Sitting of 20 June 1921

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

PRIVATE BUSINESS.
Sutton District Waterworks Bill,
Lords Amendment considered, and agreed to.
Eastbourne Waterworks Bill [Lords],
Read the Third time, and passed, with Amendments.
Southampton Corporation Water Bill (King's Consent signified),
Bill read the Third time, and passed.
Westminster City Council (General Powers) Bill [Lords],
As amended, considered; to be read the Third time.
County of London Electric Supply Company Bill [Lords] (by Order),
Second Reading deferred till Monday next.
Ministry of Health Provisional Orders (No. 8) Bill,
Read the Third time, and passed.
Glasgow Corporation Order Confirmation Bill,
Considered; to be read the Third time To-morrow.
Ministry of Health Provisional Orders (No. 6) Bill,
Pier and Harbour Provisional Orders (No. 2) Bill,
As amended, considered; to be read the Third time To-morrow.

MANCHESTER (POLICE, ETC.) PROVISIONAL ORDER BILL,
"to confirm a Provisional Order made by one of His Majesty's Principal Secretaries of State under Section 8 of the Police Act, 1893, uniting the Police and Fire Brigade Pensions Funds of the city
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of Manchester," presented by Sir JOHN BAIRD.
Ordered, That Standing Order 193a be suspended, and that the Bill be now read the First time.—[The Chairman of Ways and Means.]
Bill accordingly read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 143.]

PILOTAGE PROVISIONAL ORDERS (No. 5) BILL,
"to confirm certain Pilotage Orders made by the Board of Trade under the Pilotage Act, 1913, relating to Pilotage in the Pilotage Districts of Barry, Bristol, Cardiff, Gloucester, Llanelly, Newport, Port Talbot, and Swansea," presented by Sir WILLIAM MITCHELL-THOMSON.
Ordered, That Standing Order 193a be suspended, and that the Bill be now read the First time.—[The Chairman of Ways and Means.]
Bill accordingly read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 144.]

ORAL ANSWERS TO QUESTIONS.

  PROFITEERING ACT.
  Mr. MOSLEYasked the President of the Board of Trade whether he can now state the total charges, including staffs, stationery, office accommodation, and other charges, incurred in connection with the Profiteering Act, and the total number of convictions obtained under that Act?
  The PRESIDENT of the BOARD of TRADE (Mr. Baldwin): The expenses of the Board of Trade, Central Committee and Appeal Tribunals to the 31st May, including office accommodation (figures for which are only available up to 31st March), stationery and other charges, amounted to £75,557. I am unable to state the expenses of local committees, as they were defrayed out of local rates. In proceedings before Courts of Summary Jurisdiction 169 convictions were obtained.
  Lieut.-Commander KENWORTHY: Can the right hon. Gentleman say what was the maximum penalty?
  Mr. BALDWIN: Not without notice.

  WIRELESS TELEGRAPHY WATCHERS.
  Lieut.-Commander KENWORTHYasked the President of the Board of Trade if he has received any reports of inefficiency on the part of the wireless telegraphy watchers instituted under the Merchant Shipping (Wireless Telegraphy) Act, 1919; and, if not, whether he would be prepared to consider such reports, if submitted to him, with a view to amending, if necessary, this Act?
  Mr. BALDWIN: I have received statements to the effect that watchers are in some cases inefficient, and I will be prepared to consider any definite reports that may be placed before me.
  Lieut.-Commander KENWORTHY: Is the right hon. Gentleman aware that there has been a considerable loss of British shipping during the employment of this class, and, further, that actual cases have come up in the courts which were open to his officials to investigate?
  Mr. BALDWIN: It is under consideration.

  COAL INDUSTRY DISPUTE.

    EMERGENCY TRANSPORT.
    Sir ARTHUR FELLasked the President of the Board of Trade if he is aware that the officials of the defunct Food Ministry are sending out circulars and forms to tradesmen requiring them to give minute detailed returns of all the motor vehicles they own, what they carry in them, what drivers they employ, and other particulars which will cause great trouble to supply; that indignation is being expressed at the waste of time involved in making these returns; what use will be made of these returns; and at what date will the activities of the Food Ministry and its officials cease?
    Mr. BALDWIN: The Food Department have called for returns in view of the duty laid upon them of providing transport for foodstuffs in the event of an emergency.
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    I am not able, at the moment, to say when the work of this Department will be finally concluded.
    Sir A. FELL: Why should they not have been sent out a long time ago? These notices were sent out only last week, after three months' coal strike?

    FOREIGN COAL.
    Major KELLEYasked the President of the Board of Trade whether all Government orders for foreign coal are to be cancelled immediately British miners decide to return to work; and, if not, will the coal be sold in this country or diverted elsewhere?
    The SECRETARY for MINES (Mr. Bridgeman): Orders which have been definitely placed cannot be cancelled. Such of the Government coal, if any, as remains unsold, after the resumption of work in the mines, will be disposed of in this country or elsewhere to the best advantage in the circumstances.

    DAMAGED PITS (UNEMPLOYMENT BENEFIT).
    Sir F. HALLasked the President of the Board of Trade what is the number of coal pits which, owing to the damage done to them during the coal dispute, will either be permanently closed or shut down until such time as the necessary repair works can be carried out; what is the number of men ordinarily employed at or in connection with the pits that have been damaged; and whether these men will be entitled to receive unemployment benefit when the dispute is over?
    Mr. BRIDGEMAN: I am afraid it is quite impossible to make any estimate of the extent of the damage done to mines by the stoppage or of the number of mines damaged. In many mines no one has been below ground since 31st March, and the present condition of the workings and roadways is quite unknown. With reference to the last part of the question, I would refer my hon. and gallant Friend to the reply given by my right hon. Friend the Minister of Labour to the hon. and gallant Member for Clackmannan and Eastern on the 8th June.
    Sir F. HALL: Are we to understand, in reply to the last part of the question, that none of these people are going to get Out-of-Work Donation or Unemployment Benefit?
    Mr. BRIDGEMAN: I have answered that by referring the hon. and gallant Gentleman to the answer of 8th June.
    Mr. J. JONES: Is the right hon. Gentleman aware that the allegations in this question are from Sinn Fein sources?
    Sir F. HALL: The hon. Member for Silvertown has not any idea what Sinn Fein means.

    ARMY RESERVIST CALLED UP (COLDSTEEAM GUARDS).
    Major COHENasked the Prime Minister whether Sergeant G. Payne, No. 2,646,487, 1st Battalion Coldstream Guards, a Reservist called up during the recent emergency, has been thrown out of employment by his firm, Messrs. Thomas Tillings, Limited, road transport contractors, Peckham, S.E., on account of his being unable to continue at his work for a period owing to having been mobilised for Army service; whether many employers have dealt in a similar manner with Army Reservists; and, seeing that such a course of action is both prejudicial to the national interest, inasmuch as the Reserve was mobilised for the preservation of public order, and unfair to the individual Reservists who responded to the call, what action he proposes to take to have Sergeant Payne reinstated in his former position?
    The SECRETARY of STATE for WAR (Sir Laming Worthington-Evans): My right hon. Friend has asked me to reply to this question. The facts were as stated in the first part of the question, but when they were brought to my notice, I asked the chairman of the directors of Messrs. Thomas Tilling, Limited, to see me. He told me that this non-commissioned officer was engaged as a "mate" on a Foden steam wagon and that, owing to the coal strike, all Foden steam wagons are at present off the road. The chairman of the company has, however, promised me that when the wagons are again used, this non-commissioned officer will be the first to be reinstated. I am glad that this case is satisfactorily settled, and I will undertake to inquire into any other case to which my attention may be called, and to take such action as is possible. I know of no other case at present. The response of the Army Reserve on the present occasion was as prompt and universal as it always has been. The cases of failure to report were in-
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    finitesimal in number, and I am glad to bear grateful testimony to the patriotism of these tried soldiers, who came forward to undertake, if necessary, the duty of preserving public order.

    EXCHEQUER CHARGES.
    Captain WEDGWOOD BENNasked the Prime Minister the total cost to the Exchequer of expenditure connected with the coal stoppage; and what Supplementary Estimate will be needed to meet such charges?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hilton Young): I would refer the hon. and gallant Member to the Supplementary Estimates already presented for Emergency Services and Rail way Agreements. Further Supplementary Estimates will be required for Navy, Army, and Air Services, the total cost of which, to date, including terminal charges still to be incurred, is estimated at about £9,000,000. As the coal stoppage still continues and the net result of Government purchases of coal for essential services cannot yet be determined, it is impossible to give any final figures.
    Captain BENN: Will the House of Commons have an opportunity of discussing this Supplementary Estimate?
    Mr. YOUNG: I am reminded that the Railway Vote is being taken on Thursday. The remainder of the question should be addressed to the Leader of the House.
    Captain TERRELL: Are we to take it from the answer that no further Estimate will be required for the railways?
    Mr. YOUNG: As I have already said, it is impossible at present to give any final figure.

    GOVERNMENT OFFER.
    Colonel NEWMANasked the Prime Minister whether, in view of the reception of the Government's offer of a contribution from the taxpayer of £10,000,000 by those engaged in the coal industry and of the unsatisfactory conditions under which the ballot on the question of its acceptance has been conducted, he will reconsider the granting of this large sum at the present moment?
    The PRIME MINISTER (Mr. Lloyd George): I would refer my hon. and gallant Friend to the letter which I addressed to the Secretary of the Miners' Federation on Saturday last, and which has been published in the Press.
    Mr. R. McLAREN(by Private Notice) asked the Prime Minister if he has received intimation from the Miners' Federation that the miners' strike has to be continued; if so, will he give an assurance to the owners of collieries that protection will be afforded, where necessary, to men willing to go to work; and whether such men will have a proportion of the £10,000,000 added to their wages, provided they start work during this week?
    The PRIME MINISTER: The answer to the first and second parts of the question is in the affirmative. As to the last part of the question, it is plain that it would be impossible to allocate the grant of assistance which the Government offered, unless upon a plan operating throughout the whole coalfield, and that the acceptance of the Miners' Federation was accordingly always necessary as a condition precedent to the payment and distribution of that sum. That acceptance was not forthcoming within the time. As to this matter, I must refer my hon. Friend to the letter which I sent to the Miners' Federation on Saturday, a copy of which has already appeared in the Press.
    Lieut.-Commander KENWORTHY: What will the Government do now?
    Lieut.-Colonel Sir J. HOPE: Will the right hon. Gentleman not consider granting a portion of the £10,000,000 in a flat rate distributed to those men who desire to return to work?
    The PRIME MINISTER: The hon. and gallant Gentleman knows that would not meet the case, because there are certain districts where the £10,000,000 would not be needed at all, and therefore the flat rate is not applicable, because there are certain districts where the wage demanded could be paid at present without any assistance.
    Sir J. HOPE: Could not the rate be varied according to the district?

    SAFEGUARDING OF INDUSTRIES BILL.
    Sir GODFREY COLLINSasked the President of the Board of Trade to what countries Part II of the Safeguarding of Industries Bill will apply if the Bill is passed into law this year?
    Mr. BALDWIN: It is impossible to say until the findings of the Committees to be set up under the Bill have been received.
    Major MACKENZIE WOOD: Are we to understand from that answer that the Government do not know the effect of a Bill which they have introduced into this House?
    Sir G. COLLINS: Is the right hon. Gentleman unable to give the House definite information as to the particular Clauses in the different Treaties, and to say specifically to which countries this Bill applies, especially in view of the fact that this question has been on the Order Paper for six days?
    Mr. BALDWIN: I think the information for which the hon. Member asks is contained in an answer I gave him last week, but he has got another question down on the same subject.
    Mr. HOGGE: How can the House discuss this Bill if we do not know the countries to which it will apply, until some Committees are set up under the Bill to determine to which countries it will apply; and, if we cannot have that information, do the Government propose to continue the discussions on the Committee stage, without supplying the House with that information?
    Mr. BALDWIN: I think this would be much better debated on the Bill itself.
    Mr. HOGGE: Might I call the attention of the Leader of the House to this question? Is the Leader of the House aware that we are informed that we shall not know the countries to which this Bill applies until certain Committees have been set up under the Bill, and will he see, before we reach the Committee stage, that the House is put in possession of this information?
    Mr. CHAMBERLAIN (Leader of the House): If the hon. Gentleman requires an answer from me to a question of such

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    magnitude, I shall be grateful if he will put the question on the Paper, and give me an opportunity of considering it.
    Mr. HOGGE: Is my right hon. Friend aware that the House cannot possibly discuss this Bill unless they know the countries to which it will apply; and will he give us an undertaking that, before we are asked to consider it in Committee, we shall have the information?
    Mr. CHAMBERLAIN: No, I am not aware that the House cannot discuss this Bill in Committee, where I presume the information which the hon. Gentleman seeks can be given.
    Mr. HOGGE: No.
    Mr. CHAMBERLAIN: Then will the hon. Gentleman put his question to me down on the Paper, and let me have an opportunity of considering it?
    Sir G. COLLINSasked the President of the Board of Trade if there is any Clause in any Treaty, Agreement, or Convention with France, Italy, or Japan which will stop Part II of the Safeguarding of Industries Bill being applied to each of those countries if the Bill is passed during the present Session?
    Mr. BALDWIN: I would refer my hon. Friend to the answer which I gave to the hon. and gallant Member for East Newcastle (Major Barnes) on the 13th June.
    Sir G. COLLINS: Is the right hon. Gentleman aware that the answer to which he refers directs the attention of the House to commercial Treaties, Conventions, and Agreements applying to

    IMPORTS of the undermentioned articles into the United Kingdom, consigned from all European countries, registered during the year ended 31st December, 1920.

    Description.

    Quantity.

    Value.

    Tons.

    £

    Pig iron

    …

    …

    177,202

    2,075,994

    Ingots, other than of special steel

    …

    …

    7,424

    229,579

    Blooms, billets, slabs, other than of special steel: steel

    …

    …

    54,480

    1,219,427

    Special steels

    …

    …

    310

    30,520

    Total Imports of all descriptions of iron and steel and manufactures thereof.

    467,432

    11,853,528

    The total value of the Imports of all goods, except Food and Drink, into the United Kingdom, consigned from Germany, registered during the year ended 31st December, 1920, amounted to £28,319,000.
    some 25 countries, and in view of the impossibility of any hon. Member being able to satisfy himself as to the exact bearing of each Clause of the Bill, will the right hon. Gentleman state specifically what is the answer to the question on the Paper?
    Mr. KILEY: Are we to understand from the list of countries which has been given that we have no commercial Agreement or Convention with France in any matter, shape, or form, and that that will be the only country to which this Bill will apply?
    Sir G. COLLINS: I wish to give notice that, at the end of Question Time, I shall ask leave to move the Adjournment of the House, in order to call attention to a definite matter of urgent public importance in connection with this Bill.

  TRADE AND COMMERCE.

    IMPORTS.
    Captain COOTEasked the President of the Board of Trade whether he can give the figures of the total value of the importation of pig iron and steel, respectively, from Europe to the United Kingdom for the year January, 1920, to January, 1921, and the value of the imports of all kinds of goods, exclusive of articles of food and drink, from Germany during the same period?
    Mr. BALDWIN: With the hon. Member's permission, I will have a statement circulated in the OFFICIAL REPORT.
    The following is the Statement:

    MOTOR VEHICLE SPARE PARTS (IMPORT DUTY).
    Captain Viscount CURZONasked the President of the Board of Trade whether taximeters, speedometers, spare parts, etc., for taximeter cabs and other commercial vehicles are subject to import duty; and, if so, on what grounds?
    Mr. YOUNG: Whether imported "accessories" or "component parts" of motor ears are charged with duty depends upon the nature of the vehicles in connection with which they are used. As taxicabs are liable to tax, their accessories, etc., are also chargeable, but the accessories, etc., of certain exempt classes of trade vehicles are themselves exempt.

  GOVERNMENT STAFFS.

    BOARD OF TRADE.
    Mr. REGINALD NICHOLSONasked the President of the Board of Trade whether he proposes to retain the publicity section of his Department?
    Mr. BALDWIN: No, Sir. I have decided to abolish the publicity section of the Board of Trade as from the 15th July next.
    Mr. CARTERasked the President of the Board of Trade how many officials in his Department are at present receiving a salary of £1,000 or over; and how many received such salaries in June, 1914?
    Mr. BALDWIN: The number of whole-time officials in receipt of basic salaries of £1,000 or over are as follow:

    1914

    32

    1921–22 permanent

    54

    1912–22 temporary

    30

    The hon. Member will, however, realise that the volume of work in the respective years is not comparable.

  PEACE TREATIES.

    EX-GERMAN SHIPS.
    Sir J. BUTCHERasked the President of the Board of Trade whether any ex-German ships allotted to this country by the Reparations Commission, and announced to be available for British and Allied nations only, have been sold to German ownership through a German
    872
    broker; and whether he will give particulars of these sales, the names of the broker and purchasers, and the reason for so selling the ships?
    Mr. BALDWIN: The sales of ex-German ships are being conducted by Lord Inchcape on behalf of the Reparation Commission, but I understand that 10 ex-enemy ships, nine of which had been advertised for sale on the British market, have been sold to Mr. Sloman of Hamburg, the brokers being Messrs. Arthur Capel and Company. These were 10 special ships which had been engaged continuously in the Baltic on repatriation work under the auspices of the League of Nations. They flew the German flag and carried German officers and crews, and had never been placed on the British register. No satisfactory offers for any of these ships were received from any British firm.
    Sir J. BUTCHER: Why were they not kept at their present duties and then offered for sale along with the rest of the ex-enemy ships?
    Mr. BALDWIN: They were not released until the particular work they were busy with was completed.
    Lieut.-Colonel Sir F. HALL: What is the meaning of not being on the British register?
    Mr. SPEAKER: The hon. and gallant Gentleman had better put a question down.
    Sir J. BUTCHER: Why was it necessary to sell these ships before the duties to which they were assigned were finished; why did they not wait till the duties were finished?
    Mr. BALDWIN: We wanted to get the best price we could. They fetched very much better prices; and prices of ships have been falling every day since.
    Sir J. BUTCHER: Was the Chamber of Shipping consulted?
    Sir R. THOMAS: Are there not more ships in this country than we can usefully employ, and is it not well to dispose of the ships we do not want?

    GERMAN REPARATION.
    Mr. MOSLEYasked the President of the Board of Trade whether the German Government has yet issued an official

    873
    notice to German traders guaranteeing to them the repayment of the 26 per cent. duty levied on goods exported from Germany and consigned to the United Kingdom in accordance with the undertaking given by the German Government, as stated by the Lord Privy Seal?
    Mr. BALDWIN: So far as I am aware, no such notice has been issued by the German Government, but I understand that they are informing inquirers that exporters will be indemnified for the amount of the levy.
    Mr. A. M. SAMUEL: Will that indemnification be paid to the German exporter at the current rate of the exchange of the day or at some nominal exchange of so many marks to the pound, as obtained before the War; it is a very important matter?
    Mr. BALDWIN: I would like notice of that question.

    BRITISH CLAIMS (GERMANY).
    Sir CYRIL COBBasked the Parliamentary Secretary to the Board of Trade whether a credit cash balance, belonging to a British subject, in a German bank during the War was a debt owing by the bank to the British subject; if so, why a regularly proved claim for such a debt lodged 18 months ago with the British Clearing House for enemy debts has remained unpaid; and what are the grounds upon which the German or other authorities allege that such debts have lost their character of debts and have become the proceeds of liquidation, in view of their sequestration by the German authorities under German war emergency legislation?
    Mr. BALDWIN: A credit cash balance in a German bank belonging to a British national resident in British territory on 10th January, 1920, is a debt within the meaning of Article 296 of the Treaty of Versailles, provided the balance existed before the War or arose out of a pre-War transaction as defined by that Article. A great number of claims in respect of such balances have been admitted and paid. In certain cases, the German banks have paid the moneys to the German public trustee under war emergency legislation. With regard to these cases, I would refer my hon. Friend to the reply given to the hon. Member for Exeter on the 15th inst.
    Mr. LAMBERTasked the Prime Minister what is the position of British
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    creditors in respect of debts due to them by Germans; which debts have been paid to the German public trustee; what steps should British creditors take, under the Peace Treaty of Versailles, to compel the Germans to pay these debts; and whether each individual British creditor must go to the expense of bringing each case before the next arbitral tribunal?
    Mr. BALDWIN: I have been asked to reply. As regards the first part of the question, I would refer the right hon. Member to the reply given to the hon. Member for Exeter on the 15th June. It may be assumed that when the question of principle has been decided by the mixed arbitral tribunal in the test case referred to, it will be accepted by Germany as governing similar cases.
    Mr. LAMBERT: Does that mean that the particular creditor of the German will be obliged to go before this tribunal?
    Mr. BALDWIN: No, as I understand it, the German Government will accept the test case as governing the others.
    Mr. KILEY: Is the right hon. Gentleman aware that this tribunal has met only once or twice, and is there any prospect of its resuming?
    Mr. BALDWIN: I hope it will do so without delay.

    UPPER SILESIA.
    Lieut.-Commander KENWORTHYasked the Prime Minister if he can make any statement on the present situation in Upper Silesia; and what steps have now been taken to bring about a settlement?
    The PRIME MINISTER: I am not prepared to make a statement at present.
    Lieut.-Commander KENWORTHY: Is the right hon. Gentleman aware that while the German regular troops have been withdrawn the Allied troops are remaining there, and the territories are being handed over to the Polish insurgents, which is likely to lead to a general outbreak?
    The PRIME MINISTER: I do not think that represents the situation. I have heard rumours to that effect, but I do not think that they are quite accurate.
    Mr. LAWSONasked the Under-Secretary of State for Foreign Affairs whether he can state how many members

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    of the Allied Commission are at present in Upper Silesia; and what is the nationality and official position of each?
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Cecil Harmsworth): According to the latest figures available, 520 members of the Inter-Allied Commission are in Upper Silesia at present, of whom 294 are French, 85 Italian, and 141 British.
    Mr. LAWSONasked the Under-Secretary of State for Foreign Affairs whether the Allied Commission in Upper Silesia are in agreement as to the best methods of restoring order in the territory under their control; and, if not, whether there is any prospect of an immediate meeting of the Supreme Council to which their difference might be referred?
    Mr. HARMSWORTH: I do not think it desirable to make a further statement on the subject at this moment.
    Lieut.-Commander KENWORTHY: Does the Hon. Gentleman expect to be able to make any further statement on this matter within the next few weeks?
    Mr. HARMSWORTH: My hon. and gallant Friend will have heard the reply given by the Prime Minister on that subject.
    Lieut.-Commander KENWORTHY: It was altogether indefinite. May I ask if the hon. Gentleman has or expects to have any information to give the House?
    Mr. HARMSWORTH: Of course I can add nothing to what the Prime Minister said.
    Mr. LAWSON: Is there any truth in the statement which has appeared in the Press that there has been trouble between the French and German forces there, and that two British subjects have been killed in the trouble?
    Mr. HARMSWORTH: Perhaps the hon. Member would give me notice of a specific question of that kind?

    ULTIMATUM TO GERMANY.
    Sir F. HALLasked the Lord Privy Seal whether Germany has in all respects carried out the terms of the ultimatum which was recently presented by the Allies with regard to the execution of
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    the Treaty of Versailles; and, if not, will he state which conditions still remain unfulfilled?
    Mr. CHAMBERLAIN: Yes, Sir. My information is that the terms of the ultimatum have been either actually fulfilled or are in course of execution. As regards some of the terms, the time limit has not yet expired.

    HOURS OF LABOUR (GERMANY).
    Sir F. HALLasked the President of the Board of Trade whether an eight-hours law is in force in Germany; whether in a large number of instances the workpeople have refused to carry out the provisions of this measure; and will he endeavour to obtain particulars of the hours and wages prevailing there in a number of leading industries, and statistics as to output, with a view to this information being made available for the guidance of employers and workpeople here?
    The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Sir Montague Barlow): I have been asked to reply. Hours of labour have been legally restricted to eight per day or 48 per week in Germany since November, 1918. Cases of evasion of the measure are certainly being reported by the factory inspectors, but there is no evidence of widespread refusal to carry out the law. Information as to hours and wages is made accessible to the public through the quarterly journal, "Labour Overseas," issued by the Ministry of Labour. Official German statistics of output are issued for two industries only, i.e., coal (monthly) and iron and steel (yearly). I will send my hon. and gallant Friend the forthcoming issue of "Labour Overseas."
    Sir F. HALL: Is it not the fact that the workmen of Germany are crying out against this eight-hours day—[HON. MEMBERS: "Oh!"]—and has it not been shown that the whole desire of the workpeople in Germany is to increase their output, and to work the number of hours necessary in order to give a reasonable return—
    Mr. SPEAKER: That question ought to be put on the Paper, and not asked as a supplementary question.
    Lieut-Commander KENWORTHY: Who are the pro-Germans now?
    Sir F. HALL: On a point of Order. Has not an hon. Member who has received a certain reply from the Government a right to interrogate the Minister, seeing that it is impossible to anticipate the answer likely to be received from the Government Bench?
    Mr. SPEAKER: The hon. and gallant Gentleman is pursuing an argument. Will he be good enough to ask the next question?
    [Question 18. See col. 864.]

    FARINA (KING'S LYNN).
    Mr. J. GARDINERasked the President of the Board of Trade to whom was the farina manufactured at King's Lynn disposed of; what sum was received for it; and what was the profit or loss on the transaction?
    Mr. BALDWIN: The portion which has been sold was placed on the market in the usual commercial way through a broker. As a considerable portion of the farina manufactured remains unsold it is impossible to state what will be the profit or loss on the transaction. For fuller details of those transactions I would refer my hon. Friend to the Reports from the Committee of Public Accounts (House of Commons Paper, 231).
    Mr. GARDINER: Would it be right to say that the land has since been lying waste?
    Mr. BALDWIN: Perhaps the hon. Gentleman will put down a question.
    Major M. WOOD: Has the Government disposed of all its mills?
    Mr. BALDWIN: Not all yet.

    ATMOSPHERIC POLLUTION (LONDON).
    Sir HARRY BRITTAINasked the Secretary for Mines whether his attention has been directed to the fact of the purity of the atmosphere in London during the coal stoppage; and whether, when normal mining conditions again prevail, all possible steps will be taken in the interests of coal conservation, as well as public health, to limit and eventually
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    forbid the wasteful burning of raw coal in this and other great cities?
    The MINISTER of HEALTH (Sir Alfred Mond): I have been asked to reply to this question. I would refer my hon. Friend to the reply I gave to the hon. Member for Middlesbrough West on the 1st instant, of which I will send him a copy.

    PUBLIC ACCOUNTS (FORM).
    Mr. MOSLEYasked the Prime Minister whether any decision has been arrived at on the recommendations of the seventh Report of the Select Committee on National Expenditure, 1918, as to the, form of Public Accounts?
    Mr. YOUNG: The new system has been introduced in the War Office, and has-also been tried experimentally in certain cases in the Admiralty. I am not satisfied that it is suitable for Votes-other than War Office Votes, or for Civil Votes generally, but the whole matter, including the question of the possible increase in staff and cost involved by the proposed change, is under consideration.

    INDUSTRIAL CONFERENCE.
    Major KELLEYasked the Prime Minister whether he will consider the desirability of inviting the leaders of capital and labour to a new industrial, conference when the present disputes in coal, engineering, and cotton have been closed, to see if it is possible to avoid such disastrous results as have been brought about by the present differences, not only to capital and labour immediately concerned in these disputes, but to the whole country?
    The PRIME MINISTER: I can add nothing to what has already been said in reply to questions on this subject.

    GREECE AND TURKEY.
    Lieut.-Commander KENWORTHYasked the Prime Minister what steps are now being taken to bring about peaceful conditions in Turkey-in-Asia; whether any efforts are being made to call a fresh conference to discuss a settlement between the Greeks and Turks; and whether the Italian troops have been withdrawn?
    The PRIME MINISTER: This matter is now under consideration between the French Prime Minister and my Noble Friend the Foreign Secretary (Earl Curzon), pending a report from whom I am not in a position to make any statement. As soon as I receive definite information I will take an early opportunity of informing the House.
    Lieut.-Commander KENWORTHY: Yes, but may I ask the right hon. Gentleman if he can give us any comforting assurance to the effect that his Noble Friend has come to an agreement with the French Prime Minister?
    The PRIME MINISTER: I would rather make no statement till my Noble Friend comes back.
    Mr. AUBREY HERBERTasked the Prime Minister if he will consider the advisability, under Article 11 of the League of Nations, of exercising the Friendly right of any Member to draw the attention of the Council of the League of Nations to the present dispute between Turkey and Greece that again threatens the peace of Europe?
    The PRIME MINISTER: My hon. Friend may rest assured that His Majesty's Government will not lose sight of this possibility, if at any time it appear to them likely to advance matters in any way.
    Mr. HERBERT: Will the Prime Minister say whether the present situation in Asia Minor is not due to the mistakes of the Imperial Council, and would it not be a good thing to hand this dispute over to some other body?
    The PRIME MINISTER: I cannot answer that question. It is a matter for the League of Nations.
    Colonel WEDGWOOD: Has this situation not been altered by the arrangements made in Paris yesterday?
    Viscount CURZONasked the Prime Minister whether he can assure the House that no expenditure in respect of men, money, or material aid to Greece will be incurred without obtaining the sanction of the House of Commons?
    The PRIME MINISTER: I would refer any Noble Friend to the answer which was given to him by the Lord Privy Seal
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    on Thursday last, in reply to a supplementary question on this subject.

    MERCHANT SHIPPING TONNAGE (SALE).
    Major BARNESasked the Prime Minister if his attention has been called to the resolution moved by the ex-president of the Chamber of Shipping and passed by the North of England Steamship Owners' Association on Monday, the 30th ultimo, demanding a free and unrestricted world's market for the sale of tonnage; and whether this war-time restriction will now be removed?
    Mr. BALDWIN: I have been asked to reply. As indicated in the answer which I gave the hon. Member on 9th June, I think that the sooner we can get back to a condition of complete freedom from restriction the better it will be. But this particular restriction was imposed by special Acts of Parliament—the British Ships (Transfer Restriction) Acts—and those Acts remain in force for three years after the official end of the War. After carefully considering the matter in all its bearings, I do not think the time has yet come for proposing the repeal of these Acts, but in the meantime each case in which it is desired to transfer a ship to a foreign flag will be carefully considered on its merits.
    Sir F. HALL: Is the right hon. Gentleman aware of the enormous excess of tonnage in this country at the present time, and under the circumstances is it not advisable to remove this embargo in order that tonnage may be transferred to other countries?

    MINISTER WITHOUT PORTFOLIO.
    Mr. ERSKINEasked the Prime Minister what steps, if any, the Government propose to take in the direction of reducing the salary of the Minister without Portfolio, in view of the strong feeling both inside and outside the House, more especially as expressed at the recent bye elections of St. George's and East Hertford?
    Major C. LOWTHERasked the Prime Minister (1) whether he will leave to a free vote of the House the payment of a salary to a Minister without Portfolio;

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    (2) whether he can give an assurance to the House that it is not his intention to appoint an additional Minister without Portfolio at a salary?
    The PRIME MINISTER: I hope, in the course of the Debate, to give the attitude of the Government on this subject.
    Mr. J. JONES: Will the right hon. Gentleman take into consideration the result of the Heywood election?
    Major LOWTHER: Is the right hon. Gentleman not aware that it would be off considerable assistance to the House if he would state if this Supplementary Estimate is going to be made a matter of confidence or not?
    The PRIME MINISTER: That is exactly the question which has been put to me.
    Major LOWTHER: The right hon. Gentleman did not answer my question as to whether he can tell us beforehand whether this Vote will be made a matter of confidence or not.
    The PRIME MINISTER: I said in my reply that in the course of the Debate I would give the attitude of the Government.
    Major LOWTHER: That is not an answer to my question.

    MINISTERS (DEPARTMENTAL DUTIES).
    Brigadier-General COCKERILLasked the Prime Minister how many Ministers have no departmental duties; and what is the total of the salaries paid to such Ministers?
    The PRIME MINISTER: The Lord Privy Seal and the Minister without Portfolio have no departmental duties, and receive salaries of £5,000 per annum each. The Paymaster-General has no departmental duties, and is unpaid.
    Mr. J. JONES: Will the right hon. Gentleman state the number of naval and military officers who are drawing salaries without doing any work?
    Mr. HOGGE: What about the Lord President of the Council?
    The PRIME MINISTER: He certainly has departmental duties, some of them very important.

    FOREIGN REFUGEES (MAINTENANCE).
    Viscount CURZONasked the Prime Minister at what rate money is now being provided out of the British Exchequer for the maintenance of refugees of various nationalities throughout the world; and what is the total number of refugees who are a charge upon the British Exchequer?
    Mr. YOUNG: The refugees being maintained by His Majesty's Government consist of Russians and Armenians. There are also some Assyrians who fought for us and who took refuge in Mesopotamia. These also have been supported by us but they are being settled in Mesopotamian territory, and a final charge of £400,000 for them, including present maintenance and final settlement charges, appears in the recent Estimate for the Middle East. In addition, a sum of £3,000 has been placed at the disposal of the Committee for the Relief of British Subjects from Russia in the current year, and there are some Russian refugees in Serbia, Cyprus, Egypt and Mesopotamia—the latter having come from the Caspian Sea. Approximately, the total number of refugees of all foreign nationalities including the Assyrians mentioned above, is 37,500, and the monthly cost of maintenance, £90,000. The number will be reduced to 17,700 when the Assyrians are settled and the Russians at Basra shipped to Vladivostock as proposed.
    Lieut.-Commander KENWORTHY: Will the Treasury consider the advisability of reducing the grants for these refugees by the same amount as the unemployment donation is being reduced in this country?
    Sir J. D. REESasked the Under Secretary of State for Foreign Affairs what is the nature of the obligation under which the British Government lies to support for an indefinite period Russian, Armenian, and other refugees; and whether, seeing that any undertaking made on behalf of the Government, whether by express or implied sanction, has been redeemed by the long-continued maintenance in idleness of these people, the Government will now announce to them that within a month from an early given date they must, like others, fend for themselves?
    Mr. HARMSWORTH: The Russian refugees, for whom His Majesty's Government

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    have assumed responsibility, consist of the remnants of the Volunteer Army who were evacuated from South Russia early in 1920 under an assurance given on behalf of His Majesty's Government that the families of General Denikin's officers should not suffer if the anti-Bolshevik forces were defeated. There are, in addition, a small number of Russians at Basra who had to be evacuated from West Persia towards the end of last year. While His Majesty's Government do not regard their obligations as indefinite, they cannot desert refugees for whom they assumed responsibility, until some means have been found for enabling them to earn their own living. The Armenian and Assyrian refugees took up arms on the side of the Allies during the War, and since the Armistice have been maintained by His Majesty's Government until arrangements can be made for their future settlement. In this connection I would refer my hon. Friend to the speech of the Secretary of State for the Colonies made in this House on Tuesday last.
    Sir J. D. REES: Does not the right hon. Gentleman think that there is an obligation to the British taxpayer over-riding these obligations which it might be held to have been handsomely discharged?
    Mr. HARMSWORTH: My hon. Friend knows as well as any Member of the House how anxious the Government are to rid themselves of this responsibility, but it still remains a responsibility.
    Captain W. BENN: Do we understand that this is one of the residuary obligations of the anti-Bolshevik adventures earlier last year, and could we have a revised Estimate showing exactly what the public has paid for these unsuccessful adventures?
    Mr. HARMSWORTH: The figures relating to these Russian refugees have been frequently given.
    Mr. J. JONES: Will the hon. Gentle man undertake to apply a similar principle to British unemployed who want maintenance?
    Mr. HARMSWORTH: That does not arise out of the question.

    NATIONALITY LAW.
    Sir WILLIAM DAVISONasked the Prime Minister whether he will see
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    that an opportunity is found in the course of the forthcoming Imperial Conference with the Dominion Prime Ministers to secure their approval to an urgently needed amendment of the British Nationality Act of 1914, to enable the children of British subjects of British blood resident abroad to be recognised as British citizens, although born in a foreign country of a father who was not himself born within His Majesty's allegiance but is of full British blood?
    The PRIME MINISTER: I can add nothing to the answers already given to my hon. Friend in reply to questions on this subject.
    Sir W. DAVISON: Is the right hon. Gentleman aware that the Home Secretary said the arrangements of the agenda was not a matter for him, but for the Prime Minister, and can he say if he will, informally at any rate, consult the Dominion Prime Ministers upon a matter on which they are certain to agree, and it is only a question of securing their approval?
    The PRIME MINISTER: We shall be discussing the agenda to-morrow, and I will call their attention to it.

    EDUCATION ACT.
    Sir W. DAVISONasked the Prime Minister whether, in view of the anomalous position which has arisen owing to the Education Act of 1918 having been brought into partial operation in certain areas and forbidden by Cabinet decree to be brought into operation in other areas of the country, he will introduce a short Government Bill suspending the operation of the Education Act of 1918 for a period of years until the financial state of the country is in a better position to bear the heavy expenditure involved by the Act in respect of continuation schools and other matters?
    Sir R. THOMAS: Having regard to the fact that the best assets left in this country are the brains of the country, will the right hon. Gentleman not disregard the views of the hon. Member opposite?
    The PRIME MINISTER: I think my answer will satisfy both parties. I do not consider that the temporary difficulties arising out of the present financial circumstances call for such general legislation as my hon. Friend suggests.
    Sir W. DAVISON: Does the right hon. Gentleman recognise the anomalous position we are in when a large part of the country where they put the Act into operation is compelled to provide 50 per cent. of the educational expenditure, whereas other parts are forbidden to put the Act into operation by Cabinet decrees?

    PALESTINE.
    Sir H. BRITTAINasked the Prime Minister whether, in view of the heavy financial obligations imposed on this country by the War, His Majesty's Government has made approaches to wealthy Zionists throughout the world with a view to their assuming full financial responsibility for Palestine; and, if not, will such approaches now be made?
    The UNDER-SECRETARY of STATE for the COLONIES (Mr. E. Wood): The answer to both parts of the question is in the negative. As long as this country continues to act as mandatory State in Palestine, His Majesty's Government is of opinion that it is incumbent upon them to accept the responsibilities, financial or other, which such a position involves.
    Lieut.-Commander KENWORTHY: Is the hon. Gentleman aware that the Zionists, rich and poor, throughout the world have been most generous in contributing to the resettlement of their compatriots in Palestine, and will he refute the suggestions made in the hon. Member's question?
    Colonel WEDGWOOD: Is the hon. Member aware that the wealthy Zionists referred to have offered to finance a defence force, which will be a considerable relief to the British taxpayers?
    Sir H. BRITTAIN: Is it not right that this great and patriotic race should have a say in the determination of their own land?
    Colonel WEDGWOOD: And the defence of it?

    COST OF LIVING.
    Mr. HURDasked the Prime Minister whether he is aware that a committee representing the Trades Union Congress, the Labour party, and the Co-operative Union have issued a statement discredit-
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    ing the official index figure of the cost of living as being far too low; and that, on the other hand, the figure is also discredited by the statistical investigations of Dr. A. L. Bowley and the London School of Economics as being far too high and applicable to no more than a small proportion of the wage-earners; and whether, seeing how largely wage readujstments and industrial unrest are related to this doubly-discredited official figure, he will forthwith invite a few impartial statistical authorities to review the basis of calculation of the figure in the light of these new facts?
    Mr. LEONARD LYLEasked the President of the Board of Trade whether his attention has been called to criticisms of the accuracy and reliability of the Board of Trade index respecting the cost of living; and whether, to re-establish any weakened confidence in it, he proposes to issue an official statement on the subject?
    Sir M. BARLOW: I have been asked to reply. I have seen the statement issued by the Joint Committee referred to. No details have yet been published by the Committee showing how their percentage has been arrived at. We are inviting the Committee to supply us with details comparable with those which have been published in connection with the Ministry of Labour index number, in order that we may be able to consider to what extent the differences revealed establish a case for investigation. In the meantime I think it will be recognised that criticisms which are so mutually destructive as to imply that the Ministry of Labour index number on the one hand understates, and on the other hand overstates, the actual increase would appear, when taken in conjunction, to support rather than to discredit the conclusions reached by the Ministry of Labour.
    Mr. HURD: Do not both agree to this extent, that the Board of Trade index figure is utterly fallacious in its basis?
    Sir M. BARLOW: I am not certain whether my hon. Friend refers to the Board of Trade index figure or that of the Ministry of Labour. If he is referring to the latter I have already intimated that if he or his Committee will send us the information he desires we will go into the matter and see if there is any ground for further investigation.
    Mr. HURD: Is the hon. Gentleman aware that the matter has already been gone into by independent statistical experts?
    Mr. J. JONES: Is the hon. Gentleman aware that the trade unionists of the country have for a long time contested these index figures, and have themselves appointed experts who have examined into, and reported against them?
    Mr. SPEAKER: That was stated in the original question.
    Mr. HOGGE: Why are there two sets of figures?
    Sir M. BARLOW: One set relates to wholesale, and the other to retail prices.
    Colonel WEDGWOOD: Was not the method of calculating the figures changed during the War, because the Board of Trade figures were considered to be too high?
    Sir M. BARLOW: That is not the fact.

    CHINA.
    Commander BELLAIRSasked the Prime Minister whether the Government has taken into consideration recent efforts towards constitutional government in China, its culture, and vast potentialities; whether he is aware that the census brings the population up to 447,000,000; whether, in pursuance of our historic mission of encouragement to China, the Government will now raise the status of our diplomatic representative to that of ambassador, as has been done in the case of Brazil with a population of 31,000,000; and whether any negotiations will be opened with the five other Powers who have post offices in China for the withdrawal of these post offices in recognition of China as a great Power?
    Mr. HARMSWORTH: His Majesty's Government naturally consider all facts of importance relating to China. There are various estimates of the population, which is believed to exceed 300,000,000. It is not proposed to raise the status of His Majesty's representative in existing conditions in China. The answer to the last part of the question is in the negative.
    Commander BELLAIRS: In regard to the inferior status of the diplomatic repre-
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    sentatives from and to China, is the hon. Member aware that the British Minister as well as the Allied Ministers gave a pledge at Pekin in August, 1917—I quote it verbatim—that the Powers would do all that rests with them to insure that China shall enjoy in her international relations the position and the regard due to a great country," and is not the hon. Gentleman's answer a violation of that pledge?
    Mr. HARMSWORTH: I do not think I can discuss that matter by way of question and answer.

    WEI-HAI-WEI.
    Commander BELLAIRSasked the Prime Minister whether the Japanese occupation of Port Arthur under the original terms of the lease was to expire on 27th March, 1923; whether, as a result of the Japanese 48-hour ultimatum of 7th May, 1915, China abandoned her claim for the return of this territory; whether, in regard to this and other results of the ultimatum, the United States in May, 1915, notified their refusal to recognise these results; and whether, as they affect our undertaking to return Wei-hai-Wei when Port Arthur is returned, we will notify China that we will not take advantage of negotiations to which we were not a party and will now negotiate for the return of Wei-hai-Wei?
    Mr. HARMSWORTH: The facts are as stated in the first part of the question. By one of the Sino-Japanese treaties of 25th May, 1915, the term of the lease of Port Arthur, which was originally 25 years, was extended to 99 years. On 15th May, 1915, the American Legation at Peking sent a Note to the Chinese Foreign Office recording the refusal of the United States Government to recognise such articles of the Sino-Japanese Agreements as might conflict with the provisions of any existing treaty between China and the United States. His Majesty's Government as at present advised do not propose to take any action in the sense suggested in the last part of the question.

    CANADIAN CATTLE (ROYAL COMMISSION).
    Mr. JAMES GARDINERasked the Prime Minister if the Irish Department of Agriculture has employed counsel or is being legally represented at the Royal

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    Commission on the Importation of Store Animals; has the Department other representatives in attendance in addition to legal representatives; will the expenses be provided out of public funds; and what will be the amounts payable?
    The ATTORNEY-GENERAL for IRELAND (Mr. Denis Henry): The Department of Agriculture and Technical Instruction for Ireland are being legally represented at the Royal Commission on the Importation of Store Cattle. In addition members of the Department's staff are in attendance from time to time to furnish the Commission with figures or other information as required. The expenses will be provided out of public funds. It is not at this stage possible to say what they will amount to.
    Mr. GARDINER: Will the right hon. Gentleman consider whether it is fair and reasonable to provide counsel to help on one side of the inquiry, and to pay nothing on the other side
    Mr. HENRY: The Department of Agriculture and Technical Instruction in Ireland are safeguarding one of the most important industries of the country.
    Major M. WOOD: Are we to understand that they are representing the Government view in this matter?
    Major NEWMAN: Are the Scottish Board of Agriculture providing their own counsel?
    Mr. HENRY: They can if they like.
    Major WOOD: Can I have an answer to my question? Are the Irish Department of Agriculture presenting the Government view on this question?
    Mr. HENRY: They are presenting the view which they entertain with regard to Ireland.
    Major WOOD: And is that view different from that held by the Government?
    Mr. SPEAKER: It is impossible to discuss the question in this way.

    EGYPT (AIR STATIONS).
    Sir W. JOYNSON-HICKSasked the Lord Privy Seal when the Colonial Secre-
    890
    tary will make his promised statement on the position of Egypt from the Air Force point of view?
    Mr. CHAMBERLAIN: My right hon. Friend included a statement on this subject in his speech on the Vote for the Middle East. Any further statement, which, I presume, would be made by the Secretary of State for Air, must take place in the discussion of the Air Votes.
    Sir W. JOYNSON-HICKS: I listened to the whole of the speech, and there was not a word about air in it. Does the right hon Gentleman not remember that the Secretary for the Colonies went out to Egypt, taking with him the Air Staff, and that he distinctly promised, on the original Air Estimate, that on his return he would deal with the very important question of the maintenance of the air stations in Egypt?
    Mr. CHAMBERLAIN: At the time when my right hon. Friend said he expected to deal with the air situation in Egypt he was Secretary of State for Air as well as Secretary of State for War; but the speech which the right hon. Gentleman delivered the other day was of such great moment, and dealt with problems which so interested my hon. Friend that perhaps he overlooked this particular passage.
    Sir W. JOYNSON-HICKS: I did not hear it.
    Lieut.-Commander KENWORTHY: Neither did I.
    Mr. CHAMBERLAIN: Hon. Members must have overlooked it.
    Sir W. JOYNSON-HICKS: It must have been a very rarefied statement.

    MIDDLE EAST (DEBATE).
    Sir W. JOYNSON-HICKSasked the Lord Privy Seal when he will give another day for the continuance of the Debate on the Middle East Department?
    Mr. CHAMBERLAIN: I hope that it may be possible to allocate a Supply Day in the course of next week to the Colonial Office Vote in order that this discussion may be resumed. I would, however, suggest that, if this course is followed, it would probably meet the general convenience of the House if the discussion

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    on the Middle East Department came to an end by about 6 o'clock, so that there may be an opportunity for a general discussion on other matters arising out of the Colonial Office Vote.
    Mr. ORMSBY-GORE: Is the right hon. Gentleman aware that a great many Members wish, on this particular Supply Day, to discuss the question of Southern Rhodesia, arising out of Lord Buxton's Report, and also the future of Northern Rhodesia?
    Colonel WEDGWOOD: And East Africa?
    Mr. CHAMBERLAIN: It was proposed to finish the discussion on the Middle East on the first day, but a desire was expressed by representatives of influential sections of opinion that the discussion should be resumed on a later day, and I endeavoured to make an arrangement, which is summarised in the answer I have given, which would both meet the desire of those who wish to resume for a short time the discussion on the Middle East and give an opportunity of discussing other matters germane to the Vote.
    Mr. HOGGE: Is it not a fact that that has already been agreed, and is it not further agreed that my right hon. Friend proposes to extend the time from 11 till 12 on that Supply day, in order to meet the wishes of those Members who desire to discuss other Colonial Office points?
    Mr. CHAMBERLAIN: Yes, Sir, on the understanding that we sit not later than 12. I am prepared to do that in order to give a little more time for discussion, and we propose beginning with the resumed discussion on the Middle Eastern Vote. That was the arrangement come to between the two sides of the House.
    Sir J. D. REES: Is the right hon. Gentleman aware that one feature of Debates on the Middle East is the exclusion of middle-aged experts from the East?
    Mr. CHAMBERLAIN: I console myself by the thought that those hon. Gentlemen find other opportunities of making their voices heard.
    Earl WINTERTON: Will the right hon. Gentleman consider whether some of
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    these matters ought not to form the subject of a separate Debate? For example, the position of Southern Rhodesia, in view of the great importance of the whole future of Rhodesia, is scarcely a Colonial Office question. Will the right hon. Gentleman consider the making of that the subject of a separate Debate?
    Mr. CHAMBERLAIN: As soon as I attempt to find an opportunity for discussion, my Noble Friend, or some other Member, asks that some other subject may be introduced. There is not unlimited time at our disposal. It rests, of course, not with me, but with the Chairman of Committees, whom he shall call, and the subject first taken depends upon who it is that the Chairman calls. I thought that the subject which has been indicated as the one upon which it was immediately desired to have a discussion was the East African question.

    NILE DAMS.
    Mr. ORMSBY-GOREasked the Under-Secretary of State for Foreign Affairs whether work has ceased on both the Blue and White Nile dams; what was the original estimate for the cost of the two dams, respectively, and what is the present estimated cost; how much money has actually been spent to date on each dam; whether there is any financial liability in respect of either falling upon the British Treasury under the Soudan Loan Act of 1919; and, if so, what is the annual charge for interest which was guaranteed by the British Government?
    Mr. HARMSWORTH: As the answer contains a number of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
    The following is the answer:
    Work on the White Nile dam has been suspended, but is proceeding on the Blue Nile weir. According to information recently submitted to the Egyptian Government, the White Nile dam was summarily estimated in 1914 to cost £E. 1,000,000, but this estimate was made before any complete examination of the site had been effected. In 1918 the figure was revised to £E. 1,700,000, and in 1919 to £E.2,200,000. The latest estimate for the dam itself, exclusive of subsidiary works which its construction would in-

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    volve, amounts to £E.5,700,000. The Blue Nile weir and Gezira canalisation project was estimated in 1916 to cost £E.2,550,000, and in 1919 this estimate was revised to £E.3,500,000. The latest estimate amounts to £E.8,252,800. Actual expenditure up to the 31st March last on the White Nile dam amounted to about £E.556,000; that on the Blue Nile weir and canalisation scheme will amount on the 30th June to about £E.3,264,000. No financial liability in respect of the White Nile dam is incurred by the British Treasury. The contingent liability of His Majesty's Government in respect of the guarantee under the Soudan Loan Act, 1919, of interest on loans raised by the Soudan Government, is £350,000 sterling per annum.

    KANTARA-HAIFA RAILWAY.
    Sir J. D. REESasked the Under-Secretary of State for Foreign Affairs whether repayment is being made to the British Government for the standard-gauge railway from Kantara to Haifa and the branches of that railway to Jerusalem and Beersheba; and whether the Egyptian Government will take over the Kantara-Rafa section, which runs through Egyptian territory?
    Mr. WOOD: It is proposed that the capital value of such parts of the railways in Palestine as were constructed by the British military authorities shall be made a charge against the Palestine Government. The properties in question, however, have not yet been valued. As regards the last part of the question, the matter is still under discussion, but the Egyptian Government have not yet agreed to take over the section in question.

    AGRICULTURAL WAGES (ARREARS)
    Mr. HARTSHORNasked the Minister of Agriculture whether he can state the number of cases relating to arrears of wages due to agricultural employés investigated by officials of the Agricultural Wages Board up to a recent date; what was the total amount of such arrears; how many prosecutions were undertaken; and what were the total fines inflicted?
    Major BARNSTON (Comptroller of the Household): The number of workers whose cases have been investigated by the Agricultural Wages Board since its institution up to the 11th instant is about 26,000, the number of employers involved being about 10,000. The total amount of arrears of wages paid is £38,225. Prosecutions have been instituted against 334 employers, and resulted in the infliction of £964 in fines.

    PEMBREY FARM SETTLEMENT.
    Mr. HINDSasked the Minister of Agriculture what is the total sum expended at Pembrey Farm, up to the 31st March last, in respect of land, buildings, improvements, stock, implements, labour, and all other outgoings; what are the total receipts for the same period; how many ex-soldiers have been accommodated on the farms; what portion of the land is still farmed by the Ministry; and whether any change of policy is contemplated?
    Major BARNSTON: In reply to the first two parts of mw hon. Friend's question, the accounts of the Pembrey Farm Settlement up to 31st March last are now in course of preparation, and will be published as soon as they are completed. The latest information available in a complete form is contained in Command Paper 1184. In reply to the third part of the question, four ex-service men have been provided with holdings, while 17 additional ex-service men are working on the Settlement. Of the latter, 14 are profit sharers and one is on probation. 1,300 acres are still being farmed by the Ministry, of which 572 acres are to be offered for sale by auction in July, with possession at Michaelmas. The Ministry proposes to await the result of the sale before arriving at a decision as to the future policy with regard to the rest of the Settlement.

    NAURU PHOSPHATE.
    Mr. J. GARDINERasked the Minister of Agriculture what quantity of Nauru phosphate has been sold on behalf of the British Government up to date to buyers in the United Kingdom and elsewhere, respectively; do such sales extend over one year or, if longer, over what period do they extend; and how

    895
    many tons per annum do they amount to to buyers in the United Kingdom and elsewhere, respectively?
    Major BARNSTON: I will make inquiries of the British Phosphate Commissioners and communicate the result to the hon. Member. The Commissioners, not the Ministry, are the responsible body for making sales of Nauru phosphate.
    Mr. ORMSBY-GORE: Are the Commissioners responsible to the Colonial Office, to the Ministry of Agriculture, or to the Board of Trade? What Government Department appoints them, and to whom are they responsible?
    Major BARNSTON: I should require notice of that question.

  INDIA.

    ARMY CADETS (SELECTION).
    Colonel Sir C. YATEasked the Secretary of State for India whether his attention has been called to the statement in the Press that at the passing-out examination for the cadets at the Royal Military College, Camberley, the last 10 on the list are now made to take commissions in the Indian Army, and that it used to be the other way about, the Indian Army being considered one of the plums of the service, and commissions in it could only be obtained by picked cadets who passed high out of the Royal Military College; and, if this is so, can he give any explanation of the change?
    Lieut.-Colonel Sir J. GILMOUR (for Mr. Montagu): My right hon. Friend's attention has been called to the newspaper paragraph referred to, and he has taken steps to have it contradicted. He would refer my hon. and gallant Friend to his reply to him on 23rd March. Selection for the Indian Army is, of course, purely voluntary. The second, fourth, fifth and sixth on the list, among others, all chose the Indian Army.

    NON-CO-OPERATION MOVEMENT.
    Sir C. YATEasked the Secretary of State for India whether his attention has been called to a statement in the Indian Press that so-called arbitration courts have been established in India in pursuance of the non-co-operation movement, and that the members of such a
    896
    court at Jainagar, in the Durbhanga district of Bengal, inflicted on a woman the sentence of having her head shaved and her face painted with tar and lime; and, if so, can he state what steps have been taken by the Government of India to put an end to these unconstitutional tribunals, and to punish the men composing them?
    Sir J. GILMOUR: My right hon. Friend has not seen a report of the case referred to. Arbitration is not in itself unconstitutional, and arbitrators' decisions in civil cases may be enforced in civil Courts if the parties accepted the arbitration, even if they resorted to arbitration on their own initiative and not at the instance of any Court. But if any person acting or professing to act as an arbitrator causes bodily harm to another, he is liable to prosecution in the ordinary course for a breach of the criminal law.
    Sir C. YATE: Have these men been prosecuted?
    Sir J. GILMOUR: I have no information on that point.

    PUBLICITY OFFICES.
    Sir C. YATEasked the Secretary of State for India whether his attention has been called to the article in the Allahabad "Pioneer Mail" of the 20th May, entitled, Public Information in India; and, considering that the publicity organisations previously existing have been abolished in the Punjab and Bengal by the votes of the local Legislatures, and those in other provinces are said to be starved in resources and cold-shouldered by the Administration, he will suggest to the Government of India the desirability of following the example of the French Government in the matter, as advocated by the "Pioneer," and of doing their best to give life to the movement in favour of better information for the people?
    Sir J. GILMOUR: My right hon. Friend has seen the article referred to. He does not accept as correct the statement that publicity offices in India have been starved in resources and cold-shouldered by the Administration. On the contrary, most local governments have been actively supporting them. I have already communicated to the Government of India my views as to the importance of the work.

    HOUSING (FARM WORKERS).
    Mr. SWANasked the Minister of Health if his attention has been called to the effect on the housing shortage in rural areas of the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, under which no farmer can be expected to let a vacant house to a non-farm worker, seeing that possession cannot be regained if the house should be required at a later period for the use of a worker on the farm, the lack of accommodation being thereby accentuated and houses left empty which otherwise would readily be let; and is he prepared to amend the Act in such a way as to remove this difficulty?
    Sir A. MOND: I have received representations to the same effect as the hon. Member's question, but they are based on a misapprehension. The usual requirement of alternative accommodation for a tenant does not apply where a dwelling-house is required for the occupation of a person engaged on work necessary for the proper cultivation of an agricultural holding. I will send the hon. Member a copy of the relevant section of the Act.
    Mr. SWAN: In the event of a large number of houses being out of use, is it not possible to relax that Regulation?
    Sir A. MOND: I was just pointing out that there is no such Regulation as the hon. Member seems to think exists.

  NAVAL AND MILITARY PENSIONS AND GRANTS.

    ROYAL INNISKILLINGS (JAMES BLAKE).
    Mr. A. WILLIAMSasked the Minister of Pensions whether his attention has been called to the case of James Blake, No. 25,577, Royal Inniskillings, who, at the hearing before the appeal tribunal, produced a certificate from the medical man who attended his family for 15 years stating that there was no sign of tuberculosis either in him or in any of his family prior to his enlistment; is he aware that Blake also had a certificate from his employer stating that he had never lost any work during the last 10 years through ill-health, and that the medical authorities of the Army nevertheless gave it as their opinion that he was suffering from tuberculosis before he enlisted; and whether he will reconsider this case and a very
    898
    large number of similar cases in which men are discharged in a helpless condition from the Army and are denied a pension on the ground that their disability is not attributable to their military service, although they were quite well before entering the Army?
    The PARLIAMENTARY SECRETARY to the MINISTRY of PENSIONS (Major Tryon): As my right hon. Friend informed the hon. Member in a letter dated 9th June decisions of the Pensions Appeal Tribunals are final, and my right hon. Friend regrets, therefore, that he has no power to adopt the course suggested in this question.
    Mr. WILLIAMS:Is the hon. and gallant Gentleman aware that these decisions rest upon the evidence given and that the Government gives evidence which is in direct conflict with that of those who have known the man for many years?
    Major TRYON: The evidence is given by the witnesses. These courts were set up by the action of the House of Commons independent of the Ministry and when the court decides in the same sense that the Ministry decide, the presumption is that the Ministry is right.
    Mr. WILLIAMS: Is it not a fact that the witnesses sent are the medical men employed by the Ministry who give evidence directly contrary to those who have known the man for many years?
    Major TRYON: I cannot accept that as an accurate statement of the facts.

    PENSION BOOK (H. TAYLOR).
    Mr. ROBERT YOUNGasked the Minister of Pensions whether he is aware that H. Taylor, reference No. S.E.S. 43,570, was notified on 22nd March that a pension book had been despatched to the Warrington Post Office, and that a similar notice was sent on 4th April informing him that a book was on that day sent to Sankey Bridges; will he say on which of these days was the book sent; and is he aware that on the 9th May Mr. Taylor was instructed that his pension was increased to 20s. from 16th March, and that from this last date no pension has yet been paid?
    Major TRYON: Pension books authorising payments of the pension due in this case were despatched without delay,

    899
    but I understand that no money has been drawn by the pensioner since 19th April. I am writing to my hon. Friend regarding the case.

    POST OFFICE SAVINGS BANK
    Mr. HANNONasked the Postmaster-General whether the values of the securities held by the Commissioners for the Reduction of the National Debt on behalf of the Post Office Savings Bank, which are set forth on page 3 of House of Commons Paper No. 127, dated 26th June, represent the nominal values of these securities, their market values on 31st December, 1918, or their values at the original purchase price; and if he can state what are the amounts of these three values respectively?
    Mr. YOUNG: The values given are the nominal values, the Table in question being directed, as stated therein, and as prescribed by Section 9 of the Savings Banks Act, 1904, to show the nature and amount only of the securities held. The security for the Post Office depositors is the Consolidated Fund of the United Kingdom, and is in no way affected by the market price from time to time of the investments held for the Post Office Savings Bank Fund.

  IRELAND.

    MILITARY OPERATIONS.
    Mr. A. HERBERTasked the Chief Secretary for Ireland whether, since his policy of reprisals has failed, it will be finally repudiated?
    Mr. HENRY: I cannot accept the premises contained in the hon. Member's question. The position is as stated by my right hon. Friend the Chief Secretary on the 13th instant in reply to a question on this subject by my hon. and gallant Friend the Member for Bury St. Edmunds. To that reply there is nothing to add.
    Lieut.-Commander KENWORTHY: Is the right hon. Gentleman aware that the Chief Secretary said this policy of official reprisals was being reconsidered, and has any decision been come to to modify it or abandon it?
    Mr. HENRY: No, Sir.

    RESTORATION OF ORDER ACT.
    Captain W. BENNasked the Secretary of State for the Home Department whether he has taken the opinion of the Law Officers of the Crown on the question of whether any words in the Restoration of Order in Ireland Act confer power upon him to make Regulations; and, if so, which are the words referred to?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Shortt): I have nothing to add to the answers already given on this point.
    Captain BENN: On what words in the Act does the right hon. Gentleman found his power to make these Regulations? That is a question which has never been answered.
    Mr. SHORTT: It is a question which I have answered several times.
    Captain BENN: Will the right hon. Gentleman, in order to save time, circulate in the OFFICIAL REPORT the quotation from the Act showing the power on which he relies?.
    Mr. SHORTT: It has been circulated with my answer several times.
    Captain BENN: Will the right hon. Gentleman, out of courtesy, do it again on this occasion?

    YOUNG MEN'S CHRISTIAN ASSOCIATION.
    Lord R. CECILasked the Secretary of State for War whether the Army Council has recently asked the Young Men's Christian Association to close down its work in some 19 centres; and what is the reason for this request?
    Captain KING (for Sir L. Worthington-Evans): My right hon. Friend would refer my Noble Friend to the reply on this subject given to my hon. and gallant Friend the Member for Clackmannan and Eastern on 12th May last. He is sending my Noble Friend a copy of this answer.

    NATIONAL HEALTH INSURANCE.
    Mr. CAUTLEYasked the Minister of Health whether a chaplain employed by a board of guardians at a salary of £60

    901
    per annum is excluded from the benefits of the National Health Insurance Acts and made ineligible for membership of an approved society by employment under the Local and Public Authorities Order, 1914; and, if so, whether he will take steps to have the Order repealed which inflicts such hardship on a deserving and poorly paid class of the community?
    Sir A. MOND: The High Court decided in 1912 that curates in the Church of England and certain other ministers of religion were not employed under a contract of service and were therefore outside the scope of compulsory insurance. There is not, in my view, good ground for placing a chaplain to a board of guardians in a different position.

    TEACHERS' SALARIES (WALES).
    Lieut.-Colonel HURSTasked the President of the Board of Education whether there is any truth in the rumour that the Board of Education has granted an interview to a deputation of Welsh teachers with regard to the salaries' question after declining to see deputations of teachers from various parts of England; and, if so, what are the grounds of such preference?
    The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. H. Lewis): The answer is in the negative.

    CRIMINAL INVESTIGATION DEPARTMENT.
    Mr. HARTSHORNasked the Financial Secretary to the Treasury whether he can state the present monthly cost of the Scotland Yard Department of which Sir Basil Thomson is the chief?
    Mr. SHORTT: I have been asked to reply to this question. The cost of the staff of the Department in Scotland House of which Sir Basil Thomson is head, beyond the pay and expenses of the normal establishment of metropolitan police officers, is £663 13s. 4d. a month.

BUSINESS OF THE HOUSE.
Sir D. MACLEAN: May I ask the Leader of the House what is the additional business for to-morrow other than that intimated last week?
Mr. CHAMBERLAIN: I propose to put down as first Order to-morrow the Committee stage of the Financial Resolution for the Unemployment Insurance Bill. The Bill is now in Committee and the Financial Resolution is necessary to enable progress to be made. As the right hon. Gentleman knows, the Bill itself is one of great urgency. I propose, therefore, to take it as first Order to-morrrow.

SAFEGUARDING OF INDUSTRIES BILL.
Sir G. COLLINS: I ask leave to move the Adjournment of the House in order to discuss a definite matter of urgent public importance, namely, "The uncertainty as to the future economic position of the country owing to the refusal by His Majesty's Government of definite information as to the treaties or engagements in force between the United Kingdom and other countries." In asking your permission, Sir, may I recall to your memory that the hon. Member for Chippenham, on 24th June, 1919, moved the Adjournment of the House in these words:
"That the uncertainty as to the future economic policy of the country, in the absence of definite steps for the prevention of dumping and the protection of key industries promised at the recent general election, is a matter of great urgency to this country and calls for immediate action by the Government."
Mr. SPEAKER: I am afraid that I cannot put this Question to the House. In the first place, the Motion submitted to me by the hon. and gallant Gentleman is in itself indefinite, and, in the second place, the Treaties for which he asks are all, I am informed, in the Library, and therefore available to his own research. As to the urgency of the matter, the Bill itself is to come on shortly, when he can put the argument on the question. He has quoted a precedent, but where there is one precedent one way, and scores in another way, I think I am bound to take the majority, especially when I think that the majority of cases are the right ones.
Colonel WEDGWOOD: Is not that the most recent one?
Mr. SPEAKER: That may be so. I think it must have been granted per incuriam.
Mr. HOGGE: May I call attention to Question 5 on the Order Paper to-day, on which it is stated by the President of the Board of Trade that the House would not be in possession of the names of the countries until after the Bill had become an Act of Parliament? If we were to know before we went into Committee to which countries this Bill would apply, I could understand the position, but if the position is as stated, that until the Bill becomes an Act of Parliament we shall not know those countries and those countries are to be named by Committees set up under the Bill, may I respectfully ask you how this House can discuss the full purport of a Bill for safeguarding industries, when the countries to which it does apply or does not apply will not be made known until the Committees have considered those countries?
Mr. SPEAKER: That is an argument on the Bill itself. I am told that the Treaties are in the Library. Perhaps the hon. Member may persuade the Committee to drop the Clause.
Sir G. COLLINS: May I point out that under the Guillotine Resolution the House may be prohibited from discussing this very important point? In view of your ruling, may I ask if there is any other way by which the House of Commons and the country can know for the first time the intentions of the Government on this Bill?
Mr. SPEAKER: Whether it will be ascertained in Committee or not I cannot say, but as to the allocation of time, the House has already decided that point.

SUMMER TIME BILL,
"to provide for the time in the British Isles being in advance of Greenwich mean time during a certain period of the year," presented by Sir JOHN BAIRD; to be read a Second time To-morrow, and to be printed. [Bill 145.]
ORDERS OF THE DAY.

  FINANCE BILL.
  Considered in Committee [Progress, 16th June].
  [Mr. JAMES HOPE in the Chair.]

PART III.
  EXCESS PROFITS DUTY.

    CLAUSE 23.—(Termination of Excess Profits Duty.)
    (1) Excess Profits Duty under the Finance (No. 2) Act, 1915 (in this Part of this Act referred to as "the principal Act"), shall be charged, levied, and paid in respect of the excess profits of every trade or business, and repayment and set-off of duty shall be allowed, for the period which is the final accounting period of that trade or business within the meaning of this Section in all respects as if that period were an accounting period within the meaning of Part III of the principal Act, and no period subsequent to the final accounting period shall be deemed to be; or to be part of, an accounting period within the meaning of the said Part III.
    (2) For the purpose of the provisions of this Part of this Act, the final accounting period of a trade or business shall be taken to be the period which commences at the end of the accounting period of that trade or business last preceding the fixed date and ends on the fixed date, and the expression "the fixed date" means in the case of a trade or business which was commenced on or before the fourth day of August, nineteen hundred and fourteen, whether there has or has not been a change of ownership, the date of the expiration of eighty-four months from the date of the commencement of the first accounting period of that trade or business and in the case of any other trade or business the thirty-first day of December, nineteen hundred and twenty:
    Provided that in the case of a trade or business formed by the amalgamation, after the fourth day of August, nineteen hundred and fourteen, of two or more trades or businesses, the final accounting period of the amalgamated trade or business shall be the period ending on the earliest day on which the final accounting period of any one of the constituent trades or businesses would have ended if it had remained a separate trade or business.
    (3) Where any trade or business is, after the termination of its final accounting period, amalgamated with any other trade or business the provisions of the principal Act shall have effect as if the amalgamation had never taken place, and the profits or losses of that other trade or business shall be separately computed.
    (4) Where any period, which would if this Act had not passed have been an accounting
    932
    period of any trade or business within the meaning of the principal Act, commences before and ends after the termination of the final accounting period of that trade or business, the total excess profits, and any deficiencies or losses, shall be ascertained as if the first-mentioned period were such an accounting period as aforesaid and shall be apportioned between the time ending on and the time subsequent to the date of the termination of the final accounting period in proportion to the number of months or fractions of months before and after that date respectively.
    (5) If, before the passing of this Act, any duty has been paid by, or repaid or allowed by way of set-off to, any person in respect of the excess profits or the deficiencies or losses, as the case may be, of any period (being a period which if. this Act had not passed would have been an accounting period), comprising any period subsequent to the termination of the final accounting period, those excess profits, deficiencies, or losses shall be apportioned in accordance with the foregoing provisions of this Section, and a proportionate part of the amount of duty paid, or repaid or allowed, as the case may be, shall be repaid or allowed by, or repaid to, the Commissioners of Inland Revenue, and any amount so repayable to the Commissioners shall be recoverable as a debt due to the Crown from the person to whom the repayment or allowance was made.
    (6) For the purposes of this Section trades or businesses carried on by companies shall not be deemed to have been amalgamated by reason that the profits of the companies are assessed together by virtue of the provisions of Rule 6 of Part I of the Fourth Schedule to the principal Act and the trade or business of each such company shall be treated as a separate trade or business.
    (7) The Commissioners of Inland Revenue may make such assessments as may be necessary to give effect to the provisions of this Section.
    The CHAIRMAN: The Amendment on the Paper in the name of the hon. and gallant Member for Leith (Captain Wedgwood Benn), to leave out Sub section (2) and insert other words, is out of place. If he will embody the substance of his Amendment in Sub-section (2) after the word "shall" ["business shall be"], it will be in order. The second Amendment, in the name of the hon. and gallant Member for Moss Side (Lieut.-Colonel Hurst), is not in order as it stands on the Paper, but he has handed in a manuscript Amendment very much to the same effect, which is in order.
    4.0 P.M.
    Lieut.-Colonel HURST: I beg to move, in Sub-section (2), after the word "business" ["that trade or business"] to insert the words,
    "or at the option of the taxpayer the thirty-first day of July, nineteen hundred and

    933
    twenty-one, the first accounting period of each such trade or business in the event of the exercise of such option being readjusted accordingly."
    The Amendment carries out the same intention as the Amendment on the Paper, but it is in order by making the provision exerciseable at the option of the taxpayer. The intention is to give the taxpayer the option of terminating the final accounting period for which his business is liable to Excess Profits Duty at the 31st July, 1921. This Amendment is of great importance to the whole business community. It is of peculiar importance to those firms which are liable to Excess Profits Duty and which, by the accident of fortune, follow the practice of making up their accounts at the end of one of the months in the later portion of the year instead of one of the months in the earlier portion of the year. The aim of the Amendment is to give these firms equality of treatment with other firms who have had the good fortune to close their books on such a date as the 31st July, the 30th June or the end of some month in the first half of the year. With regard to the Excess Profits Duty in general, the economic objections have always been well understood by all classes, but it was accepted as a necessity of war. That acceptance, however, was undoubtedly upon the footing that all classes in the business community who were to become subject to the duty were to receive equality of treatment. Upon the face of it, this Bill purports to give equality of treatment, because it makes the accounting period for all firms 84 months. The inequality arises from the fact that the 84 months are different in the case of all firms. The 84 months may coincide with 84 months of war period or post-war period, or with 10 or 11 months of pre-war period and only 73 or 74 months of war or post-war period. It is affected by the blind chance as to whether or not a business was in the habit in 1914 of closing its annual accounts at the end of a month in the earlier portion of the year or in August or some other later month.
    4.0 P. M.
    This inequality of treatment has caused very great hardship to those businesses which are in the habit of closing their yearly accounts in August, September, October, or November. On those dates in 1920 business was at a high tide of prosperity, and those firms made up their accounts at the
    934
    crest of a great wave of economic well-being, which affords a very great contrast to the depression to which all trades are liable at the present time, and have been liable since the beginning of the year. The result is that the firm which has made up its accounts on the 31st August, 1920, as being the termination of its final accounting period, is assessed for Excess Profits Duty upon debts which appeared in their balance sheet as good and which, therefore, remain good for the purpose of Excess Profits Duty. It is assessed on stocks which appear at their inflated values and which remain nominally as stocks at those inflated values, and it is also assessed on a basis of profits shown in the balance sheet as high profits and they remain nominally as high profits. On the other hand a very large proportion of the debts have proved to be irrecoverable. I have had a communication this morning from a firm in Huddersfield who state that 50 per cent. of debts which appeared as good in the balance sheet on 30th September lastyear have proved to be irrecoverable debts. The stocks have depreciated in many cases to the extent of three-fourths in Value since the end of August and September last year, while the profits which then appeared to be great have proved to be phantom profits. In other words, the balance sheet at the end of the final accounting period of a very large number of trades and businesses during the later portion of last year now appear to have reflected a mere mirage. The prosperity was illusory; but it has remained stereotyped as a liability to which these firms are subject in respect of Excess Profits Duty. That works very great hardship in the case of firms who by the mere accident of fortune make up their accounts on those particular dates. There may be two firms who compete with one another, who carry on businesses side by side and deal in the same markets, and whose profits and turnovers and general dealings are very much the same. One of those firms stands to lose to an immense extent by becoming liable to the Excess Profits Duty by reason of its final accounting period terminating at one of the dates to which I have referred, while the other firm by the mere accident of terminating its last accounting period in the earlier

    935
    portion of the year are able to recover their losses from the Government. One firm who wind up their final accounts on 30th September compare their position with the position of another firm who have the good fortune to wind up their accounts in June or July this year and who happen to be their chief competitors. They say:
    "They are able to reclaim all their losses in the depreciation of stocks, all their losses in bad debts, and all their losses in commitments up to the extent of the total sums which they have paid in Excess Profits Duty. In addition to this, owing to the statement by the Chancellor of the Exchequer in July last as to his intentions, they have been able to make their arrangements and to dispose of their stock at very low prices knowing that they had a claim on the Government for their loss, and by these operations they have been able to undersell the market and spoil legitimate trading."
    That is the case in regard to the competition between one English firm and another. It is just as much a hardship when you compare one British firm subject to the Excess Profits Duty, who have made up their accounts to the end of one of the months in the later portion of last year, with foreign competitors. There is no merit at all in happening to balance your books in the early portion of the year. There is no principle at the bottom of this differentiation. It is simply the mere accident of fortune. This Committee has to address its mind to the question whether this great inequality of treatment, involving very severe hardship to many firms, is in any way avoidable. It is perfectly true that in the Schedule there is a paragraph which provides that subsequent depreciation in stock after the last balance sheet has been taken can be brought into account, but that does not really cover a very large number of the cases where this hardship is felt, because many firms have been carrying on business on a system of forward contracts, and these forward contracts are not covered. In many cases, not one-quarter of the stock held by the firms, in whose interests I have brought forward this Amendment, is protected by the Bill in its present form.
    Another difficulty has arisen with regard to bad debts. A great many of these balance-sheets at the termination of the final accounting period have been adjusted on the footing that the debts were good debts. There is nothing in the
    936
    Bill at present enabling a readjustment of those balance-sheets to meet the eventuality of some of those debts proving to be bad debts. It is quite true that Clause 27 gives power to make re-assessments and repayments, but it is exceedingly general in its phrasing, and my own impression is that it is not sufficiently specific to cover these cases, even if it be intended in any way to deal with them. The Amendment, I admit, is a counsel of perfection. It proposes that there shall be one uniform date for the final accounting period at the option of the taxpayer, so that firms that stand to lose very greatly by having their final accounting period made up to some date last year can elect to substitute 31st July this year. It is quite true that there may be inconvenience in adopting this Amendment. It is, however, quite possible to preserve the existing datum line upon which the duty is to be based, and, although it is perfectly true that the Treasury may stand to lose something by a readjustment of this character, it is far better, after all, to stand a certain measure of loss than to bring it about that firms have to close down in consequence of having to pay very large sums in Excess Profits Duty, sums which never became properly due from them, and which in the present condition of affairs they are totally unable to meet.
    There must be a very substantial case for some such Amendment, because since it was put down upon the Paper a very large number of hon. Members have put down their names in support of it. Those hon. Members represent many districts all over the country, and that shows, I think, how gravely and widely this grievance has been felt. One recognises that in politics the true wisdom is the discovery, not of perfection, but of the second best, and those firms who feel the grievance would be grateful if he Government could offer them something short of the counsel of perfection indicated in this Amendment. There are new Clauses down in the names of the hon. Member for Limehouse (Sir W. Pearce) and myself which provide specifically for forward contracts and bad debts. If the Chancellor of the Exchequer can see his way to promise that those new Clauses will have not only his serious, but his sympathetic attention, that will do something to allay the very great apprehension which is felt in many business quarters at

    937
    the present time and which this Amendment is intended to meet. Of course, till he has given some indication of the Government's intention to meet these very genuine hardships, which operate intolerably on industries in many parts of the Kingdom, it is desirable that this Amendment should be before the Committee, because it serves two good purposes. First of all, it enables the Committee to realise how grave and how general is this hardship, how accidental it is in its origin, and how it has no foundation whatever either in merits or on principle. Therefore, it must be met in the interests of justice and of the large amount of capital and labour that is involved in those industries which by the mere accident of the date when they made up their final accounts in 1914 at present stand to lose so much. It is also desirable to bring it forward in the hope of eliciting from the Government some assurance that the claims of the firms and trades affected by the Bill in its present form may be met with a large measure of forbearance and generosity, so far as any Government can show forbearance and generosity in these difficult and troubled times.
    The CHANCELLOR of the EXCHEQUER (Sir Robert Home): I regret that I cannot give way to my hon. and learned Friend, who has put this matter with great lucidity. He has referred to the body of support which has been given to his Amendment since it was put down upon the Paper. I am not at all surprised that a variety of names have been added to his proposition. I would venture to collect a large number of names to any proposition which would relieve any portion of the community from taxation which at the moment they do not wish to meet. In point of fact, the object of this Amendment and of many others, is to have the best of both worlds. My hon. and learned Friend seeks to give to the trader an option as to the period when his accounting period for Excess Profits Duty shall cease. In the first place, that would be entirely contrary to the pledges which were put forward by the Lord Privy Seal (Mr. Chamberlain) when he made his announcement at Birmingham as to what he proposed to do in connection with the Excess Profits Duty. He then stated specifically that in the case of businesses which started before the War their accounting period would cease in seven years, and that as to
    938
    those which started during the War the end of the accounting period could be the 31st December, 1920. To vary that now would undoubtedly create far more dislocation in the business community than even the benefits which my hon. and gallant Friend would offer to them. Of course, if you offered them an option, every man would take that which suited him best, and the result would be exceedingly detrimental, because it would involve the Exchequer in losses which would run into many millions. Accordingly, I am not favourably impressed with the Amendment at the outset.
    I feel bound also to follow the pledges which were given by my predecessor and to stand by the dates which he announced. I should like, further, to say that I have met several deputations of business men upon this question, many of them being very representative deputations. I have never yet had put before me by any representative deputation the proposition which is now brought forward by my hon. and learned Friend. I do not say that this rules it out, but at least it shows that the business community has not readily taken to this way of dealing with the matter. I appreciate part of the argument of my hon. and learned Friend. It was pointed out to me that there would be very great disparity in the results to business people whose accounting period ended at different dates, and that under the circumstances in which we live to-day it would give certain traders advantages over others. I have met that point of view, I think, satisfactorily. In any case, I have at several times received grateful acknowledgments from various bodies of the business community for the proposition which I put forward and which is now embodied in this Bill. We provide that there shall be what we call a levelling process, by which all people who have stocks which are depreciating in value at the present time shall be able to write off their loss against the profit upon which they have previously paid, and that they shall be able to do that down to a common date, which is the 31st August of this year. In these circumstances, as I have satisfactorily met, as I believe and as I have been assured, the claims of the business community upon this matter, it is perfectly obvious that it would upset the whole plan if we were now to arrange that there should be an option

    939
    which would enable people to choose the 31st July instead of any other date at which their accounting period might happen to end. So far from creating equality, it is perfectly obvious that it would still leave business people able to choose very different dates, and perhaps choose them badly, thus putting themselves in a position of great disadvantage as compared with their competitors. For these reasons, I am afraid that I cannot accept the Amendment.
    Mr. HOLMES: I do not see how the Committee can ask the Chancellor of the Exchequer to accept this Amendment. In my view the original Act was all wrong in the date that it allocated for the end of the first accounting period. The Excess Profits Duty was intended to be a rough and ready way in which large profits made by some firms during the War should be taxed. Finance Bill No. 2, 1915, which dealt with that matter should have provided for taxing for Excess Profits Duty, profits made after the 4th August, 1914. Instead of that the original Act said that the first accounting period which was assessed to Excess Profits Duty shall be the first date at which the business makes up its accounts after the 1st August, 1914. The result is that there were firms in this country who made up their accounts—I know one—on the 8th August, 1914, and paid Excess Profits Duty for the year ending 8th August, 1914. Those profits had nothing to do with the War. Many other firms made up their accounts on the 30th September, 1914. Again, their profits had nothing to do with the War. Many businesses made up their accounts to the 31st December, 1914, and paid Excess Profits Duty on those profits though they had actually lost money since the 4th August, 1914, and were thus paying on profits made during the first seven months in 1914. That is the reason why there are so many anomalies in the assessment of this duty, but it is not the present Chancellor whom we blame for it. The mistake was originally in not assessing Excess Profits Duty as from the 4th August, 1914, for all businesses, but while professional accountants would bless the hon. and gallant Gentleman for sending them work there is no doubt that if the present Amendment were accepted it would create far more anomalies than exist under the law as it at present stands, together with
    940
    the Bill which we are now considering, and I therefore hope that the Chancellor will not accept the Amendment.
    Sir W. PEARCE: I do not think my hon. Friend opposite expected the Chancellor to accept the Amendment. I agree with my hon. Friend who has just spoken. In many respects the Chancellor has met the business community very fairly, but there is a particular fact of which he has so far not been able to take cognisance. That is the case of persons who made up their accounting period to the 31st December last, and have since had to face entirely unexpected circumstances. The enormous drop in values has changed the whole prospect of business since and made a great difference as to bad debts and materials for contracts and so on, with the result that the estimates for bad debts and many other matters are entirely wrong. Therefore it would be well if the Chancellor could be persuaded to deal with this particular point. There has been such a change in the commercial position since the 31st December last that those who have made their accounting period to the 31st December are at an enormous disadvantage compared with those who have taken the 30th June. Firms with exactly similar engagements who are competitors in business are in this unequal position, one being at a disadvantage as compared with the other. I hope that the Chancellor will take cognisance of this matter and deal with the point raised so skilfully by my hon. Friend opposite.
    Mr. A. M. SAMUEL: There is one small point on which I would like the Chancellor of the Exchequer to give an explanation. Accepting my hon. and gallant Friend's explanation as to how the fact of taking an accounting period earlier or later might be advantageous to one firm as compared with another, what would happen if a man bought a certain quantity of goods on the 1st December, but by reason of some misfortune these goods had not been delivered until, say, the middle of January? It would be a hardship if a great fall had taken place in the price of these goods, and he sustained a loss because the goods did not come in before the 31st December and consequently were not taken stock of then. If it can be proved that those goods were on their way under an old contract and had not

    941
    been delivered by the time the accounting period ended, will some relief be given to these people?
    Sir R. HORNE: My hon. Friend will notice the Clause in the Finance Bill which provides that such a transaction as he describes will come within the period anterior to the 31st August this year. The loss upon the goods in stock would be set off against the duties paid upon profits. It is dealt with in the White Paper.
    Mr. SAMUEL: As there is some doubt about it, I think that the matter should be made clear, so that we may understand how it stands, for I did not take it so from the White Paper.
    Mr. HOLMES: I suppose that my hon. Friend meant that if a man ordered goods on the 1st December, and closed his last accounting period on the 31st December, and received delivery of the goods in January—
    Sir R. HORNE: He would not be entitled to set off.
    Mr. SAMUEL: Is not that a great hardship on a particular man?
    Sir R. HORNE: I shall deal with that point, if I may, on an Amendment dealing with forward contracts.
    Mr. KILEY: As I understand, no claims can be made unless stock is taken and accounts are made up to the 31st August. Many firms make up their accounts and stock, not to the 31st August, but to September, October, or November. That will necessitate two stock takings and the employment of the accountants twice instead of once. Could not the Chancellor see his way to extend the period and let stock be taken at the usual time, and then allow claims to be made on a pro rata basis, and so save expense and trouble?
    Sir R. HORNE: I will deal with that specifically when we come to it.
    Amendment negatived.
    Major HILLShad given notice of an Amendment, in Sub-section (2), to leave out the words
    "the final accounting period of the amalgamated trade or business shall be the period ending on the earliest day on which the final accounting period of any one of the
    942
    constituent trades or businesses would have ended if it had remained a separate trade or business,"
    and to insert instead thereof the words
    "there shall be deemed to be a separate final accounting period for each of the constituent trades or businesses included in the amalgamated trade or business ending on the day on which the final accounting period of each respective constituent trade or business would have ended if it had remained a separate trade or business, and for the purpose of ascertaining the profits and losses of each such constituent trade or business in such final accounting period the profit or loss of the amalgamated trade or business at the latest accounting period thereof shall be divided in proportion to the statutory capitals of the constituent trades or businesses as fixed for the purposes of Excess Profits Duty at the last accounting period of each such trade or business next preceding the date of the amalgamations and the amount of the profit or loss of each constituent trade or business so ascertained, or such proportion of that amount as may be attributable to the number of days, if any, of the final accounting period necessary to make up the full period of eighty-four months for each of such trades or businesses, shall be deemed to be the sum which shall determine its assessment for Excess Profits Duty for that period."
    The CHAIRMAN: The Amendment of the hon. and gallant Gentleman is not in order. There would be some cases in which it would operate as a relief, and there might be others in which its effect would be the reverse. Therefore it would increase the charge.
    Major HILLS: Without disputing your Ruling, Sir, may I ask the Chancellor of the Exchequer if he has any announcement to make on the subject of amalgamated businesses?
    The CHAIRMAN: We have not dealt with amalgamated businesses, and it would not be in order to make a statement now.
    Captain W. BENN: I beg to move in Sub-section (2) to leave out the words
    "the period ending on the earliest day on which the final accounting period of any one of the constituent trades or businesses would have ended if it had remained a separate trade or business,"
    and to insert instead thereof the words
    "the earliest period at which the respective constituents of the amalgamated business would have terminated its liability under Excess Profits Duty if it had remained a separate trade or business; or at the option of the trade or business concerned a special accounting period, the date of which is the mean date between the earliest and the latest seventh accounting periods of the constituents of the amalgamation business."

    943
    I understand the Chancellor of the Exchequer is prepared to meet us in some way, and therefore I content myself with moving the Amendment.
    Sir R. HORNE: The question of amalgamated businesses gave the Inland Revenue a great deal of trouble. Obviously, it is a very complicated problem, and it becomes enormously complicated when you take into account businesses with different dates, so far as accounting periods are concerned, amalgamated during the period for which businesses are liable to Excess Profits Duty. I do not pretend to have any specific for arriving at perfection in this matter. Anybody who tries his hand at finding an appropriate plan will be able to urge objection to any single device which I may adopt. Therefore, the best I could do was to adopt something which was the least difficult to operate and was calculated to do least injury to the business of the country. First we considered what appears in one of the Amendments on the Paper—the plan of trying to disentangle the businesses so as to give them their own period of accounting as if they had never been amalgamated. That proved to be completely impossible.
    Next we said, "Let us take a mean date." A mean date, where you had several businesses, some of them very different in size and quality from the others which form a part of the amalgamation, really seemed just as illogical and imperfect in application as anything could well be. Accordingly we were driven from that solution. In the end we came to the conclusion that the best thing to do would be to give a date which was the earliest at which any of the businesses in the amalgamation finished its accounting period. That seemed a satisfactory plan, for we thought of the great clamour from the whole of the business community to end the Excess Profits Duty as soon as possible. But this Excess Profits Duty had certainly boomerang tendencies. Now a large number of people, who wished to see it ended as rapidly as possible, desire to see, if not its continuance, at least the continuance of its effect for a much longer period. The Order Paper has borne witness to the fact that most of the businesses of the country now desire to get an extension of the time of that benevo-
    944
    lent duty's operation. There was an idea suggested in one of the Amendments of the hon. Member for North-East Derbyshire (Mr. Holmes), to provide that where there was a disproportion between one of the businesses and another in an amalgamation, an account should be taken of the disproportion and that a method should be discovered, left to the discretion of the Inland Revenue in the main, by which that disproportion could be met. That is a very difficult thing to do.
    We have devised a method which, I think, comes as near a practical scheme as anything of which I can think. We propose to provide, taking into account the disproportion in businesses, that that which has had the largest pre-War standard of profit shall rule, or, at least, have a preponderating effect in ruling, the date at which the accounting period shall be assumed to end. Suppose you had, for example, and in very rough fashion, one business amalgamated with another, where one of the businesses has three times the pre-War standard of profit of the other, then the accounting period will end—again to use very rough language—three times as near to the date at which the larger business would have ended as to the date at which the smaller would have ended. You can work it out in a large number of instances. It does not sound like a scheme which you could explain on the pure grounds of logic, but logic, after all, has very little to do with business. We think it will work out in practice fairly, justly and equitably in all the, circumstances. Accordingly, I have had a Clause drafted on these lines. It will, of course, necessitate a Resolution in Ways and Means, as it involves a charge, and a recommittal of the Bill; but if the Committee is satisfied with the general outline I have given of the scheme, it may avoid discussion of some of the Amendments on the Paper, and hon. Members will then be able to consider the precise terms of the Clause when it appears on the Paper.
    Mr. HOLMES: I think the Chancellor of the Exchequer has met us fairly and considerately. This was obviously a very difficult point with which to deal, and having regard to all the difficulties I think the new Clause is a sure and ready way of settling the matter, and probably it does it as equitably as any way that has

    945
    been thought of by anyone. In the circumstances I suggest to my hon. and gallant Friend that he should withdraw his Amendment.
    Major HILLS: The Chancellor of the Exchequer is quite right in saying that, now Excess Profits Duty is going, businesses are showing an extraordinary affection for it. In fact, one can see the picture of businesses standing round the death-bed of Excess Profits Duty and saying, "We did not like you very much when you were alive; in fact, we disliked you extremely; but please do not die just yet." Anyhow, though death has not come, dissolution is near. We have to arrange the exact hour of death, and the Amendments on the Paper have been directed to finding a proper kind of dissolution. We are all rather impressed with the merits of our own suggestions, and I still have a modest belief that mine is the best, and that the two constituent parts should bear their share of the tax or claim their share of the refund in proportion to their pre-amalgamation capital. In view of what the Chancellor of the Exchequer has said I do not propose to argue that, but I want to make sure that I understand his suggestion. I believe it to be this: That the larger business will have, say, a dividend standard of £50,000 a year, and a smaller business a dividend standard of £10,000 a year. Therefore, in the larger business the standard dividend is five-sixths of the amalgamation dividend. Assume that the larger business would come out of Excess Profits Duty six months after the smaller business, I understand that the amalgamated business will come out of Excess Profits Duty five-sixths of this six months, or five months, after the earliest period, or one month short of the longest period. If that is so, I think it very fairly meets my point. Of course, it does not meet it in all cases, but one cannot expect everything. I think it is a solution that might very well be accepted.
    Mr. MANVILLE: I think the solution proposed by the Chancellor of the Exchequer is equitable and will meet what must be a very complicated question. I am confident that it will satisfy those who take exception to the Clause as it originally stood. I therefore hope the hon. and gallant Member will withdraw his Amendment.
    Captain W. BENN: I am very much obliged to the Chancellor of the Exchequer for the treatment he has meted out to the Amendment. His solution has the elements of a just and equitable arrangement. Would he be able to circulate the draft of his proposed Amendment to-night?
    Sir R. HORNE: Yes.
    Captain W. BENN: I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. HOLMES: I beg to move, at the end of Sub-section (7), to insert a new Sub-section—
    "(8) For the purpose of removing doubts, it is hereby declared that in Sub-section (3) of Section thirty-eight of the principal Act, the words 'trade or business' shall be substituted for the word 'person,' and that the necessary verbal alterations shall be deemed to have been made."
    This Amendment is designed to reverse the House of Lords decision in the Gittus case. The Finance (No. 2) Act, 1915, imposed Excess Profits Duty not on persons but upon trades or businesses Sub-section (1) of Section 38 stated:
    "There shall be charged, levied, and paid on the amount by which the profits arising from any trade or business—"
    and so on; and then in Section 39 it says:
    "The trades and businesses to which this part of this Act applies are all trades or businesses—"
    and so on. It was trades or businesses upon which Excess Profits Duty was assessed. The duty of paying was imposed on persons for the time being owning the business. Sub-section (3) of Section 38 says:
    "Where a person proves that in any accounting period, which ended after the 4th day of August, 1914, his profits have not reached the point which involves liability to Excess Profits Duty, or that he has sustained a loss in his trade or business, he shall be entitled to repayment of such amount paid by him as Excess Profits Duty in respect of any previous accounting period, or to set off against any Excess Profits Duty payable by him in respect of any succeeding accounting period, such an amount as will make the total amount of Excess Profits Duty paid by him during the whole period accord with his profits or losses during that period."
    So that the right of payment or the right of set off was not given to a trade or business, but was given to a person. As a result of what one may assume was ere thoughtless drafting, a great many difficulties have arisen, and there is a considerable amount of feeling concerning

    947
    the unfairness with which this particular section operates. I have referred to the Gittus case. That was a judgment given on April 18th last, and the facts, briefly, were that a son succeeded to the business of his father, a wagon builder, at Penistone. The father had paid Excess Profits Duty. The son incurred a loss, and claimed repayment of a portion of the Excess Profits Duty which had been paid by his father. Notwithstanding that it was the same business, and that Excess Profits Duty is levied upon trades and businesses, the right of the son to claim repayment in respect of his father's business was refused by the Inland Revenue. As a result of the wording of this Clause the House of Lords upheld the Inland Revenue and the appellant was held to be wrong.
    The result of that case is, that a number of men who have paid Excess Profits Duty cannot now recover. I will give one example. A firm, consisting of four partners, was carrying on business in a well-known North of England town. At the beginning of 1918 they decided to form themselves into a private limited company, and they divided up the shares in exactly the same proportion as they had shared the profits in the past. It was really the same thing continued as a private limited company, the four of them holding all the shares between them instead of private partnerships. Under this decision they are unable to recover the Excess Profits Duty which they paid. This morning I had a letter from Manchester giving me another case from there, in which a man turned his business into a limited company and, although practically the whole capital belongs to him, repayment of the Excess Profits Duty, which he himself paid, is being refused to him. I am quite sure that was never intended. I want to point out, on the other side of the picture, something which makes the unfairness all the greater, and the chagrin of the taxpayer who cannot claim, all the more. A limited company is treated as the same trade or business right through the period. You may have in 1914 a limited company whose shareholders are A. B, C, and D. In 1916 they may sell all their shares to F, G, H, and I, and because it is a limited company, F, G, H, and I can recover the Excess Profits Duty which A, B, C, and D paid. I suppose in all
    948
    Acts of Parliament hardships will occur in one way or another. I believe in this case the word "person" was thoughts-lessly put into the original Act so that it is a person who has to prove that profits have not reached the point which involves liability to Excess Profits Duty.
    As a matter of fact, the Excess Profits Duty is assessed upon trades and businesses, and this Amendment would make this Clause dealing with claims for repayment read so as to provide that where it can be proved that a trade or business in any accounting period has not, so far as its profits are concerned, reached the point of liability for Excess Profits Duty, or if a loss has been sustained, the trade or business shall be entitled to repayment. That would make the trade or business the entity assessable for Excess Profits Duty, and it would be the trade or business which would have the right to claim repayment, so that the person who for the time being owned the business might either be called upon to pay or had the right to recover. The effect of that would be in some cases, that men would have the right to recover duty which had been paid by other persons, but that happens under the law at present, as in the case I have given, where the shares changed hands. Even, apart from the Gittus case, there have been many cases in which commercial men have bought businesses and taken a risk feeling that these businesses, if they were paying Excess Profits Duty, also carried with them the right of recovery in the event of losses being made. That point would be taken into account in fixing the purchase price. If a man who had paid Excess Profits Duty handed over to his successor a probable right of recovery he would take that into account in the price demanded. The Gittus case upset the prevailing opinion with regard to this matter and is causing a feeling of great uneasiness amongst businesses where ownership has changed, so far as the law is concerned, by a partnership becoming a company, but where it has not really changed as a matter of fact. I hope the Chancellor of the Exchequer will see his way to accept the Amendment.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hilton Young): I should say at the outset that it will not be possible to accept this Amendment. With a great deal of what has been said by the hon. Member for North East Derby

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    (Mr. Holmes) I am in agreement, but I find it is rather agreement on questions of detail than on the question of principle. I think the Committee will best appreciate the reason why it is impossible to accept this Amendment if I go back rather far to the beginning of the hon. Member's argument. It is not possible to agree with him that the Excess Profits Duty, any more than any other duty or tax, is a tax upon businesses as entities and not upon persons. Every tax is in the last resort a tax upon the person and is paid by the person, and in this instance Excess Profits Duty bears that out. In all stages of its application it has reference to the burden imposed on the people who pay, and not to businesses regarded as separate entities. For that reason I should be inclined to quarrel a little with the hon. Member's references to the use of the word "person." There is no question of its being a result of thoughtless drafting. I should be inclined to say that the word "person" does really carry out what is the bed-rock principle of the Excess Profits Duty, that it is a charge personal to the man who pays it and the man who carries on the business, and that for very practical reasons it cannot be attached to the business as an entity distinct from the person or persons who carry on the business. I do not really think there will be any dispute between the view I have advanced and that advanced by the hon. Member, as regards the great majority of ordinary cases of the transference of a business to a successor. In these cases, as he said, when there is a true change in the person carrying on the business, when there is such a thing as a sale, the fact that there are certain conditions outstanding at the time of the sale as regards liabilities for and right to repayment of Excess Profits Duty, is obviously taken into account in the price or the consideration for the transfer of the business. Those matters are adjusted in the price and the individual who knows of these outstanding conditions, in taking over a business, has therefore nothing to complain of. Let me go further and point out what extraordinary results this Amendment might have in application to particular cases. If a business has been badly managed by the transferor and then the transferee manages the business well, what may happen? The transferor may have made a loss on which he would be entitled to allowances. The
    950
    transferee, by managing the business well, may be making a profit, but under the Amendment he would be entitled to the allowances accruing in the first place to his predecessor. You would in such circumstances as those, have a result which I venture to describe as ludicrous, namely, that the transferee would come into these allowances simply on the ground that his predecessor had mismanaged the business.
    5.0 P.M.
    We can go upon rather wider grounds in considering the possibility of accepting this Amendment, and on the very widest grounds I have to say it is not acceptable. In its present form it would work more inconvenience to the great majority of those who are liable to Excess Profits Duty than it would benefit the minority. The immense inconvenience, the doubt and uncertainty which this Amendment must create in opening up innumerable new assessments, would have a bad effect. I am inclined to believe that people would rather have certainty in this matter than the small amount of advantage this might allow them. Let me come to the ground on which quite openly and freely I can agree with the hon. Member. It appeals to me very strongly, that there are cases such as those which he has described, in which the application of the tax, according to what I hold is the true theory, does work hardship. It is so, in such a case as that of the conversion of a private firm, into a limited liability company without any change in the persons involved or the distribution of their interests in the business. In that case, admittedly, you have only a technical transfer, and the loss of the Excess Profits Duty allowances on such a transfer as that seems to work hardship. There, again, another point of view has to be considered. I do not quite accept the statement of the hon. Member that the decision of the House of Lords in the Gittus case is a surprise, or that it works any change in what has always been understood as to the manner of the application of this Statute. I rather imagine that the reverse is the case, and that the decision of the House of Lords upholds general practice and was in accordance with the expectations of the business world as a whole. It is this Amendment which rather tends to create surprise and a reversal of practice. It having been, as I contend, the general expectation of the business world that this Section would be applied in this manner, we have to

    951
    consider, in such a transfer or conversion of a firm, whether the step has not been taken by those concerned with their eyes open. They must have weighed the results, and, if they considered it was worth while to make the conversion of the business at the expense of sacrificing the right to allowance on Excess Profits Duty, then they did so with their eyes open, and they must have considered it worth while. I quite agree that there would be hardships possible in the too punctilious application of the Statute in some cases. I believe they are not hardships which it is possible to frame legislation to overcome, but they more approach matters of administrative action. As is so well known, in trying to frame legislation on such lines, you try to get a Clause to cover a certain number of hard cases, and wherever you fix your line, you leave a certain number of hard cases outside that line. You act with far more general equity by leaving it to administrative action than to have such an unsatisfactory Clause as that to which I have referred. Finally, I think the Committee always feel a certain natural reluctance to upset a legal decision of the highest authority, and, as in this case, as I contend, the decision is in accordance with right principles and right practice, I believe the Committee will be disinclined to upset the decision, or to change the law, as is proposed by this Amendment.
    Amendment negatived.
    Clause ordered to stand part of the Bill.
    Clause 24 (Adjustment of Excess Profits Duty over aggregate period of Charge) ordered to stand part of the Bill.

    CLAUSE 25.—(Amendment of s. 40 (3) of 5 & 6 Geo. 5, c. 89.)
    (1) For the purpose of determining the modifications to be allowed under Sub-section (3) of Section forty of the principal Act by reason of exceptional depreciation or obsolescence of assets employed in a trade or business due to the present War or the necessity in connection with the present War of providing plant which would not be wanted for the purposes of the trade or business after the termination of the present War, regard shall be had to the conditions prevailing on the thirty-first day of December, nineteen hundred and twenty.
    (2) Where any modification has been provisionally made under the said Sub-section
    (3) and it is found on the final determination of the modification that the amount provisionally allowed is too small or too great, the deficiency or excess, as the case may be, shall be taken into account in computing the excess profits or the deficiencies or losses, as the case may be, for the final accounting period.
    Sir W. RAEBURN: I beg to move, in Sub-section (1), to leave out the words
    "regard shall be had to the conditions prevailing on the thirty-first day of December, nineteen hundred and twenty,"
    and to insert instead thereof the words
    "there shall be granted as an allowance the difference between the original cost price of the asset, plus any subsequent capital expenditure, and its value after the War, and its value after the War for this purpose shall be its value on the thirty-first day of August, nineteen hundred and twenty-one."
    This Amendment puts forward two points. One is the principle upon which an asset, which has to be dealt with as a War asset, is to be valued; and the second is the date at which the valuation is to take place. The Clause as it stands in the Bill says, "regard shall be had to the conditions prevailing." That is the principle upon which the Clause has been based. It is an exceedingly wide phrase, and it is entirely wide of the promise that was given by the Treasury at the time the Excess Profits Duty was passed. Immediately after the Excess Profits Duty was introduced, shipowners—and I happened at the time to be President of the Chamber of Shipping—were received as a deputation by Mr. McKenna, then Chancellor of the Exchequer, and he explained to us the purport and scope of the Excess Profits Duty. He explained to us that it would be a War Enactment spread over all the years of the War, and that an average would be taken at the end of the time as to whether there had been profits, and how much those profits had been. We were afterwards deprived of that average Clause, and I am not raising it here at all. Then the Chancellor of the Exchequer went on to explain that obsolescence or depreciation of the value of the ship would be taken into account at the end of the War, and, after a long discussion, a Memorandum was issued by the Inland Revenue. It says:
    "It will be observed that the final settlement contemplated is to be made in all cases by reference to the post-War value of the ships concerned, and not to any estimated

    953
    pre-War cost which may have been provisionally considered in the circumstances referred to in the preceding paragraph."
    In other words, what he said was, "We wish shipowners to go on with building and buying, irrespective of what it costs. The ships are absolutely necessary. I quite realise values may go very high, but, after the War, they will go very low, and you will be entitled, when the accounting period comes, to take into account the price you pay, and the value of the vessel at the end of the War." It was a very definite statement, but when you come to the Clause in this Bill, instead of putting in words to carry out that undertaking, you have this wide phrase used:
    "Regard shall be had to the conditions prevailing on the thirty-first day of December, nineteen hundred and twenty."
    You can translate anything into that. You might say it is not a question of the value on the 31st December alone that should be taken into account, and that there are a great many other subjects to take into account. One of the contentions that the Inland Revenue could apply is that, instead of the value of the ship at the date in the Bill, the owner is entitled to an estimated value of the ship on the average of seven years of shipbuilders' prices. That is a totally different way of arriving at the figures. The value is the value in the market at the end of December. Of course, I shall be told, probably by my hon. Friend, that one objection is that the value of tonnage at the end of December last had been greatly depressed by an unexpected event, namely, the throwing on the market of about 300 German ships, and therefore the December value is not the real value of the market, but a value created by circumstances which no Chancellor of the Exchequer could possibly have conceived at the time he made the statement. I was struck by the statement of the Chancellor of the Exchequer when he said he would stand by the promises of his predecessor. That is all we ask him to do in this case. There is in the Memorandum, which is not a Memorandum issued by us, but by a Government Department, this explicit statement:
    "the post-War value of the ships concerned, and not to any estimated pre-War cost—"
    We think that the Amendment I am now proposing carries that out. It lays down a principle upon which the difference is to be arrived at, namely, the cost of the asset and its value at the end of the period, and
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    it does not leave us to the mere chance of what the Inland Revenue may regard as circumstances to be taken into account. That is as regards the question of the principle upon which values are to be arrived at. The second point is that, instead of 31st December, 1920, as in the Bill, the Amendment mentions 31st August, 1921. The undertaking was that the value was to be taken at the end of the War. We are not contending for a moment that there should be anything so indefinite as the "end of the War," whenever that may be, and we have put in a date. Why should any other assets be treated differently? I want to show how unfairly the 31st December would act towards shipowners. When the promise was made to shipowners it was known that the tonnage would cost far and away more than the price at which a ship would be valued at the end of the War. Out of what could the shipowner pay the enormous cost except profits? The very highest price of British tonnage was in January, 1920, when it was £31 a deadweight ton. The fall was unappreciable until June, of 1920, when the price was £24. In December, mentioned in the Bill, it had come down to £14, and from December till now it has fallen from £14 to £7 15s. It can be understood what a difference that means in the case of a vessel of 6,000 to 20,000 tons.
    Therefore, we think it is not fair to take the value at 31st December. I have no doubt the Chancellor of the Exchequer will say, as he has said already to-day, "You want the best of both worlds. You want to pick and choose the time when this valuation shall be made." I want to meet the Chancellor of the Exchequer fairly in the matter. We might say that the promise was "the end of the War." Why do you say 31st December for us and 31st August for others?" Put us all on the same footing, but if you will not do that—and the fall has been going on continuously from December till now, and has not yet ceased—I say at least meet us by inserting 31st August. To make it 31st December, just before the heaviest fall commenced, is anything but fair. There were those who were induced by high prices to clear out of ships. They walked off with all the profits, and those who stuck in, and continued to serve their country, are now placed in a position of great disadvantage. Many of the big

    955
    lines lost a great deal of their tonnage, which they replaced, sometimes at huge cost. Many of the general cargo shipowners bought standard ships from the Government at £18 and £20 per ton. We are not, therefore, asking anything like the full effect of the tremendous depreciation, but we say that for those who listened to the Government's invitation and pressure to go on building at whatever cost, and acquiring ships from elsewhere at any cost, it is not quite fair now to say to them, "In the first place we are not going to give you the plain and explicit principle that we promised, and we are not going to give you the benefit of the great fall that took place in the price of ships." I hope the Chancellor of the Exchequer will at any rate meet us in the matter, because this is not a matter that is raised only to-day. Ft is the outcome of this Memorandum on which we all acted. We believed in good faith that if we did carry out the Government's wish we would be treated in an equitable manner. I ask the right hon. Gentleman, therefore, to make it quite clear what is meant by this phrase, "regard being had," and also to meet us in the matter of the date of valuation.
    Mr. A. SHAW: I had no idea whatever that I was to take any part in this Debate. I thought those more intimately acquainted with the problem would have done so, but I must say that my hon. Friend (Sir W. Raeburn) has made what appears to me to be, although I know shipowners are not popular in this House, a very good case for a simple act of justice. This question divides itself into three stages. The first stage was a certain interview which Sir Norman Hill and others had with the late Chancellor of the Exchequer, Mr. McKenna, in 1916, and the Committee recollects the condition of affairs then. Shipowners were being pressed by the Government to go on with their construction at all costs, and they pointed out that prices were rising very rapidly and that costs were extremely heavy, and Mr. McKenna, after reviewing the whole situation, put this to them, that at the end of the War it would be the fair and proper thing to see that those who invested their money in ships at these very high costs were not prejudiced because they had come to the assistance of the country in doing so, and he made this
    956
    promise in 1916, that the difference between the enormous cost of the ships built during the War and under War conditions and the post-War value should be met by an allowance. That was the first stage, the promise made by Mr. McKenna, which was perfectly definite and clear. The second stage was that that promise was embodied in the Memorandum to which my hon. Friend has referred, a Memorandum from the Inland Revenue, dated 25th May, 1917, and the promise as made by Mr. McKenna was made perfectly clear by the terms of Clause 3 of that Memorandum, which is as follows:
    "Under Section 40 (3) aforesaid the Board of Inland Revenue recognise in normal circumstances claims for allowances (for Excess Profits Duty purposes) in respect of the depreciation in value of assets, such as ships built under War conditions at high prices which will sink to a lower level of value at the termination of the War. The aggregate amount of the allowance to he granted will, speaking generally, have reference to the difference between the original cost price of the asset plus any subsequent capital expenditure and its value after the War."
    There we have a definite promise intended to be acted upon, and in fact acted upon, and we have a definite standard laid down as the measure of the allowance which is to be made. That is the second stage. The third stage must have come about through some oversight. The third stage is Clause 25 of this Bill which, instead of embodying the clear and definite language of the promise in the first place, and the Memorandum in the second place, is of the vaguest possible description, and, lawyers advise, will be totally different in effect from the Memorandum upon the faith of which so much money has been spent and so many expensive ships have been built. I do not desire to follow my hon. Friend in the very able summary of the technical details which he gave, but I would point out one or two matters in connection with Clause 25. Towards the end of the first Sub-section of that Clause hon. Members will see that
    "regard shall be had to the conditions prevailing on the thirty-first day of December, nineteen hundred and twenty."
    That is a perfectly vague phrase. If the Government intended, as I have no doubt whatever that they do intend, to carry out the promise which was made and the Memorandum which was acted upon by those to whom the promise was made,

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    the language would not be so vague as that. The language of the Memorandum ought to be inserted in the Bill, and the Memorandum, instead of saying, "regard shall be had to the conditions prevailing," says, "The aggregate amount of the allowance to be granted will, speaking generally, have reference to the difference between the original cost price of the asset" and its value after the War, a perfectly definite measure which, I suggest to my right hon. Friend, ought in all fairness to be inserted. That would clear up the situation and carry out the promise, and those who have put their money at these inflated values into ships on the faith of that promise would feel that they had had perfectly fair treatment from the Government.
    The date is another matter, and I wish my right hon. Friend to clear up this point. For the purpose of traders' stocks the Bill, taken along with the Schedule, fixes 31st August as the date of valuation. With regard to plant, the date taken is 31st December last. That is a particularly unkind date with regard to ships, because the War conditions were still prevailing then, and, so far as shipping was concerned, we had not reached the end of the War. I do not think we have even now reached the end of War conditions, for it seems only yesterday, certainly only a very few weeks ago, since the Shipping Ministry was wound up, and the Board of Trade still possesses vast powers of interference with shipping. I would remind my right hon. Friend that here the language of the Bill and the language of the Memorandum are again at variance, because what the Bill says is 31st December, 1920, and what the Memorandum says is the value after the War. We know that the Government have been fixing different ends of the War for different purposes, but I suggest that in this connection, at any rate, it would be grossly unfair to take a date like the 31st December as the termination of the War for this purpose. It would suit the Treasury, but it would be extremely unfair to the subject. I will not labour that point any further, but I will confine myself to pointing out an illustration of the fact that here a substantial injustice is being done. It is true that it is being done to an unpopular class of people, but that should not make it any more acceptable to the Committee, because injustices done to
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    unpopular classes have a way of extending their scope and their effect. The contrast to which I would wish to direct attention is this. Take two shipowners, "A" and "B." "A" goes on building big expensive ships at the request of the Government, facing the slump which he knows will come, relying on the good faith of the British Government to carry out a solemn promise made by its Chancellor of the Exchequer, and reaffirmed in an official Memorandum. He suffers under this Bill to an enormous extent, because he did as the Government asked him and relied on the promise of the Government. "B," instead of going on building ships and carrying on business, clears out. He is able to realise high values for his ships and to put his money into something else, either Government investments or something else which does not depreciate nearly to the same extent as ships. He has nothing to fear from this Clause. It is only the man who, relying on the good faith of the Government, did as they asked him that is hit, and it seems to me—I speak with all reserve—that when the matter is viewed in that light it is clear that a substantial injustice has been done. I do hope my right hon. Friend, whose difficulties in the obtaining of money we all know, and whose gallant efforts to make ends meet we all sympathise with, will see here a substantial case for justice to a class which, though unpopular, is carrying on one of the great cardinal businesses of the country, and which really merits something far better at his hands, and the hands of the State.
    Sir R. HORNE: The Committee has listened to very trenchant speeches from hon. Members who are very well acquainted with the business about which they have been speaking. But I would remind them that their Amendment covers a much wider field than the shipping interest. It covers the business, not merely of shipowning, but of various factories and similar industries which during the War equipped themselves for the purpose of aiding the War, just as much as did shipping. I do not think anyone would by any means complain that the case which has been put by the two hon. Gentlemen who have just spoken was from their point of view, from the angle at which they look at it, exaggerated. There are, however, various considerations which the Com-

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    mittee must keep in mind in coming to a conclusion upon this matter. I should like to say at the outset that the Government will stand with complete loyalty by the pledges it gave through Mr. McKenna and other Chancellors of the Exchequer who dealt with this matter. They agreed, in the terms of the Memorandum which my hen. Friend who last spoke has quoted, that
    "The aggregate amount of the allowance to be granted, speaking generally, has reference to the difference between the original cost price of the asset, plus any subsequent capital expenditure, and its value after the War."
    My hon. Friend has asked that these words should be inserted in the Measure. The chief ground upon which he advocates this is that it gives, in clear language, the true measure of the allowance which ought to be made, whereas the Clause deals in very vague generalities. As I have said, we shall certainly fulfil what is involved in the pledge without any question. The Committee will take from me an assurance that this will be the main criterion by which we shall be guided. Quite frankly, I think the language of the Memorandum is much more indefinite and difficult to construe than the language proposed in the Bill, because, observe what it says:
    "The aggregate amount of the allowance to be granted will, generally speaking".
    I have never seen such language in an Act of Parliament. One cannot construe it. What it generally means, of course, we know; but thereafter the phraseology which is employed is not in any way more definite than that which is in the Bill. We say, "regard shall be had to the conditions prevailing on 31st December, 1920.' My hon. Friend has asked me if I did not think that was an indefinite phrase. I do not say whether it is indefinite or not. It is certainly not less definite than the phrase in the Memorandum, which is "has reference to" the difference between the original cost price of the asset, and so on. I cannot draw very much distinction as to definiteness between the phrases "having regard to" and "have reference to." I cannot think that the criticism which is made upon that part of the Clause has really very great justification. We must remember that the principle of the Memorandum will undoubtedly be applied.
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    It is perfectly plain, when you talk generally about having reference to the difference between the pre-War and the post-War value, that that does not mean that you can simply take pre-War value and post-War value—assuming that you can find post-War value!—and that the whole of the difference is to be written off. Take the case of a ship which was built at a cost of £15,000, say, in the year 1910. By the beginning of the War that ship was only worth £10,000. To-day, let us say—or whatever period satisfies my hon. Friend—it is worth £8,000. The Amendment would give the owner of that ship the full advantage of the difference between the cost price of building that ship before the War and the present value. That clearly would be inequitable result, because all the owner would be entitled to would be the pre-War value of the steamer at the time the War broke out. It is quite plain that you cannot go back to the building value of the ship years before the War and say, "The cost price must be taken as the measure of your liability." Nobody would contend that that is the meaning of the phraseology used in the Memorandum.
    Sir W. RAEBURN; That never entered into the calculation. That is not what we were discussing—vessels built before the War. These were vessels built during the War at War prices.
    Sir R. HORNE: I am taking what the Amendment says, and what it would involve. Let me take another case, since this Amendment not merely covers ships but factories. A great many munitions factories during the time of the War were private factories and received Government grants-in-aid to put up equipment for the purpose of making war material. I myself was familiar with places in which 30 per cent., 40 per cent., 50 per cent. and 60 per cent. of the cost of putting in that equipment was paid by the State. Again, according to this Amendment, there would be no allowance at all for the fact that the State had contributed in some cases the greater part of the expenditure. It is perfectly obvious, therefore, that although your main principle is pre-War value or the value of the building in the course of the War, against the post-War value, you must take into consideration all the circumstances in regard to the particular transaction. You cannot arrive at the result simply by putting the War period

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    cost price at that stage against the post-War value and judging it in that way. While I agree that the main principle is the principle set up in the Memorandum, it is subject in each case to consideration of the particular circumstances which apply to the industry. So much for the suggestion embodied in the ill and the phraseology of the Memorandum.
    I turn now to the question of the date at which the thing should be begun. It is obvious that the phrase "value after the war" requires to be construed. What is the period which might fairly be taken as the time "after the war"? In strictness we are told to adopt a period at which the war legally terminates. No one can say to-day when that will be, because, I suppose, until peace is signed with Turkey we shall not technically be at the end of the war. Obviously this would not be an appropriate time to wait for, and, equally obviously, I am sure nobody so interpreted the phrase "after the war" when this Memorandum was drawn up. I am sure the people at that time thought roughly that the time was when hostilities might cease, or some fair period after. Supposing in the middle of last year we had suggested making a valuation, then I do not know that my hon. Friend behind me would have taken very much exception to it—
    Sir W. RAEBURN: Oh, yes.
    Sir R. HORNE: I am not sure, because they happened to foresee the slump that was coming, that it would not have been said that it would be unfair to interpret the phrase "after the war" in such a way as to put the date on some day which was certainly more than a year after hostilities had ceased. We want to be fair in this matter. We do not want to take the high values ruling immediately after the Armistice. Equally it is not fair to the State to take the very bottom pit of depression, and to ask that these properties should be valued at that particular point of time. You want to take something between the two. December 31st, 1920, was more than two years after hostilities had ceased; so that by actual time it does not seem to be a very unfair period to take. But hon. Members say: "You have not dealt with the question of stocks in this way. You propose. 31st August instead of December for the
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    valuation of stocks.' The two cases are totally different. A case was presented for allowing the valuation of the stocks to take place up to 31st August of this year. It was this, and a very cogent case it was.
    The manufacturers said at the time: "When you started your Excess Profits Duty we had certain stocks in hand." Every manufacturer always has stocks in hand. "You valued these stocks at that time at the market price of the day. Well, we are quite entitled to be put under the umbrella of the Excess Profits Duty for that period of manufacture which took place during the currency of the tax, and that leaves us as at the end with a margin of stocks over, namely, those which we had roughly at the time you started your Excess Profits Duty. It is only fair that you should allow that to run off before you bring the operation of the Excess Profits Duty to an end." That is a very cogent case. It does not apply in the very slightest to the position of the ships. Accordingly, the analogy does not impress me in the very slightest. What would affect me really would be if it could be brought home to my conscience and bosom that I was doing anything unfair.
    Let me take the position of the shipowner which has been presented. It is said that the shipowner, at the suggestion of the Government, embarked upon the adventurous building with the fact staring him in the face that there was likely to be a big slump after the War, and in doing this he was benefiting the State at possible great injury to himself. That is the kind of case presented. But I have some personal acquaintance with what was going on in the building of ships, especially at the time when we required ships in view of the fact that the submarine campaign was at its height. I happened to be engaged at the Admiralty at the time and we had to deal with it. What I found at that time was not that you required to urge shipbuilders to build ships, but that the shipowners were praying for the opportunity to build; that the people whose ships were held back petitioned to be allowed to get on with the ships, the beginnings of which were already on the slips. Accordingly, what really happened at the time was that the shipowner perfectly well saw his opportunity for making profit by building ships. The hon. Member for Dumbarton (Sir W. Raeburn) told us

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    that the highest price ships reached in June, 1920, was £30 a ton. That was long after the hostilities had ceased and ships were at their highest point. Why were people buying them? There was no longer the necessity of ships being built during the War or inciting the shipowner to a patriotic endeavour.
    What happened was that the shipowner saw a profit in the distance, and it is impossible to say that because people have done something in business to obtain a profit that now you must go to the extreme of advantage with the result of doing the State the greatest possible injury. People were buying ships last year at a time when they thought the shipping boom was going to continue, but the slump came much sooner than anybody expected, and that is why we are asked to-day to make allowances which will continue until the 31st August. If I really could believe that we were doing anything unjust or unfair towards those interests I would be the first person to try and meet the claim put forward by my hon. Friend. I do not think, in fact, that I am doing anything unjust. I think the Government is taking a period which is not at all unfair in selecting the 31st December, 1920, for the purposes of this valuation. For these reasons I cannot accept this Amendment. Let me remind the Committee that many ships changed hands in the course of the War, and factories have also changed hands. But in none of these transactions has the capital paid anything in the shape of Excess Profits. Many people made large profits from the appreciation of capital value, and they paid nothing towards this duty. That is a fact that we have to keep in mind, and I have tried to meet the justice of the case so far as I am able.
    Sir W. RAEBURN: I cannot allow some of the remarks made by the right hon. Gentleman to pass without a reply. I do not think the Inland Revenue would allow the duty in the case which has been mentioned, because you could not say that the vessel had been built as a War necessity. Just look for a moment at the amount of money which the shipping companies have had to pay for liners in order to get delivery of those vessels which they were asked to go on building. Those are the people who will suffer. Those vessels are now costing
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    something like £1,000,000 instead of £250,000, and they are only just getting delivery of vessels now which have been held up by the joiners' strike for nearly six months. All that work was pressed upon the companies in order that the Government should get the benefit during the War. Consider the case of the owners faced with this enormous drop in value.
    There is another point of hardship of which the Chancellor of the Exchequer does not seem to be aware. I will give him my own case. We had a quantity of steel used for the construction of vessels, and it was commandeered by the Government, and we have been left to pay the higher price to replace that steel. There is a considerable difference between the price we have to pay now and what we contracted for some years ago. I want the Chancellor of the Exchequer to take these points into account, and I think he ought to meet us at least half way with regard to the period. The drop during that period has been very severe, and I do not think we are asking for a great concession. One point of the right hon. Gentleman's speech which will give satisfaction to the whole House is that the Government are prepared to carry out in spirit and in practice the promise made by Mr. McKenna. We know that many of these matters will require to be adjusted, but when once the principle has been laid down we are prepared to leave the matter to the Inland Revenue.
    Amendment negatived.
    Mr. HOLMES: I beg to move, in Subsection (1), to leave out the word "thirty-first," and to insert instead thereof the word "fourth."
    The Committee will realise that this particular Clause and the Section in the principal Act do not refer to ships alone. We have just heard speeches appealing to the Chancellor of the Exchequer to pity the poor shipowner. As a matter of fact this Clause and the one in the original Act refer to all businesses whether they were affected by the War or not. They paid excessive prices during the War for plant and machinery which has suffered greatly from depreciation and they have a right to put forward a claim under the 1915 Act. This Section is fixing the duty on which the final value of many of these assets up to the 31st

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    December last will be based. The Chancellor of the Exchequer's argument appeared to be that "we should value at the end of the War and we consider the 31st December, 1920, may be considered as the end of the War." I want to remind the right hon. Gentleman that his predecessor in office the year before last, when introducing his Budget, surprised not only the House but the whole country by increasing the Excess Profits Duty from 40 per cent. to 60 per cent. Excess Profits Duty was introduced as war taxation and although the War was over the duty was increased. The Chancellor of the Exchequer on that occasion said there was still a shortage of goods and people were still making large profits because the demand for goods is greater than the supply, and although war hostilities had ceased war conditions still remained, and therefore he proposed to continue the duty. That duty is still being continued.
    For these reasons I suggest that the end of the War so far as these promises are concerned should be synonymous with the end of the Excess Profits Duty. I want to remind the right hon. Gentleman that a large number of firms are being made liable to Excess Profits Duty up to the 31st March and 31st June this year and in some cases up to the 31st July, and is he going to say to them, "We said we would give you an allowance; we all give you depreciation with regard to your plant and machinery during the War, but we make you liable to excess profits up to the 30th June, 1921; but you must value your plant and machinery six months before you are liable to Excess Profits Duty." I am asking the Committee to make the date the 4th August which is the final date upon which any trade is liable to Excess Profits Duty. My point is that every trade or business should be allowed to value their plant and machinery for exceptional prices under this Clause on the last day for which they are liable for Excess Profits Duty and not six or seven months after. If I withdraw my Amendment I would like to know if the Chancellor of the Exchequer would be willing to accept as the date the end of the last accounting period, whichever is the latest.
    Sir W. RAEBURN: I agree with the arguments which have just been put forward by the hon. Member opposite, and I heartily support this Amendment.
    6.0. P.M.
    Sir R. HORNE: I think I have already answered many of the points put forward by the Mover of this Amendment, although he has certainly raised some new considerations on this question. He suggests that there are many businesses whose period of accounting will not terminate on the 31st December, and that a good many, will be going on till the 4th August. In point of fact, there are varying days, as one can well understand, down to the 4th August, and on that date not more than 3 per cent. will remain open. However, there is no real connection between the period for accounting and the valuation of the plant which has been acquired during the War. What we have to do in the case of this plant is to find a reasonable period at which the value should be determined, and the real point at issue is, if you have built plant or equipment for war purposes, at what point of time can it reasonably be said you have turned such plant over to peace uses; and when you have fixed that time what is its value for the purpose of making material which is consumed in peace-time instead of making material required for the waging of war? It is not a question of the stocks in hand which have to be brought within the accounting period. The whole question is, what is its value in time of peace when used in factories for the purpose of producing material which people consume in the ordinary walks of life? The determination of the date is a matter of opinion. We have fixed, as we think, on a period, at which it can certainly be said that the factories of this country have turned their war equipment into peace equipment, and no one will suggest that anybody is still using the plant for war purposes. I gather from another Amendment of the hon. Gentleman that he recognised there should be some qualification of value at the 31st December, as he desired to take into account not only the normal value at the fixed period, but also its value for ordinary trade. If that is his point of view, that can be just as easily determined on the 31st December as on the 31st August. I am afraid, therefore, I cannot assent to a change of the date.
    Mr. HOLMES: I will not press my Amendment if the right hon. Gentleman is willing to accept the later one to add at the end of Sub-section (1) the words "and the probable ultimate value in a normal period of such assets or plant."
    Sir R. HORNE: I cannot do that. Amendment negatived.
    Mr. HOLMES: I beg to move, at the end of Sub-section (1), to insert the words "and the probable ultimate value in a normal period of such assets or plant."
    In view of what the Chancellor of the Exchequer said a few moments ago, I hope he will be willing to add these words, for the purpose of giving greater clearness to the Section.
    Sir R. HORNE: In my view the Amendment of my hon. Friend would have a limiting rather than an extending effect. The phraseology used in the Bill by no means excludes calculation or consideration of the value of the machinery and its worth for ordinary peace avocations in normal times. My hon. Friend is in error in thinking that these words would be an assistance to claimants. They will not work out with the result which he anticipates, and I would rather leave the matter open for proper determination of value as on the 31st December.
    Mr. HOLMES: Having got that declaration on the record, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Clause ordered to stand part of the Bill.

    CLAUSE 26.—(Valuation of stock.)
    (1) Any person who is at the end of the final accounting period the owner of a trade or business subject to Excess Profits Duty shall be entitled to claim in respect of that duty relief under Part I of the First Schedule to this Act and also relief either under Part II or under Part III of that Schedule.
    (2) No claim for relief under this Section shall be allowed unless notice in writing of intention to claim the same, specifying under which Part of the said Schedule the claim is to be made, is given to the Commissioners of Inland Revenue before the first day of January, nineteen hundred and twenty-two.
    (3) The provisions of Part IV of the First Schedule to this Act shall apply to any claim made under this Section.
    Colonel WEDGWOOD: I beg to move, in Sub-section (1), to leave out the words "and also" ["this Act and also"] and to insert instead thereof the word "or."
    I am not an accountant, and do not propose to go into the details of the repayment of Excess Profits Duty or what the actual amount is. I have put down this Amendment because I want to get, if possible, from the right hon.
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    Gentleman a statement as to how much this is going to cost the country—into what liability it is going to land us. If you read Parts I, II and III of the Schedule, you will see that the people who have been paying Excess Profits Duty during the War and during the last two years are going to get something back from the Exchequer, and instead of Excess Profits Duty being a tax, it will be found to have been a compulsory reserve fund upon which companies are now to draw. Take the exception in Part III. According to that, any person who proves that the yearly average of his profits for the period between the 1st day of September, 1921, and the 31st August, 1925, both inclusive, is less than the amount of the percentage standard of the trade or business, or where there has not been one pre-War trade year than the pre-War standard of profits based on the statutory percentage on the average amount of capital employed in the trade or business during the first accounting period, or that he has suffered a loss in respect of that period and that the deficiency has arisen owing to the holding by him of trading stock at falling prices, he shall be entitled to certain repayments. But in many cases the percentage standard of the trade has been as much as 16 per cent. It is obvious that during the next four years the profits will be very low, so that under this proviso there may be enormous claims for refundment of Excess Profits Duty. It seems to me that under this Clause we are landing the State into an indefinite liability which the Treasury at the present time cannot possibly estimate. We do not know what the liabilities will be in 1925 when there will be a fresh House of Commons which may be faced with the necessity of paying back untold millions to these different trading companies. We ought, therefore, to have some explanation of the liability in which we are involving the country, and I think those who desire financial stability in the country will have to vote, not only for the Amendment, but for the entire excision of the Clause.
    Part III seems to be the most serious part, and by this Amendment I am asking that instead of people being enabled to claim cumulative repayments or refunds under Parts I, II, and III they shall only claim under Part I or under Parts II and

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    III, so that there might be some slight reduction in the sum asked to be refunded. The real point is that we must know before we saddle some future Parliament with an absolutely indefinite liability what the actual liability is to be. I think we are entitled to detailed information from the right hon. Gentleman as to what really the companies are going to get back under these proposals. My hon. Friend below me (Mr. Holmes), being an accountant, no doubt understands exactly where the State stands and where the companies stand, but I am bound to say that I have not the faintest idea as to what the actual result will be. Up till two years ago the companies were doing extremely well, and paying large sums in Excess Profits Duty. Since then there has been a slump, which is likely to last for at least five years. During that period there may be no profits, and losses may be incurred, and I want to know if the companies are going to be in a position to recoup themselves for those losses at the expense of the taxpayers. We ought to know what the liability is going to be, and we certainly ought not to land a future Parliament with a burden which the taxpayers might find it impossible to shoulder.
    The DEPUTY-CHAIRMAN (Sir E. Cornwall): If this Amendment be carried, the next one cannot be moved.
    Colonel WEDGWOOD: I do not intend to move any of the Amendments standing in my name.
    Sir R. HORNE: The question whether relief should be cumulative or not is, of course, a matter which requires considerable thought. My hon. and gallant Friend will remember that the two reliefs indicated in the White Paper and in the Report of the Financial Committee both became the subject of pledges by my predecessor in the office of Chancellor of the Exchequer, and accordingly it is essential, in our view, that we should stand by those pledges. What the precise cost would be—
    Colonel WEDGWOOD: Were the pledges given before the slump?
    Sir R. HORNE: Yes, but I think we are still bound to adhere to them, because a good deal has been done in reliance upon those pledges. In the next place, the alternatives which are there given are open to everyone who has been considering his business from the point of view of
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    the effect upon it of the termination of the Excess Profits Duty. I do not think we are in a position, even supposing that we wished to do so, to go back upon those pledges. All that has been done since those pledges were given has been to do what the business community very strongly desired, namely, to provide some equalising process which would not leave one business in a particular industry in a position of great advantage as compared with another business. In the result, what we propose to do, and what is embodied in this Bill, is to allow people to carry out the revaluation of their stock up to the 31st August, 1921, in order that they may be enabled to put the losses which they have experienced during that time against the profits upon which they paid Excess Profits Duty. The fact that we do this is not in reality a true alternative to each of the other two pledges which were given, and it would be quite out of the question to say that anyone who adopted one of the other two alternatives must necessarily be cut out of the levelling process. When you examine the conditions of each pledge, and the concession which it involves, there would be no relevency or logic in saying that, because a trader adopted the relief which was given in the White Paper, or the one given as a result of the Report of the Financial Risks Committee, he must, therefore, be excluded from the levelling process. There is no ground upon which we could say that. It is no doubt perfectly true that it is difficult to arrive at an estimate of the actual amount involved in these reliefs, because you cannot tell which of the two alternatives will be taken. Nevertheless, we are fully convinced that, in the interests of the trade and industry of the country, and in the desire not to make the position more difficult for them than it need be—and, therefore, in the and, in the interests of the Exchequer—we ought to give the relief which is embodied in the levelling process. In these circumstances, I am afraid I cannot accept the suggestion of my hon. and gallant Friend that we ought to depart from one of them, and I think we must leave them in the shape in which they are.
    Colonel WEDGWOOD: I cannot accept the explanation of the right hon. Gentleman. He has not made clear to us either what the liability is or whether it falls this year or five years hence, and he has

    971
    not dealt with the question of taking the years 1921 to 1925, averaging the losses, and deducting them from the Excess Profits Duty. That is the serious point. Is that part of the pledge given by the right hon. Gentleman's predecessor in office?
    Sir R. HORNE: I am sorry I did not explain it more elaborately, but I thought my hon. and gallant Friend would understand that the period 1921–25 is that which is involved in the relief given by the Report of the Financial Risks Committee, and that, undoubtedly, is a pledge of the Government.
    Colonel WEDGWOOD: And that would fall entirely in one lump sum upon Parliament in 1925?
    Sir R. HORNE: Not necessarily so at all.
    Colonel WEDGWOOD: Why not? They will not know.
    Sir G. COLLINS: I think the point which my hon. and gallant Friend has made is quite a reasonable one. He is anxious to find out from the Government what is the cost to the Exchequer of this concession, and what rebates or repayments will be granted in this year and in coming years through the insertion of this Clause in the Finance Act. The Chancellor of the Exchequer has recently issued a Circular to the Departments referring to the finances of the coming year. When that Circular was issued, there must have been in the minds of the Treasury certain facts as to the total revenue to be received from the arrears of the Excess Profits Duty in the coming year. Therefore, they must have taken into account, when that Circular was issued, the concessions which, as the right hon. Gentleman informed the Committee, were promised by his predecessor. Therefore, these pledges, which we are anxious that the Government should fulfil to the letter, will involve a loss of revenue to the Exchequer. We are anxious to find out what will be the proceeds from the arrears of the Excess Profits Duty in this year and in coming years. The arrears of Excess Profits Duty this year are estimated to bring in £120,000,000. That is the figure for which allowance was made in the Chancellor of the Exchequer's statement earlier in the Session. Now we
    972
    are anxious to find out whether these concessions will reduce the revenue for the present year. I think that that is a reasonable point for my hon. and gallant Friend to make, and I hope the Government will inform the Committee as to the nature and amount of the concession. A further point has come to light during recent days which bears upon this matter, namely, the loss incurred by the Sugar Commission, which amounts to £21,000,000. That will have to be found by the taxpayer. Now that the Report of the Sugar Commission has been presented to the House, the House learns for the first time that the Commission were anxious to increase the price of sugar, so that the loss should not fall upon the general body of taxpayers. My hon. and gallant Friend's point is, What is the loss which will fall on the taxpayer? I think it is a perfectly reasonable point, and I hope that the Chancellor of the Exchequer will give the Committee some information upon it before the Clause is passed.
    Mr. HOLMES: The Chancellor of the Exchequer is allowing all business firms in the country to revalue their stock during the last accounting period to the 31st August next, and it is impossible at the moment to make an accurate estimate as to the effect of such revaluation upon their liability to Excess Profits Duty or their right to repayment. No one can tell yet what the state of our trade and of the world's trade will be on the 31st August, and it is is difficult, therefore, to say whether prices are going up or down. If there were an upward tendency between now and then, it would improve the position of the Chancellor of the Exchequer. I would ask him if it is possible for him to say whether it is not the belief of the Inland Revenue authorities that there will always be coming in, from arrears of Excess Profits Duty or from the final assessment to Excess Profits Duty for 1921–22, 1922–23, and so on, more than sufficient to cover the claims for repayment which are likely to come under this Clause.
    Colonel WEDGWOOD: My hon. Friend (Sir G. Collins) has put the point admirably clearly, and my hon. Friend (Mr. Holmes) has also made the matter clearer to me. My difficulty, however, is this: Under Part III. you are allowing

    973
    traders to claim indefinite sums, depending upon what their profits are between 1921 and 1925. Until those four years are over, they cannot tell what their losses will be, but after that time, that is to say in 1925, every one of these companies will come along and say that they have made a loss, or that their profits have not been as much as they were before the War by so much—that before the War they made 16 per cent., but that in these four years they have made nothing; and they will claim repayment of Excess Profits Duty paid, it may be now, it may be three years ago. They will all have to wait until the end of 1925 in order to find out what their losses are and what their claim is. Then they will come to Parliament and say, "You must refund us so many millions." Up to then, year by year, there will have been sums coming into the Exchequer from arrears. All arrears will then be stopped, and then the payments will come. And now we have the Government coming forward and saying that they are pledged to do this, and putting the responsibility for these payments, of millions, it may be, on some future Parliament in 1925. The right hem. Gentleman has said that this was a pledge given before the slump came, and it is going to cost the taxpayers of this country millions. These light-hearted pledges given to big business interests from the Government Bench are to involve us in an expenditure of millions, and they say that, because it is a pledge, this House of Commons is bound to implement that pledge. It may be that the Government are bound to implement that pledge, but we on these Benches are not bound to implement it.
    That suggestion comes curiously from a Government which is going to throw over the pledges it made to the farmers six months ago and the pledges it made to the unemployed who put their 5d. into the Insurance Fund week by week. Pledges, however, made to big businesses, have got to be kept, because it is the next Parliament that will have to pay the debt. In 1925 the right hon. Gentleman will not be in power, but sitting in his place will be my hon. Friend the Member for Edinburgh (Mr. W. Graham), and he will be asked to pay. I do not know how many millions, because at some prehistoric date the late Chancellor of the Exchequer made a wild promise
    974
    before the slump came that these sums would be refunded to the payers of Excess Profits Duty. We shall, therefore, be bound to find hundreds of millions of pounds to make good that promise. The right hon. Gentleman is perfectly right to vote for this Clause, but we, obviously, are perfectly right to vote against it. By voting against it we register our intention, when 1925 comes round, of not implementing that pledge and of not paying that money back. We are showing it in the only way we can, namely, by going into the Lobby against the Government. It is almost terrible to see the way in which these enormous financial obligations are incurred quite lightly by hon. Members on the Gevernment Bench. When the time comes they either scrap them or pass them on to their successors. We do not want to carry the baby, and we shall show it by voting in the other Lobby.
    Sir R. HORNE: Perhaps I may say a word or two in reply to the somewhat exacerbated language which my hon. and gallant Friend has thought fit to use at the end of his speech. There have been pressed upon the Government, in regard to these matters, certain considerations of fairness and justice which seem to be entirely absent from my hon. and gallant Friend's mind. We have given weight to a variety of views, which, undoubtedly, show that the Excess Profits Duty, driven to a logical end, would have produced conditions of great unfairness in some instances, and would also have had the effect of putting such a burden upon the industry of this country as would make it really impossible to carry it on with any certainty of success. Under these circumstances I am sure no one would desire that the State should attempt to collect money. Accordingly, you have to take into account what is fair and just and what is practicable. Under these circumstances we arrived at certain conclusions which seem to have commended themselves to the Committee up to the time the hon. and learned Gentleman arrived. He did not have the benefit of hearing the Debate on the previous Amendments, which might possibly have changed his view. The Estimate for this year of the amount of Excess Profits Duty which will be collected is £120,000,000, and for next year £70,000,000. The hon. and gallant Gentleman asks by how much the concession upon the stock valuation will de-

    975
    plete the sum which otherwise we might have had from Excess Profits Duty. In arriving at the figure of £120,000,000 that concession has been taken into account; but supposing we had not made that concession and had succeeded in collecting the money according to our original estimate we should have realised something like £80,000,000 more, but this figure does not take full account of the abnormal depreciations in value which have occurred.
    Sir G. COLLINS: I am grateful to the right hon. Gentleman for the information he has given us, which I understand is that if this Clause is passed the arrears of Excess Profits Duty this year will bring in £120,000,000 and next year £70,000,000. Will that be the total arrears of Excess Profits Duty?
    Sir R. HORNE: No, I do not say that. There will be undoubtedly from year to
    year Excess Profits Duty being collected, and of course there is a limitation upon all these concessions. It does not go beyond a certain figure under any circumstances. It is not the indefinite kind of obligation which the hon. and gallant Gentleman seems to think.
    Sir G. COLLINS: I understand the actual cost of this concession amounts to something like £80,000,000.
    Sir R. HORNE: I would rather put it as I put it before. You could have collected, in a period of depression and depreciation such as the present, £80,000,000 more if you had not given this concession.
    Question put, "That the words 'and also' stand part of the Clause."
    The Committee divided: Ayes, 218; Noes, 39.

    Division No. 174.]

    AYES.

    [6.35 p.m.

    Adkins, Sir W. Ryland D.

    Coote, Colin Reith (Isle of Ely)

    Holmes, J. Stanley

    Agg-Gardner, Sir James Tynte

    Cowan, D. M. (Scottish Universities)

    Hood, Joseph

    Archer-Shee, Lieut.-Colonel Martin

    Craik, Rt. Hon. Sir Henry

    Hope, Lt.-Col. Sir J. A. (Midlothian)

    Astbury, Lieut.-Com. Frederick W.

    Davidson, J. C. C.(Hemel Hempstead)

    Hopkins, John W. W.

    Astor, Viscountess

    Davidson, Major-General Sir J. H.

    Horne, Edgar (Surrey, Guildford)

    Bagley, Captain E. Ashton

    Dawes, James Arthur

    Home, Sir R. S. (Glasgow, Hillhead)

    Baird, Sir John Lawrence

    Denniss, Edmund R. B. (Oldham)

    Hume-Williams, Sir W. Ellis

    Baldwin, Rt. Hon. Stanley

    Dockrell, Sir Maurice

    Hunter, General Sir A. (Lancaster)

    Balfour, George (Hampstead)

    Doyle, N. Grattan

    Hurd, Percy A.

    Balfour, Sir R. (Glasgow, Partick)

    Du Pre, Colonel William Baring

    Hurst, Lieut.-Colonel Gerald B.

    Banbury, Rt. Hon. Sir Frederick G.

    Edwards, Hugh (Glam., Neath)

    Jackson, Lieut.-Colonel Hon. F. S.

    Barnes, Rt. Hon. G. (Glas., Gorbals)

    Elliot, Capt. Walter E. (Lanark)

    Jameson, John Gordon

    Barnett, Major Richard W.

    Evans, Ernest

    Jephcott, A. R.

    Barnston, Major Harry

    Eyres-Monsell, Com. Bolton M.

    Jesson, C.

    Barrand, A. R.

    Falle, Major Sir Bertram Godfray

    Johnstone, Joseph

    Barrie, Charles Coupar (Banff)

    Fell, Sir Arthur

    Jones, Sir Edgar R. (Merthyr Tydvil)

    Barton, Sir William (Oldham)

    Flannery, Sir James Fortescue

    Jones, Henry Haydn (Merioneth)

    Bellairs, Commander Carlyon W.

    Ford, Patrick Johnston

    Joynson-Hicks, Sir William

    Bennett, Sir Thomas Jewell

    Foreman, Sir Henry

    Kellaway, Rt. Hon. Fredk. George

    Bird, Sir A. (Wolverhampton, West)

    Foxcroft, Captain Charles Talbot

    King, Captain Henry Douglas

    Bird, Sir William B. M. (Chichester)

    Fremantle, Lieut.-Colonel Francis E.

    Kinloch-Cooke, Sir Clement

    Blair, Sir Reginald

    Ganzoni, Sir John

    Lambert, Rt. Hon. George

    Borwick, Major G. O.

    Gardiner, James

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Boscawen, Rt. Hon. Sir A. Griffith-

    Geddes, Rt. Hon. Sir E. (Camb'dge)

    Lister, Sir R. Ashton

    Bowles, Colonel H. F.

    Gibbs, Colonel George Abraham

    Lloyd, George Butler

    Bowyer, Captain G. W. E.

    Gilmour, Lieut.-Colonel Sir John

    Lloyd-Greame, Sir P.

    Brassey, H. L. C.

    Glanville, Harold James

    Locker-Lampson, G. (Wood Green)

    Breese, Major Charles E.

    Goff, Sir R. Park

    Lorden, John William

    Bridgeman, Rt. Hon. William Clive

    Goulding, Rt. Hon. Sir Edward A.

    Lowther, Major C. (Cumberland, N.)

    Briggs, Harold

    Grant, James Augustus

    Mackinder, Sir H. J. (Camlachie)

    Brittain, Sir Harry

    Green, Joseph F. (Leicester. W.)

    McLaren, Hon. H. D. (Leicester)

    Broad, Thomas Tucker

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    McLaren, Robert (Lanark, Northern)

    Bruton, Sir James

    Greig, Colonel Sir James William

    M'Lean, Lieut.-Col. Charles W. W.

    Buchanan, Lieut.-Colonel A. L. H.

    Gritten, W. G. Howard

    Macleod, J. Mackintosh

    Buckley, Lieut.-Colonel A.

    Hacking, Captain Douglas H.

    McMicking, Major Gilbert

    Bull, Rt. Hon. Sir William James

    Hallwood, Augustine

    M'Neill, Ronald (Kent. Canterbury)

    Burn, Col. C. R. (Devon, Torquay)

    Hamilton, Major C. G. C.

    Macpherson, Rt. Hon. James I.

    Butcher, Sir John George

    Hannon, Patrick Joseph Henry

    Magnus, Sir Philip

    Cautley, Henry Strother

    Harmsworth, C. B. (Bedford, Luton)

    Mallalieu, Frederick William

    Cecil, Rt. Hon. Evelyn (Birm., Aston)

    Harris, Sir Henry Percy

    Manville, Edward

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    Haslam, Lewis

    Marriott, John Arthur Ransome

    Chamberlain, N. (Birm., Ladywood)

    Henderson, Major V. L. (Tradeston)

    Mildmay, Colonel Rt. Hon. F. B.

    Clay, Lieut.-Colonel H. H. Spender

    Hennessy, Major J. R. G.

    Molson, Major John Elsdale

    Coats, Sir Stuart

    Henry, Denis S. (Londonderry, S.)

    Mond, Rt. Hon. Sir Alfred Moritz

    Cobb, Sir Cyril

    Herbert, Col. Hon. A. (Yeovil)

    Moore, Major-General Sir Newton J.

    Cockerill, Brigadier-General G. K.

    Herbert, Dennis (Hertford, Watford)

    Morris, Richard

    Cohen, Major J. Brunei

    Hills, Major John Waller

    Mosley, Oswald

    Colfox, Major Wm. Phillips

    Hinds, John

    Munro, Rt. Hon. Robert

    Colvin, Brig.-General Richard Beale

    Hoare, Lieut.-Colonel Sir S. J. G.

    Neal, Arthur

    Conway, Sir W. Martin

    Hohler, Gerald Fitzroy

    Newman, Colonel J. R. P. (Finchley)

    Newman, Sir R. H. S. D. L. (Exeter)

    Samuel, A. M. (Surrey, Farnham)

    Watson, Captain John Bertrand

    Nield, Sir Herbert

    Samuel, Samuel (W'dsworth, Putney)

    White, Col. G. D. (Southport)

    Ormsby-Gore, Hon. William

    Sanders, Colonel Sir Robert Arthur

    Williams, Aneurin (Durham, Consett)

    Parker, James

    Seddon, J. A.

    Williams, C. (Tavistock)

    Pearce, Sir William

    Shaw, Hon. Alex. (Kilmarnock)

    Williams, Col. Sir R. (Dorset, W.)

    Pease, Rt. Hon. Herbert Pike

    Shaw, Capt. William T. (Forfar)

    Williamson, Rt. Hon. Sir Archibald

    Pennefather, De Fonblanque

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Willoughby, Lieut-Col. Hon. Claud

    Percy, Lord Eustace (Hastings)

    Smith, Sir Malcolm (Orkney)

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Perkins, Walter Frank

    Sprot, Colonel Sir Alexander

    Wilson, Rt. Hon. J. W. (Stourbridge)

    Perring, William George

    Stanley, Major Hon. G. (Preston)

    Wilson, Col. M. J. (Richmond)

    Philipps, Sir Owen C. (Chester, City)

    Stanton, Charles Butt

    Wilson-Fox, Henry

    Pollock, Sir Ernest Murray

    Sturrock, J. Leng

    Winterton, Earl

    Pownall, Lieut.-Colonel Assheton

    Sutherland, Sir William

    Wise, Frederick

    Pratt, John William

    Taylor, J.

    Wood, Hon. Edward F. L. (Ripon)

    Prescott, Major W. H.

    Terrell, George (Wilts, Chippenham)

    Wood, Sir H. K. (Woolwich, West)

    Purchase, H. G.

    Thomson, F. C. (Aberdeen, South)

    Wood, Major M. M. (Aberdeen, C.)

    Raeburn, Sir William H.

    Thomson, Sir W. Mitchell- (Maryhill)

    Worthington-Evans, Rt. Hon. Sir L.

    Randies, Sir John Scurrah

    Tickler, Thomas George

    Young, E. H. (Norwich)

    Raw, Lieutenant-Colonel Dr. N.

    Townley, Maximilian G.

    Young, Sir Frederick W. (Swindon)

    Rawlinson, John Frederick Peel

    Tryon, Major George Clement

    Younger, Sir George

    Richardson, Alexander (Gravesend)

    Turton, Edmund Russborough

    Roberts, Samuel (Hereford, Hereford)

    Waddington, R.

    TELLERS FOR THE AYES.—

    Roberts, Sir S. (Sheffield, Ecclesall)

    Wallace, J.

    Colonel Leslie Wilson and Mr.

    Roundell, Colonel R. F.

    Warren, Sir Alfred H.

    Dudley Ward.

    NOES.

    Bowerman, Rt. Hon. Charles W.

    Hallas, Eldred

    Parkinson, John Allen (Wigan)

    Briant, Frank

    Hartshorn, Vernon

    Rees, Capt. J. Tudor- (Barnstaple)

    Bromfield, William

    Hayward, Evan

    Richardson, R. (Houghton-le-Spring)

    Brown, James (Ayr and Bute)

    Hodge, Rt. Hon. John

    Royce, William Stapleton.

    Cairns, John

    Hogge, James Myles

    Sexton, James

    Carter, W. (Nottingham, Mansfield)

    Irving, Dan

    Spencer, George A.

    Davies, A. (Lancaster, Clitheroe)

    Kenworthy, Lieut.-Commander J. M.

    Swan, J. E.

    Finney, Samuel

    Kenyon, Barnet

    Walsh, Stephen (Lancaster, Ince)

    Galbraith, Samuel

    Lawson, John James

    Waterson, A. E.

    Graham, W. (Edinburgh, Central)

    MacVeagh, Jeremiah

    White, Charles F. (Derby, Western)

    Grundy, T. W.

    Morgan, Major D. Watts

    Young, Robert (Lancaster, Newton)

    Guest, J. (York, W.R., Hemsworth)

    Murray, Hon. A. C. (Aberdeen)

    Hall, F. (York, W. R., Normanton)

    Murray, Dr. D. (Inverness & Ross)

    TELLERS FOR THE NOES —

    Halls, Walter

    Myers, Thomas

    Colonel Wedgwood and Mr. George

    Barker.

    Amendment made: In Sub-section (2), leave out the word "Part" ["under which Part of the said Schedule"], and insert instead thereof the word "Parts."—[Mr. Holmes.
    Mr. MANVILLE: I beg to move, in Sub-section (2), to leave out the words "first day of January," and to insert instead thereof the words "twenty-eighth day of February."
    This Amendment is proposed with the object of enabling those who are distant from the country to have adequate time to express their intention of claiming. I think the Chancellor of the Exchequer is prepared to accept the Amendment.
    Sir R. HORNE: There are on the Paper other Amendments dealing with this point. I shall be prepared to go further than my hon. Friend, and to accept the Amendment standing in the name of the hon. and gallant Member (Captain Bowyer), to insert the words "thirty-first day of March."
    Mr. MANVILLE: Perhaps I can move the Amendment in that form, or withdraw it.
    The CHAIRMAN: If the hon. Member will withdraw the Amendment, I will put the Amendment to insert the words "thirty-first day of March."
    Amendment, by leave, withdrawn.
    Captain BOWYER: I beg to move, in Sub-section (2), to leave out the words "first day of January," and to insert instead thereof the words "thirty-first day of March."
    Amendment agreed to.
    Motion made and Question proposed, "That the Clause, as amended, stand part of the Bill.
    Colonel WEDGWOOD: Before the Clause is carried, I want to know if it is a fact that at the end of 5 years, that is, at the end of August, 1925, the companies who have been paying Excess Profits Duty will be able to put in claims on the then Chancellor of the Exchequer for refund of what they have already paid. I rather gathered from the right hon. Gentleman's speech that it was only a question of not paying Excess Profits Duty and not a question of actual refund, but, as I read Part III, any

    979
    payer of Excess Profits Duty is entitled to claim refund, but he cannot make his claim under Part III until 1925. Then he may be able to claim refund. Is that so or not? I know there is a limit in the amount that can be reclaimed, and that it is only a certain percentage of the total amount paid by the firm. If 75 per cent. of the firms in the country find that during the next 4 years their average profits are less than their pre-War standard, and they are, therefore, entitled to make a claim for refund, there will then be a very heavy call upon the Chancellor of the Exchequer, and it will be for the right hon. Gentleman's successor to deal with that call. I may be wrong in my reading of the Act. I am not au fait with the Excess Profits Duty, but it seems to me plain English that that claim will be made and that the country will have to meet that liability.
    Sir R. HORNE: Undoubtedly money may be reclaimed up to a certain limited amount.
    Colonel WEDGWOOD: 40 per cent.
    Sir R. HORNE: Equally, also, claims may be made for a period down to 1925. In the ordinary way of business nobody anticipates that there will be many claims in the last part of the period, for the reason that people will be realising such losses as they are making in connection with this matter during the first period. It is anticipated that the great weight of these claims will fall on this year and on the next, and will taper off until there is a very small amount for the latter part.
    Colonel WEDGWOOD: Have they not to take the average of the 4 years?
    Sir R. HORNE: Yes. You take what business you have done in the course of the four years and the losses you have sustained; but at the same time the burden of this will fall upon this year and next year. My hon. and gallant Friend may rest assured that there is no possibility of large claims coming in in 1925.
    Colonel WEDGWOOD: I do not understand. I am speaking of Part III. How can any claims fall upon this year or next year, when Part III says:
    "If a person … proves that the yearly average of the profits of the trade or business for the period 1921–1925 is less than the amount of the percentage standard, etc."
    980
    How can losses upon that period fall upon this year or next year? How can it be possible to estimate until 1925 what are your losses from 1921 to 1925? How can you avoid the plain deduction that a claim made under Part III must be handed in not earlier than 1925?
    Sir R. HORNE: For the reason that the alternative relief that is given under Part III of the First Schedule of the Bill will be very small in comparison, and, therefore, what we shall have to meet in respect of that relief will be comparatively small.
    Sir G. COLLINS: As a result of the discussion that has just taken place, I think it is clearly shown that the Government this year are taking credit in their annual revenue for large sums from Excess Profits Duty, and they are postponing their liabilities for payment to future years. That is a very important point, when the Committee this afternoon is being asked to pass Clause 26. The Government are discounting their economies, and post-dating their liabilities. I could give many instances to confirm that statement. It is true that the Government to-day are taking credit in their annual revenue for arrears of Excess Pro fits Duty in past years, and are postponing their liabilities to future years. They are taking credit for £120,000,000 this year, dropping to £70,000,000 next year. It is a reasonable point that before crediting the annual accounts of the nation with the arrears of Excess Profits Duty, the right hon. Gentleman should not take credit in the revenue side until he has a surplus set aside and earmarked for the definite purpose of meeting the repayments which he will require to find in the coming years. It may be a very big figure. The Chancellor of the Exchequer has already told the Committee—and I take no exception to the concession—that the concession he has made will cost £80,000,000. It may be much larger. There may be a much larger drop in the fall of prices than the Chancellor of the Exchequer anticipates. He may scratch his head as a wise Scotsman, and hope that these falls will not take place. I agree with him there, but they may take place.
    Who could have perceived three months ago the very large drop in prices, the sudden, steep, downward curve, which may continue month after month in the future. If it does continue, there will be

    981
    much larger repayments to firms of Excess Profits Duty. Therefore, the anticipated surplus this year of £120,000,000 and of £70,000,000 next year may not mature. The Chancellor of the Exchequer, anxious as he is to keep his revenue side up this year, has taken credit for £120,000,000, therefore avoiding coming to the House for increased taxation. He, is postponing his liabilities to a future date. I hope the right hon. Gentleman will give a definite assurance that he will, as a prudent Scotsman, set aside a certain amount of the arrears which he is gathering in week by week, and earmark it purposely
    to meet repayments in future years, and not carry the whole amount of £120,000,000 into his annual revenue, because he is by this concession—a justifiable, wise, and prudent concession—giving something to traders which may month after month in future largely reduce his anticipated surplus. I ask him to take thought for the morrow, and, like a business man, set aside a certain percentage of the money he receives this year.
    Question put, "That the Clause, as amended, stand part of the Bill."
    The Committee divided: Ayes, 217; Noes, 38.

    Division No. 175]

    AYES.

    [7.0 p.m.

    Adkins, Sir W. Ryland D.

    Eyres-Monsell, Com. Bolton M.

    Lloyd, George Butler

    Agg-Gardner, Sip James Tynte

    Falle, Major Sir Bertram Godfray

    Lloyd-Greame, Sir P.

    Ainsworth, Captain Charles

    Fell, Sir Arthur

    Locker-Lampson, G. (Wood Green)

    Archer-Shee, Lieut.-Colonel Martin

    Flannery, Sir James Fortescue

    Lorden, John William

    Astor, Viscountess

    Ford, Patrick Johnston

    Lowther, Major C. (Cumberland, N.)

    Bagley, Captain E. Ashton

    Foreman, Sir Henry

    Mackinder, Sir H. J. (Camlachie)

    Baird, Sir John Lawrence

    Foxcroft, Captain Charles Talbot

    McLaren, Hon. H. D. (Leicester)

    Baldwin, Rt. Hon. Stanley

    Fremantle, Lieut.-Colonel Francis E.

    McLaren, Robert (Lanark, Northern)

    Balfour, George (Hampstead)

    Ganzoni, Sir John

    M'Lean, Lieut.-Col. Charles W. W.

    Balfour, Sir R. (Glasgow, Partick)

    Gardiner, James

    Macleod, J. Mackintosh

    Banbury, Rt. Hon. Sir Frederick G.

    Geddes, Rt. Hon. Sir E. (Camb'dge)

    M'Micking, Major Gilbert

    Barlow, Sir Montague

    Gibbs, Colonel George Abraham

    McNeill, Ronald (Kent, Canterbury)

    Barnes, Rt. Hon. G. (Glas., Gorbals)

    Gilbert, James Daniel

    Macpherson, Rt. Hon. James I.

    Barnett, Major Richard W.

    Gilmour, Lieut.-Colonel Sir John

    Maitland, Sir Arthur D. Steel

    Barnston, Major Harry

    Glanville, Harold James

    Mallalieu, Frederick William

    Barrand, A. R.

    Goff, Sir R. Park

    Manville, Edward

    Barrie, Charles Coupar (Banff)

    Goulding, Rt. Hon. Sir Edward A.

    Marriott, John Arthur Ransome

    Bellairs, Commander Carlyon W.

    Green, Joseph F. (Leicester, W.)

    Mildmay, Colonel Rt. Hon. F. B.

    Bird, Sir A. (Wolverhampton, West)

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    Molson, Major John Elsdale

    Bird, Sir William B. M. (Chichester)

    Greig, Colonel Sir James William

    Mond, Rt. Hon. Sir Alfred Moritz

    Blair, Sir Reginald

    Gritten, W. G. Howard

    Moore, Major-General Sir Newton J.

    Borwick, Major G. O.

    Hacking, Captain Douglas H.

    Morris, Richard

    Bowles, Colonel H. F.

    Hailwood, Augustine

    Mosley, Oswald

    Bowyer, Captain G. W. E.

    Hamilton, Major C. G. C.

    Munro, Rt. Hon. Robert

    Boyd-Carpenter, Major A.

    Hannon, Patrick Joseph Henry

    Neal, Arthur

    Breese, Major Charles E.

    Harmsworth, C. B. (Bedford, Luton)

    Newman, Colonel J. R. P. (Finchley)

    Bridgeman, Rt. Hon. William Clive

    Haslam, Lewis

    Newman. Sir R. H. S. D. L. (Exeter)

    Briggs, Harold

    Henderson, Major V. L. (Tradeston)

    Nield, Sir Herbert

    Brittain, Sir Harry

    Hennessy, Major J. R. G.

    Ormsby-Gore, Hon. William

    Broad, Thomas Tucker

    Henry, Denis S. (Londonderry, S.)

    Parker, James

    Bruton, Sir James

    Herbert, Col. Hon. A. (Yeovil)

    Parry, Lieut.-Colonel Thomas Henry

    Buckley, Lieut.-Colonel A.

    Herbert, Dennis (Hertford, Watford)

    Pearce, Sir William

    Bull, Rt. Hon. Sir William James

    Hills, Major John Waller

    Pease, Rt. Hon. Herbert Pike

    Burn, Col. C. R. (Devon, Torquay)

    Hinds, John

    Percy, Lord Eustace (Hastings)

    Butcher, Sir John George

    Hoare, Lieut.-Colonel Sir S. J. G.

    Perkins, Walter Frank

    Cautley, Henry Strother

    Hohler, Gerald Fitzroy

    Perring, William George

    Cecil, Rt. Hon. Evelyn (Birm., Aston)

    Holmes, J. Stanley

    Philipps, Sir Owen C. (Chester, City)

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    Hood, Joseph

    Pollock, Sir Ernest Murray

    Chamberlain, N. (Birm., Ladywood)

    Hope, Lt.-Col. Sir J. A. (Midlothian)

    Pownall, Lieut.-Colonel Assheton

    Clay, Lieut.-Colonel H. H. Spender

    Hopkins, John W. W.

    Pratt, John William

    Coats, Sir Stuart

    Home, Edgar (Surrey, Guildford)

    Prescott, Major W. H.

    Cockerill, Brigadier-General G. K.

    Horne, Sir R. S. (Glasgow, Hillhead)

    Purchase, H. G.

    Cohen, Major J. Brunei

    Hunter, General Sir A. (Lancaster)

    Raeburn, Sir William H.

    Colfox, Major Win. Phillips

    Hurd, Percy A.

    Randles, Sir John Scurrah

    Colvin, Brig.-General Richard Beale

    Hurst, Lieut.-Colonel Gerald B.

    Raw, Lieutenant-Colonel Dr. N.

    Conway, Sir W. Martin

    Jackson, Lieut.-Colonel Hon. F. S.

    Rawlinson, John Frederick Peel

    Coote, Colin Reith (Isle of Ely)

    James, Lieut.-Colonel Hon. Cuthbert

    Richardson, Alexander (Gravesend)

    Cowan, D. M. (Scottish Universities)

    Jameson, John Gordon

    Roberts, Samuel (Hereford, Hereford)

    Craik, Rt. Hon. Sir Henry

    Jephcott, A. R.

    Roberts, Sir S. (Sheffield, Ecclesall)

    Davidson, Major-General Sir J. H.

    Jesson, C.

    Roundell, Colonel R. F.

    Dawes, James Arthur

    Johnstone, Joseph

    Royds, Lieut.-Colonel Edmund

    Denniss, Edmund R. B. (Oldham)

    Jones, Sir Edgar R. (Merthyr Tydvil)

    Samuel, A. M. (Surrey, Farnham)

    Dockrell, Sir Maurice

    Jones, Henry Haydn (Merioneth)

    Samuel, Samuel (W'dsworth, Putney)

    Doyle, N. Grattan

    Joynson-Hicks, Sir William

    Sanders, Colonel Sir Robert Arthur

    Du Pre, Colonel William Baring

    Kellaway, Rt. Hon. Fredk. George

    Seddon, J. A.

    Edwards, Allen C. (East Ham, S.)

    King, Captain Henry Douglas

    Shaw, Hon. Alex. (Kilmarnock)

    Edwards, Hugh (Glam., Neath)

    Kinloch-Cooke, Sir Clement

    Shaw, Capt. William T. (Forfar)

    Elliot, Capt. Walter E. (Lanark)

    Lambert, Rt. Hon. George

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Entwistle, Major C. F.

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Simm, M. T.

    Evans, Ernest

    Lister, Sir R. Ashton

    Smith, Sir Malcolm (Orkney)

    Sprot, Colonel Sir Alexander

    Waddington, R.

    Winterton, Earl

    Stanley, Major Hon. G. (Preston)

    Wallace, J.

    Wise, Frederick

    Stanton, Charles Butt

    Warren, Sir Alfred H.

    Wood, Hon. Edward F. L. (Ripon)

    Stevens, Marshall

    Watson, Captain John Bertrand

    Wood, Sir H. K. (Woolwich, West)

    Sturrock, J. Leno

    Weston, Colonel John Wakefield

    Wood, Major M. M. (Aberdeen, C.)

    Sutherland, Sir William

    White, Col. G. D. (Southport)

    Worthington-Evans, Rt. Hon. Sir L.

    Taylor, J.

    Williams, Aneurin (Durham, Consett)

    Young, E. H. (Norwich)

    Terrell, George (Wilts, Chippenham)

    Williams, C. (Tavistock)

    Young, Sir Frederick W. (Swindon)

    Thomson, F. C. (Aberdeen, South)

    Williams, Col. Sir R. (Dorset, W.)

    Younger, Sir George

    Thomson, Sir W. Mitchell (Maryhill)

    Williamson, Rt. Hon. Sir. Archibald

    Tickler, Thomas George

    Willoughby, Lieut.-Col. Hon. Claud

    TELLERS FOR THE AYES.—

    Townley, Maximilian G.

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Colonel Leslie Wilson and Mr.

    Tryon, Major George Clement

    Wilson, Rt. Hon. J. W. (Stourbridge)

    Dudley Ward.

    Turton, Edmund Russborough

    Wilson-Fox, Henry

    NOES.

    Barker, G. (Monmouth, Abertillery)

    Halls, Walter

    Richardson, R. (Houghton-le-Spring)

    Bowerman, Rt. Hon. Charles W.

    Hartshorn, Vernon

    Royce, William Stapleton

    Briant, Frank

    Hayday, Arthur

    Sexton, James

    Bromfield, William

    Hayward, Evan

    Spencer, George A.

    Brown, James (Ayr and Bute)

    Hodge, Rt. Hon. John

    Swan, J. E.

    Cairns, John

    Hogge, James Myles

    Walsh, Stephen (Lancaster, Ince)

    Carter, W. (Nottingham, Mansfield)

    Kennedy, Thomas

    Waterson, A. E.

    Davies, A. (Lancaster, Clitheroe)

    Kenworthy, Lieut.-Commander J. M.

    Wedgwood, Colonel Josiah C.

    Finney, Samuel

    Kenyon, Barnet

    White, Charles F. (Derby, Western)

    Galbraith, Samuel

    MacVeagh, Jeremiah

    Young, Robert (Lancaster, Newton)

    Graham, W. (Edinburgh, Central)

    Morgan, Major D. Watts

    Grundy, T. W.

    Myers, Thomas

    TELLERS FOR THE NOES.—

    Guest, J. (York, W. R., Hemsworth)

    Parkinson, John Allen (Wigan)

    Mr. Lawson and Mr. Frederick

    Hallas, Eldred

    Rees, Capt. J. Tudor (Barnstaple)

    Hall.

    CLAUSE 27.—(Power to make assessments and repayments.)
    Notwithstanding anything to the contrary in the principal Act, repayments and adjustments of Excess Profits Duty, and assessments and additional assessments to Excess Profits Duty in respect of any accounting period, may be made at any time, as the case may require, unless and until Parliament otherwise determines.
    Mr. GRATTAN DOYLE: I beg to move, after the word "Duty" ["adjustments of Excess Profits Duty"], to insert the words "may be obtained and made."
    This is a purely formal Amendment, which I am moving on behalf of my hon. and gallant Friend (Colonel Gretton).
    Mr. YOUNG: I accept this Amendment. Amendment agreed to.
    Sir W. RAEBURN: I beg to move to leave out the words "unless and until Parliament otherwise determines," and to insert instead thereof the words "within three years."
    The Clause contains the words
    "Additional assessments to Excess Profits Duty in respect of any accounting period, may be made at any time, as the case may require, unless and until Parliament otherwise determines."
    That means that the question of account may go on for years. My Amendment, if carried, will provide that there should be a limit of three years from the passing of this Bill during which these assessments can be reopened or made. I hope
    984
    the Chancellor of the Exchequer will agree to this, because it is just as well for his own Department as for those who have to be assessed that this limitation should be made.
    Mr. YOUNG: I fear the Government cannot accept this Amendment. There are really several good practical reasons why it would be unsuitable. In the first place, the Amendment, as moved by my hon. Friend, has no date from which the three years would run. Therefore it would be imperfect in form. In substance, it would be undesirable and impracticable that the date for the making of assessments should be confined to three years. I know there is the analogy of the Income Tax in which the assessment is spread over three years, but the difficulties with regard to the Excess Profits Duty are so much greater that there is no real comparison between the two. Another great practical difficulty is that the stock allowances must of necessity be running for a much longer period than three years. Therefore to limit the period to three years would simply be to necessitate further legislation at the end of that time. In the second place, the Amendment would have an undesirable effect from the taxpayer's point of view, as it would limit his possibility of obtaining new assessments and rectifications in the future on further information, just as it would limit the authority of the Board of Inland Revenue. From the point of view of both

    985
    it is impracticable, and especially in view of the longer period which must run before the completion of the stock assessments.
    The CHAIRMAN: It now appears that this Amendment is not in order. It would limit the power of assessment and therefore cannot be put
    Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.
    Clauses 28 (Determination of excess mineral rights duty), 29 (Repeal of s. 55 of 6 & 7 Geo. 5, c. 24), 30 (Interpretation and saving), 31 (Extension of s. 14 of 63 & 64 Vict., c. 7 to persons killed during disorders in Ireland), 32 (Sinking Fund with respect to Conversion Loan), and 33 (Continuance during current financial year of s. 58 of 10 & 11 Geo. 5, c. 18, 38 & 39 Vict., c. 45), ordered to stand part of the Bill.

    CLAUSE 34.—(Amendment of s. 60 of 6 & 7 Geo. 5, c. 24.)
    The powers of the Treasury under Section sixty of the Finance Act, 1916 (which empowers the Treasury to carry out arrangements for the exchange of securities issued under any War Loan Act) may be exercised at any time unless and until Parliament otherwise determines, and the said Section shall have effect as if it formed part of Section one of the War Loan Act, 1919, and the provisions of the said Section one shall apply accordingly.
    Mr. WADDINGTON: I beg to move, at the end of the Clause, to add:
    "Provided that such powers shall in no case be exercised by the Treasury until and unless the proposed exercise thereof has been specifically submitted to Parliament and Parliament has expressed by resolution its consent thereto."
    The Government should by now be aware that control in matters of finance should be within the power of the House of Commons and not within the power of a Department. It is surprising, therefore, that in Clause 34 the Government propose to make permanent the power that was given to the Treasury purely as a war measure under the Finance Act of 1916. Under Section 60 of that Act, Parliament gave to the Treasury the power of varying any War loans which had been issued during the War. That is to say, the Treasury could exchange any securities for securities of different value, and by that means increase the amount of the National Debt and the amount of the taxation of the country without coming to
    986
    the House of Commons for sanction. In regard to the proposed Clause, which makes this power permanent, we have the danger shown by the example of the recent War Loan Conversion. In presenting the Budget, the Leader of the House announced that he had made a reduction of £259,000,000 upon the National Debt. Then, at the end of his speech, he announced that the Treasury had decided to have a 3½ per cent. War Loan Conversion; that they would consequently increase the National Debt, if that Conversion were successful, by £400,000,000, and that they would increase by the operation of the Sinking Fund the taxation of the country by £7,500,000 a year. That increase of taxation was laid before the House without the House having any opportunity of discussing it, or any power whatever of dealing with it. In fact the opinion of the House was flouted, because the Leader of the House announced that the public terms of the Conversion would be available in the Vote Office immediately he sat down. Before the House had passed any Resolution on the subject whatever, the stockholders in these War Bonds had had posted to them a notice which carried it into operation and inflicted this very serious burden upon the taxpayers of the country.
    Fortunately, that conversion scheme was not a great success. What has been the effect; even of its comparative failure? The amount converted has increased the National Debt by £100,000,000. It has involved, by the operation of the Sinking Fund, that Parliament has to collect in taxes £2,000,000 more during the next year than it would otherwise have to have done. If we were to make permanent a provision such as this, we should give to the Department powers of increasing the National Debt and of increasing the burden on the taxpayers. Surely we are not going to carry out this proposal and to prevent the control remaining in the House of Commons, a thing which has been talked about as being so necessary and so reasonable. This is one of those questions upon which it is unfortunate that the Government ignore the feeling of the House and of the country. They ought to pay more attention to bringing within the scope of his House matters of finance which are so important, and on the ground that it is unwise, and that

    987
    there is nothing to justify it, to make this Clause permanent I beg to move this Amendment.
    Sir F. BANBURY: I am not at all sure that the hon. Gentleman's Amendment is not a good one, but I rose to draw his attention to the fact that some of his statements are incorrect. He stated that under the new Loan the liability of the country would be increased by £100,000,000. There is no liability for repayment under the new Loan. All that has been done is to create an annuity of 3j per cent., but there is no increase in the capital charge.
    Mr. WADDINGTON: Two and a-half per cent. must be provided under the terms of the conversion. That is a liability of £2,000,000 which is imposed by this conversion.
    Sir F. BANBURY: It is a permanent sinking fund which is bound to redeem the loan. Consequently it is not a capital charge upon the taxpayer but merely an annuity. But leaving that out of the question, I disagree with the hon. and learned Member when he said that the Government gave too much. My opinion is that the Government did not give enough and that that is why the loan failed. Some Members of the House of Commons do not seem to understand that the financial situation is very serious and unless you are going to break your obligations you must have a high rate of interest in order to be able to renew. The view that you can renew at low rates of interest is absurd. It is the fault of the Government. Instead of having a 3 per cent. loan issued on terms which I think would represent 5½ per cent. with 40 years before the first redemption took place there should have been a 6 per cent. loan at par compulsorily redeemable in 20 years. That might have been a success and then if things were better in the meantime we should be able to borrow at a lower rate. But the real question is whether the Government should have power to make arrangements for the repayment of debt without the sanction of Parliament. On that I am inclined to agree with the hon. Member, and I hope that the Government will accept the Amendment.
    Lieut.-Colonel HURST: I would like to pursue the point to which the right hon.
    988
    Baronet referred, namely, that the issue before the Committee is not whether the recent process of conversion initiated by the Government is sound or unsound. The object of this Amendment is to secure Parliamentary control over any system of conversion or exchange initiated in time of peace by the Government. The great majority of Members of this Committee will be of opinion that my hon. Friend (Mr. Waddington) enunciated the soundest constitutional dectrine, definitely aligning himself with Pym, Hampden, and the other pioneers and pathfinders of our constitutional liberties. During the War the Government was given power to exchange War stock in such manner as it thought fit, without consulting Parliament every time, for reasons for which the War itself was responsible. In time of war the old Latin adage applies "Inter arma silent leges." When war is going on you cannot have long debates about every single act, whether military or financial, done by the executive Government. This Clause purports to give the Government wide powers of conversion and enlarging the National Debt in time of peace, which is a power very distinct from that which Parliament vested in the Government during the War.
    The Amendment ought to commend itself to the Committee and the country on two grounds. First, it is bound up with the control of the House of Commons over all matters of finance, which is something much more than a newspaper stunt and is a constitutional ideal for which Parliament fought for many centuries. Secondly, it is a matter of convenience to the people that proposals of this sort should be fully discussed by Parliament before being published to the country as effective offers on the part of the State. In consequence of financial proposals of this sort going to the country without any previous Parliamentary discussion there is a great deal of ill-informed criticism. If there is a full discussion in the House beforehand on a financial operation of this character it means that the merits of the scheme will be explained to Parliament and through Parliament and the Press to the people, and if any criticism is found to be well established in the House the Government will be able to meet that criticism by amending the scheme before it is put before the country. Not only because this Amendment commends itself

    989
    to sound canons of constitutional law, but also because it really makes it more convenient and easy for the Government to effect many of these necessary processes of conversion, I hope it will be supported.
    Sir D. MACLEAN: It may assist the Committee in coming to a decision on this matter if I refer to the Section which is made permanent by this Clause now under discussion. Section 60 of the Finance Act of 1916 gave the Government of that day, and subsequent Governments, very sweeping powers, but it carefully circumscribed them in these words:
    "During the continuance of the War and six months thereafter the Treasury may for the purpose of carrying out any arrangement made with them for the exchange of securities issued under any War Loan Act passed during the continuance of the War provide for the issue of new securities, etc."
    The latter part of the Clause now before the Committee proposes that this Section which I have just read shall have exactly the same effect as if it were included in Clause 1 of the War Loan Act of 1919—another beautiful example of legislation by reference. Under Clause 1 the Government have wide and drastic powers. What they seek to do is to take away from the control of this House the power which is specifically given to it in the most carefully guarded way in 1916. I cannot imagine any reason why this power should be taken away from the House. The power is during the War and six months thereafter. Why not allow this to run on under the Act of 1916? No doubt it would give some extra trouble to the Departments concerned, but one of the functions of the House of Commons is to give trouble to the Departments concerned and to the Ministers who represent them. Unless we do that our functions very largely disappear. If the Government simply say that it is simply a matter of convenience, then in the present state of financial affairs, I am in favour of maintaining every barrier that exists as against the Departments concerned making any financial arrangements or getting money any more easily. I hope that the Government will allow the House of Commons to retain the power which it at present possesses over this not unimportant financial transaction to which reference has been made. I think that I am not misrepresenting the feeling of the Committee when I say that they ask
    990
    not only for a case to be made out, but for an overwhelming case to be made out before granting the demand of the Government. If there is some real ground of urgent public necessity, I daresay that the Committee will give the power, but if no such case is made out I shall vote against the proposal of the Government.
    Mr. MYERS: The Amendment commends itself to those on this side of the House with whom I am associated. In the first place, Parliamentary control is to be retained in every detail. Then, as to the financial policy which has been pursued by the Government, shorn of all the technical phraseology, to plain men on this side of the House the financial operations of the Government seem something like this: During the War various steps were taken to persuade the school children of the country to take 20s. for 15s. 6d. on a five years' loan. By means of various types of advertisements these short-term loans were negotiated. We understand from the Chancellor of the Exchequer that these short-term loans of about £620,000,000 are falling due between now and the end of 1925, and the conversion policy of the Government is to ask these people to suspend their calls upon the Government until 1961. Instead of receiving back £100 now, the Government promise payment of £160 in 1961, and if the whole of this £620,000,000 is converted into 1961 stock, we shall convert the £620,000,000 of debt into a debt of £1,000,000,000. If we pay 3½ per cent. on the 1961 stock, it brings a return slightly above the present rate of interest on the original investment of £100. I am for paying off the debt and for not increasing it. From this side of the House specific methods that could be adopted in order to relieve the country of debt have been enunciated. We are of opinion that the conversion policy pursued by the Government would not be accepted by the country at large if the country understood what was being done in its name.
    Mr. YOUNG: I think the discussion upon this Amendment has really involved larger issues than the Amendment itself would justify. It has been said that the object of the Amendment was to secure Parliamentary control over the operations of conversion. In order to make it clear just how we stand, I have to point out

    991
    that as a matter of fact the Amendment would fail to effect any such purpose, because the Treasury has, in the legislation to which reference has been made, powers already to deal with by far the greater part of the loans and securities in question. Under the War Loan Act of 1919 it has power to give security in exchange for the greater part of the big issues of the War loan securities, and it has in general ample powers already to give further security for securities that are maturing. The only difficulty in the first place has been in respect of certain exchanges as distinguished from the renewing of securities, and in the second place, owing to a slight gap between the two statutes, has been in respect of certain comparatively small issues of war securities over which the Treasury has no power of making these exchanges. Let me put it into figures. If this Amendment were passed it would make it necessary for the Treasury to come to the House for authority to deal with exchanges of securities amounting to only £220,000,000, but there would be still completely under the control of the Treasury and liable to no necessity for coming to the House for any authority, securities to the value of £2,832,000,000.
    Sir F. BANBURY: It is a step in the right direction.
    Mr. YOUNG: It is a very small step, and I have to submit that it would be a step in the wrong direction. It is a general, normal, constitutional form that the House and the Committee should give authority to the Treasury to borrow on such terms and conditions as the Treasury may prescribe. That form of words will be familiar to every Member of the Committee. Let me recall the attention of the Committee to our present state and outlook regarding this matter. There are these large issues rapidly maturing now and in the immediate future from year to year. One of the most difficult, and without being unduly pessimistic, one of the most anxious operations which will have to be performed by the Chancellor of the Exchequer and the Treasury will be the making of arrangements for the conversion of these short-dated issues as they fall due. Does it really improve things at this particular moment to impose what would be new regulations on those responsible for successfully overcoming the difficulties of
    992
    these big operations? I appeal to any Member who has practical acquaintance with issues in the city to envisage what would be the result of making it necessary, before any issue is made in the city of London, that the terms of the issue should be published and discussed and very likely altered in many respects here on the Floor of the House. I do not think that anyone would look upon that as anything but an extraordinarily unwise procedure.
    Sir F. BANBURY: When the late Mr. Goschen made the conversion of Consols into 2½ per cent. Consols was that not put before the House?
    Mr. YOUNG: I speak with very great diffidence on the question of historical finance as against the authority of the right hon. Baronet.
    Sir F. BANBURY: I am not sure about the facts.
    Mr. YOUNG: From recollection, I think it was not so, but that the terms of that great conversion loan were never altered from the first date of publication. At any rate, I believe the Committee will realise the importance of that practical consideration at the present time.
    Mr. WADDINGTON: With reference to Mr. Goschen's scheme, the Resolution was submitted by Motion to this House in March, 1888. It was discussed a month, and it was not until the Resolution had been put into an Act of Parliament that the details were publicly issued in the City and the country.
    Mr. YOUNG: My recollection is that there were no alterations in the essential terms of the issue, but be that single precedent what it may, I take my stand on common sense for the moment. It cannot be in the interests of successful operations, in the interests of the Exchequer and of the taxpayer, that there should be a publication of the terms of an issue, and, under modern conditions, a discussion, for speculative movements, upsetting of the market and general uncertainty must inevitably be the result. The Amendment would not effect its purpose for the reasons I have stated.
    Sir D. MACLEAN: I quite admit that the arguments we have heard, in so far as the operation of dealing with and issuing loans is concerned, carry a

    993
    considerable weight, and I quite agree that the Amendment as it stands is inadequate to carry out the view that I was expressing. The position I was arguing was this: What case has the Treasury made for taking away from the House the control which it would possess when the War comes to an end? That is what the Clause is doing. I agree that under Clause 60, during the War and six months after the Treasury has this power, but the Treasury is now asking by Clause 34 to abrogate Clause 60, so that when the War ends the Treasury will have full power under Section 1 of the Act of 1919. I agree that a case was made against the Amendment qua Amendment, but the right hon. Gentleman has not met the point I have been putting. Why alter the existing state of affairs now? There is no occasion for it. What the Executive is doing is what it is always doing, that is, taking some opportunity of clearing up what it no doubt calls the tags and ends of those safeguards which still remain to the House in its control over finance. The Treasury is seeking to anticipate the end of the War. It must make an overwhelming case for doing so, but so far has not done it. Why make this alteration now? We on this side of the House have been taking a line during the whole of this discussion against any further narrowing by the Executive of the rights which this House at present possesses. We are told that this is only a small thing. Then why not withdraw the Clause altogether? If the hon. Member responsible for the Amendment withdraws it, we can vote against the Clause as a whole, but I suggest that the Government should withdraw the Clause which is exciting a considerable amount of uneasiness amounting almost to suspicion. The Government will gain nothing by it; it is not worth their while to press it and I suggest they should leave things as they are under the Act of 1916.
    Mr. A. M. SAMUEL: I think most of the points raised by the hon. Member for Spen Valley (Mr. Myers) and the hon. Member for Rossendale (Mr. Waddington) have been met very well and disposed of by the Financial Secretary for the Treasury. Whatever may be the merits or demerits of the Clause I could not for a moment support the Amendment. Let us see what its effect would be. The Amendment proposes to add the words
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    "Provided that such powers shall in no case be exercised by the Treasury until and unless the proposed exercise thereof has been specifically submitted to Parliament and Parliament has expressed by Resolution its consent thereto."
    That means that if the Chancellor of the Exchequer should find it suddenly necessary to obtain money on a ways and means advance from the Bank of England, or to make an issue of Treasury Bills he will have to discuss the proposal on the Floor of the House of Commons and ask consent. I think it would be a most unbusinesslike procedure on the part of the House thus to discuss internal financial operations in this way continually, and even perhaps for week after week about one single issue; with different Members suggesting different methods and haggling about the price that should be paid. Why, the market would be as flat as a pancake before you could issue the Treasury Bills or a loan and the whole project would end in failure. I would be the very last to agree to part with the control of the House over finance, but whatever may be done with regard to the Clause as a whole, I think this particular Amendment is entirely misconceived and unworkable, and I shall vote against it.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Sir G. COLLINS: Under this Clause the Committee is asked to increase the powers of the Treasury. I think the Committee should ask itself whether the powers granted to the Treasury in the past have been exercised with a due regard to the public interest. The Debate during the last half-hour has centred round the question of whether certain powers which they possess at present should be further developed, and my right hon. Friend the Member for Peebles (Sir D. Maclean) has reminded the Committee that certain powers granted during the War were very limited in extent, and applied to specific purposes. The point I am anxious to put before the Committee is this: Is the ultimate authority in financial matters to be the Treasury or the House of Commons? This Clause raises that very wide question in a definite form. During the last five or seven years, month by month and little by little, the Treasury has sought to encroach on the powers of the House of

    995
    Commons. The Debate this afternoon has served the useful purpose of directing attention once again to this vital and all-important point. The hon. Gentleman who replied for the Government on the Amendment just withdrawn said the powers which the Government are asking for only cover £220,000,000, and that they have further powers for which they have not received the authority of this House covering the much larger sum of £2,832,000,000.
    During the last month there has been a very striking example of the Treasury's failure to safeguard the interests of the taxpayer. They have floated a very large Conversion Loan offering a very high rate of interest, spread over a very long period, and thus putting a burden on the taxpayer for 40 years—I am glad to say without much success. They have misread the money market and the true situation, and with that record staring us in the face they ask us for further powers. I suggest that, so far from granting further powers, the powers granted during the War for specific purposes should be withdrawn at the very earliest date. I recollect in 1917, when I
    was closely connected with the Committee on National Expenditure, how the members of that Committee found themselves, time after time, at variance with the Treasury. The Treasury were jealous of the House of Commons, and wished to retain in their own hands the powers given to them during the War. This Clause proposes to continue those powers for a further period of time, but we would be well advised to revoke all special powers given to the Treasury in time of war and come back to peace conditions and a peace outlook at the earliest possible moment. I hope this matter will be pressed to a Division. It is a very large and vital question as to how far bureaucratic powers taken during war are to continue in times of peace. There can be but one answer to that, and I hope the members of the Committee will turn their minds to the constitutional question of whether the House of Commons or the Treasury is to be the ultimate authority in matters of finance.
    Question put, "That the Clause stand part of the Bill."
    The Committee divided: Ayes, 169; Noes, 54.

    Division No. 176.]

    AYES.

    [7.55 p.m.

    Addison, Rt. Hon. Dr. Christopher

    Colvin, Brig.-General Richard Beale

    Haslam, Lewis

    Adkins, Sir W. Ryland D.

    Conway, Sir W. Martin

    Henderson, Major V. L. (Tradeston)

    Agg-Gardner, Sir James Tynte

    Coote, Colin Reith (Isle of Ely)

    Hennessy, Major J. R. G.

    Amery, Leopold C. M.S.

    Davidson, Major-General Sir J. H.

    Henry, Denis S. (Londonderry, S.)

    Austin, Sir Herbert

    Dawes. James Arthur

    Herbert, Dennis (Hertford, Watford)

    Bagley, Captain E. Ashton

    Denniss, Edmund R. B. (Oldham)

    Hinds, John

    Baird, Sir John Lawrence

    Dewhurst, Lieut.-Commander Harry

    Hohier, Gerald Fitzroy

    Balfour, George (Hampstead)

    Dockrell, Sir Maurice

    Hope, Lt.-Col. Sir J. A. (Midlothian)

    Balfour, Sir R. (Glasgow, Partick)

    Edgar, Clifford B.

    Hopkins, John W. W.

    Barlow, Sir Montague

    Edwards, Major J. (Aberavon)

    Horne, Edgar (Surrey, Guildford)

    Barnes, Rt. Hon. G. (Glas., Gorbals)

    Edwards, Hugh (Glam., Neath)

    Home, Sir R. S. (Glasgow, Hillhead)

    Barnett, Major Richard W.

    Evans, Ernest

    Hunter, General Sir A. (Lancaster)

    Barnston, Major Harry

    Eyres-Monsell, Com. Bolton M.

    Hurd, Percy A.

    Barrand, A. R.

    Falle, Major Sir Bertram Godfray

    Hurst, Lieut.-Colonel Gerald B.

    Barrie, Charles Coupar (Banff)

    Fell, Sir Arthur

    Jackson, Lieut.-Colonel Hon. F. S.

    Bellairs, Commander Carlyon W.

    Flannery, Sir James Fortescue

    Jameson, John Gordon

    Benn, Sir A. S. (Plymouth, Drake)

    Ford, Patrick Johnston

    Jones, Sir Edgar R. (Merthyr Tydvll)

    Bennett, Sir Thomas Jewell

    Foreman, Sir Henry

    Kellaway, Rt. Hon. Fredk. George

    Birchall, Major J. Dearman

    Fremantle, Lieut.-Colonel Francis E.

    King, Captain Henry Douglas

    Bird, Sir William B. M. (Chichester)

    Ganzoni, Sir John

    Lane-Fox, G. R.

    Blair, Sir Reginald

    Gardiner, James

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Borwick, Major G. O.

    Gee, Captain Robert

    Lister, Sir R. Ashton

    Bowles, Colonel H. F.

    George, Rt. Hon. David Lloyd

    Lloyd, George Butler

    Bowyer, Captain G. W. E.

    Gibbs, Colonel George Abraham

    Lloyd-Greame, Sir P.

    Boyd-Carpenter, Major A.

    Gilbert, James Daniel

    Locker-Lampson, Com. O. (H'tingd'n)

    Breese, Major Charles E.

    Gilmour, Lieut.-Colonel Sir John

    Lorden, John William

    Bridgeman, Rt. Hon. William Clive

    Glanville, Harold James

    McLaren, Hon. H. D. (Leicester)

    Briggs, Harold

    Goff, Sir R. Park

    McLaren, Robert (Lanark, Northern)

    Brittain, Sir Harry

    Goulding, Rt. Hon. Sir Edward A.

    M'Lean, Lieut.-Col. Charles W. W.

    Bruton, Sir James

    Green, Joseph F. (Leicester, W.)

    McMicking, Major Gilbert

    Buckley, Lieut.-Colonel A.

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    Magnus, Sir Philip

    Bull, Rt. Hon. Sir William James

    Gregory, Holman

    Manville, Edward

    Burn, Col. C. R. (Devon, Torquay)

    Greig, Colonel Sir James William

    Mitchell, William Lane

    Butcher, Sir John George

    Gritten, W. G. Howard

    Montagu, Rt. Hon. E. S.

    Cautley, Henry Strother

    Hacking, Captain Douglas H.

    Moore, Major-General Sir Newton J.

    Cecil, Rt. Hon. Evelyn (Birm., Aston)

    Hailwood, Augustine

    Morden, Col. W. Grant

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    Hamilton, Major C. G. C.

    Morris, Richard

    Cockerill. Brigadier-General G. K.

    Hannon, Patrick Joseph Henry

    Murray, C. D. (Edinburgh)

    Cohen, Major J. Brunei

    Harmsworth, C. B. (Bedford, Luton)

    Neal, Arthur

    Newman, Sir R. H. S. D. L. (Exeter)

    Samuel, Samuel (W'dsworth, Putney)

    Watson, Captain John Bertrand

    Norris, Colonel Sir Henry G.

    Sanders, Colonel Sir Robert Arthur

    Weston, Colonel John Wakefield

    Norton-Griffiths, Lieut.-Col. Sir John

    Shaw, Capt. William T. (Forfar)

    White, Col. G. D. (Southport)

    Parker, James

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Williams, C. (Tavistock)

    Pease, Rt. Hon. Herbert Pike

    Simm, M. T.

    Williams, Col. Sir R. (Dorset, W.)

    Pennefather, De Fonblanque

    Smith, Sir Malcolm (Orkney)

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Perkins, Walter Frank

    Stanley, Major Hon. G. (Preston)

    Wilson-Fox, Henry

    Perring, William George

    Stanton, Charles Butt

    Wise, Frederick

    Pratt, John William

    Stevens, Marshall

    Wood, Hon. Edward F. L. (Ripon)

    Prescott, Major W. H.

    Sturrock, J. Leng

    Wood, Sir H. K. (Woolwich, West)

    Purchase, H. G.

    Sugden, W. H.

    Worsfold, T. Cato

    Raeburn, Sir William H.

    Taylor, J.

    Worthington-Evans, Rt. Hon. Sir L.

    Randies, Sir John Scurrah

    Thomson, F. C. (Aberdeen, South)

    Young, E. H. (Norwich)

    Rawlinson, John Frederick Peel

    Thomson, Sir W. Mitchell- (Maryhill)

    Young, Sir Frederick W. (Swindon)

    Richardson, Alexander (Gravesend)

    Thorpe, Captain John Henry

    Roberts, Samuel (Hereford, Hereford)

    Townley, Maximilian G.

    TELLERS FOR THE AYES.—

    Roundell, Colonel R. F.

    Tryon, Major George Clement

    Colonel Leslie Wilson and Mr.

    Royds, Lieut.-Colonel Edmund

    Turton, Edmund Russborough

    McCurdy.

    Samuel, A. M. (Surrey, Farnham)

    Warren, Sir Alfred H.

    NOES.

    Barker, G. (Monmouth, Abertillery)

    Hayward, Evan

    Rendall, Athelstan

    Bromfield, William

    Hodge, Rt. Hon. John

    Richardson, R. (Houghton-le-Spring)

    Brown, James (Ayr and Bute)

    Hogge, James Myles

    Robertson, John

    Cairns, John

    Irving, Dan

    Royce, William Stapleton

    Carter, W. (Nottingham, Mansfield)

    Johnstone, Joseph

    Spencer, George A.

    Collins, Sir Godfrey (Greenock)

    Jones, Henry Haydn (Merioneth)

    Swan, J. E.

    Cowan, D. M. (Scottish Universities)

    Kennedy, Thomas

    Waddington, R.

    Davies A. (Lancaster, Clitheroe)

    Kenworthy, Lieut.-Commander J. M.

    Walsh, Stephen (Lancaster, Ince)

    Entwistle, Major C. F.

    Kenyon, Barnet

    Waterson, A. E.

    Finney, Samuel

    Kiley, James Daniel

    Wedgwood, Colonel Josiah C.

    Galbraith, Samuel

    Lawson, John James

    White, Charles F. (Derby, Western)

    Graham, R. (Nelson and Colne)

    Maclean, Rt. Hn. Sir D. (Midlothian)

    Williams, Aneurin (Durham, Consett)

    Graham, W. (Edinburgh, Central)

    Mallalieu, Frederick William

    Williams, Col. P. (Middlesbrough, E.)

    Grundy, T. W.

    Morgan, Major D. Watts

    Wintringham, Thomas

    Guest, J. (York, W. R., Hemsworth)

    Murray, Dr. D. (Inverness & Ross)

    Wood, Major M. M. (Aberdeen, C.)

    Hall, F. (York, W. R., Normanton)

    Myers, Thomas

    Young, Robert (Lancaster, Newton)

    Halls, Walter

    Newbould, Alfred Ernest

    Hartshorn, Vernon

    Parkinson, John Allen (Wigan)

    TELLERS FOR THE NOES.—

    Mayday, Arthur

    Rees, Capt. J. Tudor- (Barnstaple)

    Mr. George Thorne and Major

    Barnes.

    Clauses 35 (Transfer of registered bonds by deed), 36 (Amendment of Part VII of 33 & 34 Vict., c. 71), 37 (Provisions with respect to redemption of Government stock), 38 (Interpretation), and 39 (Civil Contingencies Fund), ordered to stand part of the Bill.

    CLAUSE 40.—(Interest on certain loans not to be treated as profits for purposes of Corporation Profits Tax.)
    8.0 P.M.
    The interest receivable by any company in respect of any securities forming part of the three and one-half per cent. Conversion Loan redeemable in nineteen hundred and sixty-one, or in respect of any securities forming part of any loan which may be issued at any time after the passing of this Act as respects which the Treasury on the issue thereof direct that this Section shall apply, shall not be included in the profits of the company for the purpose of Corporation Profits Tax under Part V of the Finance Act, 1920.
    Colonel WEDGWOOD: I beg to move to leave out the words
    "or in respect of any securities forming part of any loan which may be issued at any time after the passing of this Act as respects which the Treasury on the issue thereof direct that this Section shall apply."
    998
    I think it is extremely undesirable that there should be certain securities, investment in which absolves the company from paying the Corporation Profits Tax on that security. Holders of the 3½ per cent. Conversion Loan are already exempt from Corporation Profits Tax in respect of that loan, but we do not want to have any more loans started, or any more stocks and shares on the market, possession of which will exempt the company holding them from having to pay this tax. The tax ought to be paid by all or none, and it is very undesirable that there should be this exemption. Wherever you have exemptions of that sort, you are very likely to have cumbrous machinery or fraud, and it is extremely difficult to keep a check on the investments.
    Mr. YOUNG: With a good deal of what the hon. and gallant Gentleman said on the point of general principle, I am quite in agreement, but I am not sure that he perfectly comprehends the reason why this particular provision is made as regards the Conversion Loan and Government stock of that sort. It is owing to the provisions of the law relating to the Corporation Profits Tax which, as they

    999
    work at present, have this result, that certain high-class securities, in the nature of debentures and so on in railways, which fall into classes of exemption from the Corporation Profits Tax, receive, when they come into the hands of investing companies and so on, whose principal business and income are derived from investment in other companies, a marked preference over Government securities of various sorts. I will not go into the samewhat intricate details of the manner in which that comes about, but, owing to the necessary and proper exemptions which are given under the Corporation Profits Tax, certain advantages as securities are received by these high-class debentures and so on over Government securities. That is, of course, a very grave disadvantage from the point of view of the Exchequer, and it is to remove that disadvantage that this machinery is provided. As regards future levies, the effect of my hon. and gallant Friend's Amendment—I am not quite sure he intends it—would be to allow the concession to be made on this occasion, and to prevent it being made in the future. He recognises, no doubt, that a promise was given, but I would venture to submit to him that if there is a strong case, as I have argued there is, for making this exemption, it is really in regard to future operations of this sort that there will be less objection taken, because the circumstance of this concession being given will, of course, be known before the price of the loan, or the bargain determining the loan, is fixed, and it will be taken into account and due consideration will be received in arranging the terms of the loan. Under these circumstances, I trust my hon. and gallant Friend will not press the Amendment.
    Sir G. COLLINS: As I understand, capital invested in railways or in debentures or preference shares, if they are sold and transferred to a holding company, the capital so transferred is not liable to the Corporation Profits Tax. In other words, capital comes under the Corporation Profits Tax in one form of investment, but not in another form. Surely it shows the gross unfairness of the Corporation Profits Tax that a fortunate individual, knowing the law about the Corporation Profits Tax, can invest his money in one class of security, and escape that tax,
    1000
    while others, who are not well posted in these matters, or may not be fully informed, are required to pay the tax.
    Mr. YOUNG: I am not sure that I made quite clear my own meaning, perhaps because I did not want to enter into a region with which I thought hon. Members were familiar. What I was referring to, of course, was the arrangement by which certain returns of capital are not taxed twice over under the Corporation Profits Tax. Having paid once in their own company, the interest does not pay again when received by another company, such as an investment or loan company.
    Mr. RAWLINSON: Would that principle apply to a railway debenture?
    Mr. YOUNG: Yes.
    Sir G. COLLINS: The main point I put before the Committee was that a particular type of investment escapes the Corporation Profits Tax altogether, and investments in other types of securities become liable to the payment of this tax. You single out a particular class of investors—they may be poor investors—for special taxation, which is not levied on other classes of the community. It is levied upon investors who, in their own judgment, and, it may be, without full knowledge, invest their hard-earned savings in deferred shares, which, judging by prospectuses issued in the last few days, are a very attractive form of investment. I hope my hon. and gallant Friend will press his Amendment to a division. The Corporation Profits Tax is a grossly unfair tax. Experience has shown that it is unfair between one type of individual and another. It violates the fundamental principle of taxation, which is, ability to pay.
    The CHAIRMAN: The question is a narrow one, namely, whether certain securities ought to be exempted from the tax. The hon. Member must not go into the wider question.
    Sir G. COLLINS: I was venturing to argue that there should be a larger number of investments not liable to the tax. I quite realise I was on delicate ground in pressing the larger question, and I shall resume my remarks upon that point when it is moved to leave out the Clause.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 165; Noes, 52.

    Division No. 177.]

    AYES.

    [8.15 p.m.

    Addison, Rt. Hon. Dr. Christopher

    Fremantle, Lieut.-Colonel Francis E.

    Moore, Major-General Sir Newton J.

    Adkins, Sir W. Ryland D.

    Ganzoni, Sir John

    Morden, Col. W. Grant

    Agg-Gardner, Sir James Tynte

    Gardiner, James

    Morris, Richard

    Amery, Leopold C. M. S.

    Gee, Captain Robert

    Murray, C. D. (Edinburgh)

    Austin, Sir Herbert

    Gibbs, Colonel George Abraham

    Neal, Arthur

    Bagley, Captain E. Ashton

    Gilbert, James Daniel

    Norris, Colonel Sir Henry G.

    Baird, Sir John Lawrence

    Gilmour, Lieut.-Colonel Sir John

    Norton-Griffiths, Lieut.-Col. Sir John

    Balfour, George (Hampstead)

    Goff, Sir R. Park

    Parker, James

    Balfour, Sir R. (Glasgow, Partick)

    Goulding, Rt. Hon. Sir Edward A.

    Parry, Lieut.-Colonel Thomas Henry

    Barlow, Sir Montague

    Gray, Major Ernest (Accrington)

    Pease, Rt. Hon. Herbert Pike

    Barnes Rt. Hon. G. (Glas., Gorbals)

    Green, Joseph F. (Leicester, W.)

    Perkins, Waiter Frank

    Barnett, Major Richard W.

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    Perring, William George

    Barnston, Major Harry

    Gregory, Holman

    Pratt, John William

    Barrand, A. R.

    Greig, Colonel Sir James William

    Prescott, Major W. H.

    Barrie, Charles Coupar (Banff)

    Gritten, W. G. Howard

    Purchase, H. G.

    Birchall, Major J. Dearman

    Hacking, Captain Douglas H.

    Randles, Sir John Scurrah

    Bird, Sir William B. M. (Chichester)

    Hailwood, Augustine

    Rawlinson, John Frederick Peel

    Blair, Sir Reginald

    Hamilton, Major C. G. C.

    Richardson, Alexander (Gravesend)

    Borwick, Major G. O.

    Hannon, Patrick Joseph Henry

    Roberts, Samuel (Hereford, Hereford)

    Bowles, Colonel H. F.

    Harmsworth, C. B. (Bedford, Luton)

    Roundell, Colonel R. F.

    Bowyer, Captain G. W. E.

    Haslam, Lewis

    Royds, Lieut.-Colonel Edmund

    Boyd-Carpenter, Major A.

    Henderson, Major V. L. (Tradeston)

    Samuel, A. M. (Surrey, Farnham)

    Breese, Major Charles E.

    Henry, Denis S. (Londonderry, S.)

    Samuel, Samuel (W'dsworth, Putney)

    Bridgeman, Rt. Hon. William Clive

    Herbert Dennis (Hertford, Watford)

    Sanders, Colonel Sir Robert Arthur

    Briggs, Harold

    Hinds, John

    Shaw, Hon. Alex. (Kilmarnock)

    Broad, Thomas Tucker

    Hohler, Gerald Fitzroy

    Shaw, Capt. William T. (Forfar)

    Bruton, Sir James

    Hood, Joseph

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Buckley, Lieut.-Colonel A.

    Hope, Lt.-Col. Sir J. A. (Midlothian)

    Simm, M. T.

    Bull, Rt. Hon. Sir William James

    Hopkins, John W. W.

    Smith, Sir Malcolm (Orkney)

    Burn, Col. C. R. (Devon, Torquay)

    Hopkinson, A. (Lancaster, Mossley)

    Stanley, Major Hon. G. (Preston)

    Carter, R. A. D. (Man., Withington)

    Horne, Edgar (Surrey, Guildford)

    Stanton, Charles Butt

    Cautley, Henry Strother

    Home, Sir R. S. (Glasgow, Hillhead)

    Sturrock, J. Leng

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    Hunter, General Sir A. (Lancaster)

    Sugden, W. H.

    Chamberlain, N. (Birm., Ladywood)

    Hurst, Lieut.-Colonel Gerald B.

    Taylor, J.

    Churchman, Sir Arthur

    Jackson, Lieut.-Colonel Hon. F. S.

    Thomson, F. C. (Aberdeen, South)

    Colvin, Brig.-General Richard Beale

    Jameson, John Gordon

    Thomson, Sir W. Mitchell- (Maryhill)

    Conway, Sir W. Martin

    Jesson, C.

    Thorpe, Captain John Henry

    Coote, Colin Reith (Isle of Ely)

    Johnstone, Joseph

    Turton, Edmund Russborough

    Cowan, D. M. (Scottish Universities)

    Jones, Sir Edgar R. (Merthyr Tydvil)

    Waddington, R.

    Cowan, Sir H. (Aberdeen and Kinc.)

    Jones, Henry Haydn (Merioneth)

    Wallace, J.

    Davidson, Major-General Sir J. H.

    Kellaway, Rt. Hon. Fredk. George

    Warren, Sir Alfred H.

    Dawes, James Arthur

    King, Captain Henry Douglas

    Watson, Captain John Bertrand

    Dean, Commander P. T.

    Lane-Fox, G. R.

    White, Col. G. D. (Southport)

    Denniss, Edmund R. B. (Oldham)

    Lister, Sir R. Ashton

    Williams, C. (Tavistock)

    Dewhurst, Lieut.-Commander Harry

    Lloyd, George Butler

    Williams, Col. Sir R. (Dorset, W.)

    Dockrell, Sir Maurice

    Lloyd-Greame, Sir P.

    Wilson-Fox, Henry

    Doyle, N. Grattan

    Locker-Lampson, Com. O. (H'tingd'n)

    Wise, Frederick

    Edgar, Clifford B.

    Lorden, John William

    Wood, Hon. Edward F. L. (Ripon)

    Edwards, Hugh (Glam., Neath)

    McMicking, Major Gilbert

    Wood, Sir H. K. (Woolwich, West)

    Evans, Ernest

    Magnus, Sir Philip

    Worsfold, T. Cato

    Eyres-Monsell, Com. Bolton M.

    Mallalieu, Frederick William

    Worthington-Evans, Rt. Hon. Sir L.

    Fell, Sir Arthur

    Manville, Edward

    Young, E. H. (Norwich)

    Flannery, Sir James Fortescue

    Middlebrook, Sir William

    Young, Sir Frederick W. (Swindon)

    Ford, Patrick Johnston

    Mitchell, William Lane

    Foreman, Sir Henry

    Mond, Rt. Hon. Sir Alfred Moritz

    TELLERS FOR THE AYES.—

    Fraser, Major Sir Keith

    Montagu, Rt. Hon. E. S.

    Colonel Leslie Wilson and Mr.

    McCurdy.

    NOES.

    Barker, G. (Monmouth, Abertillery)

    Hartshorn, Vernon

    Rees, Capt. J. Tudor- (Barnstaple)

    Barnes, Major H. (Newcastle, E.)

    Hayday, Arthur

    Rendall, Athelstan

    Barton, Sir William (Oldham)

    Hayward, Evan

    Richardson, R. (Houghton-le-Spring)

    Bromfield, William

    Hodge, Rt. Hon. John

    Robertson, John

    Brown, James (Ayr and Bute)

    Hogge, James Myles

    Rose, Frank H.

    Cairns, John

    Irving, Dan

    Royce, William Stapleton

    Carter, W. (Nottingham, Mansfield)

    Kennedy, Thomas

    Spencer, George A.

    Collins, Sir Godfrey (Greenock)

    Kenworthy, Lieut.-Commander J. M.

    Thomson, T. (Middlesbrough, West)

    Davies, A. (Lancaster, Clitheroe)

    Kenyon, Barnet

    Thorne, G. R. (Wolverhampton, E.)

    Entwistle, Major C. F.

    Kiley, James Daniel

    Walsh, Stephen (Lancaster, Ince)

    Finney, Samuel

    Lawson, John James

    Waterson, A. E.

    Galbraith, Samuel

    MacVeagh, Jeremiah

    Wedgwood, Colonel Josiah C.

    Glanville, Harold James

    Morgan, Major D. Watts

    White, Charles F. (Derby, West'n)

    Graham, R. (Nelson and Colne)

    Murray, Dr. D. (Inverness & Ross)

    Williams, Aneurin (Durham, Consett)

    Graham, W. (Edinburgh, Central)

    Myers, Thomas

    Wood, Major M. M. (Aberdeen, C.)

    Grundy, T. W.

    Newbould, Alfred Ernest

    Young, Robert (Lancaster, Newton)

    Guest, J. (York, W. R., Hemsworth)

    Parkinson, John Allen (Wigan)

    Halls, Walter

    Polson, Sir Thomas A.

    TELLERS FOR THE NOES.—

    Mr. Frederick Hall and Mr. Swan.

    Mr. G. BALFOUR: I beg to move, after the word "apply," to insert the words
    "and the dividends or interest received from any company the profits of which are exempted from Corporation Profits Tax under the proviso to Section fifty-two, Subsection (2), of the Finance Act, 1920."
    The object is to remove uncertainty and to give effect to exemptions from Corporation Profits Tax on the dividends or interest received from certain companies, the profits of which are exempt under Section 52 of the Finance Act, 1920. I think the ambiguity which exists was due to the fact that concessions were made last year on Section 52, and the necessary consequential Amendments were not made in Section 53. Under Section 53 any joint stock company receiving dividends from a company liable to Corporation Profits Tax does not bring into account those dividends for the purpose of computation of Corporation Profits Tax in that joint stock company, such as a trust or investment company, if the dividend was already liable to the tax. Under Section 52 certain companies are exempt from Corporation Profits Tax. Being exempt, they are therefore not liable. Had they been liable, under Section 53 the company receiving the dividend would have had no further liability to Corporation Profits Tax in respect of that dividend, but being exempt under Section 52, there has arisen from time to time since the passing of the Act of last year a question as to whether there is not a charge on the dividend received from the exempted company when it is received by the joint stock or holding company. My Amendment is to remove that ambiguity and to make it clear that exemption from Corporation Profits Tax is at least as strong as the meeting of the liability for Corporation Profits Tax. There are two parties who are substantially affected. The one is the trust or investment company receiving the dividend from these companies, and they are naturally anxious to have this provision made clear, but in my opinion a still more serious grievance exists in connection with a joint stock holding company holding the whole of the mortgages, debentures, or shares of a company which is exempt under Section 52 of the Act.
    Certain building societies and public utility societies are exempt under Section 52. Many of these companies which are exempt, being companies created by
    1004
    Statute, have the whole of their share capital held by a holding company. The statutory company is exempt under the Finance Act of last year and in this Bill, but the holding company receiving the whole of the interest and the dividends of the statutory company may be called upon to pay the Corporation Profits Tax before it hands over the proceeds of the property to the shareholders. That, I am sure, was not the intention last year. The Bill as it stands does not take account of that difficulty, or remove it—the difficulty created, by what I think were hurried Amendments last year. I suggest the Amendment that I have put down will remove the difficulty both as to these companies and the holding companies; as regards the latter, it is simply a case, as I have said, between the earnings of the property and the shareholders, for there is no doubt there is no interest by the holding company in the earnings of the other; it acts simply as trustee between the two parties.
    Mr. YOUNG: On this Amendment, on behalf of my right hon. Friend, I shall be able to go part of the way to meet the hon. Member; not, I fear, the whole way. As regards the trust and investment companies, I believe there is no case at all for exception and the relief suggested. It is the general principle of the whole Corporations Tax that investment incomes should be liable, and I can see on the merits of the case no reason at all why, admitting in the first place that income is not taxed on receipt by the first company, it ought not to pay when received by the investment company. It is surely a sheer negation or contradiction to seek to extend that exemption to companies where the income received by the first company has not paid tax, or for whatever reason. As regards the general position of the investment company, I take it in broad terms the case of my hon. Friend is this: that the first company does not pay the tax, and so there is no reason why the second company should. We come to a very different case in the second case which he put. There is this great practical difference, here I entirely agree with him that we are on different ground, because the holding company cannot change its investment. Its whole existence is derived from that of the exempted company. I think I can undertake on behalf of my right hon. Friend to con-

    1005
    sider this matter before Report, and to give effect to some Clause exempting the holding company.
    Sir G. COLLINS: The reply of my hon. Friend clearly reveals the inequality which exists and which will be extended if the Government carry out their intention. If I correctly understand the Amendment, it is this: there is capital in a certain company, that company paying Corporation Profits Tax; the dividends of that company pass to another company, and the other company is liable to pay Corporation Profits Tax. The underlying idea is that the Limited Liability Acts conferred certain favours or privileges on capital, invested according to those Acts, and for that privilege the Chancellor, if I remember correctly what he said, considered that the capital invested in these companies should pay some return for that right. I think the tax itself is a bad tax, but the reply of my hon. Friend will make it more unfair and more unjust than it is to-day, between one company and another. The holding company, as my hon. Friend has said, cannot transfer its holding, for it is a holding company pure and simple. But when a company forms itself into a holding company it does so for a very good reason—for its own interest—justifiable and right, no doubt, but if the argument of the Government is correct, that the Limited Liability Acts give a privilege which induces them to impose a Corporation Profits Tax, I suggest that that tax should be levied as well on the profits of the holding company. What is good for one class of company should apply all round. To make a distinction between a holding company or trust company or any other company is unfair between taxpayer and taxpayer, and ought not to receive the support of the Government.
    Mr. G. BALFOUR: In view of the statement made by the Financial Secretary I ask leave to withdraw my Amendment. I will endeavour to suggest something adequate between now and the Report stage.
    Amendment, by leave, withdrawn.
    Mr. WATERSON: I beg to move, at the end of the Clause to add a new Sub-section—
    "(2) On and after the fifth day of April, nineteen hundred and twenty-one, the provisions in Part V of the Finance Act, 1920
    1006
    (which relate to the Corporation Profits Tax), shall cease to apply to the profits of a society registered under the Industrial and Provident Societies Act, 1893, and paragraph (h) in Section fifty-three of the Finance Act, 1920, is hereby repealed."
    I desire to ask the representative of the Government to endeavour to apply, shall I say respectfully, the same sense of proportion which the Chancellor very suitably announced on a previous Amendment. The right hon. Gentleman said there was some sense of fairness and justice when dealing with excess profits. I want the Government to give the same consideration and to have the same sense of fairness and justice in the case of the societies that come under the Industrial and Provident Societies Act as they are prepared to give, quite justifiably doubtless, to those other organisations which have been appealing so far as the Excess Profits Duty is concerned. I am afraid I shall find myself in a difficulty in endeavouring to bring to the Committee new suggestions as to why these societies should be exempt from a tax. I only am too painfully aware that last year on the Budget it was my duty to make five speeches at least upon this matter. I trust the Committee will bear with me in endeavouring to find some new suggestions that will save me from reiterating what I said last year.
    In tracing the Industrial and Provident Societies Act, I am led to the conclusion that every society which has its status under that Statute are working-class organisations. We can summarise them as friendly societies, working men's clubs, trade unions, building societies, and incidentally, and last but not least, the co-operative societies. I do not think that there is any Member of the Committee who would be prepared to say that any of these organisations are out for the specific purpose of making profit. I know of none, and I have been privileged to work inside most of the organisations I have mentioned, with the exception of the working men's club movement, for many years. With regard to the charge that these societies are organised for the specific purpose of making huge surpluses at the consumers' or the members' expense, I think it is well known to the Committee that any organisation which has its standing under that particular Act has its limitations. Not only that, but it also has to open its doors wide to anyone who may

    1007
    have a desire to enter therein. One thing we have repeatedly asked the Government to do is to remove one of those limitations, that is, in conjunction with the £200 share limit. If the Government are anxious to endeavour to force limitations that come along with the privilege of working under the Industrial and Provident Societies Acts, we think it exceedingly unfair that they should force upon us the obligations which they force upon a limited liability company.
    This tax in my humble judgment—and I do not pride myself upon having as much brains as some hon. Members of this Committee, but I attempt to use them to the best of my ability—as applied to cooperative societies has not been a success. I do not think the right hon. Gentleman who speaks for the Government will be able to say that it has been a success. If my memory serves me correctly, whilst you endeavoured to secure from the co-operative movement £175,000, it is a remarkable thing that something less than that amount has accrued from the application of the Act. First of all I feel justified in mentioning, as I did on the last occasion, that I feel the Government has made a huge mistake in not altering the Industrial and Provident Societies Act before it applied the obligations forced upon a limited liability company on those organisations which came under the Industrial and Provident Societies Acts. I do not know of a case taken to the High Courts, but I still hold the view—and until the case has been thoroughly tested I shall retain that opinion—that to apply this tax to such societies is an illegal practice.
    There is another point which I am anxious to bring before the Committee. It was only last year, for the first time in the history of these organisations, that the Chancellor of the Exchequer violated the principle upon which these organisations were built and upon which they have always stood. For more than 25 years every Chancellor of the Exchequer has maintained that principle, and the attitude of previous Chancellors of the Exchequer has been borne out by statements that have been promptly given by officers of the Board of Inland Revenue. I will quote to the Committee what a Deputy Chief Inspector of Taxes said before the Royal Commission which investigated this question. Replying to a
    1008
    question put to him, Mr. E. Standford, of London, a Deputy Chief Inspector of Taxes, said:
    "If a co-operative society is to be treated like an ordinary trader you have only to look at the statement that I have put in showing what the profits are and what taxes we are already receiving under Schedule A to see that their statement cannot be controverted; for instance, that the revenue is receiving more tax than it would receive, assuming that dividends on purchases are regarded as non-taxable."
    We have always received every penny piece that was due to us by law. We have never pleaded for preferential treatment in the slightest degree, but we have a right to ask that this House shall give to the working class organisations that sense of fairness and justice which the Chancellor of the Exchequer has mentioned this afternoon. It is true—I do not think the Inland Revenue authorities would endeavour to get away from this fact—that under Schedules A and B of the Income Tax we have already been over taxed, and what we might have reclaimed we have not attempted to secure. This only goes to prove that there has been a decided endeavour to assist the country as far as the securing of revenue is concerned, and we feel that the injustice of this Corporation Profits Tax placed upon the movement as a whole is apparent to anyone who is prepared to give it even the slightest consideration.
    This Clause applies a tax to corporations and societies registered under the Acts I have mentioned, which, strange to say, is not applied to any other class of trader or organisation. We are prepared to argue that even if the tax might fairly be applied to corporations registered under the Corporations Acts, it still would be grossly unfair to levy it upon mutual trading organisations registered under the Industrial and Provident Societies Acts. Those who have studied the ramifications of these organisations cannot help admitting upon first sight without further search that these societies are entirely different from those of companies which are simply arranged organisations working for profit. The whole scope of their operations are based upon a different principle with an entirely different object. Those organisations for which I am pleading this evening are mere mutual trading organisations. They are nevertheless put into the same category—into the same melting-pot—as the competitive organisations which are trading for private profit. Surely the pub-

    1009
    lished results of their trading should be sufficient evidence of the facts I have endeavoured to elucidate. Moreover, co-operative societies pay a limited rate of interest on their share capital, and that is subject to Income Tax. The basis of the Income Tax is that it is a tax on income and not a tax on savings. Companies often pay on their ordinary share capital enormous rates of interest to a comparatively small number of shareholders as a result of the profits they have got from the community to whom they have distributed their goods. Co-operative societies make no such profits. It is true that they make surpluses, which at the end of the surplus period are distributed, the bulk of it going back into the pockets of the members. The relationship of the members of the co-operative movement to their society is again quite different to that of the shareholders in limited liability companies to their companies. In limited liability companies they are associated for profit, but members of the co-operative societies share in the surplus from trade only according to the amount of the service taken, and not according to the amount of capital that they may be fortunate enough to possess in the business. It depends on their mutuality, on how far they are prepared to help mutually, what they receive as return in kind. They get a return according to their own action and as a result of their own initiative. I take it any Government would be prepared to support a policy of that description.
    Compare the results of co-operative trading during the period of the War with the results of the trading of companies and private trading organisations. It has been found on examination that the reserves of the private trading companies have been going up by leaps and bounds, whereas in the same period the small reserve which the co-operative movement possessed at the beginning has now been reduced by 45 per cent. If the Chancellor of the Exchequer will look at some of the Government reports dealing with profiteering he will find how things have been going on in that regard. We who happen to belong to the co-operative movement, and have been driven into it by the action of private enterprise and vested interests in this country, do not stand for privilege in the question of taxation. We do not ask that in the slightest degree. Ours is a simple or-
    1010
    ganisation, composed practically of working men and working women, a large percentage of whom are not liable to Income Tax at all, and there is just a possibility that the Inland Revenue authority, when it endeavours to secure that which is now the law of the land, may find itself faced with many hundreds of thousands of applications for a return of that portion of the surplus which has been handed over to it in the shape of taxation in this respect. We are not seeking for any exceptional provision at all. We simply claim the right as citizens to go on in the same way as past Chancellors of the Exchequer have recognised we are entitled to. We simply ask justice and fairness.
    The Corporation Profits Tax, as applied to the co-operative movement, is a tax upon thrift. It is a tax on provident management, and the last thing any Government should do should be to tax the thrift of the working people of this country. We all of us possess some human nature, and it is quite possible there may be some who, if this provision is insisted upon, will declare that if it is the intention of the Government to put a tax upon their mutual savings and upon their surpluses intended for distribution among themselves, then they must see to so arrange matters that there will be no surpluses at all. That could easily be done. There is no desire to do it if only the Government are prepared to give us fair consideration. The Corporation Profits Tax is not Income Tax at all. It is a tax on trade profits. One of my hon. Friends, in the course of the Debate this evening, has been endeavouring on various Amendments to show the un-wisdom of taxes of this character. Of course, I cannot debate this Amendment on those lines, but I do want to emphasise the fact that, so far as these organisations are concerned, these organisations of friendly societies and trade unions associated in the co-operative movement as it now stands, the industrial and provident societies really make no profits at all. I want to appeal to the right hon. Gentleman to give this matter his earnest consideration. There is going to be a rather keen Debate on this Amendment, which is drafted with the specific purpose of creating a direct negative to the attitude of the Government. I want to ask the Chancellor of the Exchequer, if he feels he can do no

    1011
    more, to at least agree that the decision on this Amendment shall be given by the free and unfettered voice of the House of Commons. I make that appeal to him.
    Before I sit down, I would, ask the right hon. Gentleman to remember that, whilst there are many men who happen to be the proud possessors of certain shares and interests in limited liability companies, and are to-day paying Super-tax, that cannot be said of the organisations of which I am speaking, and which are appealing unitedly that this tax shall be removed from them. There are no Super-tax payers in that movement. I am reminded that the Government saw their way clear last year to give a three years' exemption to railway companies. I am not going to argue, at this stage, whether that was wise or unwise, but I say that, if they could give to the railway companies a three years' exemption, there is some justification for asking the Government to give to the co-operative movement, and those other movements that are affected by this provision, some consideration in that respect, in order that they may be able to feel that sense of fairness to which the right hon. Gentleman has more than once referred. I ask him, therefore, to consider this Amendment in the light of the new evidence that has been submitted to him, both documentary and otherwise, in order that, if he cannot, on behalf of the Cabinet, accept the Amendment, he may, at any rate, endeavour to leave to the Committee freedom and liberty, so that Members may have the privilege of voting in the way that their conscience directs.
    Captain GEE: On a point of Order. I should like to ask your view, Sir Edwin, as to the position in which Members will be if this Clause is carried, seeing that we have two other Amendments also dealing on the same lines with the same Clause.
    The DEPUTY-CHAIRMAN (Sir E. Cornwall): I think the Amendment that follows this would be in order.
    Captain BOWYER: It may seem strange to Members on the other side of the Committee that I am heart and soul behind this Amendment, particularly in view of the reference in my hon. Friend's speech to the fact that private enterprise seemed to be on one side and the co-
    1012
    operative movement certainly on another side, if not the other side. My hon. Friend, I think, went so far as to say that the co-operative movement had been largely prejudiced by private enterprise. It would, of course, be out of Order for mo to go into that, but it is odd that one who believes, as I do, in private enterprise, should yet be supporting the cooperative movement and the mutual trading on which it is built up. I feel that this question, in the minds of many hon. Members, is the subject of some prejudice before they really are willing to give it serious consideration. It may be that in many cases the co-operative movement seems to be tantamount to a movement emanating from hostile quarters, and I can think of two events last year which may have led many Members to feel such a prejudice in their minds, instead of looking at the matter from the point of view of its intrinsic worth. The first is a sentence spoken by the Chancellor of the Exchequer last year, when he said:
    "I have the authority of the representatives of Labour and the special representative of the Co-operative Societies upon the Royal Commission on Income Tax for the proposals submitted to the House."
    9.0 P.M.
    I submit that that was, I will not say unfair, but was not an accurate description of what actually happened. All hon. Members will be familiar with the fact that there were members of the great cooperative movement who signed the Minority Report, and who did go so far as to say that they thought that they would be willing to submit to a corporation tax; but when a deputation saw the Chancellor of the Exchequer in May of last year, the matter was, I think, quite clearly explained. My hon. Friend the Member for Central Edinburgh (Mr. W. Graham) last year—and I expect he will do the same again this year—easily persuaded the House that the Chancellor of the Exchequer's statement that he could claim to be backed by the cooperative movement when he brought forward the Corporation Profits Tax was not really doing justice to what actually took place. While I am on the question of prejudice, I should like to say that to my mind you cannot mix up the profits of a company with the results of mutual trading, and it is upon that that the whole question turns. It is true, as the Mover of the Amendment has said, that

    1013
    co-operators do not seek to shirk their liability to taxation. It is also true that to a large extent co-operators are not assessable in the same way as other people in the country, and that, again, seems to prejudice them and to bear out the contention which is so often made, that the co-operative movement is escaping its liability to contribute towards the taxation of the country. The right hon. Gentleman the Member for Chelmsford (Mr. Pretyman) and the hon. Member for Everton (Sir J. Harmood-Banner), who signed a reservation last year in the Report of the Royal Commission, called attention to the volume of trade which is being done—I think it is a greater volume each year—by the co-operative movement. The words of the reservation are worth repeating. They are as follows:
    "I have, however, been much impressed by the evidence of the growth of these societies, of the magnitude of their operations, and of their tendency to absorb business previously carried on by trading organisations whose liability to Income Tax is unquestionable. It is obvious that if this process is indefinitely continued the loss to the Revenue will be very great, and that a corresponding increase must take place in the burden of other taxpayers. It is also clear that the present high rate of tax must tend to increase the advantage of the societies over private traders and manufacturers, and so to accelerate the progress of their absorption or displacement. I think that the very large trade carried on by co-operative societies ought to bear its due share of taxation, and that if the Income Tax is not a suitable instrument for that purpose, then some fair and workable method of taxation should be devised to fit the circumstances of the case."
    It would be interesting to learn whether the co-operative movement has, since the 18th May, 1920, or since the Debates last year been able to devise any fair system of adding its share to the taxes of the country. There is a large body of opinion which says that, in view of the great volume of trade done by the movement, it is not paying its just proportion. Personally, I am not inclined at present to agree with that opinion, and I think that, if you cannot say—as in my opinion you cannot—that the co-operative movement should pay a tax on profits you ought not to tax it by means of the Corporation Profits Tax simply because you want to tax it somehow. This system of mutual trading needs no words of mine to commend it. I do not look on it as being antagonistic to private enterprise or to the trade of the country, and I think the more
    1014
    the merits of mutual trading are examined the more everyone must be satisfied that it is entirely sound, and still more that it militates in favour of a great number of what one might call the poorer citizens of the country, and in view of the fact that I am quite convinced that it is not a case of profit but of surplus which is being taxed, I shall certainly support the Mover of the Amendment, and if he goes to a Division I shall support him by my vote.
    Mr. G. BARNES: I rise to associate myself with the Amendment, although I could not very well endorse all the arguments the Mover put forward in favour of it. For instance, he put in the plea that it was illegal, and he spoke about the House of Lords being appealed to. I think, the Act of Parliament having been passed, the House of Lords-must fall into line, and therefore I attach no importance to what the Courts or the House of Lords may think or do. This House has passed this tax, and I take it it will be imposed until the House reverses its previous decision. I hope it will now reverse that previous decision, and I am perfectly sure, if it does not it now, the force of public opinion will be such that it will have to do it ultimately. I do not agree with the Corporation Tax at all, because it seems to me to run counter to the underlying principle of the Income Tax, which I take to be that the individual is taxed, providing his income is over a certain amount, and this House and public opinion have from time to time fixed what that amount shall be. It has been fixed and readjusted so often recently that I really do not know where it stands, but at all events the principle is that a man's income, if it is not above a certain amount held to be necessary for maintenance in decent comfort, is exempt from taxation. The Corporation Tax taxes a corporation, and therefore taxes everyone in it, whatever his income may be, and, it seems to me, is contrary to the principle of the Income Tax. It is an anomaly. But in applying it to cooperative societies, another anomaly is introduced because the tax is imposed upon what is not income at all. I base that statement upon two things, first of all upon authority and then upon the facts of the case. As to authority, Commissions, and Committees, and Departmental Committees of the Inland Revenue have reported upon this matter from time to time for the last 30 or 40

    1015
    years, and they have all agreed that this surplus, or whatever it may be, of the co-operative societies is not income at all, and therefore not taxable.
    But apart altogether from authority, take the commonsense interpretation of the proceedings of a co-operative society. I am a member of a co-operative society, and have been ever since I was of age. Incidentally, I was a member in the struggling time of the co-operative societies here in London when many workmen lost all their savings. What takes place? As a member of a co-operative society, I go to the counter and buy a certain amount of goods, at least I pass over a certain amount of money and get in exchange a certain amount of goods. Those goods are not handed over to me at a price which might be regarded as their real price, that is to say, the price at which the members of the co-operative society agree to do service one to another. They are handed over to me at the market price. We have agreed to sell to one another at the market price merely as a matter of convenience. We could decide next week to sell not at the market price, but at the cost of production. It would be inconvenient to us, and it would introduce a principle which we do not want to introduce. It would be an exceedingly difficult thing to do, because in selling meat I suppose you would have to ascertain how much was to be charged for flesh and how much for bone, and so on. It would be difficult to apply the principle, but if the co-operators made up their minds that they would sell hot at the market price, but at the real price to them, it could be done, and by that means dividends would be wiped out and instead of getting our change, so to speak, at the end of the quarter or half-year, which is not profit, there would be no change at all, because we should get the goods at a price correspondingly less in the degree to which the dividend was ultimately paid. Therefore it seems to me that the case is proved, first by authority and then by the facts of the situation, that there is no profit and no income, and therefore it is not right to tax whatever it may be called.
    The Chancellor of the Exchequer is in a very illogical position. As I gather, he admits all I have so far said, and therefore he says, "I will not tax one part of the surplus. I will not tax that part that
    1016
    is distributed to the Members." What is the difference between the two parts? If he taxes the part that is retained in the hands of the society, to that extent he taxes something which would otherwise have increased the dividends that ultimately went to members, and therefore the position he puts himself in is altogether an illogical one. It may be that there is something in the plea that the corporation have large property, and they carry on a large business and therefore ought to contribute more liberally or largely to the Revenue. Let the right hon. Gentleman bring some other proposition forward that harmonises with the dicta of authority, and with the facts, and I think I can say the co-operators would be inclined to look at it sympathetically. But so far as I have been able to judge, co-operators now pay in the same way as everyone else pays. In the first place, supposing a man has £100 in a co-operative society, and gets £5 interest, he has to pay upon that £5 exactly the same as anyone else. That is to say, if his income exceeds that amount I spoke of a little while ago, that £5 is entered as part of his income and he pays upon it exactly the same as anyone else. And in taxing a co-operative society, if the man's income is not up to that limit, including the £5 in his income, he can recover from the Government. The Government put themselves in the position that they might be inundated with a multitiude of forms making claims by people who are taxed not only unjustly but illegally. Therefore the individual pays just the same as any other individual as far as I can see, and when you come to the property of the society, the same thing occurs so far as I know. I believe the co-operative society pays upon its investment like any other society, corporation, or company. Therefore there is no need to differentiate, as the law now does, between the non-co-operator and the co-operator, whether in an individual or corporate capacity. The co-operator now pays exactly the same as anybody else. In imposing this taxation you are imposing a special tax upon the co-operator, which is unjust, and I believe this House will recognise some time or other, if it does not now, that the tax is unjust and impolitic.
    Let me put in a word for the good work done by co-operative societies. It is especially necessary now in the time through which we are passing, when there is great

    1017
    unrest, and charges of all kinds are brought against the Government, when we have people who have no stake in the country, so to speak, restless and regardless of law and order, that we should have 4,000,000 or 5,000,000 people enrolled together in these co-operative societies, who own a little property, and by that means regard themselves as having a stake in the country. These people have been thrifty, and regard themselves as doing something to steady public opinion against the forces I have mentioned. It seems to me to be impolitic to put a special tax upon these people at this particular time, when we ought to be encouraging combinations of this character, encouraging people to stand together, not to upset Governments, not to create industrial unrest, but to stand together for the purpose of getting the country through an awkward pass. On that ground, as well as other grounds, I appeal to the Chancellor of the Exchequer to reconsider this matter, even at the eleventh hour, and see if he cannot make some different and better arrangement to raise on something else the money that is raised by this tax.
    Mr. A. HOPKINSON: I hope the Committee will have nothing whatever to do with this Amendment. The hon. and right hon. Members who have supported it have failed to show where the real sting of the Amendment comes in. It is an Amendment which, unlike other Amendments on the Paper, is intended to exempt from this particular form of taxation the surplus earned by co-operative societies, including that which they earn by competing directly with the private trader and dealing with non-members. All the large co-operative wholesale societies do a very large amount of trade with non-members. There are lines of steamships running from this country to Continental ports, and their main object is to bring back dairy produce and other foreign produce for sale to members of co-operative societies; but does anyone suppose for a moment that if these ships could get outward cargoes as well as inward cargo, they would not compete against the ordinary privately-owned shipping concerns? They go out with coal and come back with dairy produce. Coal cargo is a cargo for whose freight they compete directly with coal shippers and ship-owners working under private enterprise.
    1018
    Just in the same way a very large amount of retail trade is done by many co-operative societies with non-members on a profit basis. During the War a co-operative society near my home in Lancashire was selling to me furniture and other things for hospitals. During the War I was vastly the largest customer of that society, and I was a non-member. Therefore, the Committee should distinguish most carefully between the two sources of the surplus of co-operative societies: first of all, the surplus which is due to retail trading with their own members; my name is down to an Amendment exempting taxation in that case. They should remember also that there is a large amount of ordinary competitive trading, in which case I do not think anyone would deny that any surplus which accrues is profit in the ordinary sense of the word, and should be taxed just as much as the profits of any private individual.
    Mr. WATERSON: It has always been recognised that that trade that is not between members is liable to taxation, and the co-operative societies have no desire to run away from that.
    Mr. HOPKINSON: That being the case, why did not the hon. Member for Kettering put his name to the Amendment which appears next on the Paper, instead of putting his name to an Amendment which, if carried, would involve the non-taxation of profits made from trading with non-members? I listened very carefully to the speeches of hon. Members who supported the Amendment, and there was not a word said on that particular point. This Amendment is completely different from the subsequent Amendments on the Clause, and it involves the outrageous injustice of taxation upon private or limited liability companies, whilst exempting from taxation their direct competitors in the co-operative societies. I hope the Committee will bear that in mind, and whatever may be their opinion as to whether surpluses obtained by dealing with members of the society should be described as profits or not, they will remember that this Amendment, if carried, will exempt from taxation profits gained by the ordinary trade process of dealing with non-members and dealing for what is most certainly ordinary profit.
    Mr. J. ROBERTSON: The hon. Member for Mossley (Mr. Hopkinson) has

    1019
    created an impression that a very large amount of trade is created by co-operative societies with non-members. We have figures of one of the largest societies in the West of Scotland on this point, and the figures are ·0 and ·22 per cent. in that society. Co-operators are not against that portion of their profits being taxed. This tax is undoubtedly a tax upon the thrift of the working man. We hear a great deal from time to time that the working man should be encouraged to save, but no sooner does he attempt to save than there is a method adopted for taking away the savings, or at any rate, he does not get credit for the savings. We had an example the other day in discussing the question of pensions. In the North of England they make provision for the aged workman by a contribution from wages, but when the time comes for pension the contribution is deducted from the pension, and they get a lesser pension because they have contributed in order to get the pension. As a co-operator I am entirely against this tax. As a co-operator I do not think I should be exempted when an individual who is a non-co-operator pays, but I do not think that because I am a co-operator I should pay a tax which a non-co-operator is not called upon to pay.
    I do not think any of the previous speakers, who have been against this Amendment, have touched the fundamental principle underlying this tax at all. I am going to take the position of three workmen, each receiving the same wage and not liable to Income Tax. Workman No. 1 spends his wage in the co-operative store. Workman No. 2 spends his wage with a private trader. Workman No. 3 spends his wage with a private trader who pays a discount. At the end of the week they have spent their wages. There may be amongst the three workmen a difference of opinion as to who is spending his wages most economically. The co-operator who has spent his wages with the co-operative store, and has probably 2s. or 2s. 6d. in the pound left, is taxed. The individual who has spent his wages with a private trader, and was more economical than the other man, is not taxed at all. The person who has spent his wages with the private trader and received a discount is not taxed either, as you are demanding that the co-operator shall be
    1020
    taxed. That is the crux of the whole question. As has been pointed out by the right hon. Member for Gorbals (Mr. G. Barnes), this is really a tax upon the workman who is a member of a co-operative society. I am prepared to admit that on the side of the co-operators there may be individuals who believe in private trading, but there is not the slightest doubt that this agitation to tax co-operative stores has had its mainspring in the very same spirit which endeavoured to boycott the co-operative stores out of existence some years ago. As co-operators, we are willing to pay the same tax as any other individual, but until those who are in favour of a tax can show us that the workman who spends his money in a co-operative store should be taxed as against the other two individuals who do not spend their wages in co-operative stores, then all co-operators are bound to resist this tax being imposed at the present time.
    As a co-operator, I have riot the slightest doubt, if the time came when we entirely eliminated the middleman, and everything were entirely in the hands of the co-operative societies, which I think would be a very good thing, although, no doubt, there would be considerable opposition in this House—the question has been put here, where are you going to get your taxes from—that there would be a tax equitable and just both to the co-operator and to every other individual, and the amount which would be derived from it would meet the tax at present paid by the private trader. This would be far more than compensated for by the enormous advantage which the co-operative movement is bringing to the working classes of the country. Whether or not the Committee defeats this Amendment, I believe the force of public opinion and the sheer logic of the situation will compel either the present Chancellor of the Exchequer or a future Chancellor of the Exchequer to cease putting an unjust burden upon individuals who merely wish to improve their position in life by spending their wages economically while allowing other individuals who spend their wages in another direction to go free.
    Mr. STURROCK: I sincerely trust the Committee will repudiate the Amendment moved very ably and interestingly by the hon. Member for Kettering (Mr. Water-son). We must approach all these proposals with reference to the Finance Bill

    1021
    from the point of view of the revenue of the country. I have listened with great care to these discussions, and I have found no reason whatsoever for thinking for a moment of going into the Lobby in support of the Amendment. I think the hon. Member for Kettering really did the cause of co-operation great disservice when he committed it to this point, that if the Amendment were not carried or the Government remained adamant to the representations of those who represent the co-operators they could so arrange their business that there would be no margin of saving. Hon. Gentlemen opposite know perfectly well that if they were so to arrange their business they would do the worst day's work for the co-operative movement that was ever conceived, because the whole of the co-operative movement, so far as I know, rests upon this, that they so arrange business and fix prices as to distribute what they call their savings—not dividends—among their clients. They have built up what is now an enormous business in this country. Gentlemen opposite talk as though the co-operative movement were some small, struggling concern, which is barely able to keep its head above water. They know very well that it is one of the most powerful organisations, industrially and politically, in this country. [HON. MEMBERS: "Hear, hear!"] They all agree. I know something about it, and I know they have opposed me and they always will oppose me, not that I care in the least about the co-operative movement from the political point of view, although some hon. Members opposite may be timorous about it, I am not. Hon. Members opposite argue against the Chancellor of the Exchequer's action in including them in the Corporation Tax. We have had certain vague utterances to-night about willingness to meet the ordinary obligations of citizenship, but hon. Gentlemen opposite are logical, and they know very well that the co-operative spokesmen have never put forward one single definite tangible proposition in reference to their coming in under any scheme of taxation. They have never said where they were willing to come into the scheme of things. They know as well as I do that they are well able to bear taxation just as every individual is doing in the country. I, who stand like the right hon. Gentleman the Member for Peebles (Sir D. Maclean) for a strong Liberal and individualistic policyߞ
    Lieut.-Commander KENWORTHY: When did you find that out? Since St. George's?
    Mr. STURROCK:—will never support any movement which endeavours to avoid taxation at a time when the great bulk of the wage-earning and small shop-keeping class in my own and other constituencies is suffering from the penalty of taxation, while the co-operative movement sends its spokesmen here to-night to claim that they shall go scot free from all these burdens and taxes. I do not think it is fair. I should like to hear, before we go to a Division—otherwise, reluctantly, I shall be compelled to vote against this Amendment—what really is in the minds of the speakers on behalf of the co-operative movement? Are they prepared to accept a fair burden, which ought to be imposed upon them as citizens of this country? When one reads in the Press, as one frequently does, of the great capital that they possess, of their tea estates, of the enormous tobacco warehouses they have, the shops they own, the jute factories, and of the land they buy—the land, let me add, upon which they find small landholders, whom they sweep away in the most ruthless fashion—
    Mr. G. BARKER: Following a bad example.
    Mr. STURROCK: When we read of all these things, and know that this cooperative movement is a gigantic trust—for that is what it really is—we ought not to have had the professions that we have had from the hon. Member for Kettering, who has really played upon the Committee in rather a minor key, as though he were a man struggling with adversity. We ought to have a definite statement from a responsible source of what the co-operative movement is prepared to do in the matter of meeting its obligation. Otherwise, as representative for the time being of an industrial constituency with a great mass of small shopkeepers, ratepayers and taxpayers, I cannot support the Amendment.
    Mr. J. W. WILSON: I hope that when the right hon. Gentleman comes to reply he will make plain the actual incidence of the present tax and explain how the provision which we adopted last year after considerable debate has worked So far as I understand paragraph (h) which is referred to in this Amendment, it does

    1023
    exempt from Corporation Tax the profits of these companies, in so far as they are distributed to their members either by way of dividend or bonus or discount on purchases. That disposes, to some extent, of the argument that it is a tax on the savings and purchases of workmen who indulge in co-operative purchases. How far it has been possible to make that distinction in the practical working of the Act I would like to know. The House decided, after considerable discussion last year, that the profits distributed to members, which are distributed, I understand, not according to their holdings, but according to the purchases they make, are not to be considered as coming under the Corporation Tax any more than under the Income Tax. What I would like to know is whether the arguments adduced last year and adduced to-night are to be addressed towards the exemption of profits which are kept in the business and used for increasing the business capacity, plant or buildings, or represent trade with outside purchasers in so far as trade is done with outside purchasers. That is the only portion of the profits which, I understand, it is claimed comes under Corporation Tax.
    To my mind it is a question whether the distinction is worth making, or whether the actual working of last year's tax has proved to what extent it is a revenue producing tax, as that part of the profits earned by these companies is probably much smaller than that which is returned to members. At the same time, the tax is producing considerable unrest and criticism, but not because it is levied on dividends or bonus paid to or discount given to members. Personally I think that the operation of the Corporation Tax gives much cause for criticism. I would be glad to see it swept away altogether. It was copied from America, where they had not at the time an active Income Tax such as we have in this country, though they afterwards reverted to our system of Income Tax as being a better form of taxation. Personally I should feel surprised if this Corporation Tax does survive many more Finance Acts; but that is outside this matter, except that I speak as one who does not believe in the Corporation Tax, and therefore I am disposed to support any Amendment excluding anybody from its operation.
    Mr. HAILWOOD: I rise to oppose the Amendment. I do so without any hesitation in spite of the phrases used by those who speak on behalf of co-operative societies. We are told that they do not make profit, that they make a surplus, that this surplus arises not from trading but from exchange, and every time there is any kind of legislation which would affect any co-operative society, immediately you find some new reason advanced to show why co-operative societies should not be included. They are really the most unfair and illogical section of the community. While claiming to be exempt from their fair share of taxation they are to-day turning over £350,000,000 per year, and one would think, if they had any sense or judgment, that they would be prepared to pay the same share of taxation as any other trader pays in the course of his business. If, as time goes on, co-operative societies swallow up the whole trade of the community—and it is not only middlemen but manufacturers who will be involved—what is going to happen? Meantime, those traders will be taxed more and more heavily every year, because there is less trade and there are fewer people to pay, because the co-operative people swallow all the trade of the country. If these co-operative societies paid their fair share of Income Tax and Excess Profits Duty, which even to-day under present legislation they do not, Income Tax would be lower and there would be more money raised from the Corporation Profits Tax.
    The hon. Member for Kettering (Mr. Waterson) has told us that this will be a tax on thrift. If there is in this country a tax on thrift it is the Income Tax. One might say that all taxation is a tax on thrift. Personally I do not agree with Income Tax. I think that it is the most stupid tax ever invented, because the more a man saves, the more he prospers, the more he is taxed. Not that I have ever experienced it in its higher reaches. I wish I could. But at the same time it is undoubtedly a tax on thrift, but it is no argument to say to the House of Commons that when co-operative societies have to pay a certain tax it is a tax on thrift, because the members of a co-operative society are thrifty people. It is perfectly illogical. In the next breath they say that these people are immune from Income Tax because they are so poor. How can thrifty people be

    1025
    poor? I should like to have the matter cleared up, and to know definitely whether members of co-operative societies are thrifty or whether they are poor, for it is inconceivable that they can be both. In my experience they belong to the better end of working class people and I believe they are thrifty people and not poor.
    The right hon. Member for the Gorbals Division (Mr. G. Barnes) told us that the co-operator paid the same as anybody else. I fail to see that, and I do not think he made it clear to the House. What is more, it is making it more difficult for private traders to extend their businesses, having regard to the enormous taxes they have to pay. Income Tax at the rate of 6s. in the £ takes away big slices of the private traders' profit, and prevents them from accumulating money for the extension of their businesses. We see ships and corn mills and factories being taken over by co-operative societies from private traders. An hon. Member instanced three workmen who were exempt from Income Tax. One would think that the next best thing would be for them to change their occupations. The majority of workmen to-day are liable to Income Tax. If they are exempt it is not because the amount of their income exempts them, but because they have wives and children, and are family men. Income Tax goes down low enough to-day to embrace every class of workman. It is, therefore, wrong to cite cases of that sort. I hope the House will reaffirm the decision reached last year and defeat this Amendment by a large majority.
    Mr. W. GRAHAM: I dare say I am in the position of many other hon. Members, in that I would rather have spoken on a later Amendment than on this, but as I am afraid the Chancellor of the Exchequer may reply on general grounds, I ask the attention of the Committee while I try to make the position clear as we see it on the Opposition side of the House. What actually was the proposal passed by the House of Commons for the first time last year? Let it be made plain at the outset that the co-operative movement desires no exemption at all as far as its non-mutual trading is concerned. I recognise at once that there is a great difference between the Amendment now before us and that which stands in the name of the hon. Member for Linlithgow (Mr.
    1026
    Kidd). At the beginning of this controversy attention was drawn to a small passage which occurred in a reservation to the Report of the Royal Commission on Income Tax. It was a reservation signed by a minority of the Members of the Commission, and was to the effect that if ever a Corporation Tax was introduced, a cooperative society would fall to make payment. That statement was torn from its context by the Chancellor of the Exchequer last year, and was pressed into service as an argument that the duty should be applied to the undistributed portion of the surplus arising from the, trading of these societies.
    If any hon. Member will look at that reservation, and particularly at the last paragraph but one, he will find that, while it makes that statement regarding a Corporation Tax, it immediately proceeds to defend the principle of mutuality, and it is plain to any reader that the first part, of that small paragraph was intended to be read as applying to the profits of a co-operative society of a non-mutual character, and that the theory throughout was that the mutual principle would be safeguarded. Look beyond that to what the Chancellor of the Exchequer actually did. We are not quarrelling with the amount of money involved in this proposal, for from the standpoint of national finance there is no money in it. The whole question at stake is the invasion of what the co-operative movement calls the principle of mutuality. Has that principle been invaded in the proposals of the Chancellor of the Exchequer? In the first place, the Royal Commission on Income Tax made it plain that there was never any proposal to apply taxation to the dividend on purchases, which is paid to the members of the societies from time to time. They also made it plain from the general tenor of their report that they were in favour of safeguarding what was mutually earned. But the Chancellor of the Exchequer came along last year and he said: "I must find that portion of their surplus which is most closely analogous to a profit in the company sense of the term." If I remember aright, that was the precise phrase of the Chancellor of the Exchequer. The right hon. Gentleman fastened upon the undistributed portion of the surplus arising from mutual trading, and he applied the Corporation Profits-Tax to that.

    1027
    Hon. Members will recognise that what is under discussion is a very narrow issue as regards revenue, but it is a very broad issue when the question of the principle of mutuality is concerned. Our aim in taxation is to get something which first of all will be productive, and in the second place fair both from the point of view of principle and of the individual on whom the tax falls. Yet the Chancellor of the Exchequer adopted a device which was thoroughly illogical. In fact, he agreed with the whole tenor of the reasoning of the Royal Commission that this was mutually earned, and he said that what was mutually earned should be exempt, but he selected a portion of this same mutually earned fund and applied the tax to that. It is on that that the whole controversy has arisen. In practice what do the societies do with the undistributed portion? It is quite true that the practice varies. In some cases a part of it is set aside for contingency purposes. In other cases they use it for education and also for certain philanthropic and charitable duties in which they engage from time to time. Look at the effect of the imposition of this tax on a portion of a fund of this kind, devoted in the main to purposes which, if not undertaken by the co-operative societies, would in part fall to be undertaken by the State. For no particular gain in revenue you are applying taxation to a thing which is really used in the public interest. In the first place this device is illogical, and in the second place it operates against a portion of the fund which is devoted to public purposes.
    I come now to the criticisms which have been offered from different parts of the House. Some hon. Members have said, with perfect justice, that if this tax is opposed some alternative should be offered. Apart from the fact that I am quite satisfied the co-operative movement is now contributing its fair share of taxation, many hon. Members have confused a principle of taxation with the mere growth of the movement, which of course is recognised—it has now 4,000,000 members. The growth of the movement, however, is one thing and a principle of taxation is quite another. It is no argument in favour of a reversal of an accepted principle merely to say that we must change the principle because this particular movement has grown to an extent which very few were able to foresee. That
    1028
    line of reasoning will hardly bear examination. It is, however, a perfectly reasonable request that the co-operative movement should offer an alternative to the proposals which have been introduced by the Chancellor of the Exchequer. In a great movement of 4,000,000 members, it is undoubtedly difficult to bring home the incidence of taxation to the individual constituents and explain it fully to each one. There is bound to be great difference of opinion, and there is difference of opinion among members of the co-operative movement on what I am going to say now. The proposal I am going to make to the Chancellor of the Exchequer is in no way authoritative. I am not sure that it would be supported by the co-operative movement at this time, but I know there is a volume of opinion in the co-operative movement on the question of taxation of non-mutual earnings, such as I believe would regard what I am going to suggest now, as a fair and reasonable proposal.
    10.0 P.M.
    In my own constituency of Edinburgh we have the largest society in Scotland with very nearly 66,000 members out of a population, which before the extension of the city, was in round figures about 320,000. There you have a society which might be said to represent the greater part of the life and activity of the capital of Scotland. They have considered this proposal, and after a great deal of discussion came to the conclusion that it would be worth while to recommend taxation under four heads. They propose first that the tax should be applied to the profits of non-mutual trade; on that point there is no difference of opinion at all. In the second place they suggest there should be taxation of the interest on members' share capital. The third proposal is that they should be taxed on the earnings of their reserve funds, and the fourth that they should pay taxation on the returns from investments held outside the co-operative movement. There you have a foundation for a perfectly fair taxation of the co-operative movement which has this great recommendation, that if you adopt it it does not invade the principle of mutuality as your present proposal does. I am bound, however, to direct the attention of the Committee to a difficulty regarding these four heads of taxation. Two of them stand out clearly

    1029
    and distinctly as non-mutual in character. There is an element of doubt regarding the other two—numbers two and three—as to whether or not the mutual factor enters, and I know that as regards those two there has been some controversy in the city of Edinburgh and elsewhere. While I have no authority to speak for the co-operative movement and must not be interpreted as speaking for them on this point, I suggest that there would be no insuperable difficulty in arriving at an agreement in the field of controversy which I have just indicated. Two of these heads, as I say, are recognised, and as regards the other two, a fair and reasonable adjustment is possible. The Chancellor can find in that programme an alternative, and if on those lines he can devise something which the great body of reasonable and moderate opinion will adopt, then he will get a far better scheme than the illogical device which is now in operation, and above all he will get the goodwill and support of 4,000,000 of people as against the unrest and distrust of the present time.
    Sir R. HORNE: The speech to which we have just listened has thrown the first new idea into the arena of Debate. All that we have hitherto been privileged to hear has followed the lines of the controversy upon the last occasion when this important matter was debated. I am not sure that one could not have replied to some of the speeches in advance. I do not complain of that for a moment. The topic is one of great and far-reaching importance, and it undoubtedly excites a great deal of interest among vast masses of the people in this country upon one side or the other. I should like to make one remark in connection with a note which was struck in many of the speeches which have been delivered. It seems to be assumed that on one side of the House you will find partisans of the Co-operative movement, and on the other side partisans of the individual trader. I am bound to enter a demurrer to that.
    Mr. MYERS: In the main it is true.
    Sir R. HORNE: The names on the Order Paper attached to the various Amendments make it perfectly clear that you cannot divide the House on any such principle. I, for one, decline to have myself written down as a supporter of one side or the other, because of the
    1030
    general character of my political opinions. No one is more ardent than I am in the tribute I am prepared to pay to the very great work which the Co-operative movement has done in this country. It has been referred to as a great movement towards thrift, and I am perfectly certain that, no matter how prejudiced any individual trader might be, he would be compelled to acknowledge the truth of the claim made for the Co-operative movement that it has probably done more to encourage thrift among the masses of our people than any other single factor of which we are aware. Accordingly, I approach this topic with every desire not only to do justice by the Co-operative movement but even to act generously, because of the feeling which I have that it deserves every support that people who value the institutions of this country can give, and I should like to endorse what my right hon. Friend the Member for the Gorbals Division of Glasgow (Mr. G. Barnes) said, that it is a great, stabilising influence amongst the mass of our people to-day.
    Let us approach, accordingly in that spirit, the question as to whether the co-operative movement should be liable for any duties under the Corporation Profits Tax. We have for long in this country recognised the immunity of the co-operative society from Income Tax upon the proceeds of their trade, and even their immunity from Income Tax upon the investments outside of the co-operative societies themselves. I do not. know whether my hon. Friend the Member for Central Edinburgh (Mr. W. Graham) would go so far as to say, not merely that they should pay Corporation Profits Tax upon such investments, but whether they should pay Income Tax. I do not know, and perhaps it is not relevant to the present discussion. But, at any rate, we have recognised their immunity from the ordinary Income Tax law of this country. But the Corporation Profits Tax is something quite new, and it is well to look at the basis upon which it is founded. The theory of a Chancellor of the Exchequed who looked round for some new tax was that corporations enjoyed special privileges under our law, and they do. They have a perpetual existence. They do not become liable to the ordinary obligations which others coming into succession from time to time endure; and, in the second place,

    1031
    they have a system of limited liability which enables individuals to become members of them with confidence that they will not be required to pay more than a certain limited amount of money, no matter what happens. Those are great privileges. Incidentally, they have enormously increased the trade of this country, and been the soul of enterprise in many fields of venture, and it was thought not to be inequitable that corporations, as such, should pay something for these privileges. They are corporations of individuals and every one of them enjoys the privileges which the law in this respect confers.
    Could you, therefore, upon any ground, say that the co-operative societies, which in that respect are upon the same platform as all other limited companies, should escape from paying something for that privilege? Do not let us talk about it in the meantime as profits, but let us say that every corporation ought to pay something by way of tax for the privilege that it enjoys as a limited company, carrying on its business under these immunities. It was found that, so far as the ordinary corporation was concerned, the profit which it earned formed the most convenient basis upon which to assess the measure of its liability to the State for some form of revenue, and, accordingly, in the case of the ordinary corporation, the Profit Tax applies. Now you come to the co-operative societies. What can you get that seems in a similar position? Do not let us get into a squabble as to whether they earn profits or not, but let us see where they stand. They enjoy the possession of property which they themselves occupy. They draw rents from property which they let. They draw interest upon large investments outside of the ordinary co-operative society; and, in the last place, and in the most important respect, they have got the proceeds which they enjoy from trading. With regard to one portion of that trading, obviously, on the line of argument upon which I am proceeding at the moment, it would be unfair to tax them upon the basis of something which they divide amongst their members. We have always recognised this argument, that what is divided amongst the members of co-operative societies is, in reality, a discount upon purchases, and, accordingly, it is quite unfair to base any tax upon that part
    1032
    of it. But once they divide that which they regard as appropriate amongst their members, what about the balance?
    The theory of co-operative trading, as the right hon. Member for the Gorbals Division has pointed out, is that you do not want to charge more than cost price and the expense of selling the article to your members. You do not want to make profit. That is the theory, and once you have distributed your dividends you are supposed to have fulfilled your obligation in that respect. But you have got something over. What about that balance? I am not going to enter into the controversy whether it is profit or not, or what you choose to call it. There is something other than that which is necessary to keep your obligation to your members to supply the goods at what they cost to supply them, and I do not think it is unfair to treat the balance as something which, whatever you call it, is a measure of the liability of the co-operative societies to contribute to the support of the State. I think that is a fair argument, and I do not think it does any injustice to the theory of mutuality of trade, or discourages that which we all want to encourage and to see prosper. But somebody in the course of debate said, "If you are going to treat the balance like that they will take care to distribute the balance in advance. If they do that, of course, you will lose the measure upon which you profess to assess their contributions to the State." But I do not believe they can do that, and I say that, not merely as a practical question, but by way of indicating a point of view as to what this balance may be considered to be. One of the reasons why you cannot do it is this: You cannot, with regard to each article, tell at any particular moment precisely what your costs are, and therefore, in selling your pound of butter or tea, assess the exact amount you ought to charge.
    The Member for Linlithgow (Mr. Kidd) last year, in a notable speech on this subject, gave an illustration of five people buying a chest of tea and distributing it amongst each other at exactly what it cost. That is a prime example of mutuality of trading, but cooperative societies in these days have gone far beyond that. It is not five people known to each other that are carrying out trading operations to-day, but multitudes of

    1033
    people, who never see each other, and you cannot, in regard to each sale and purchase, make a calculation such as my hon. Friend produced in order to make appear to the Committee the simplicity of the whole of this operation. Believe me, co-operative trading is not nearly so simple as that to-day. Not only so, but if I am rightly informed, your distribution now of dividends is not on the basis of what each article a person bought has cost, but it is on the basis of general profit and loss over a large field of trading. You may lose on your butter and gain on your tea, and therefore you are not in a position nowadays, under your system of co-operative trading, with all its ramifications, to perform the operation of mutual division at precisely cost price. I suggest to the Committee, keeping these considerations in view, that it is not an unfair thing for the State, which gives these amenities and privileges to co-operative societies, to assess, as in the case of every other corporation, upon some such measure as I have indicated, what they ought to pay towards the upkeep of the State.
    It is said, "But this is an Income Tax," or perhaps I ought rather to say that the hon. Member for Kettering said it was not an Income Tax, and one of his supporters said it was. There seems to be some dubiety as to what it is. I am confident, however, that it is not an Income Tax, which is something charged upon the individual. This is not a charge on an individual at all, but on a corporation, and just like any corporation, although the corporation pays this tax, its individual members also pay Income Tax on their incomes including the share of income they get out of a limited liability company. This is not an Income Tax at all, but it is a Corporation Tax on something perfectly separate, and it has nothing to do with the principles of Income Tax. It is said that it is a tax upon thrift. It is no more a tax upon thrift than any tax which is imposed upon us is a tax upon thrift. You may always say that because a tax takes something from what you have earned there is a less inclination to earn. Let me remind my hon. Friends opposite that if this is a tax upon thrift, it is not the only tax upon thrift. There is a much more severe one that applies to the Income Tax payer. What is unearned income but the savings of thrift? Yet
    1034
    unearned income is far higher taxed. If I make £500 a year and buy with the extra £100 some stock or share, immediately the stock or share I buy with that extra £100 becomes something yielding unearned income, and is more highly taxed than if I earned it, although in point of fact it is the earnings of my labours. Therefore, keep in mind that the Income Tax payers of this country who are paying on unearned income are paying what is really a tax, and a large tax, on thrift.
    Mr. WATERSON: Whose earnings?
    Sir R. HORNE: If I had not myself, with the sweat of my brow, earned a little in that way, I should be sorry for myself to-day, but I pay Income Tax on that, and I pay at a higher rate on what I previously earned than on what I earn now. What I earned and saved is going into this abyss where you are more highly taxed.
    Mr. J. BROWN: Who is earning it now?
    Sir R. HORNE: Who is earning what I earned? Some more fortunate individual. Let us, however, keep this Debate free from words and names which have nothing to do with the matter. This is not a tax upon the individual, nor is it in the ordinary sense what you would call a tax upon profits. It is a tax paid by which you can measure the services of the State to the co-operative societies. Replying to my hon. Friend (Mr. J. W. Wilson) as to how it will work, I cannot say in practice how it will work. But let me say that the majority of the corporations do not make up their books till December or March, and that after the assessment is made they have a further two months in which to make payment. Accordingly we, although we estimated for some millions last year, have been able so far to get only £650,000. But we do not anticipate any difficulty as to the money remaining in the hands of the co-operative societies. This Amendment is to exempt co-operative societies altogether from this tax. That is not the proposal of the hon. Member for Edinburgh, nor did I think that, in reality, it was the attitude of the co-operative societies. I know that the deputation which recently waited upon me put that forward as the best line of attack, but they retreated from that to a more tenable position at a later stage of

    1035
    the discussion. I do not understand there really is any objection on the part of cooperative societies to pay tax upon the results of non-mutual trading, though my hon. Friend will exclude that by his Amendment. Nor do I understand that they have any objection to paying tax upon the interest of investments which are made outside the co-operative organisation. That also is excluded by this Amendment. Therefore I imagine a good many people not unfriendly to cooperative societies will be unwilling to give their adherence to the Amendment on the Paper. I am sorry to see an Amendment of this kind brought in, not merely because I disagree with it, but because co-operative societies will, if they demand immunities of the kind suggested, alienate in the country a good deal of the sympathy which otherwise they would get. I hope the Amendment will not be persisted in.
    Sir D. MACLEAN: I thought when the Chancellor of the Exchequer rose to reply to the very clear, reasonable, and friendly speech made by the Member for Central Edinburgh (Mr. W. Graham) that he was going to meet him as far as he possibly could. No one on either side went so far as the Member for Central Edinburgh to meet the Chancellor of the Exchequer, for he went a very long way. I want to suggest to the Prime Minister, as well as to the Chancellor of the Exchequer, how important it is at the present moment if we can by any means arrive at a solution of a point of irritation which is so marked in this particular case of the co-operative societies. I believe if the Prime Minister had heard the speech of the Member for Central Edinburgh he would have recognised that there was a real opportunity at this stage and the Report stage of arriving at a genuine settlement of a vexed and difficult question.
    Sir R. HORNE: I have not said that my mind is closed on this matter. I have been dealing with the Amendment of my hon. Friend the Member for Kettering (Mr. Waterson), which was not withdrawn. I am not prepared to say until after a closer study what I might be able to do in regard to the hon. Member for Edinburgh's suggestion. I am not in a position to say anything now on that point.
    Sir D. MACLEAN: This will be the only Amendment upon which the Committee will have an opportunity of dealing with this point.
    The CHAIRMAN: If this Amendment be rejected, the following Amendment will not be out of Order. The rejection of the greater Amendment will not reject the lesser.
    Sir D. MACLEAN: I did not know how the selection of Amendments might have been exercised. What I have got from the Chancellor of the Exchequer is something which I am glad to have elicited. I have got a shadow of what I hoped to have got in the right hon. Gentleman's speech, namely, that he does not shut his mind to the possibility of taking what my hon. Friend the Member for Central Edinburgh has laid before the Committee as the foundation for a possible settlement of this vexed question.
    Sir R. HORNE: I want to see first how the hon. Member for Central Edinburgh's proposal is going to work out, and I must have some information about that before I can say anything at all.
    Sir D. MACLEAN: Then it amounts to this: that the Chancellor of the Exchequer prefers this question to be debated on the succeeding Amendment. If that is so, I will say no more, and allow the Division to be taken on this Amendment. That is the real point which has come out in this Debate as to what possibility there is of a settlement.
    Sir R. HORNE: I think my right hon. Friend is treating me rather unfairly. We have had a proposition made by the hon. Member for Central Edinburgh (Mr. W. Graham) who said that he does not profess to speak for any co-operative society. The hon. Member for Kettering (Mr. Waterson) does represent the cooperative movement, and he has tabled an Amendment which seeks to make co-operative societies entirely immune from this tax. We really must deal with this Amendment. In the meantime, I am not in a position to say that I should accept my hon. Friend's suggestion. It contains a great deal more than has been suggested by the co-operative societies at any time or by their officials, and obviously the hon. Member for Kettering does not think he could give any support to that

    1037
    suggestion. Under these circumstances I do think it is too much for the right hon. Gentleman to press me as he is doing.
    Sir D. MACLEAN: Perhaps the best thing would be for us to dispose of this Amendment at once. I will therefore say no more.
    Mr. MYERS: It has been suggested that if the Chancellor of the Exchequer's proposals were pushed to their logical conclusion the co-operative societies might be compelled to eliminate from their operations the making of a surplus. That suggestion met with a quite ready response from the opposite side of the House. I believe that that spirit prevails in many quarters, and there is an opinion very widely held in some circles that if anything that can be brought to bear on the co-operative movement should force them to that position there would be a corresponding improvement in the relationship between the working people of the country and private traders. There are people who hold the view that the dividend which is paid to members of co-operative societies is the magnet that attracts them there and if that could be removed they would take their custom from the co-operative movement and give it to the private traders. There are those who believe that if this policy is pursued it might ultimately force the co-operative movement to take that step, and there are those who believe, too, that the intention behind this proposal is to effect that policy and to compel it to be done. The Chancellor of the Exchequer just now suggested that the motive behind the procedure of the co-operative movement was to sell at cost price, and, having regard to the fact that they are able to fix prices to fit in with the cost of production a certain margin has to be created which is paid back to members after three months or so. After surplus has been repaid, the Chancellor of the Exchequer has stated, there is a balance still remaining, and that balance ought, it is said, to be made the subject of taxation in some form or another. It is quite true that after the dividends have been paid out to the co-operative members, there is very often a substantial balance remaining, but I would remind this House of the objects to which this balance is devoted. In the first place, large contributions are made every year by the cooperative movement to charitable institu-
    1038
    tions, and, in addition to that, a large volume of educational work is done, Any tax that is imposed upon the balances of the co-operative movement after dividend has been paid is a tax upon the movement's educational work and upon its association with the charitable institutions of the country. [HON. MEMBERS; "Divide!"] I just want to make one more point, to meet the suggestion of the Chancellor of the Exchequer that he declined to recognise the dividing of the Committee upon the partisan spirit of the co-operative versus the non-co-operative point of view; and the hon. Member for Heywood (Mr. Halls) asserted that that very largely is the dividing line in the House of Commons. I believe that if that had not been so there would have been no proposal to tax co-operative societies. I have here—[HON. MEMBERS: "Divide, divide!"]—the Report of the Royal Commission on Income Tax, and I should like to quote from it this statement. [Interruption.] I know that hon. Members opposite are familiar with this quotation, and that there is a lack of desire on their part to hear it again. It speaks of:
    "The great and rapid growth of the cooperative movement in recent years, and the number of individual trading competitors who are adversely affected by its progress"…"
    The number of individual private traders who are adversely affected by the progress of the co-operative movement, in my judgment and in that of many more outside the House of Commons, is behind this; proposal to tax the co-operative societies. There is no logic or equity in the proposal to impose upon the co-operative movement in this country a tax which in its initiation was intended to apply to large corporations trading under the Companies Acts. The Corporation Profits Tax was intended to get at large shipping companies, for instance, which made as much profit out of one voyage as the ship cost, and at the large profits of our colliery companies, in the cotton trade, in the brewing industry, and in all the great trusts and syndicates which operate-from one point only. The object of these large concerns is to make profit out of the mass of the community, and when that profit has been made none of it goes back to the community from which it was gained. It goes into the hands of a small number of shareholders who own these large organisations. Where a surplus or

    1039
    profit is made in the co-operative movement, every penny of it goes back to the people who created it, and there is no analogy whatever between the operations of the co-operative movement on the one hand and of the great profit private trading corporations on the other.
    We assert, as co-operators, that the right hon. Gentleman's designation of the co-operative movement as a corporation cannot be sustained when the movement is submitted to close analysis and investigation. We assert that there is no affinity whatever between the great private shipping, brewing, or cotton companies and the co-operative movement; and all the argument in the direction of endeavouring to prove that the one is the same thing as the other falls to the
    ground under even a cursory investigation. Our protest is that it is the growing strength of the co-operative movement, adversely affecting private interests—as is shown in the Report of the Royal Commission on Income Tax—that is behind this proposal, and if we can force our co-operative movement back to a change of policy, eliminating their surplus and working just at cost price, and the smallest possible margin of surplus in their turnover, we believe we shall play into the hands of the private interests which we believe to be the motive behind this attack upon our co-operative societies.
    Question put, "That those words be there added." there added."
    The Committee divided: Ayes, 59; Noes, 188.

    Division No. 178.]

    AYES.

    [10.40 p.m.

    Barker, G. (Monmouth, Abertillery)

    Grundy, T. W.

    Rendall, Athelstan

    Barnes, Rt. Hon. G. (Glas., Gorbals)

    Guest, J. (York, W. R., Hemsworth)

    Richardson, R. (Houghton-le-Spring)

    Barnes, Major H. (Newcastle, E.)

    Hall, F. (York, W.R., Normanton)

    Robertson, John

    Barton, Sir William (Oldham)

    Halls, Walter

    Rose, Frank H.

    Benn, Captain Wedgwood (Leith)

    Hartshorn, Vernon

    Royce, William Stapleton

    Bowerman, Rt. Hon. Charles W.

    Hayday, Arthur

    Sexton, James

    Bowyer, Captain G. W. E.

    Hayward, Evan

    Shaw, Hon. Alex. (Kilmarnock)

    Bramsdon, Sir Thomas

    Hodge, Rt. Hon. John

    Spencer, George A.

    Bromfield, William

    Hogge, James Myles

    Stanton, Charles Butt

    Brown, James (Ayr and Bute)

    Irving, Dan

    Swan, J. E.

    Cairns, John

    Johnstone, Joseph

    Thomson, T. (Middlesbrough, West)

    Carter, W. (Nottingham, Mansfield)

    Kennedy, Thomas

    Walsh, Stephen (Lancaster, Ince)

    Davies, A. (Lancaster, Clitheroe)

    Kenworthy, Lieut.-Commander J. M.

    White, Charles F. (Derby, Western)

    Denniss, Edmund R. B. (Oldham)

    Kenyon, Barnet

    Williams, Aneurin (Durham, Consett)

    Edwards, Hugh (Glam., Neath)

    Maclean, Rt. Hn. Sir D. (Midlothian)

    Wilson, James (Dudley)

    Entwistle, Major C. F.

    Mallalieu, Frederick William

    Wood, Major M. M. (Aberdeen, C.)

    Finney, Samuel

    Morgan, Major O. Watts

    Young, Robert (Lancaster, Newton)

    Galbraith, Samuel

    Murray, Dr. D. (Inverness & Ross)

    Glanville, Harold James

    Myers, Thomas

    TELLERS FOR THE AYES.—

    Graham, R. (Nelson and Colne)

    Newbould, Alfred Ernest

    Mr. Waterson and Mr. Lawson.

    Graham, W. (Edinburgh, Central)

    Parkinson, John Allen (Wigan)

    NOES.

    Addison, Rt. Hon. Dr. Christopher

    Briggs, Harold

    Eyres-Monsell, Com. Bolton M.

    Agg-Gardner, Sir James Tynte

    Bruton, Sir James

    Falle, Major Sir Bertram Godfray

    Ainsworth, Captain Charles

    Buckley, Lieut.-Colonel A.

    Fell, Sir Arthur

    Amery, Leopold C. M. S.

    Burn, Col. C. R. (Devon, Torquay)

    Foxcroft, Captain Charles Talbot

    Archer-Shee, Lieut.-Colonel Martin

    Butcher, Sir John George

    Fraser, Major Sir Keith

    Astbury, Lieut.-Com. Frederick W.

    Carr, W. Theodore

    Fremantle, Lieut.-Colonel Francis E.

    Austin, Sir Herbert

    Carter, R. A. D. (Man., Withington)

    Ganzoni, Sir John

    Bagley, Captain E. Ashton

    Cautley, Henry Strother

    Gee, Captain Robert

    Baird, Sir John Lawrence

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    George, Rt. Hon. David Lloyd

    Baldwin, Rt. Hon. Stanley

    Chamberlain, N. (Birm., Ladywood)

    Gibbs, Colonel George Abraham

    Balfour, George (Hampstead)

    Churchman, Sir Arthur

    Gilmour, Lieut.-Colonel Sir John

    Banbury, Rt. Hon. Sir Frederick G.

    Clay, Lieut.-Colonel H. H. Spender

    Gould, James C.

    Barlow, Sir Montague

    Coats, Sir Stuart

    Goulding, Rt. Hon. Sir Edward A.

    Barnett, Major Richard W.

    Cockerill, Brigadier-General G. K.

    Grant, James Augustus

    Barnston, Major Harry

    Colvin, Brig.-General Richard Beale

    Gray, Major Ernest (Accrington)

    Barrand, A. R.

    Coote, Colin Reith (Isle of Ely)

    Green, Joseph F. (Leicester, W.)

    Barrie, Charles Coupar (Banff)

    Cowan, D. M. (Scottish Universities)

    Greig, Colonel Sir James William

    Bellairs, Commander Carlyon W.

    Cowan, Sir H. (Aberdeen and Kinc.)

    Gritten, W. G. Howard

    Bennett, Sir Thomas Jewell

    Craik, Rt. Hon. Sir Henry

    Guinness, Lieut.-Col. Hon. W. E.

    Birchall, Major J. Dearman

    Curzon, Captain Viscount

    Hacking, Captain Douglas H.

    Bird, Sir A. (Wolverhampton, West)

    Davidson, J. C. C.(Hemel Hempstead)

    Hailwood, Augustine

    Bird, Sir William B. M. (Chichester)

    Davidson, Major-General Sir J. H.

    Hamilton, Major C. G. C.

    Blair, Sir Reginald

    Dawes, James Arthur

    Hannon, Patrick Joseph Henry

    Borwick, Major G. O.

    Dewhurst, Lieut.-Commander Harry

    Harmsworth, C. B. (Bedford, Luton)

    Bowles, Colonel H. F.

    Doyle, N. Grattan

    Haslam, Lewis

    Boyd-Carpenter, Major A.

    Du Pre, Colonel William Baring

    Hennessy, Major J. R. G.

    Brassey, H. L. C.

    Edgar, Clifford B.

    Henry, Denis S. (Londonderry, S.)

    Breese, Major Charles E.

    Elliot, Capt. Walter E. (Lanark)

    Herbert, Dennis (Hertford, Watford)

    Bridgeman, Rt. Hon. William Clive

    Evans, Ernest

    Hilder, Lieut.-Colonel Frank

    Hinds, John

    Moore-Brabazon, Lieut.-Col. J. T. C.

    Sprot, Colonel Sir Alexander

    Hohler, Gerald Fitzroy

    Murray, C. D. (Edinburgh)

    Stanley, Major Hon. G. (Preston)

    Hood, Joseph

    Neal, Arthur

    Starkey, Captain John Ralph

    Hopkins, John W. W.

    Newman, Colonel J. R. P. (Finchley)

    Sturrock, J. Leng

    Hopkinson, A. (Lancaster, Mossley)

    Nicholson, William G. (Petersfield)

    Taylor, J.

    Horne, Edgar (Surrey, Guildford)

    Norris, Colonel Sir Henry G.

    Thomas, Sir Robert J. (Wrexham)

    Horne, Sir R. S. (Glasgow, Hillhead)

    Parker, James

    Thomson, F. C. (Aberdeen, South)

    Hunter, General Sir A. (Lancaster)

    Pearce, Sir William

    Thomson, Sir W. Mitchell- (Maryhill)

    Hurst, Lieut.-Colonel Gerald B.

    Pease, Rt. Hon. Herbert Pike

    Townley, Maximilian G.

    Jackson, Lieut.-Colonel Hon. F. S.

    Pennefather, De Fonblanque

    Townshend, Sir Charles Vere Ferrers

    James, Lieut.-Colonel Hon. Cuthbert

    Perkins, Walter Frank

    Tryon, Major George Clement

    Jameson, John Gordon

    Perring, William George

    Turton, Edmund Russborough

    Jephcott, A. R.

    Pollock, Sir Ernest Murray

    Walters, Rt. Hon. Sir John Tudor

    Jones, Sir Evan (Pembroke)

    Pownall, Lieut.-Colonel Assheton

    Ward, Col. L. (Kingston-upon-Hull)

    Jones, G. W. H. (Stoke Newington)

    Pratt, John William

    Ward, William Dudley (Southampton)

    Jones, Henry Haydn (Merioneth)

    Purchase, H. G.

    Warner, Sir T. Courtenay T.

    Kellaway, Rt. Hon. Fredk. George

    Randles, Sir John Scurrah

    Watson, Captain John Bertrand

    Kiley, James Daniel

    Rankin, Captain James Stuart

    Weston, Colonel John Wakefield

    King, Captain Henry Douglas

    Rawlinson, John Frederick Peel

    White, Col. G. D. (Southport)

    Lane-Fox, G. R.

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

    Williams, C. (Tavistock)

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Richardson, Alexander (Gravesend)

    Williams, Col. Sir R. (Dorset, W.)

    Lindsay, William Arthur

    Roberts, Samuel (Hereford, Hereford)

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Lister, Sir R. Ashton

    Roberts, Sir S. (Sheffield, Ecclesall)

    Wilson-Fox, Henry

    Lloyd, George Butler

    Roundell, Colonel R. F.

    Wise, Frederick

    Lloyd-Greame, Sir P.

    Royds, Lieut.-Colonel Edmund

    Wood, Hon. Edward F. L. (Ripon)

    Locker-Lampson, G. (Wood Green)

    Samuel, A. M. (Surrey, Farnham)

    Wood, Sir H. K. (Woolwich, West)

    Lorden, John William

    Samuel, Samuel (W'dsworth, Putney)

    Worsfold, T. Cato

    Lyle, C. E. Leonard

    Sanders, Colonel Sir Robert Arthur

    Worthington-Evans, Rt. Hon. Sir L.

    M'Lean, Lieut.-Col. Charles W. W.

    Sassoon, Sir Philip Albert Gustave D.

    Young, E. H. (Norwich)

    McMicking, Major Gilbert

    Seddon, J. A.

    Young, Sir Frederick W. (Swindon)

    Manville, Edward

    Seely, Major-General Rt. Hon. John

    Middlebrook, Sir William

    Shaw, Capt. William T. (Forfar)

    TELLERS FOR THE NOES.—

    Mitchell, William Lane

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Mr. McCurdy and Colonel Leslie

    Montagu, Rt. Hon. E. S.

    Simm, M. T.

    Wilson.

    Moore, Major-General Sir Newton J.

    Smith, Sir Malcolm (Orkney)

    The CHAIRMAN: As I have already indicated, the next Amendment, standing in the name of the hon. Member for Linlithgow (Mr. Kidd) is in order, but it would not be in order to repeat the general discussion as to the position of co-operative societies in regard to taxation. The discussion will have to be confined to specific proposals for partial exemption.
    Mr. KIDD: I beg to move, at the end of the Clause, to add the words
    "And where the profits are profits or surplus arising from the trading with its own members of a society registered under the Industrial and Provident Societies Acts no such Corporation Profits Tax shall be charged."
    I shall keep before me the fact that I am speaking at a very late hour of the evening. It is always disagreeable to repeat old arguments; and I am very glad that you, Sir, have given me a hint that I am not to do so on this occasion. Even without your ruling, I should have noticed part of the ground which I should otherwise have had to cover has already been thoroughly explained. To-night one hon. Member committed himself to the view that many hon. Members of this Committee started with a prepossession against co-operative societies. I want at the outset to disclaim, as far as I am concerned, any such suggestion. The support which was given
    1042
    last year to an Amendment in similar terms to that which I am moving was a splendid proof of the sense of fairness of this House, more particularly if we keep before us the fact that it was inevitable that a large number of hon. Members, particularly on this side, might quite reasonably be under some misapprehension with regard to the history, purpose and achievements of the co-operative movement. On that occasion the present Lord Privy Seal, then the Chancellor of the Exchequer, used many mixed arguments. I am not sure but that the present Chancellor of the Exchequer himself relies upon all these same arguments to-night. The first line of defence in support of his proposal last year, which was taken up by the then Chancellor of the Exchequer, was, that he was warranted in making his proposal, having regard to the unhappy terms of the Minority Report of the Royal Commission on Income Tax. I am not desirous to touch the feelings of any hon. Members who were members of that Commission, but it was hardly fair to the minority to represent them as being in support of this tax. The intrinsic evidence supplied by that Minority-Report, however, conclusively went to establish this fact, that no corporation which did not earn profits was to be subjected to a Corporation Tax. It is only fair to the Lord Privy Seal

    1043
    to say that the debates on last year's Bill had not gone far when, with the frankness, generosity, and courage which we associate with him, he abandoned that particular line of defence.
    The right hon. Gentleman's next line of defence discussed necessarily the character of co-operative societies. I do not wish to go into that to-night, or to indulge in the mathematical formulae with which I wearied the Committee on the last occasion. The Chancellor of the Exchequer explained that he was not bound by a profit basis, but what is truly the basis of this tax, not as a matter of speculation, but as a matter of express terms of his own view, is profit, and the basis is never anything else until you try to rope in co-operative societies. The mere fact that co-operative societies are introduced in this violent and unnatural and purely artificial manner is primâ facie proof that they have no right to be there at all. My hon. Friends on the other side are worrying very much about the confused minds of Members here about co-operative societies. They need not charge Members on this side with confusion of mind with regard to cooperative societies when they themselves constantly exhibit still worse confusion. They seem to believe that co-operative societies are of the nature of charitable organisations. They are nothing of the kind. They represent the most conspicuously successful capitalist movement in this country.
    The CHAIRMAN: The hon. Member is going rather beyond the scope of the Amendment. He is lapsing into a general discussion which took place on the last Amendment.
    Mr. KIDD: My whole intention, as I understood it to be my duty, was to reply to previous arguments, and I am now deprived of that joy which I had hoped for. This Amendment differs from the last not in degree but in kind. It seeks to exempt simply the results of the mutual trading between members of cooperative societies, and in putting forward such an Amendment I simply ask for co-operative societies treatment precisely similar to that which has been given to insurance companies. If you look at the Act of 1920, Section 53, you will see, in paragraph (b), of Sub-section (2), under
    1044
    which you propose to make this assessment:
    "Profits shall include, in the case of mutual trading concerns, the surplus arising; from transactions with members, and in the case of societies registered under the Industrial and Provident Societies Act (1893) any sum paid by way of bonus, discount, or dividend on purchases shall be treated as trade expenses, and a reduction shall accordingly be allowed in respect thereof."
    11.0 P.M.
    Then take the next paragraph, (i):
    "In the case of a company carrying on the business of life assurance the part of the profits belonging or allocated to, reserved for or expended on behalf of policy holders or annuitants shall be apportioned between the profits of the company directly liable to assessment to Corporation Profits Tax and the profits not so liable, and a deduction shall be allowed of the amount so apportioned to the profits so liable."
    What does that mean? That where a mutual insurance company does outside business, as a co-operative society sometimes does, that part of its business which is represented by "profits belonging or allocated to, reserved for or expended on behalf of policy-holders or annuitants" is exempt from this taxation. I ask for nothing more in my Amendment. The phraseology is altered in order to meet the case of a trading society as distinguished from an insurance society. The right hon. Gentleman is worried about figures. I disclaim any idea of exempting co-operative societies from taxation on that outside trading. Why is Income Tax paid by a company trading for profit? In the course, of their trading they have to rely on the law. The law supports the credit which they give, and as against that support they ought to make a contribution towards the cost of maintaining the law. But in a mutual trading society there is no such credit, no such requirement for support of the law, and for that reason they should make no contribution. I am bringing about me like a hive of angry bees such good friends as the right hon. Baronet (Sir F. Banbury). With all respect to the right hon. Baronet, taxes are not imposed for mere fun. There is always some theory of justification for them. I hope the Committee will agree that the case I make for the exemption of co-operative societies from this tax, as far as mutual trading is concerned, is not a demand that any special favour should be shown to co-operative societies. It is simply a demand that they be accorded

    1045
    the strictest justice. The Chancellor of the Exchequer may ask me what I would propose to do. I would recognise as he has done that mutual trading cannot result in a profit, and, as he has done, I would exempt that part of the surplus which is paid away in so-called dividends. What becomes of the balance of the surplus? It is represented by stocks of groceries, drapery and other goods. Let me illustrate. Supposing I give the Chancellor of the Exchequer £100 to spend for me on something which I anticipate will cost £100. If he makes the desired purchase at an expenditure of £80, then there is a saving of £20 which he could not, by any process of reasoning, say was liable to taxation, nor is the remaining £10, represented it may be by stocks. Suppose further, he returns me £10, that obviously must be exempt from taxation. I entirely agree with the proposal of the hon. Member for Central Edinburgh (Mr. Graham). It seemed to me that the four little lambs which he offered for the slaughter were preeminently my own. My Amendment only wants to exempt all that he wants to exempt. If the exemptions for which I ask are conceded, there will still be open for taxation the four items specified by the hon. Member for Central Edinburgh. What is the answer of the Chancellor of the Exchequer? He asks that we should give him a night to think it over. Last year the right hon. Gentleman chaffed me about my calculations and about my metaphysics. I wonder who has excelled in metaphysics to-night? The right hon. Gentleman wants a night for calculations to find out how much he can make out of the offer of the hon. Member for Central Edinburgh. I do not think I shall differ with the hon. Member for Central Edinburgh; my difference is with the Chancellor of the Exchequer. I do not care whether he makes £100,000, £10,000, or 10d.—in this Amendment, I offer for his attention everything he is entitled to have. With me it is a matter of principle. The specific proposal which has been put forward illustrates what he can have under this Amendment, and what he cannot have, and exhausts the possibilities of the societies so far as this tax is concerned. The plea that incorporation justifies the tax is the most unsound of all. A co-operative society is not a company trading for profit, and precisely because
    1046
    it has not exploited the public as a trading company, it pays no capital duty. My right hon. Friend starts off with his tax as a tax based upon profits, until he ropes in co-operative societies, when he shifts his ground by saying it is not a tax based upon profits, but a tax based upon incorporation. My reply to that is that if it is regarded as based on profits, it is a further Income Tax, but if regarded as based on incorporation, it is only a second edition of capital duty.
    The CHAIRMAN: the hon. Member is now again back to his former argument about the general position of co-operative societies. The question of the Amendment is whether profits or surplus arise from trading with its own members should be taxed or not. We cannot go into the whole status of the societies.
    Mr. KIDD: I accept your ruling. It was the one argument last year which was not replied to. I can understand that this House is sick of the co-operative societies; they are not more sick than I am; but I am putting forward this Amendment with the conviction that what I ask for these societies is nothing more nor less than simple, undiluted justice. I urge it, not as a co-operator or as one interested in co-operation, but as one who appreciates the misconception that will arise in the minds of millions of our people if a tax like this is imposed, which, with all the ability and dialectical skill of two successive Chancellors of the Exchequer, cannot be justified to the sense of this House. It is for that reason that I have pressed my Amendment.
    Sir R. HORNE: I was a little surprised that my hon. Friend who has just sat down described this Clause as violent. It is rather, difficult to discover violence in a Clause of a Bill or Statute, and the only thing that I could think of when he was talking was a remark of Sidney Smith, that he always liked the Second Book of Euclid best, because if anything it was more impassioned than the others. I think my hon. Friend carried a little of that enthusiasm into his speech which was lacking in the cold Clauses of my Bill. I was also a little surprised at one line of argument he used. He said, "Give me what you put in your previous Act with regard to life insurance societies." That is exactly what we have done. I have had again before me the particular

    1047
    provision to which he referred, and I discovered that with regard to these life insurance societies, what is set aside for immediate or ultimate division amongst the members of the society itself is not subject to tax. In the same way we propose not to tax that which is divided as dividends amongst the members of the co-operative societies. But whatever is surplus to that does form the subject of taxation, just as we propose to make that surplus in the case of the co-operative societies the measure of the revenue which they should render to the State, and accordingly you have got a complete analogy in the life insurance societies for what we propose to do in this connection.
    Mr. KIDD: I think the right hon. Gentleman misunderstood me. Will he tell me what provision he makes for the stocks, which represent part savings, as surely as the part paid away as so-called dividends?
    Sir R. HORNE: As far as what is put to reserve is concerned, we propose to make it subject to the tax. My hon. Friend said that his Amendment is the same as the proposal made by the hon. Member for Central Edinburgh (Mr. W. Graham). He is under a complete delusion in regard to that. The proposals of the hon. Member for Central Edinburgh went much further than my hon. Friend's Amendment. It only shows how much he has misunderstood either his own Amendment or the proposals of my hon. Friend. In point of fact, his proposals would yield not a fifth of the revenue which the hon. Gentleman's proposals would yield. He proposes by his Amendment to exclude from tax the earnings of the reserve fund, which came within the purview of the proposals of the hon. Member for Central Edinburgh. He asked me whether I would accept the other proposals, but how can I accept the other proposals, in view of the attitude that the co-operative societies have themselves taken? It is not going to bring peace in regard to this question. It will not rid us of this controversy in the slightest, so far as I can, gather from the attitude of the hon. Member for Kettering (Mr. Waterson), and in the course of the debate it is clear that the hon. Members opposite who supported the co-operative societies on the previous Amendment are by no means inclined to go so far as the hon. Member for Central Edinburgh. Under the circumstances I think it is very
    1048
    little use saying to-night that I shall be prepared to accept the proposal. What I should rather be inclined to do is this: If there is any real movement in the cooperative societies themselves which would show that they are anxious to find a way to contribute some proper share of the revenue of the State upon some other basis than this, and if mutuality is really the crucial position so far as they are concerned, we shall have to work it out in the next twelve months. In the absence of any indication of a suggestion from the societies that will really yield an appreciable sum to the revenue, I cannot for my part accept the proposal, still less can I accept the proposed amendment.
    Sir RYLAND ADKINS: I desire—[HON. MEMBERS: "Divide, divide!"] For my own sake, I will not detain the Committee more than a moment. I fully appreciate the terrible position of any mere Englishman who intervenes in this contest of Caledonian dialectics. The position, I desire to say simply, to-night represents very closely the position of the debate on the Report Stage of the Finance Bill last year. Then, as now, this particular Amendment was moved; then, as now, certain suggestions were mentioned; and though the Chancellor of the Exchequer did not altogether slam the door, the opening narrowed as the debate went on. This Amendment merely seeks to exclude from tax those operations of the Co-operative Societies which are strictly mutual. It may or may not be possible —I hope it will be—to attain some agreement on the general question which arises on this, and I thank the hon. Member for Edinburgh for the ingenuity and importance of his suggestion. Until something is agreed upon it becomes necessary to mention the protest made last year by a larger number of Members against the taxation of the purely mutual operations of the co-operative societies.
    Lieut.-Colonel Sir J. HOPE: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
    I appeal to the Chancellor of the Exchequer to accept this Motion so that he may have the right to think over the effect of the Amendment, and also to see whether peace cannot be attained between the co-operative societies and the Government. It seems to me that there is very little separating the Chancellor of the Ex-

    1049
    chequer and those of us who wish to remove some of the taxation from the co-operative societies. A night's thought might enable an arrangement to be arrived which the Chancellor would accept, and which would satisfy the cooperative societies. I do appeal to the right hon. Gentleman.
    Question put, "That the Chairman do report Progress, and ask leave to sit again."
    The Committee proceeded to a Division.
    Sir F. BANBURY(seated and covered): Am I right in saying that the hon. Baronet (Sir J. Hope) did not
    move to report progress, and that the Motion should not have been put, as it was never moved?
    The CHAIRMAN: I understood that the hon. Baronet did move it, and nobody rose to speak. Consequently I put the motion.
    Sir J. HOPE: I only appealed to the Chancellor of the Exchequer to accept a Motion to report Progress, but I did not intend to move it.
    The CHAIRMAN: Then the Motion when put a second time can be negatived by consent.
    The Committee divided: Ayes, 56; Noes, 166.

    Division No. 179.]

    AYES.

    [11.28 p.m.

    Astor, Viscountess

    Hall, F. (York, W.R., Normanton)

    Robertson, John

    Austin, Sir Herbert

    Halls, Walter

    Rose, Frank H.

    Barker, G. (Monmouth, Abertillery)

    Hartshorn, Vernon

    Royce, William Stapleton

    Barnes, Major H. (Newcastle, E.)

    Hayday, Arthur

    Shaw, Capt. William T. (Forfar)

    Barton, Sir William (Oldham)

    Hayward, Evan

    Spencer, George A.

    Benn, Captain Wedgwood (Leith)

    Hogge, James Myles

    Sprot, Colonel Sir Alexander

    Bird, Sir A. (Wolverhampton, West)

    Hope, Lt.-Col. Sir J. A. (Midlothian)

    Stanton, Charles Butt

    Bramsdon, Sir Thomas

    Irving, Dan

    Swan, J. E.

    Brown, James (Ayr and Bute)

    Johnstone, Joseph

    Thomson, Sir W. Mitchell- (Maryhill)

    Cairns, John

    Kennedy, Thomas

    Thorne, G. R. (Wolverhampton, E.)

    Carter, W. (Nottingham, Mansfield)

    Kiley, James Daniel

    Walsh, Stephen (Lancaster, Ince)

    Davies, A. (Lancaster, Clitheroe)

    Lawson, John James

    Williams, Col. P. (Middlesbrough, E.)

    Entwistle, Major C. F.

    Maclean, Rt. Hn. Sir D. (Midlothian)

    Wilson, James (Dudley)

    Finney, Samuel

    Morgan, Major D. Watts

    Wintringham, Thomas

    Glanville, Harold James

    Myers, Thomas

    Wood, Major M. M. (Aberdeen, C.)

    Glyn, Major Ralph

    Newbould, Alfred Ernest

    Young, Robert (Lancaster, Newton)

    Graham, R. (Nelson and Colne)

    Parkinson, John Allen (Wigan)

    Graham, W. (Edinburgh, Central)

    Pennefather, De Fonblanque

    TELLERS FOR THE AYES.—

    Grundy, T. W.

    Rendall, Athelstan

    Lieut.-Commander Kenworthy and

    Guest, J. (York, W. R. Hamsworth)

    Richardson, R. (Houghton-le-Spring)

    Mr. Hodge.

    NOES.

    Addison, Rt. Hon. Dr. Christopher

    Cautley, Henry Strother

    Hailwood, Augustine

    Adkins, Sir William Ryland Dent

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    Hamilton, Major C. G. C.

    Agg-Gardner, Sir James Tynte

    Chamberlain, N. (Birm., Ladywood)

    Hannon, Patrick Joseph Henry

    Amery, Leopold C. M. S.

    Churchman, Sir Arthur

    Harmsworth, C. B. (Bedford, Luton)

    Archer-Shee, Lieut.-Colonel Martin

    Clay, Lieut.-Colonel H. H. Spender

    Hennessy, Major J. R. G.

    Astbury, Lieut.-Com. Frederick W.

    Coats, Sir Stuart

    Henry, Denis S. (Londonderry, S)

    Bagley, Captain E. Ashton

    Cockerill, Brigadier-General G. K.

    Herbert, Dennis (Hertford, Watford)

    Baird, Sir John Lawrence

    Colvin, Brig.-General Richard Beale

    Hilder, Lieut.-Colonel Frank

    Baldwin, Rt. Hon. Stanley

    Coote, Colin Reith (Isle of Ely)

    Hinds, John

    Balfour, George (Hampstead)

    Cowan, D. M. (Scottish Universities)

    Holmes, J. Stanley

    Banbury, Rt. Hon. Sir Frederick G.

    Cowan, Sir H. (Aberdeen and Kinc.)

    Hood, Joseph

    Barlow, Sir Montague

    Davidson, J. C. C. (Hemel Hempstead)

    Hopkins, John W. W.

    Barnett, Major Richard W.

    Davidson, Major-General Sir J. H.

    Home, Edgar (Surrey, Guildford)

    Barnston, Major Harry

    Dawes, James Arthur

    Home, Sir R. S. (Glasgow, Hillhead)

    Barrand, A. R.

    Dean, Commander P. T.

    Hurd, Percy A.

    Bellairs, Commander Carlyon W.

    Dewhurst, Lieut.-Commander Harry

    Jameson, John Gordon

    Benn, Sir A. S. (Plymouth, Drake)

    Du Pre, Colonel William Baring

    Jephcott, A. R.

    Bennett, Sir Thomas Jewell

    Elliot, Capt. Walter E. (Lanark)

    Jones, Sir Evan (Pembroke)

    Birchall, Major J. Dearman

    Evans, Ernest

    Jones, Henry Haydn (Merioneth)

    Bird, Sir A. (Wolverhampton, West)

    Eyres-Monsell, Com. Bolton M.

    Kellaway, Rt. Hon. Fredk. George

    Bird, Sir William B. M. (Chichester)

    Falle, Major Sir Bertram Godfray

    King, Captain Henry Douglas

    Borwick, Major G. O.

    Foxcroft, Captain Charles Talbot

    Kinloch-Cooke, Sir Clement

    Boscawen, Rt. Hon. Sir A. Griffith-

    Fraser, Major Sir Keith

    Lane-Fox, G. R.

    Bowerman, Rt. Hon. Charles W.

    Fremantle, Lieut.-Colonel Francis E.

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Bowyer, Captain G. W. E.

    Ganzoni, Sir John

    Lindsay, William Arthur

    Boyd-Carpenter, Major A.

    Gee, Captain Robert

    Lloyd, George Butler

    Brassey, H. L. C.

    Gibbs, Colonel George Abraham

    Lloyd-Greame, Sir P.

    Breese, Major Charles E.

    Gilmour, Lieut.-Colonel Sir John

    Locker-Lampson, Com. O. (H'tingd'n)

    Bridgeman, Rt. Hon. William Clive

    Green, Joseph F. (Leicester, W.)

    Lorden, John William

    Briggs, Harold

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    Lowther, Major C. (Cumberland, N.)

    Bruton, Sir James

    Greig, Colonel Sir James William

    Lyle, C. E. Leonard

    Buckley, Lieut.-Colonel A.

    Gritten, W. G. Howard

    M'Curdy, Rt. Hon. Charles A.

    Burn, Col. C. R. (Devon, Torquay)

    Guinness, Lieut.-Col. Hon. W. E.

    McLaren, Robert (Lanark, Northern)

    Carr, W. Theodore

    Hacking, Captain Douglas H.

    M'Lean, Lieut.-Col. Charles W. W.

    McMicking, Major Gilbert

    Rawlinson, John Frederick Peel

    Walters, Rt. Hon. Sir John Tudor

    Manville, Edward

    Richardson, Alexander (Gravesend)

    Ward, Col. L. (Kingston-upon-Hull)

    Montagu, Rt. Hon. E. S.

    Roberts, Samuel (Hereford, Hereford)

    Waterson, A. E.

    Moore, Major-General Sir Newton J.

    Roundell, Colonel R. F.

    Weston, Colonel John Wakefield

    Moore-Brabazon, Lieut.-Col. J. T. C

    Royds, Lieut.-Colonel Edmund

    Wheler, Col. Granville C. H.

    Murray, C. D. (Edinburgh)

    Samuel, A. M. (Surrey, Farnham)

    White, Col. G. D. (Southport)

    Neal, Arthur

    Samuel, Samuel (W'dsworth, Putney)

    Williams, Aneurln (Durham, Consett)

    Newman, Colonel J. R. P. (Finchley)

    Sanders, Colonel Sir Robert Arthur

    Williams, C. (Tavistock)

    Newman, Sir R. H. S. D. L. (Exeter)

    Seddon, J. A.

    Williams, Col. Sir R. (Dorset, W.)

    Nicholson, Reginald (Doncaster)

    Seely, Major-General Rt. Hon. John

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Nicholson, William G. (Petersfield)

    Shaw, Hon. Alex. (Kilmarnock)

    Wilson, Rt. Hon. J. W. (Stourbridge)

    Norman, Major Rt. Hon. Sir Henry

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Wise, Frederick

    Parker, James

    Simm, M. T.

    Wood, Hon. Edward F. L. (Ripon)

    Pease, Rt. Hon. Herbert Pike

    Stanley, Major Hon. G. (Preston)

    Wood, Sir H. K. (Woolwich, West)

    Perkins, Walter Frank

    Starkey, Captain John Ralph

    Worthington-Evans, Rt. Hon. Sir L.

    Perring, William George

    Taylor, J.

    Young, E. H. (Norwich)

    Pickering, Colonel Emil W.

    Thomas, Sir Robert J. (Wrexham)

    Young, Sir Frederick W. (Swindon)

    Pollock, Sir Ernest Murray

    Thomson, Sir W. Mitchell- (Maryhill)

    Younger, Sir George

    Poison, Sir Thomas A.

    Townley, Maximilian G.

    Pownail, Lieut.-Colonel Assheton

    Townshend, Sir Charles Vere Ferrers

    TELLERS FOR THE NOES.—

    Pratt, John William

    Tryon, Major George Clement

    Colonel Leslie Wilson and Mr.

    Purchase, H. G.

    Turton, Edmund Russborough

    Dudley Ward.

    Randles, Sir John Scurrah

    Wallace, J.

    Captain W. BENN: May I ask on what Motion by an hon. Member you put the Question that you report Progress?
    The CHAIRMAN: On the Motion of the hon. and gallant Member for Midlothian.
    Captain W. BENN: Are you aware that the hon. and gallant Baronet has stated that he never made the Motion.
    The CHAIRMAN: I understood him to make it, and when I put it he did not repudiate it.
    Original Question again proposed.
    Mr. WATERSON: We have had several invitations from the other side of the Committee to state how far the co-operative movement would be prepared to go in this matter. I think that the difficulty of the position of one speaking for the movement will be generally recognised. Since those remarks were made, I have had a hurried interview with one or two of those who have to deal with this matter in the movement, and am now deputed to say one or two brief words with regard to it. If the Amendment that has been so ably put forward by my hon. Friend really means that, firstly, annual values of property shall be liable to tax, secondly, income from investments, if not previously taxed, and, thirdly, profits from sales to non-members—if that is all that is contained in the Amendment, then I am able to say that it could be accepted, and if that
    be the real intention of the Amendment, I would appeal to the right hon. Gentleman to accept it. We feel that it goes a very long way, particularly when there is a section of the movement that is somewhat in a difficulty as to paying anything at all. We are using all our powers and influence to endeavour to see that justice is done all round, and I think the Chancellor of the Exchequer will be able to get a reasonable sum that will be satisfactory to the Government if he accepts the Amendment, which, as I have said, we are prepared to accept if its principles are those which I have stated.
    Sir R. HORNE: I appreciate the trouble my hon Friend has taken, in the interval, to discover how far the co-operative movement would be prepared to go. He declared that the proposal he has made goes a very long way, but in point of fact the annual value of land held by the cooperative societies, and the profits of trading with non-members, which he seems to represent as a concession, are already automatically taxed to income tax. The only thing that is added is taxation upon interest on investments which are outside the movement altogether. I do not think that that can be represented as a very big advance, and I am sorry to say that I am not prepared at the moment to accept it.
    Question put, "That those words be there added."
    The Committee divided: Ayes, 95; Noes, 125.

    Division No. 180.]

    AYES.

    [11.40 p.m.

    Adkins, Sir W. Ryland D.

    Barnes, Major H. (Newcastle, E.)

    Birchall, Major J. Dearman

    Astbury, Lieut.-Com. Frederick W.

    Barrand, A. R.

    Bowerman, Rt. Hon. Charles W.

    Astor, Viscountess

    Barton, Sir William (Oldham)

    Bowyer, Captain G. W. E.

    Bagley, Captain E. Ashton

    Benn, Sir A. S. (Plymouth, Drake)

    Bramsdon, Sir Thomas

    Barker, G. (Monmouth, Abertillery)

    Benn, Captain Wedgwood (Leith)

    Breese, Major Charles E.

    Bromfield, William

    Jameson, John Gordon

    Rose, Frank H.

    Brown, James (Ayr and Bute)

    Jephcott, A. R.

    Royce, William Stapleton

    Cairns, John

    Johnstone, Joseph

    Seely, Major-General Rt. Hon. John

    Carter, W. (Nottingham, Mansfield)

    Jones, Sir Evan (Pembroke)

    Shaw, Hon. Alex. (Kilmarnock)

    Coote, Colin Reith (Isle of Ely)

    Kennedy, Thomas

    Shaw, Capt. William T. (Forfar)

    Cowan, D. M. (Scottish Universities)

    Kenworthy, Lieut.-Commander J. M.

    Spencer, George A.

    Davies, A. (Lancaster, Clitheroe)

    Kinloch-Cooke, Sir Clement

    Sprot, Colonel Sir Alexander

    Elliot, Capt. Walter E. (Lanark)

    Lane-Fox, G. R.

    Stanton, Charles Butt

    Entwistle, Major C. F.

    Lawson, John James

    Swan, J. E.

    Finney, Samuel

    Lloyd, George Butler

    Taylor, J.

    Gee, Captain Robert

    Lowther, Major C. (Cumberland, N.)

    Thomson, T. (Middlesbrough, West)

    Glanville, Harold James

    McLaren, Robert (Lanark, Northern)

    Thorne, G. R. (Wolverhampton, E.)

    Glyn, Major Ralph

    Maclean, Rt. Hn. Sir D. (Midlothian)

    Waddington, R.

    Gould, James C.

    McMicking, Major Gilbert

    Wallace, J.

    Graham, R. (Nelson and Colne)

    Mallalieu, Frederick William

    Waterson, A. E.

    Grundy, T. W.

    Manville Edward

    Wheler, Col. Granville C. H.

    Guest, J. (York, W.R., Hemsworth)

    Morgan, Major D. Watts

    Williams, Aneurin (Durham, Consett)

    Hall, F. (York, W.R., Normanton)

    Mosley, Oswald

    Williams, Col. P. (Middlesbrough, E.)

    Halls, Walter

    Myers, Thomas

    Wilson, James (Dudley)

    Hartshorn, Vernon

    Newbould, Alfred Ernest

    Wilson, Rt. Hon. J. W. (Stourbridge)

    Hayday, Arthur

    Newman, Sir R. H. S. D. L. (Exeter)

    Wintringham, Thomas

    Hayward, Evan

    Parry, Lieut.-Colonel Thomas Henry

    Wood, Sir H. K. (Woolwich, West)

    Hodge, Rt. Hon. John

    Pennefather, De Fonblanque

    Young, Robert (Lancaster, Newton)

    Hogge, James Myles

    Pickering, Colonel Emil W.

    Younger, Sir George

    Holmes, J. Stanley

    Poison, Sir Thomas A.

    Hopkinson, A. (Lancaster, Mossley)

    Rendall, Athelstan

    TELLERS FOR THE AYES.—

    Hurd, Percy A.

    Richardson, R. (Houghton-le-Spring)

    Mr. Kidd and Lieut.-Colonel Sir

    Irving, Dan

    Robertson, John

    John Hope.

    NOES.

    Addison, Rt. Hon. Dr. Christopher

    Fraser, Major Sir Keith

    Parker, James

    Agg-Gardner, Sir James Tynte

    Fremantle, Lieut.-Colonel Francis E

    Pease, Rt. Hon. Herbert Pike

    Ainsworth, Captain Charles

    Ganzoni, Sir John

    Perring, William George

    Amery, Leopold C. M. S.

    Gibbs, Colonel George Abraham

    Pollock, Sir Ernest Murray

    Archer-Shee, Lieut.-Colonel Martin

    Gilmour, Lieut.-Colonel Sir John

    Pownall, Lieut.-Colonel Assheton

    Austin, Sir Herbert

    Grant, James Augustus

    Purchase, H. G.

    Baird, Sir John Lawrence

    Green, Joseph F. (Leicester, W.)

    Bandies, Sir John Scurrah

    Baldwin, Rt. Hon. Stanley

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    Raw, Lieutenant-Colonel Dr. N.

    Balfour, George (Hampstead)

    Greig, Colonel Sir James William

    Rawlinson, John Frederick Peel

    Banbury, Rt. Han. Sir Frederick G.

    Gritten, W. G. Howard

    Richardson, Alexander (Gravesend)

    Barlow, Sir Montague

    Guinness, Lieut.-Col. Hon. W. E.

    Roberts, Samuel (Hereford, Hereford)

    Barnett, Major Richard W.

    Hacking, Captain Douglas H.

    Roundell, Colonel R. F.

    Barnston, Major Harry

    Hailwood, Augustine

    Royds, Lieut.-Colonel Edmund

    Bellairs, Commander Carlyon W.

    Hamilton, Major C. G. C.

    Samuel, A. M. (Surrey, Farnham)

    Bird, Sir A. (Wolverhampton, West)

    Hannon, Patrick Joseph Henry

    Samuel, Samuel (W'dsworth, Putney)

    Bird, Sir William B. M. (Chichester)

    Harmsworth, C. B. (Bedford, Luton)

    Sanders, Colonel Sir Robert Arthur

    Borwick, Major G. O.

    Hennessy, Major J. R. G.

    Seddon, J. A.

    Boscawen, Rt. Hon. Sir A. Griffith-

    Henry, Denis S. (Londonderry, S.)

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Boyd-Carpenter, Major A.

    Herbert, Dennis (Hertford, Watford)

    Simm, M. T.

    Brassey, H. L. C.

    Hilder, Lieut.-Colonel Frank

    Stanley, Major Hon. G. (Preston)

    Bridgeman, Rt. Hon. William Clive

    Hinds, John

    Starkey, Captain John Ralph

    Briggs, Harold

    Hood, Joseph

    Thomas, Sir Robert J. (Wrexham)

    Bruton, Sir James

    Hopkins, John W. W.

    Thomson, Sir W. Mitchell- (Maryhill)

    Buckley, Lieut.-Colonel A.

    Home, Edgar (Surrey, Guildford)

    Townley, Maximilian G.

    Burn, Col. C. R. (Devon, Torquay)

    Home, Sir R. S. (Glasgow, Hillhead)

    Townshend, Sir Charles Vere Ferrers

    Carr, W. Theodore

    Jones, Henry Haydn (Merioneth)

    Tryon, Major George Clement

    Cautley, Henry Strother

    Kellaway, Rt. Hon. Fredk. George

    Turton, Edmund Russborough

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    King, Captain Henry Douglas

    Walters, Rt. Hon. Sir John Tudor

    Chamberlain, N. (Birm., Ladywood)

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Ward, William Dudley (Southampton)

    Churchman, Sir Arthur

    Lindsay, William Arthur

    Weston, Colonel John Wakefield

    Clay, Lieut.-Colonel H. H. Spender

    Lloyd-Greame, Sir P.

    White, Col. G. D. (Southport)

    Coats, Sir Stuart

    Locker-Lampson, Com. O. (H'tingd'n)

    Williams, C. (Tavistock)

    Cockerill, Brigadier-General G. K.

    Lorden, John William

    Williams, Col. Sir R. (Dorset, W.)

    Colvin, Brig.-General Richard Beale

    Lyle, C. E. Leonard

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Davidson, J. C. C. (Hemel Hempstead)

    M'Lean, Lieut.-Col. Charles W. W.

    Wise, Frederick

    Davidson, Major-General Sir J. H.

    Montagu, Rt. Hon. E. S.

    Wood, Hon. Edward F. L. (Ripon)

    Dean, Commander P. T.

    Moore, Major-General Sir Newton J.

    Worthington-Evans, Rt. Hon. Sir L.

    Dewhurst, Lieut.-Commander Harry

    Moore-Brabazon, Lieut.-Col. J. T. C.

    Young, E. H. (Norwich)

    Du Pre, Colonel William Baring

    Murray, C. D. (Edinburgh)

    Young, Sir Frederick W. (Swindon)

    Evans, Ernest

    Neal, Arthur

    Eyres-Monsell, Com. Bolton M.

    Newman, Colonel J. R. P. (Finchley)

    TELLERS FOR THE NOES.—

    Falle, Major Sir Bertram Godfray

    Nicholson, William G. (Petersfield)

    Mr. McCurdy and Colonel Leslie

    Foxcroft, Captain Charles Talbot

    Norman, Major Rt. Hon. Sir Henry

    Wilson.

    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Lieut.-Commander KENWORTHY: I should like to put a question on a matter which was ruled out of order earlier this evening. We ought to have an explana-
    1054
    tion why the proceeds of the 3½per cent. Conversion Loan should be exempted from Corporation Profits tax. This seems to be singling out one respective Government security from a tax from which we have just refused to exempt Co-operative funds. The poorer classes have not the

    1055
    money to invest in these loans. This means exemption for the rich class of investors. It is only rich people who can afford to invest in Government loans today.
    Captain W. BENN: Is the Chancellor of the Exchequer going to give an explanation?
    Lieut.-Commander KENWORTHY: May I press for an answer?
    Sir R. HORNE: It is not really necessary to give an explanation. Hon. Members who followed what was done in connection with the Conversion Loan must have been aware that the prospectus announced that a concession was to be given, and therefore you find in the Bill the proposal necessary to carry that into legislation. The reason for giving this particular concession is not entirely new. There have been other Government loans which have been issued free of particular taxes. It was considered proper and wise under present circumstances to free the Conversion Loan of anything in the shape of Corporation Profits Tax. Those who advised the Government thought it would make the desire to convert very much greater if this advantage was given. It is a complete error on the part of my hon. Friend to suggest that poor people had no investments in the war bonds which have been converted. There were very considerable investments by the working classes in these War Bonds, and it is an entire error to suggest that this is anything in the way of a concession to rich investors. It is a concession which covers many thousands of investors, and those who get the benefit include many of those for whom the hon. Member professes to make his appeal.
    Mr. A. WILLIAMS: As one interested in the co-operative movement for many years, I wish to put a question to the Chancellor of the Exchequer. I understand the position of the Chancellor of the Exchequer with regard to the Conversion Loan where the conditions were declared some time ago, but why is power taken to exempt any securities "forming part of any loan which may be issued at any time—"
    Mr. RAWLINSON: Is the hon. Member in order in asking questions when the matter has been debated, and the Committee has divided and come to a decision on this?
    The CHAIRMAN: The Question is, "That the Clause stand part of the Bill." The hon. Member is in order.
    Mr. WILLIAMS: I am taking up the argument where the Chancellor of the Exchequer left it. Although the right hon. Gentleman's argument may be sound as to the Conversion Loan, with regard to which a declaration was made long ago, it certainly is not just now—when the Committee has refused to exempt the working man's ordinary investments—to take powers to exempt these other investments. It may have been all very well when the case of the working man's investment was not decided. Now that it has been decided it is unfair to take these wide powers to exempt any of these investments which the Government like to issue. If I am in order, I would move that these words be omitted.
    Question put, "That the Clause stand part of the Bill."
    The Committee divided: Ayes, 150; Noes, 36.

    Division No. 181.]

    AYES.

    [11.54 p.m.

    Addison, Rt. Hon. Dr. Christopher

    Boscawen, Rt. Hon. Sir A. Griffith-

    Cowan, D. M. (Scottish Universities)

    Adkins, Sir William Ryland Dent

    Bowyer, Captain G. W. E.

    Davidson, J. C. C. (Hemel Hempstead)

    Agg-Gardner, Sir James Tynte

    Boyd-Carpenter, Major A.

    Davidson, Major-General Sir J. H.

    Ainsworth, Captain Charles

    Brassey, H. L. C.

    Dean, Commander P. T.

    Amery, Leopold C. M. S.

    Breese, Major Charles E.

    Dewhurst, Lieut.-Commander Harry

    Archer-Shee, Lieut.-Colonel Martin

    Bridgeman, Rt. Hon. William Clive

    Du Pre, Colonel William Baring

    Astor, Viscountess

    Briggs, Harold

    Elliot, Capt. Walter E. (Lanark)

    Austin, Sir Herbert

    Bruton, Sir James

    Evans, Ernest

    Baird, Sir John Lawrence

    Buckley, Lieut.-Colonel A.

    Eyres-Monsell, Com. Bolton M.

    Baldwin, Rt. Hon. Stanley

    Burn, Col. C R. (Devon, Torquay)

    Falle, Major Sir Bertram Godfray

    Balfour, George (Hampstead)

    Carr, W. Theodore

    Foxcroft, Captain Charles Talbot

    Banbury, Rt. Hon. Sir Frederick G.

    Chamberlain, Rt. Hn. J. A. (Birm. W.)

    Fraser, Major Sir Keith

    Barlow, Sir Montague

    Chamberlain, N. (Birm., Ladywood)

    Fremantle, Lieut.-Colonel Francis E.

    Barnett, Major Richard W.

    Churchman, Sir Arthur

    Ganzoni, Sir John

    Barnston, Major Harry

    Clay, Lieut.-Colonel H. H. Spender

    Gee, Captain Robert

    Bellairs, Commander Carlyon W.

    Coats, Sir Stuart

    Gibbs, Colonel George Abraham

    Benn, Sir A. S. (Plymouth, Drake)

    Cockerill, Brigadier-General G. K.

    Gilmour, Lieut.-Colonel Sir John

    Bird, Sir William B. M. (Chichester)

    Colvin, Brig-.General Richard Beale

    Glyn, Major Ralph

    Borwick, Major G. O.

    Coote, Colin Reith (Isle of Ely)

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    Greig, Colonel Sir James William

    McLaren, Robert (Lanark, Northern)

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Guinness, Lieut.-Col. Hon. W. E.

    M'Lean, Lieut.-Col. Charles W. W.

    Simm, M. T.

    Hacking, Captain Douglas H.

    Mallalieu, Frederick William

    Sprot, Colonel Sir Alexander

    Hailwood, Augustine

    Manville, Edward

    Stanley, Major Hon. G. (Preston)

    Hamilton, Major C. G. C.

    Montagu, Rt. Hon. E. S.

    Starkey, Captain John Ralph

    Hannon, Patrick Joseph Henry

    Moore, Major-General Sir Newton J

    Sugden, W. H.

    Harmsworth, C. B. (Bedford, Luton)

    Moore-Brabazon, Lieut.-Col. J. T. C.

    Thomas, Sir Robert J. (Wrexham)

    Hennessy, Major J. R. G.

    Murray, C. D. (Edinburgh)

    Thomson, F. C. (Aberdeen, South)

    Henry, Denis S. (Londonderry, S.)

    Neal, Arthur

    Thomson, Sir W. Mitchell- (Maryhill)

    Herbert, Dennis (Hertford, Watford)

    Newman, Colonel J. R. P. (Finchley)

    Townley, Maximilian G.

    Hilder, Lieut.-Colonel Frank

    Newman, Sir R. H. S. D. L. (Exeter)

    Townshend, Sir Charles Vere Ferrers

    Hinds, John

    Norman, Major Rt. Hon. Sir Henry

    Tryon, Major George Clement

    Hood, Joseph

    Parker, James

    Turton, Edmund Russborough

    Hope, Lt.-Col. Sir J. A. (Midlothian)

    Pease, Rt. Hon. Herbert Pike

    Walters, Rt. Hon. Sir John Tudor

    Hopkins, John W. W.

    Pennefather, De Fonblanque

    Ward, William Dudley (Southampton)

    Home, Edgar (Surrey, Guildford)

    Pickering, Colonel Emil W.

    Weston, Colonel John Wakefield

    Home, Sir R. S. (Glasgow, Hillhead)

    Pollock, Sir Ernest Murray

    Wheler, Col. Granville C. H.

    Jameson, John Gordon

    Pownall, Lieut.-Colonel Assheton

    White, Col. G. D. (Southport)

    Jephcott, A. R.

    Purchase, H. G.

    Williams, C. (Tavistock)

    Johnstone, Joseph

    Randles, Sir John Scurrah

    Williams, Col. Sir R. (Dorset, W.)

    Jones, Henry Haydn (Merioneth)

    Raw, Lieutenant-Colonel Dr. N.

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Kellaway, Rt. Hon. Fredk. George

    Rawlinsoh, John Frederick Peel

    Wise, Frederick

    Kidd, James

    Richardson, Alexander (Gravesend)

    Wood, Hon. Edward F. L. (Ripon)

    King, Captain Henry Douglas

    Roberts, Samuel (Hereford, Hereford)

    Wood, Sir H. K. (Woolwich, West)

    Lane-Fox, G. R.

    Roundell, Colonel R. F.

    Worthington-Evans, Rt. Hon. Sir L.

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Royds, Lieut.-Colonel Edmund

    Young, E. H. (Norwich)

    Lindsay, William Arthur

    Samuel, A. M. (Surrey, Farnham)

    Young, Sir Frederick W. (Swindon)

    Lloyd, George Butler

    Samuel, Samuel (W'dsworth, Putney)

    Younger, Sir George

    Lloyd-Greame, Sir P.

    Sanders, Colonel Sir Robert Arthur

    Locker-Lampson, Com. O. (H'tingd'n)

    Seely, Major-General Rt. Hon. John

    TELLERS FOR THE AYES.—

    Lorden, John William

    Shaw, Hon. Alex. (Kilmarnock)

    Colonel Leslie Wilson and Mr

    Lowther, Major C. (Cumberland, N.)

    Shaw, Capt. William T. (Forfar)

    McCurdy.

    NOES.

    Barker, G. (Monmouth, Abertillery)

    Halls, Walter

    Spencer, George A.

    Barnes, Major H. (Newcastle, E.)

    Hartshorn, Vernon

    Stanton, Charles Butt

    Barton, Sir William (Oldham)

    Hayday, Arthur

    Swan, J. E.

    Bowerman, Rt. Hon. Charles W.

    Holmes, J. Stanley

    Thomson, T. (Middlesbrough, West)

    Bromfield, William

    Kennedy, Thomas

    Waterson, A. E.

    Brown, James (Ayr and Bute)

    Kiley, James Daniel

    Williams, Aneurin (Durham, Consett)

    Cairns, John

    Lawson, John James

    Williams, Col. P. (Middlesbrough, E.)

    Carter, W. (Nottingham, Mansfield)

    Morgan, Major D. Watts

    Wilson, James (Dudley)

    Davies, A. (Lancaster, Clitheroe)

    Newbould, Alfred Ernest

    Young, Robert (Lancaster, Newton)

    Glanville, Harold James

    Richardson, R. (Houghton-le-Spring)

    Graham, R. (Nelson and Colne)

    Robertson, John

    TELLERS FOR THE NOES.—

    Grundy, T. W.

    Rose, Frank H.

    Sir Thomas Bramsdon and Lieut.

    Guest, J. (York, W. R., Hemsworth)

    Royce, William Stapleton

    Commander Kenworthy.

    Hall, F. (York, W. R., Normanton)

    Question put, and agreed to.

    Clauses 41 (Amendment of s. 6 of 8 Edw. 7, c. 16) and 42 (Construction, short title, and repeal) ordered to stand part of the Bill.
    Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Sir B. Horne.]
    Committee report Progress; to sit again To-morrow.

GREENWICH HOSPITAL.
Commander EYRES-MONSELL (Civil Lord of the Admiralty): I beg to move,
"That the expenditure of Greenwich Hospital for the year 1919–20, in excess of the approved Estimate, be sanctioned."
Captain W. BENN: Are we to have no explanation of this?
Lieut.-Colonel Sir J. GILMOUR (Lord of the Treasury): I asked particularly about it to-day, and I understand that there is no fresh charge. It is a local and domestic question, and this is merely a matter of form.
The remaining Orders were read, and postponed.
It being after half past eleven of the clock, upon Monday evening, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at Three minutes after Twelve o'Clock.

COAL INDUSTRY DISPUTE.
  COAL COMMISSION'S REPORT (CONTROL).
  COAL COMMISSION'S REPORT (CONTROL).
  CRIME, YORKSHIRE.
  CRIME, YORKSHIRE.
  PRICES AND COST OF PRODUCTION.
  PRICES AND COST OF PRODUCTION.
  HARVEST OPERATIONS.
  HARVEST OPERATIONS.
  GOVERNMENT EMPLOYES (WAGES).
  GOVERNMENT EMPLOYES (WAGES).
HOUSING.
  RENTS.
  RENTS.
  BUCKINGHAM AND BRACKLEY (LOANS).
  BUCKINGHAM AND BRACKLEY (LOANS).
  ARCHITECTS, WATFORD.
  ARCHITECTS, WATFORD.
  LEASEHOLDS (IMPROVEMENTS).
  LEASEHOLDS (IMPROVEMENTS).
  NATIONAL HEALTH INSURANCE.
  NATIONAL HEALTH INSURANCE.
TRANSPORT.
  RAILWAYS (SUPPLEMENTARY ESTIMATE).
  RAILWAYS (SUPPLEMENTARY ESTIMATE).
  FERRY SERVICE, NORTH AND SOUTH BLYTH, NORTHUMBERLAND.
  FERRY SERVICE, NORTH AND SOUTH BLYTH, NORTHUMBERLAND.
  BURNTISLAND-GRANTON AND QUEENSFERRY FERRY SERVICES.
  BURNTISLAND-GRANTON AND QUEENSFERRY FERRY SERVICES.
  SHROPSHIRE UNION RAILWAYS AND CANAL COMPANY.
  SHROPSHIRE UNION RAILWAYS AND CANAL COMPANY.
  RAILWAY AND CANAL AGREEMENTS (DEFICIENCIES).
  RAILWAY AND CANAL AGREEMENTS (DEFICIENCIES).
IRELAND.
  MILITARY OPERATIONS.
  MILITARY OPERATIONS.
  SHIPMENT OF ARMS, LONDONDERRY AND DONEGAL.
  SHIPMENT OF ARMS, LONDONDERRY AND DONEGAL.
  FAIRS AND MARKETS (RESTRICTIONS).
  FAIRS AND MARKETS (RESTRICTIONS).
  CASES UNDER INQUIRY.
  CASES UNDER INQUIRY.
  BOLSHEVISM AND SINN FEIN (INTERCOURSE).
  BOLSHEVISM AND SINN FEIN (INTERCOURSE).
  PRISONERS, VICTORIA BARRACKS, BELFAST.
  PRISONERS, VICTORIA BARRACKS, BELFAST.
BRITISH ARMY.
  COURT MARTIAL, CHELSEA BARRACKS.
  COURT MARTIAL, CHELSEA BARRACKS.
GOVERNMENT STAFFS.
  WAR OFFICE.
  WAR OFFICE.
  COLONIAL OFFICE.
  COLONIAL OFFICE.
  LIVESTOCK OFFICERS.
  LIVESTOCK OFFICERS.
  SALARIES AND BONUSES.
  SALARIES AND BONUSES.
  MINISTRY OF TRANSPORT.
  MINISTRY OF TRANSPORT.
RUSSIA.
  GENERAL WRANGEL'S TROOPS.
  GENERAL WRANGEL'S TROOPS.
  TRADE AGREEMENT.
  TRADE AGREEMENT.
  CONSULAR APPOINTMENTS.
  CONSULAR APPOINTMENTS.
  GREECE AND TURKEY.
  GREECE AND TURKEY.
PEACE TREATIES.
  GERMAN BANKS (BRITISH CREDIT BALANCES).
  GERMAN BANKS (BRITISH CREDIT BALANCES).
  GERMAN REPARATION.
  GERMAN REPARATION.
  GERMAN WAR CRIMINALS (TRIAL).
  GERMAN WAR CRIMINALS (TRIAL).
NAVAL AND MILITARY PENSIONS AND GRANTS.
  DISABILITY PENSIONS (R. DICKENSON).
  DISABILITY PENSIONS (R. DICKENSON).
NATIONAL FINANCE.
  REVENUE AND EXPENDITURE.
  REVENUE AND EXPENDITURE.
  SCOTLAND.
  SCOTLAND.
  INCOME TAX.
  INCOME TAX.
  EXCESS PROFITS DUTY.
  EXCESS PROFITS DUTY.
  SEDITIOUS SPEECHES (TRIAL AT PONTEFRACT).
  SEDITIOUS SPEECHES (TRIAL AT PONTEFRACT).
  DEATH SENTENCE, HINCKLEY
  DEATH SENTENCE, HINCKLEY
  COLONIES AND PROTECTORATES (WAR CONTRIBUTIONS).
  COLONIES AND PROTECTORATES (WAR CONTRIBUTIONS).
  BRITISH COTTON-GROWING ASSOCIATION.
  BRITISH COTTON-GROWING ASSOCIATION.
  INDIA (STERLING LOAN).
  INDIA (STERLING LOAN).
  EDUCATION (LEAVING AGE).
  EDUCATION (LEAVING AGE).
  INDUSTRIAL INSURANCE.
  INDUSTRIAL INSURANCE.
  DYESTUFFS DEVELOPMENT COMMITTEE.
  DYESTUFFS DEVELOPMENT COMMITTEE.
  MUNITIONS (DEPARTMENTAL AUDIT).
  MUNITIONS (DEPARTMENTAL AUDIT).
  GRIMSBY FISHING FIRM (DUTCH VESSELS).
  GRIMSBY FISHING FIRM (DUTCH VESSELS).
  GROCERY AND PROVISION TRADE (WAGES).
  GROCERY AND PROVISION TRADE (WAGES).
  UNEMPLOYMENT BENEFIT.
  UNEMPLOYMENT BENEFIT.
  POSTAL AND TELEGRAPH CHARGES.
  POSTAL AND TELEGRAPH CHARGES.
  PARLIAMENTARY PAPERS (RULES AND ORDERS).
  PARLIAMENTARY PAPERS (RULES AND ORDERS).