food comes from shops and restaurants, and that it exists purely for the purpose of their wasting it.
THE PRESIDENT OF THE BOARD OF AGRICULTURE AND FISHERIES (THE EARL OP SELBORNE): My Lords, I will answer my noble friend's questions, and I am glad that in your Lordships' House there is at least one friend of agriculture. There are, I know, many more, but I wish their voices were more often heard. The noble Lord asked me whether the Circular of April 26 stood and held good. My answer to him is, Yes, it does. There is no change since that Circular was issued. Then he alluded to the case of a farmer who had been called up. This is not the only case that has been brought to my notice, but I cannot conceive under what circumstances a farmer who complies with the definition of a certified occupation in

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this Circular can be called up. Here is the definition—
"Farmer, including market gardener and fruit farmer, provided that farming is his sole occupation, and his personal labour or superintendence is indispensable for the proper cultivation of his holding."
Those latter words were inserted for this reason. Yon may have two brothers farming together, and one may be quite sufficient to manage the farm during the time of the war. In that case the other brother ought to go. But I assume that the case which my noble friend mentioned is not such a case as that.
LORD HINDLIP: I believe not.
THE EARL OF SELBORNE: It is, I understand, the case of a man whose sole occupation is farming, and on whose superintendence and management the cultivation of the farm depends. It certainly is wholly against the intentions of the Government and of the War Office, just as much as of the Board of Agriculture, that such a man should be sent into the ranks of the Army. All I can say is that if such cases do occur and they are brought to my notice I am sure my noble and gallant friend Lord Kitchener will assist me in trying to remedy the wrong that has been done. And when I say "wrong" I am not talking of the hardship to the man individually. I am talking of the wrong to the nation, because, as I will show presently and as I have already mentioned in this House, the matter of food production is one of growing and intense anxiety.
The noble Lord alluded to the working of the Tribunals, and asked whether the married man who had attested voluntarily would be in a different position from the man who had not attested and who now, under the Bill that your Lordships are discussing, is brought within the purview of military service. Nobody knows better than my noble friend opposite (Lord Derby) what great harm was done by those zealous recruiting officers who went about without any authority and put up placards stating, "No appeal without attestation." There is no doubt that a good many men would not have attested but for that notice, which was wholly unauthorised—
THE EARL OF DERBY: Hear, hear.
THE EARL OF SELBORNE: And which has done far more harm than good. I do not think, so far as I know, that the position of a man who did attest under that pressure will be any more favourable before the Tribunal than the position of the man who did not attest. The case of each will be judged on the principles laid down in the instructions sent by the Local Government Board to the Local Tribunals; and in those cases where they differ the case will be argued before the Tribunals by my representative on the one hand and by the representative of the War Office on the other. I am glad to say that in a great many cases they do not differ. They come to an arrangement, and both hold the same view. But there arc cases, as you would suppose, where they do differ, and then they have to assist in the pleading of the case before the Local Tribunal.
Testimony has been given, justly given in my judgment, as to the working of these Tribunals as a whole, and considering their number and the materials which existed for their composition I think their performance has been remarkable. But I do not conceal from your Lordships, and I should particularly not wish to conceal from the House of Commons, that I view the proceedings of some of the Appeal Tribunals with very grave anxiety. Cases have been reported to me, each by what my noble friend behind me would call a "substantial authority," which are quite incomprehensible. Two cases were brought to my notice only to-day of men in charge of some ploughing machines. One was a case where a steam plough had under contract 2,000 acres of land; yet the men connected with that machine were sent by the Appeal Tribunal into the Army, at the very moment when Lord Kitchener has done his best to get back from the ranks of the Army some of the men who, earlier in the war, had voluntarily enlisted from the same class of labour.
I am told by those who know the House of Commons that there is an impression prevalent among a large section of that Assembly that agriculture has not even yet given its fair quota of men to the Army. I do not say that there are not farms, possibly parishes and possibly districts, where there are still men who ought to be taken from agriculture for the Army; but I do say that I believe, taken as a whole, agriculture has given not only its full share but more than its full share

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of men to the Army, and that we have reached a point where, unless the Tribunals are extremely careful what they do, the food production of this country will be seriously impaired. Those words are uttered with a very full sense of responsibility. Taking the farmers of the country as a whole, they have parted with almost all the skilled labour they can possibly spare. And, my Lords, I would say to those in the House of Commons who have taken the view that agriculture has not given its full quota, Do they really consider what it means if the Tribunals make a mistake and send many men to the Army who are really indispensable for the production of food on the land? It means that more food will have to be imported, and tonnage diverted from the carriage of munitions to the carriage of food; it means that money will be spent on buying food elsewhere which would otherwise be used in supporting the finance of the Allied Armies in the field; and it means a constantly increasing cost of living—it means famine prices. Therefore I earnestly beg those in the House of Commons, if such there be, who think that many men can still be taken from the land, to accept on my responsibility the assurance that this is not so, and that the danger at the present moment is not lest too few men should be taken from the land into the Army but lest the land should be so drained that the food production of this country should be seriously crippled.
I should like to say a word in reply to my noble friend opposite and in endorsement of what my noble friend Lord Lansdowne said. My noble friend opposite skimmed very lightly over the possible existence of the danger of a breach of national unity. He put that aside as having been more or less a bogey, conjured up by the imagination of His Majesty's Government and never really existing. My noble friend is entitled to his opinion, but in my judgment he is wrong. There has been a real danger of such a breach in the unity of the nation as would have far outweighed any advantage from what is called a more bold or clean-cut policy. In my judgment we who have earnestly contended for this Bill would have done very wrong had we even run a risk of breaking that unity when our purpose could be served and we could get our object and maintain that unity. Of course, I prefer this Bill to the plan which we
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discussed a few weeks ago. But my noble friend is quite wrong in thinking that this Bill is going to give us one man more than that compromise would have done, or give us one man a single day earlier. That plan had not the merit of simplicity or of a clean-cut principle.
THE MARQUESS OF SALISBURY: Or of fairness.
THE EARL OF SELBORNE: I do not admit that, because if the result is the same in both cases there is no unfairness in adopting one plan rather than the other. He said, as proof of the fact that there never had been a danger of disunion, "Where is the disunion now?" My Lords, not only is the argument true that my noble friend used, but I would remind him that a great deal has happened since we had our previous discussion in this House. In the first place, the opinion of the House of Commons is of great weight in the formation of national opinion on such a subject as this. Then there have been these horrible events in Ireland, coining just at that moment, convincing everybody rho may have needed convincing how complicated and how serious is the task which still lies before us in the war. I have said that because I dispute altogether the assurnption that lay at the bottom of my noble friend's statement, that the circumstances to-day are exactly the same as they were when we discussed the question last in your Lordships' House.
LORD HINDLIP: Will the noble Earl give me an answer to my question whether the Board of Agriculture's representative is expected to attend each Tribunal?
THE EARL OF SELBORNE: There is a representative of the Board of Agriculture appointed to each Appeal Tribunal. He is supposed to be present at every sitting when agricultural cases are taken. Generally it is a matter of arrangement between him and the Tribunal as to the days on which those cases will be taken. As regards the Local Tribunals, the War Agricultural Committee have appointed their representative to those Tribunals, and they, I imagine, make the same arrangement.
LORD LAMINGTON: Before the debate closes, I should like to ask the noble Lord whether it has been represented to the War

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Office that those time-expired men who have been, or will be, discharged before this Bill comes into force should be allowed the opportunity of rejoining their old units, if there are any vacancies in those units? Under Clause 13 the Government have full powers at a subsequent period to transfer them to any other unit they desire; therefore that point will be perfectly safeguarded. But it seems to me only right that those men who have done their service and are discharged because they are time-expired should have an opportunity of rejoining their old unit.
LORD SANDHURST: I am instructed that the wish which the noble Lord has indicated will be respected as far as possible.
On Question, Bill read 2a, and committed to a Committee of the Whole House on Monday next.

EMPLOYMENT OF ALIEN PRISONERS.
LORD LAMINGTON LORD LAMINGTON rose to ask His Majesty's Government whether it has now been arranged for prisoners of war and interned civilians to be employed on work other than for camp purposes; and, if not, what are the reasons for their non-employment.
The noble Lord said: My Lords, when I raised this matter two months ago the noble Lord the Paymaster-General asked me to put a Question down at a later date, as he hoped by then to have some further information. He said the difficulty was the number of Departments concerned in the question of finding employment for prisoners and the fact that the labour unions, such as the Dockers' Union, objected to having prisoners employed on their work. I now ask the noble Lord whether he can give any information as to the result of the Committee on this question over which I understand he presides.
THE PAYMASTER-GENERAL (LORD NEWTON): My Lords, the Question of my noble friend is one of considerable importance, and it is unfortunate that it should not attract more attention than will presumably be the case under present circumstances. I had better, for the purpose of convenience, first explain what has been done with regard to military
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prisoners, and deal with civilians afterwards. With regard to military prisoners, I am able to inform the noble Lord that a step of some importance has been taken. At this moment there are between 2,000 and 3,000 German prisoners being employed in France. They are employed at the Port at Havre, and I think at Rouen—I am not quite sure as to that—but they are employed in relieving the extreme congestion that prevails in French ports; they are employed in unloading the ships, but of course they have nothing to do with munitions of war. With regard to the directions in which it is proposed to employ military prisoners in this country, arrangements are being made with a view to providing men for cutting timber in Scotland. This arrangement has been the subject of discussion between the War Office and other Departments for several months, and I am bound to admit that not a single tree has fallen yet nor is in imminent danger of falling, so far as I am aware. But I have this afternoon received information from the Home Grown Timber Committee to the effect that arrangements have already been made for placing 550 men immediately, and the Committee are only awaiting the consent of the Admiralty, the War Office having already consented. Four hundred more men will be placed as soon as certain preliminary arrangements have been concluded, subject, of course, to the consent of the military and naval authorities. I rather think that negotiations upon this subject have been proceeding since the autumn of last year. Other schemes are in process of construction.
I now turn to the question of the employment of civilians who are interned. As my noble friend is aware, employment is not obligatory on civilians; they can only be put to work in the event of their being ready to do it of their own free will. The interned civilians in this country are far more numerous than the military prisoners. There are altogether here 32,000 interned civilians, 27,000 of whom are Germans. The majority of these civilians are interned in the Isle of Man, where a certain amount of employment has been found for them. They are engaged in quarrying, in road-making, and to a certain but not to a great extent upon the farms. They are not employed to a great extent, because I understand that there is still a certain amount of labour available in the Isle of Man. They are further employed, I

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believe, in cutting peat, and in occupation of that kind. In addition to that, there is a great deal of work performed inside the camps. I understand that thousands of mail-bags have been turned out by these prisoners, not only in the Isle of Man, but also in the camp at Islington; and a large number of brushes and brooms for Government use have also been produced by interned aliens. I might add that all the clothing which is required for these very numerous interned men is made by the prisoners themselves. They grow their own vegetable produce to a considerable extent, and I understand that 39 acres of land have just been taken for this purpose. In addition, repairs and drainage works are being carried on by interned civilians.
I should be the first to admit, although it is no special concern of mine, that this record is not a perfectly satisfactory one, and it is all the less satisfactory when one compares it with what is going on in Germany. I have obtained figures from German newspapers which show that in Prussia alone there are at this moment between 900,000 and 1,000,000 prisoners employed in some capacity or other. As far as I am personally concerned, I can assure my noble friend that since I have had any connection with this question of prisoners I have never ceased agitating and worrying the Government Departments concerned with regard to this question of employment, and I am afraid I must admit that I am thoroughly unpopular with every Department concerned.
THE EARL OF SELBORNE: Not mine.
LORD NEWTON: My noble friend is kind enough to say that his Department is an exception. I am bound to pay this tribute to my noble friend, that I have obtained very valuable support from him and his Department, as I shall presently explain. My noble friend may remember that on the previous occasion I pointed out the numerous difficulties which confront the Government in employing prisoners. These are not solely difficulties created by the trade unions and by Labour leaders. Difficulties have also been put in the way of the employment of prisoners by employers, corporations, and bodies of that kind.
I can illustrate the sort of difficulty that prevails by my own personal experience. With the assistance of my noble friend
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behind me I persuaded the Home Office to try an experiment upon a modest scale in my own county, Cheshire. I persuaded them to allow a system under which a farmer is enabled to engage an interned alien on the same conditions as those in which he formerly employed agricultural labourers—that is to say, he would be merely called upon to provide the man with food and lodging, but would not be responsible for his safety. All that he would have to do would be to make the man report himself from time to time to the Police, and, in the case of the man proving unsatisfactory, he would be returned to the camp whence he came. I confess I thought that I had achieved something practical, and I anticipated that this action would have been received with a certain amount of gratitude in my own county. But far from that being the case, I have been denounced as a semi-dangerous lunatic who is anxious to let loose on the county of Cheshire a gigantic flood of German spies. I should like to plead, in exculpation, that I never contemplated that any German should be so employed. What I suggested was that aliens who were technically hostile aliens but not Germans—such as Hungarians Croats, Poles, Galicians, and Ottoman subjects—might be employed with perfect safety, more especially if the commandant of the camp was prepared to be responsible for their good behaviour. But I found it almost an impossible task to induce people to realise that a Croat, or an Armenian, or a Galician is not the same thing as a German spy. When I said a moment ago that the experiment was going to be tried upon a modest scale, I am bound to say that this condition has been strictly observed, because up to now only two aliens have been applied for, and only one has arrived. On the other hand, I am able to state that this solitary alien has proved a complete success, and I have no doubt this will be the case with the other one. And it is rather to the credit of this House that the two employers who requested the services of these two aliens were both members of this House. I have not the smallest doubt in my own mind that before long everybody will be clamouring for these aliens, and I hope that my own county will have the first pick, although it has not shown any alacrity in availing itself of them up to now. I cannot help thinking, with my noble friend Lord Selborne, that there will be a greater shortage in the agricultural world than exists at the present time, and

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when that moment arrives every sensible man will be only too thankful to avail himself of such labour as this, and in so availing ourselves of it we may show ourselves to be as practical as the Germans have been.
LORD LAMINGTON: I thank the noble Lord for his answer, which is very satisfactory. But it is strange that 2,000 or 3,000 men should have been sent to France while we want so much labour over here. Or were the men released already there?
LORD NEWTON: That is an inquiry which ought to be addressed to my noble friend beside me (Lord Sandhurst), because it is purely a War Office question. But there is one fact which I forgot to mention—namely, that these German prisoners in France are under British and not French supervision.

GERMAN BAKERS.
VISCOUNT TEMPLETOWN: My Lords, I beg to ask His Majesty's Government whether they will inquire into the case about a baker in Wandsworth reported in the Pall Mall Gazette of Monday, May 8, as follows: "A baker who applied at the Wandsworth Tribunal for the exemption of his son, who assisted him in his business, said it seemed very hard that he should have to close his shop when the Government allowed Germans from internment camps to come out and compete with him"; and to ask whether His Majesty's Government would take the necessary steps to prevent the baker's son being removed from his father's business.
LORD SANDHURST: My Lords, the man referred to is Mr. G. H. M. King, baker, of 268, Wandsworth-road, Streatham. His case was before the Tribunal on the 8th instant, for the exemption of his son on the ground that he assisted him in the business, which could not be carried on without him. He made the statement that it was very hard on English bread-bakers to be taken away for military service when Germans were being freed from internment camps to carry on the trade, and that there were two Germans on each side of him competing with him. The Tribunal adjourned the case for a fortnight, until the 22nd instant, so that King can bring definite proof of his statement and the matter be properly investigated. The Home Office have made inquiries through the Police and have ascertained that the son is a music-hall artist and does not assist in the baking. One of the two German bakers referred to is a naturalised British subject (Klotz, 9, New-road, Wandsworth), and the other is British born (Wickert, of 259, Wandsworth-road). The Home Office state that it is not the case that Germans are being released from internment camps to work for German bakers, and that if a German baker has been released it was for some special reason. The number of Germans released in the last three months has been 17; and during the same period 203 were interned.
VISCOUNT TEMPLETOWN: I am much obliged to the noble Lord for his answer.
House adjourned at Eight o'clock, till To-morrow, half-past Ten o'clock.