HC Deb 23 May 1901 vol 94 cc1061-99

With reference to telegram on the annexed form the following directions are issued for the guidance of contractors for the export of coal, etc., as to the nature of the information to be furnished in support of their claims, and which should, if possible, accompany the contracts themselves:—

  1. 1. The contractor should understand that he should produce evidence to prove how much coal has already been supplied by him, and the contract, and how much remains to be so supplied.
  2. 2. To prove that the consignee or buyer abroad declines either to forego the contract or to allow the addition of the export duty to the price.
  3. 3. To prove the loss that would be entailed upon himself by his failing to fulfil his contract, e.g., loss of sums still due to him for coal already supplied under the contracts or forfeiture on deposit account.
  4. 4. It is to be explained that if either breaking or continuing to fulfil a contract involves nothing more than a non-realisation of previously expected profit, no concession must be expected.
  5. 5. Telegram received 7.3 p.m., 20th inst., contractors should be instructed to disclose and prove their margin of profits.

(By order)


Cardiff, 22nd April.


What is the effect of that order? That very firm, whose name I have mentioned, under the direction of that order, did send to a firm in Paris with whom they had a large contract for export of coal, previously made, a telegram to say that by order of the British Government they were obliged to ask them to pay them 1s. a ton more than they had contracted for, and this is the answer which they got. I give the actual words of the Paris firm— I certainly will not ask the buyers to now pay a higher price than that stipulated in accordance with your instructions in your telegram of the 17th inst. As long as I have been in business I have not broken my word yet, and the moment will not come when I shall do so. If the British Government chooses to insert a clause in the Coal Export Tax Bill that secures for your coal-masters and exporters an indemnity for breach of contract, your country has to decide whether it is wise or foolish to follow their lead. As far as I am concerned I must just bear the consequences for the small contract entered into with you as well as for a further 300,000 tons closed elsewhere, but I will maintain my reputation and uphold the honest name my firm has preserved now in the third generation.

A pretty sort of thing to have sent from a foreign country to an English firm! That is the position in which we are landed by this terrible "out tax," which is the beginning of a method of taxation which leads you, as I have said, you do not know where. Now, a large part of the South Wales coal is exported to Genoa to work the railways of North Italy, which bring food stuffs to England. What is the effect of this tax there? The freights on these railways will be raised, and consequently you will have the price of food raised in this country. That, I think, is a thing that has not yet been noticed.

I do not claim to be an expert with regard to coal in Northumberland, but twenty years ago I was interested in an educational movement there which brought me into contact with the miners, and I know something about the condition of the miners in that country. The figures are these, and I do not think they have been mentioned before. The total output of the mines is 11,000,000 tons a year, of which 7,600,000 go to north Germany. In north Germany you have, as was indicated by the hon. Member for Chester-le-Street, a sort of frontier inside the coast-line up to which Northumberland coal can be exported at a profit, but beyond which it comes into competition with Westphalian coal. The result of this 1s. a ton will be that that frontier line will be moved northward, and you will have a strip of land which now takes Northumberland coal which will cease to take it in the future. There are a number of pits in Northumberland which are working at a very narrow margin of profit, or at none at a have the honour to know a great many coal-owners, and they are not amongst the least humane of employers of labour in this country. If these men are millionaires they are keeping the pits working because they do not want to discharge the men. What will be the effect of this Bill? I was asked that question in conversation a few days ago by an hon. friend, and I said a large number of breadwinners would be discharged. I was asked how many, and I said 6,000. The hon. Member for Wansbeck was asked the same question the day after, and he, not knowing what I had said, gave exactly the same figure. Does not such a state of things condemn the whole policy of this tax? The most extraordinary arguments are used in favour of this tax. The Chancellor of the Exchequer says the foreigners are going to pay it, and the argument of his supporters is that it will come out of the coal-owners. It will not come out of the coal-owners. It is the colliery owners who are going to pay, not the men who owns the royalties. Those are the men I should like to get at.

Now, I want to refer to the sugar tax. I have not the honour of the acquaintance of the Chancellor of the Exchequer, and, therefore, am not prejudiced in anything I may say. I have listened to him for nine years in the House, and I have watched his career for nearly thirty years. I have a very great respect for him, and therefore I hope he will see that in what I am going to say no disrespect towards him is intended. He said something in his Budget speech, which I know he was honest in saying, but which was so extraordinary a thing that, if it had been anybody else who had said it, I should scarcely have believed it was honestly said. He said that Mr. Gladstone would have voted for these proposals with regard to the taxation on sugar.


I only said that I thought so.


That was all I meant to convey. But the point to remember is this, that Mr. Gladstone's speech to which the Chancellor of the Exchequer referred was made forty years ago, when sugar was a luxury. A change has happened since then, and sugar has become a staple article of food of the people. Mr. Gladstone would never have consented to tax the food of the people. I want the House seriously to consider one other thing, because, after all, these questions of finance are the primal and most important functions of Members of the House of Commons. The Chancellor of the Exchequer made in his Budget speech an extraordinary statement which I cannot at all understand. He said that the cost of the collection of this £5,100,000 which he expects to get out of the sugar duty is going to be only £40,000 a year, flow are you going to catch this sugar at the ports? You are going to do it by polariscopes. I know something about polariscopes, and I can tell the House that within the last ten years the price of Iceland spar has gone up to fifteen times its previous amount, and I doubt whether you could get a polariscope now for less than £25. The Chancellor of the Exchequer told us that there were only three ports—or, at any rate, a very small number—in the United Kingdom at which sugar was imported.


Oh, no. Raw sugar.


Is not that the sugar you are testing with polariscopes?


There is no question of testing refined sugar. That will be entered on the invoice as refined sugar. And that statement will be accepted with an occasional test.


You will have this result, that there will be a number of ports other than those you have at present into which sugar, both refined and unrefined, will be introduced.


It is all being carried out now with the greatest ease.


But you have to look to the future. It takes a little time to produce the results of bad taxation. It will not take place immediately, but within six months you will have to have at all the ports of the United Kingdom an entirely reorganised system of customs house officers—officers who are experts in this question, and how you are going to do that on £40,000 a year I do not know. But the principal argument I want to put with regard to sugar is this. Supposing at the time when we had a large number of sugar refineries in this country you had had a proposal to meet the action of foreign countries in giving bounties, it might have been argued that you had a great amount of capital sunk in those various refineries, and that that capital would be lost if the refineries were destroyed. But the actual fact now is that the refineries in this country have already been destroyed by the cheapness of sugar. They have been destroyed not only by the foreign bounties, but also by the removal of the last trace of taxation upon sugar in this country in 1874. With regard to the cheapness of sugar, you have two facts—that during the last twenty-six years sugar has become one of the staple articles of food of the people of this country, and that that cheapness of sugar has given rise to industries, such as the jam, confectionery, and other trades, which now employ five times the number of people that were ever employed at one time by all the sugar refineries in the country. I am not taking the point that this is a protective tax. The Chancellor of the Exchequer argues that it is not protective, and I acknowledge that he is right. It is the cheapness of sugar that is the foundation of these industries. Not only do we get our sugar cheaper because of the action of foreign countries, but we export jam and make a profit out of foreigners in that way. All that is going to be hit by this sugar duty.

I want now to refer to what I regard as the very worst point in connection with the finance of this Government, namely, the enormous increase of the National Debt. Some Members may think that this is an academic argument. I wish to goodness I could get them to read about twenty pages in one chapter of the second volume of Mill's "Political Economy." I know the point is dangerously near the one mistake Mill made in his political economy, namely, his wage fund theory, but there is not a single economist of any school in the world who has ever controverted it. The point is contained in the chapter on "National Finance," and the conclusion of the argument is that wherever you incur an increase of the debt that has been incurred by an unremunerative expenditure, such as upon a war, and when that debt has caused an increase in the rate of interest, the whole incidence of that falls upon labour. Moreover, he mentions it as the worst tax you can possibly make, because the sacrifice made by labour in meeting that tax does not accrue to the national exchequer but entirely to the capitalists who live upon the income from their investments, and the measure of the amount that accrues to them is the increase in the rate of interest. What is the condition of the finance of this Government in regard to that question? Before the war began they could borrow at 2½ per cent., and, according to a return that I hold in my hand, they had within the last year borrowed at 4⅛ per cent. That increase in the rate of interest accrues entirely for the benefit of the capitalist, and the incidence of it falls entirely upon labour. In regard to this question of the Debt, I hold here a Return, ordered by the House to be printed on the 11th March last, and it professes to be a statement of the position of the Unfunded Debt as it stood on the 27th February last. There are seven items in this statement. The three last are "Treasury Bills," and the three items preceding "Treasury Bills" are "Exchequer Bonds." That undoubtedly is Unfunded Debt. I have never been able to get any definition that clearly differentiates Funded from Unfunded Debt, excepting this—that Funded Debt is inscribed on the books of the Bank of England, and the script, whatever it is that represents it, is transferable like a bill of exchange from hand to hand, whereas Unfunded Debt is not so inscribed and can be transferred. The first item, however, is the largest. The amount is £30,000,000, and it is described as "National War Loan Stock and Bonds." I have ascertained that that is inscribed on the books of the Bank of England, and that the stock and bonds are not negotiable like bills of exchange. Therefore, I ask, why in the world is it put down as part of the Unfunded Debt? I can give the answer. It is because the Chancellor of the Exchequer at the time when the debt was contracted did not think he would have to come on the taxpayers of this country for it. He thought he was going to get it out of the mines in the Transvaal. But on the 18th April last, in his Budget speech, the right hon. Gentleman declared— When we met last December I held out hopes to the Committee that I should be able, on the occasion of this Budget, to say something definite as to a proposal for obtaining from the Transvaal some contribution towards the cost of the war. I informed the Committee that we had appointed Sir David Barbour to visit the Transvaal and to report upon the financial situation and upon the prospects of such a contribution. Sir David Barbour undertook the commission, but I need not say the prolongation of the war has very much hindered and deterred him in his work. It has been practically impossible for him to complete the inquiry in the time which I had anticipated, and therefore I have no report from him at the present moment. How comes it that the right hon. Gentleman issues this Return as to the condition of the Debt on 27th February, and makes that speech on 18th April? Surely, by the 27th February he knew perfectly well Sir David Barbour's opinion. Why, then, does he put this £30,000,000 down as part of the Unfunded Debt?


The distinction which has generally been recognised between funded and unfunded debt is that in regard to funded debt, like consols, payment cannot be demanded by the holder of the security. Unfunded debt is debt the payment of which can be demanded by the holder of the security at fixed times—such as Treasury Bills or the War Loan. It has nothing whatever to do with Sir David Barbour or the Transvaal.


I should like to have some other expert opinion upon that point. I very much doubt whether the right hon. Gentleman would be borne out by his own Department in his view. But, however that may be, I object to all the taxation of this Government, and, above ail, I object to their debt. I may therefore be asked, "Supposing the Liberals came into office to-morrow, and had to meet these demands, what is your alternative?" I have two alternative propositions. I hold that in any sound method of finance there should be some relation between our great direct tax upon capital and our direct tax upon income. Our direct tax upon income is, of course, the income tax, and the direct tax upon capital is the death duty. The death duties stand almost exactly where they did when they were established in 1894. The right hon. Gentleman the Member for West Monmouthshire said at the time that there ought to be some relation between the amount raised by the death duties and the amount raised by the income tax, and he made his estimate with regard to the death duties upon the basis of an 8d. income tax. The income tax, since then, has been increased by 6d., and I say that the death duties ought to be raised in the same proportion. By that means you would probably raise £10,000,000 a year more in taxation than you at present do. The other suggestion I have to make is that we ought to tax the enormously inflated value of the land in towns. If you take that, and the mining royalties, and the way leaves, you have an income of £120,000,000 a year, which at present is absolutely untaxed, except by way of income tax and death duties, both of which taxes are paid by any man who earns £160 a year and who leaves £500 when he dies. There surely is a source from which you might not only get the cost of this war, but also the money for social reforms which you have promised, and in regard to which you have deceived the people by not carrying them out. There is a source of income we want to get at, and I say that it is a source which you ought to tax.

And now, Mr. Speaker, in conclusion, I desire to thank the House for having listened to me for so long. And yet I make no apology for having detained the House on this question. For it is the original, primal, and essential function and duty of Members of this House of Commons, and of Members of this House of Commons alone, to decide what supplies shall be granted to the Sovereign to carry on the government of the country and to uphold the position of the Empire before the world. It is their function and duty to criticise and direct the appropriation of the supplies they have voted, and, above all, it is their function and duty to initiate and determine the taxation that should be imposed upon the people to meet the cost of these supplies. When a Minister of the Crown comes down to this House and in Committee of Supply proposes Estimates for the maintenance of the Department which he has in charge, he does so as a Minister of the Crown—he in effect is the hearer of a message from the King to the House of Commons. But when the Chancellor of the Exchequer in Committee of Ways and Means proposes the taxation necessary to meet the cost of these Estimates, he does so, not in his capacity as Minister of the Crown, but simply and solely in his capacity as an ordinary Member of the House of Commons.

I cannot help feeling that the rank and file of Members of the House of Commons have forgotten in recent years their duty in this respect. They have come to think that their whole business is to register the decrees of Ministers, if they happen to sit on that side of the House, or to support blindly and unquestioningly the criticisms of those who have been Ministers, if they happen to sit on this side of the House, and the result is a diminution of the efficiency, the credit, and the dignity of the House of Commons in the constitution of the Empire. I appeal to all Members of the House to resume their ancient functions. We all of us feel the most inspiring pride—you on that side are not the most backward in expressing your pride—in the great Empire which our fathers have built up, But remember this—however majestic the edifice may be, it is doomed to destruction if it is founded on the sand. It can only endure if it is founded upon the rock of the freedom, the happiness, the education, the intelligence, and the well-being of every one of the humblest and the poorest of our citizens.

During the past sixty years we have laid deep and strong the foundation of our Empire upon this rock, but it has been owing to the life work of three of the greatest financial statesmen that ever served a nation. It has been owing to the life work of Peel, of Cobden, and, greatest of all, of Gladstone. Ah, Mr. Speaker, could we but raise from the dead one supremely great man who is now resting in the great Abbey, and for five minutes he could re-enter this House which he dominated for a period of time extending over two generations of human life, and if, even without listening to the magic of his divine voice, we could look upon the light in his eyes, there are men on both front benches who would not dare say the things, and give the votes, and abstain from giving the votes, as they have been doing during the last three weeks. It is because I see in the reckless and reactionary finance of the past six years the beginning of the process of sapping, undermining, wasting away, and weakening the foundations on which our power and our Empire rest, that I appeal even to hon. Members opposite to bring pressure to bear on the Government which cannot exist without their support, and to put a stop to the heedless and headlong course which they are pursuing. Am I to find that it is hopeless to make such an appeal? I pray it may not be so. But if it is so—if you will not listen to our appeal, if you will not put patriotism before party, and principles before personalities, then be assured we shall appeal to that power which lies behind this House of Commons; to that power from which alone even the House of Commons itself receives its whole authority, we shall appeal to the electorate, to the people of this country, we shall appeal to the nation itself, and I am confident we shall not appeal in vain.

MR. JAMES LOWTHER (Kent, Thanet)

It is not my intention to follow up the line of argument advanced by the hon. Member who has just sat down, which seems to be that one set of persons should find the money for others to spend, but I wish to say a few words with regard to the general principles of this financial scheme. This is indeed a memorable Budget. It is memorable for the reason that for the first time during the thirty-five years I have sat in Parliament a Chancellor of the Exchequer has come down and boldly admitted that our much-vaunted financial system has broken down. We were told that our financial system would be equal to any strain. The Member for West Monmouthshire is never tired of telling us that the system of placing taxes upon a few articles is a sound policy. The Chancellor of the Exchequer, however, has boldly admitted that our financial system has broken down. I say emphatically that it has not broken down in consequence of the strain of the war, but it is our normal expenditure, rather than the strain of the war, which has exposed the weakness of our fiscal system. I dare say that I shall be told that my views are not popular, but I say that this false and one-sided system of so-called free trade which we have pursued for so many years has been discarded by the whole world, and we are the only survivors who retain those opinions, and principles which have admittedly now completely broken down. Does anyone deny that this system has proved unequal to meet the emergencies of the country? We have been told a great deal about the bloated Estimates presented to Parliament. I do not apply this term to the real requirements of this country, although I do say that economy has entirely ceased to be adopted seriously in this House. The right hon. Gentleman the Member for East Wolverhampton, in his very moderate speech, dealt very fairly with the question as a whole, but even he did not suggest any bona fide economy. He hinted at cutting off a certain number of men from the Army, and adopting some small reductions which would probably take the shape of reducing our supply of cordite and that sort of thing, while at the same time he said that he would vote for any naval Estimates which a responsible Government said were necessary for the safety of the country. He vaguely talked of reducing certain Estimates, but when we come to analyse his suggestions it only amounts to the criticism that greater caution should be taken with regard to the money spent, as distinguished from any bona fide attempt to reduce the total of the national expenditure. What is to become of the money saved by those reduced Estimates? Is it to be saved? No; the suggestion is that it should be devoted to other purposes. Whether you turn to the defensive Estimates or to the Civil Service, nobody has any practical policy of economy to advance. In the Civil Service Estimates the army of inspectors has doubled and trebled, and, as I have myself vainly urged upon the House of Commons, our educational expenditure might be largely reduced.

As regards the taxes which the Chancellor of the Exchequer proposes, I certainly welcome the new taxes as being steps towards a sounder financial system. I admit that, as regards the coal duty, I do not like an export duty. I think that is an unsound principle, but my right hon. friend certainly consoled me by expressing his conviction that the foreigner would pay it. This is a great advance, for the Chancellor of the Exchequer has always been regarded as the foreigner's friend. If the foreigner is found to pay this coal-tax it will continue. If it is found that the foreigner does not pay it, it will have to go, and that at no very distant date. Perhaps I may be permitted to express my approval of the sugar duty. While I approve of this duty I must say that I do not regard sugar so much as an essential necessary of life. I believe that greater economy in the use of sugar would, in many respects, be a very good thing, especially for the rising generation, to whom unlimited lollipops are scarcely an unmixed advantage. I would point out to the Chancellor of the Exchequer that, in introducing this sugar duty, he has once more missed a grand opportunity of performing an act which would have been welcomed, not only by the great mass of the people of this country, but also by all our fellow-subjects in our loyal colonies and dependencies. My right hon. friend has missed a grand opportunity of giving preferential advantages to our colonies and dependencies. The Chancellor of the Exchequer has had his attention called prominently to the suggestion which has been made from important colonial sources with regard to the preferential system of trade within the Empire. The Colonial Conference held at Ottawa in 1894 unanimously adopted a resolution in favour of preferential trade within the Empire, on which occasion the representatives of all the colonies and the dependencies of the Crown strongly urged a Customs arrangement by which the trade within the Empire could be placed on a more favourable footing than that carried on with foreign countries. A resolution to this effect was subsequently unanimously adopted in 1897, during the last Jubilee year, by the conference of the Premiers of all the colonies which was held in London. At that conference the representatives of the colonies undertook to confer with their colleagues to see whether such a view could not be carried out in regard to the products in the United Kingdom. I will not follow up this question, but I think it only right to add that the Australian Premiers, in view of the establishment of the Commonwealth, passed a resolution in similar terms as recently as 1898. In one quarter especially words have been followed by practical deeds, and it is worth noting that the Liberal Prime Minister of Canada—Sir Wilfrid Laurier—is a member of the Cobden Club, and he was specially decorated by that club with their gold medal, notwithstanding the fact that he had just recently passed through the Canadian Legislature a preferential rate of 25 per cent. to British goods. Nevertheless the Cobden Club overlooked that, and gave him the gold medal. Fortified by the opinion of his fellow colonists he has since changed that 25 per cent. into no less than a 33⅓ per cent. preference with regard to goods coming within the limits of this Empire. That is a proof that the colonies are prepared to act up to the resolution they have passed. The Australian representatives who were over here last year made no secret of their desire in this matter. Therefore, I say that an opportunity was offered to my right hon. friend of cementing that bond of union between all the branches of the British race by an act which would have cost him nothing. This is why I say that a grand opportunity has been missed. The views of my right hon. friend are the views of sixty years ago, and he will not be able to permanently stand in the way of this great advance towards British union. Only a day or two ago the Secretary of State for the Colonies stated in reply to a question that the Canadian Government, who naturally were tired of waiting for corresponding action upon the part of the mother country, had subsidised a foreign steamship service to the extent of no less than £10,000 a year. Our colonies have naturally to look to themselves first. If they find that they are giving 33⅓ per cent. of an advantage to the mother country, and are getting nothing in return, it is only human nature that they will look out for their own advantages, and make bargains where they can best make them. If we do miss this grand opportunity, I say that it will be the fault of the Chancellor of the Exchequer. I will not allude in detail to the question of the West Indies, but we all know that this sugar duty afforded a special opportunity to consider the demands of these dependencies. There can be no doubt that unless something is promptly done in this direction there will inevitably arise a demand for a closer union between America and the West Indies. Surely nothing could more seriously injure the British Empire than spurning the advances of our colonies in a commercial direction. The Secretary for the Colonies has pronounced himself strongly in favour of reciprocal trading relations with the colonies. He stated that Imperial unity could be best brought about in the first instance from its commercial side. Those sentiments will be very generally shared by hon. Members in all parts of the House.

As to the old Cobdenite doctrine, that is played out. I do not hesitate to say that if Sir W. Laurier—a Liberal and a Member of the Cobden Club itself—has shown the way, even the most timid mumbler of the dry bones of political economy surely may follow suit. The Chancellor of the Exchequer is at least fifty years behind the times in his commercial and financial views. Every country in the world has eschewed his views, and I will not now go over the globe to mention the countries that have eschewed them. Reference has been made just now to a great name which has passed from amongst us—Mr. Gladstone. Mr. Gladstone foresaw all this in 1894, when he pointed out that we had lost ground not only amongst the countries which had hitherto retained Protectionist views, but also in countries where free trade had been tentatively adopted, and he mentioned France and America. I only mention this fact to show that my right hon. friend, in resisting what is a truly national impulse in England towards the consolidation of the Empire upon sound broad lines of reciprocal commercial advantage, is simply kicking against the pricks. He is running against the strong current of the time, and he will soon find that he will have to give way to a strong public opinion. I will conclude by saying that I feel it to be my duty to urge these views very strongly upon the House. I will not trouble the House with taxes that I could suggest. I know that, so far from our expenditure diminishing, it is bound to increase largely in the future. I know that my right hon. friend warned us the other day that there would have to be interest paid upon the money borrowed, and he spoke of the Sinking Fund, by which I conclude he meant an augmented scheme for the reduction of our largely increased National Debt, but he omitted to mention that there were looming in the near future large fresh items of expenditure, such as old-age pensions, which he will have to give way to. I think it will be accepted throughout the House that, unless the classes who derive benefit from those pensions are not substantial contributors, it will be purely Socialism. Hence old age pensions, which are bound to come, will necessitate recourse to indirect taxation upon articles of general consumption which my right hon. friend will have to come to me for suggestions upon, little as he likes such a prospect. That, however, is beyond the question we have to consider to-night, my last word upon which is that even now I trust my right hon. friend will consider, before it is too late, whether he cannot give effect to the very large desire expressed through the Empire for preferential advantages to our colonies and dependencies.

MR. JOHN MORLEY (Montrose Burghs)

I am afraid I must ask in no conventional sense for the indulgence of the House whilst I offer one or two observations upon the Bill now under discussion. I will not, as this moment at all events, follow the right hon. Gentleman who has just sat down, but I will refer the Chancellor of the Exchequer to him as the awful example of what is going to happen to His Majesty's Government, and, perhaps, to Governments that may follow on this side of the House, if the present course of foreign and colonial policy is pursued. A discussion took place in the earlier proceedings on this Bill on the point of economy, and my right hon. friend the Member for East Wolverhampton brought a motion before the House, of which the point was that economy in our normal expenditure was the thing to which we ought to direct our attention. I was not able myself to agree in that view, because I felt that this Budget, moved as it is at this stage of a great war, is a landmark and will prove to have been a landmark in our fiscal history. This Budget is not the last chapter, but the first; it is not the end, but the beginning of, I believe, a new system on which we have em barked. Economy, no doubt, is what we all desire, but which, I believe, none of us, so long as the present maxims of policy are accepted, will be able to attain. Every one of us would vote for platonic motions for economy of expenditure, but it is idle to support these motions or to delude ourselves with the idea that they have any real significance so long as we pursue and nurse ourselves with the idea, in Lord Salisbury's words, that it is our duty to take everything and to fight everybody. All depends upon that.


The Prime Minister did not say that, if I understood my right hon. friend to imply that he used those words?


I did the Prime Minister great wrong if I said that; on the contrary, the Prime Minister was on the side of which the hon. Member for West Monmouthshire and I are humble members. It was the Prime Minister who said that you will get into great scrapes if you follow the present tendency to take everything and fight everybody.

One phrase fell from my right hon. friend the Member for East Wolverhampton the other night which I a little quarrel with. He said, talking of naval expenditure, that you ought to listen to the experts of the Navy. Perhaps the Chancellor of the Exchequer will agree with me that if you do that there will be no economy in the Navy. I regard that expression of my right hon. friend as being just as fatal to economy as the extraordinary suggestion thrown out by others on my own side of the House that the Commander-in-Chief of the Army shall be free to come to Parliament and be able to fight his own parliamentary chief on matters of Army administration. I am not so old-fashioned as the right hon. Member for Thanet, but I am old-fashioned enough to protest altogether in the name of economy and of the constitutional system against any idea of the kind—that either the experts of the Navy of the Commander-in-Chief shall overrule or appeal to Parliament against their parliamentary chiefs. The hon. Member for Exeter two days ago made a most interesting speech on economy, with most of which I entirely agree; but I will venture to tell my hon. friend this, what Mr. Gladstone said to me a thousand times, that there are only two ways of getting economy effected—one is the way pursued by a former Member for Montrose, Mr. Hume—a vigilant, tenacious, minute attention to details year after year, Committee after Committee; the other way is that a Chancellor of the Exchequer like Mr. Gladstone in Lord Palmerston's Government, like Lord Randolph Churchill with less success in another Government, like, perhaps, the present Chancellor of the Exchequer, can, no doubt, effect economies, but all these ideas of Committees examining Estimates are unavailing. I have been in the House a good many years and I have heard proposals for economy. They all come to nothing. You must either pursue economy in detail year after year, or else instal in power if you can a Chancellor of the Exchequer who will insist on having his own way in the matter of expenditure. I do not believe, for my part, that there is going to be any great economy. I do not see in the present temper of the people of this country where the steam, the generative force, of economy in this House, is to come from.

But I now come to the Finance Bill. I have given some votes in favour of the proposals of the Government, but I disclaim altogether the notion that in these votes I meant to, or hoped that the House would—to borrow my right hon. friend's phrase the other night—penalise the voters because they have adopted them. I will never deny that the country has adopted the policy of His Majesty's present Ministers. It would be childish to talk of penalising any body of men because they hold opinions which we do not happen to hold. Blood has been shed; thousands of our women have been made widows, thousands of children have been made fatherless; millions of wealth accumulated by the toil and skill of men have been flung down the abyss in pursuit of a policy which I must call a policy of stupendous folly. You have sown broadcast with both hands the seeds of enmity between two races, and if that is wrong, as I think it is, retribution will follow in a thousand shapes. I do not mean by retribution a twopenny income tax, and I do not think that a halfpenny a pound on sugar is the full Nemesis of these transactions. At the same time, though I should be most sorry to advocate any scheme of taxation which would look vindictive, I do rather rejoice at a scheme of taxation that is instructive. It is rather humiliating at this time of day, in our new century, but I declare what I think is true, that after all, in spite of a free press, in spite of the pulpit, the taxgatherer is, after all, the real schoolmaster. I cannot conceive any great empire existing under much more dangerous conditions than ours is likely to exist in if a great army of electors is to decide on questions of peace and war—decide on these great issues of policy—without its being brought home to them closely, directly, and, as Mr. Gladstone said in the passage quoted by the Chancellor of the Exchequer, "intelligibly and palpably," what the effects of their acts and decision will be. But there is another element of danger. We are told by those organs of the press which worked before the raid and after the raid for this war that the opinion of the colonies must be taken upon the terms of any settlement which is ultimately arrived at. I almost think that my right hon. friend the Colonial Secretary has on one occasion used language which pointed in that direction. Well, if you are going to have war and peace—the launching of a war and the settlement of the terms of peace—dependent upon an electorate who are not to be made personally, palpably, and intelligibly responsible, and upon colonists who, moreover, contribute nothing to the cost of the war, I think that all will agree with me—all who are willing and capable of looking at these questions largely—that no empire has ever been in a more dangerous condition than ours.

I will not detain the House with figures, but I want to put in one figure, which I believe to be right, to show where we now stand and what is the point of this Budget. It seems to me much more to the point, and it brings home the matter much more to the minds of the electors than any talk about economy. You borrowed a sum on which at 2¾ per cent.—and that is giving you a little advantage, for on some you pay more—the annual charge will be £3,500,000. Then you put upon yourselves an additional charge of nearly three times that amount for the Army. You maintain that this new charge of £9,500,000 for the Army is a necessary and permanent charge; and this, together with the £3,500,000, makes a sum of £13,000,000. What is that? We have fastened round our necks by reason of this war an annual liability and obligation to pay £13,000,000, which is the equivalent of an extra loan upon our shoulders of 470 millions added to the National Debt. The First Lord of the Treasury dissents from that proposition. The figures are there. I quite admit that there is a difference between a charge which Parliament votes and can discontinue when it likes and a permanent charge on the National Debt. But the Gentlemen on the Treasury Bench cannot say so, because they say that the charge is necessary and permanent. We have, at all events, got rid in a quiet way of the idea that of this vast burden any part is coming to us from the Transvaal. I remember three or four years ago the Chancellor of the Exchequer gave a great deal of innocent pleasure to his political friends, and I rather think to some of my political friends also, by calling me "the false prophet of the Soudan." I think he has found out by this time that there are other parts of Africa besides the Soudan that breed false prophets. It is not so long since the right hon. Gentleman talked of ten millions for this war. Then he says, in order to soothe the House—I do not mean in order to delude the country, but to keep the country simmering in expectation of Transvaal relief—"We shall keep the claim alive. We shall not leave the question out of view. My right hon. friend the Colonial Secretary and I will get whatever is possible." I wonder whether the House observed an answer which the right hon. Gentleman was good enough to make to a question I put to him. He said:—"We shall get whatever is possible from the new Government which is to be set up in the Transvaal." Then I asked, "Are they to consent to the contribution?" And the right hon. Gentleman answered, "No. We shall be very interested in hearing what they have to say; but of course the Imperial Government must ultimately decide." I was sorry to hear that answer. I was sorry because you will have fresh confusion and conflict in South Africa, because when that Government is set up—and it will not be set up very soon—you will immediately have, of course, a combination of Boer and Briton, and I think they will have a very good argument ready to their hand against contributing one sou to your charge, and their argument will be this, "We are a special class, but you have declared that this war in South Africa was waged not for a special class, not for territory, but for the interest of the Empire as a whole. Why should the people of the Transvaal, then, pay for what is for the interest of the Empire as a whole?" I am not going to argue that, but I am perfectly sure that after all these trials you will not get anything at all, or, if you do get anything, you will get it at a price which certainly will not be worth paying.

But I heard with surprise what was said about the colonies, and I thought the Chancellor of the Exchequer the other night went as far as prudence allowed when he spoke of colonial contributions under another head. We heard about Imperial funds and colonial contributions. Now, have hon. Gentlemen considered, when they look at this enormous figure, which I put at a sum equivalent to an addition of £470,000,000 to the National Debt—have they considered, in view of this stupendous figure, what sum they can reasonably expect to get from the colonies? What will it be? How are they to go about it? I wonder, putting it at the uttermost, what you can reasonably expect to get from the colonies? All that we can in reason expect to get from them, at the highest estimate, would not relieve us of one penny in the income tax—there are 14,000,000 of people against our 40,000,000—if you got to the full this colonial contribution. I read a sentence the other day by a Gentleman we well knew in this House as Sir John Lubbock, now Lord Avebury, He said— It seems to me unfortunate that we use the word Imperial in two senses. If it is a question of interest or expenditure it implies the whole Empire, but when it comes to the payment of the bill the word Imperial is confined to the British Islands. There (pointing to the Irish Benches) is one of the British Islands, and the one that has suffered most from our misrule, and that forlorn island has to pay its share of this enormous charge, while the colonies, far better off than our own poor people, are able to feast, apparently—feast is, perhaps, not the right word—are able to enjoy old-age pensions, which we cannot. The hon. Gentleman the Secretary to the Admiralty the other day said with the Imperial instinct boiling over in him, "Our own people first, our own people second, our own people third." I say the same, but I include the people who happen to live in these two islands.

Now I come to the observations that fell from the Chancellor of the Exchequer on Monday night about the war. They struck me very much. He said, "If the issue was whether Briton or Boer should be supreme in South Africa, then £140,000,000 is a trifle in comparison." I would just say in passing that is rather a new reading of the orthodox formula. I thought it was to be "equal rights." Equal rights! It appears that it is not that—it is not to be equal rights—it is to be the mastery of one race over the other.

MR. JOHN REDMOND (Waterford)

But they are not masters yet.


Yes, mastery of one race over the other, and in the name of mastery you have suppressed two little States which had as good a title—[Loud cries of "No" from the Ministerial Benches and Opposition cheers.]—as good a title—[Cries of "No."]—I hope hon. Members will listen to me—as good a title, if public law has any validity at all, to govern themselves as you have. I think it was a right hon. friend of mine who said—some of my friends have said some very embarrassing things—that the Government of the South African Republic was an imposture. [Ministerial cheers.] Be it so, but at all events it was a Government which the people to whom the country belonged cherished and have given their lives for.

MR. CUST (Southwark, Bermondsey)

May I remind the hon. Gentleman that in both cases the title to self-government was given by England to the Republics?


I have got passages, I will not say by the dozen, but a good many passages from despatches written in 1896, 1897, and 1898 which should entirely bear me out from official sources in my contention. I do not want to take up the time of the House in kindling again the fires of the old controversy. I am quite ready to do so, but there will be abundant opportunities to argue that out here and elsewhere. But I must traverse the way in which the Chancellor of the Exchequer put the issue in the sentence I have already quoted. It was not a question as the Chancellor of the Exchequer put it. The question of Boer and Briton was solving itself. The two races were intermarrying; their English education was slowly, but effectually, working out the legitimate influence of England—call it supremacy or what you like. Mr. Kruger, the representative and the rallying point of old and reactionary ideas, was himself an old man. A reform party was opposed to him that had all the future before it. Time and patience were bringing about all that any British statesman either on that side of the House or on this, and I do not except my right hon. friend the present Colonial Secretary, ever professed to desire. I do not deny for a moment the difficulties of the problem of adjusting the relations between two very different races, between two sets of men under very different and antagonistic social conditions. I do not deny, I never have denied, the enormous difficulties of solving that problem, but I contend that by taking the sword—[Ministerial cries of "Who took the sword?"]—to cut the knot of the entanglement which statesmanlike patience would have untied was a fatal blunder. I perceive that Gentlemen opposite think all this picture of mine is a dream. [Ministerial cheers.] I am right in imputing to them that view. But who tells you so? [Ministerial cries of "You."] Pardon me. Those who tell you so are the same men who told you, even at the eleventh hour, that there would be no war; the same men who, when the war broke out, said it would be over in three months; the same men who said the war would cost £10,000,000, and it has cost £150,000,000; the same men who said the Boers had lost their old heart and spirit for fighting, though they have been as brave as our own brave men. Then, when I am told that my view, that our view, of all this policy is a dream, I say were not your advisers, your inspirers, dreaming when they launched you on this enterprise? The Chancellor of the Exchequer's expenditure of £150,000,000 has brought not what British statesmen wanted, but precisely what they did not want. It has brought material havoc and ruin unspeakable; unquenched and, for long, unquenchable racial animosities; a task of political reconstruction of incomparable difficulty and all the other consequences which I need not dwell upon of this war, which I think a hateful war; a war insensate and infatuated, a war of uncompensated mischief and irreparable wrong.

I will now go on, if the House will allow me, to make a remark or two on the finance. I confess that I do not quite understand the Chancellor of the Exchequer's position. I am not going to indulge in any harassing gibes about an economical Chancellor of the Exchequer remaining in an extravagant Cabinet. Others besides him have found out that it is much easier to get into a Cabinet than to get out of it. The Chancellor of the Exchequer said that this growth of expenditure carries with it the gravest danger to the financial system to which this country owes its prosperity.


I did not say that. What I did say was that the rate of growth that had gone on during the last few years could not continue without such a danger.


The words were:— This growth of expenditure carries with it the gravest danger to the financial system to which this country owes its prosperity. If I have transcribed the words wrongly I will withdraw.


I am quite sure of what I said.


Well, so be it. It comes to this—that the right hon. Gentleman is a party, an accessory, a confederate, an accomplice in what he admits to be putting you on the road to a position of grave national danger. My point is this—How is the Chancellor of the Exchequer going to meet that danger? I confess I am disappointed, because having listened to him for two or three years, and watched his own inclination, and especially having listened to him this year, I cannot see where it is that he wants us to go. He used a phrase he is never weary of using, "You must widen the basis of taxation." After considering the Chancellor of the Exchequer's position as well as I possibly could, I am afraid that is a mere phrase. Taking indirect taxation, how are you going to widen the basis there? He has himself said that in wine, beer, spirits, and tobacco he has got to the full length of his tether, and that the taxable capacity of those who contribute to these great reservoirs of taxation is now at an end.

Then I come to what I confess interests me very much—I think it has been overlooked in the discussion so far upon this Bill and the preliminary resolutions—I mean direct taxation. The Chancellor of the Exchequer does not think it wise to lower the exemption rate of the income tax. He does not think it wise even in a moment of financial crisis like this to suspend or alter the scale of abatement, and this immense impost is to go on being levied upon the same scale as at present without any differentiation as far as distribution goes. One or two hon. Gentlemen opposite really talked of taxation as some persons have talked of war, as a splendid thing in itself—that it braces a man. They have talked of it as of the other doctrines that have been produced by this great explosion of barbarism that has been going on. It is represented that taxation is something fine. I read in a print of great authority—we have not yet heard it in the House—at least I have not yet heard it—that from a national point of view the larger part of the naval and military expenditure is only a matter of form. We are told by our instructors that most of the money passes out of one pocket into another. It must be some view of that kind which explains the attitude of this House upon the income tax. The doctrine that naval and military expenditure adds to the wealth of the country is, at this time of day, one of the most astonishing doctrines that ever was advanced. And they say, "Oh! Much of this huge figure is spent in England." To say that that is any alleviation is just as absurd as this case would be, which I rather think I remember from one of the old economic books:—A tax-gatherer goes into a man's shop and he takes out of the till, as tax-gatherer, £100, and presently there comes in another Government agent who, with that £100, buys £100 worth of the shopkeeper's goods. And then he says to the shopkeeper, "You are not ruined, you are none the worse." That ridiculous fallacy, that idiotic fallacy, is a fallacy that is now current among people who are really supposed to know the secrets of City and other finance. Now, let us look at the income tax for a moment. Ever since 1895 the income tax has stood at 8d.—and at 8d., mark you, in a time of peace. Within the last two years that 8d. has been raised 75 per cent., and, as I understand from the Chancellor of the Exchequer—I think his language goes as far as this—we are to look forward to at least a shilling income tax, possibly a 14d. income tax, possibly a 16d. income tax, but at least a shilling income tax for the rest of our natural rives.




The Chancellor of the Exchequer says he never said anything of the kind. It is a very inconvenient inference, but I think that he did say something very much to that effect. Perhaps it would not be fair to ask him when he really thinks that 14d. is going to come down to a 1s. or to 8d. or to 6d. He knows very well that he anticipates no such fall in his time. Of course there is the noble Lord the Under Secretary for Foreign Affairs, and, I think, his noble relative who sits below the gangway, who said, "Oh, England could bear ten times that amount." So, if the present Administration remains we are pledged to a 10s. income tax! We all of us know—I do not want to make any light points—but we all of us know that the most difficult of all fiscal problems is this: How are you to impose an income tax fairly upon incomes that are permanent on the one hand and incomes that are precarious and temporary on the other? How can a man who, in the famous phrase, neither toils nor spins be treated in the same way as the man who earns his income by the skill of his hand and the sweat of his brow? I venture to say this:—that at the pace at which we are now going in reference to the income tax a claim—an irresistible claim—will be set up and maintained for a readjustment of the income tax and a reconstruction of it. Yes; but if anybody thinks that that will be easily done compatibly with maxims of public equity let them read Mr. Gladstone's speech in 1853, when he set the income tax finally upon its legs. I often wonder if Mr. Gladstone knew that by setting the income tax upon its legs he was not only providing the means but he was providing the direct incentive to that enormous expenditure which it was one of the great, one of the main, objects of his life to resist and to cut down. It is a great danger to this country that you should have, financially, an irresponsible war policy; but I do think that the other danger is just as great, that you have there a resource by which the Chancellor of the Exchequer of to-day, by touching, as it were, an electric button at his table, or drawing a lever, can at once fill his chest with whatever funds he desires. The income-tax payers are not organised; they are not like the coal gentlemen. Sir, I think that is in itself a great danger, and I am perfectly sure that, if this policy, which is at the root of all wild expenditure, continues, you will have trouble of the most serious kind with the income tax.

This is my last point for the Chancellor of the Exchequer with which I will trouble the House. [Ministerial cries of "Hear, hear," and Opposition cries of "Order" and "Tories."] The House will allow me to make a passing observation to the Chancellor of the Exchequer. One conceivable device for solving what he himself has called the problem of indirect taxation would be to add an equivalent percentage all round of direct and indirect taxation alike. I know it was tried under favourable circumstances by Sir Francis Baring, who, I think, put a 5 per cent. increase on the Customs and 10 per cent. on assessed taxes. But it failed, and produced nothing like what was expected. But there was this difference between those days and these—that there were then 1,750 articles in the Customs tariff, and now there are six or eight—at any rate less than ten. I dare say the Chancellor of the Ex chequer has been casting about for some method, but until you have some method, automatic or otherwise, for adjusting the relation between direct and indirect taxation, there will be, depend upon it, great trouble. The Chancellor of the Exchequer talks about the great problem of indirect taxation, but he will not say that that great problem is solved, or is in any way towards solution, by putting on an export duty on coal or imposing a sugar tax. He must be looking very much further than these. The Chancellor of the Exchequer thinks he has gone a long way towards the solution of the problem of indirect taxation by imposing an export duty on coal and imposing a sugar tax. But I wish he could have told us in his own language, and nobody commands stronger—I mean more effective language than he does—exactly how he solves this problem. I will try to do it for him. I do not think a single question has been put to the House of Commons which goes nearer to the root of the great matter than this—"Can you go on, with the necessity of an ever increasing revenue, taking a steadily decreasing share out of the Customs duties and Excise for intoxicants and tobacco, and taking a steadily increasing share out of the income tax?" Is the financial system sound, is a country like ours safe when the ultimate foundation is the contribution of an extremely limited class of population further limited by all sorts of exemptions and abatements? If I were the most flamboyant of Imperialists I should look on such a state of things with apprehension and alarm.

It is very late, but I wish the House would let me read a little table of the way in which indirect and direct taxation have moved within the last sixty years. The first year, 1841–42, indirect taxation was 73 per cent., direct 27 per cent. In 1861–62 indirect taxation was 62 per cent., direct taxation 37 per cent. Twenty years later indirect taxation was 59 per cent., direct taxation 40 per cent. This year direct taxation is 50 per cent., indirect taxation 49. There has been a steady systematic growth of direct taxation and a steady, systematic fall of indirect taxation. The broad result is that before Sir Robert Peel took the national finances in hand indirect taxation represented nearly three-fourths of the whole, while now it is rather more than half. It is quite a mistake, by the way, to divorce taxing questions from social and political questions. I would point out that there is a sort of law by which a rise in direct taxation coincides with a change in the distribution of political power. It is not an accident that direct taxation has gone up and indirect taxation has gone down. Is it not the fact that that has followed because political power has widened? In 1874, when, as everybody knows, Mr. Gladstone went to the country and offered to abolish the income tax, it was not exactly the first time, but the second time the newly-enfranchised voters had given a deliberate opinion in regard to the questions immediately affecting themselves. Their answer was—it was an instinct, a curious instinct, great bodies of men do not work out these matters—they said, "No, we will keep on the income tax." For the rest of his days Mr. Gladstone felt that the income tax had been made a permanent element in the sources of national revenue. It is idle—I am sorry to say it is not a financial remark, but a political remark—it is idle for a militant Imperialist to say he is an ardent and unshakeable free trader. The right hon. Gentleman the Member for Thanet is not at all well advised in his doctrines in my opinion, but it is idle to deny that he is much nearer to having a considerable following in the House and the country than he ever had before. If you are going to be militant Imperialist, free trade goes. That is my firm belief. And the beginning of the job is the Budget which the Chancellor of the Exchequer has introduced, and which I am not resisting. I do not mean to resist it, because it has been launched on a scheme of policy which has to be provided for, and it is not my business to say how he could better have provided for it than he has done.

I will wind up with a mere commonplace, but I do wish to repeat here what I said to the electors who sent me here—the master-key of the prosperity and strength of the realm is peace. Peace means low taxes, reduced rent, advancement in the comfort and well-being of the people of these islands, and—what I do not, will not, disregard—it means the goodwill of the world. If our aim is the extension of territorial dominion, the transformation of our ancient realm, which has aided civilisation for generation after generation, into a boastful military Empire, to be supported, I suppose, by conscription and by a Customs union thrown in, which will lose us our best markets for the sake of the worst, then I say the financial ruin of which the Chancellor of the Exchequer told us undoubtedly awaits us. I quote a sentence from a great divine which I have used before— Things" are what they are, and their consequences will be what they will be. Why, then, shall we seek to deceive ourselves? Wear out your coal, pile up your Debt, multiply and magnify your responsibilities in every part of the globe; starve social reforms among your people at home; and then, indeed, you will have a Little England, a dilapidated heritage to hand on to your children and your children's children.


The right hon. Gentleman who has just sat down had no need to crave the indulgence of the House, for he may ever expect from it a sympathetic hearing. Those who have sat through the three days debate must have felt glad to meet in him a frank opponent, holding it may be unpopular views, but views which he has the courage to defend and the frankness to expound. The right hon. Gentleman said the Budget was a landmark in our financial history; but the listless air that has pervaded the benches opposite on Monday, Tuesday, and this evening, and the half-hearted discordant note struck by the Opposition in their speeches, do not give that impression. The fact of the matter is, that there has been no real discussion of the Bill, and the object seemed to be, not to bring the questions which divide us to an issue, but to hide the differences among hon. Members opposite. The attempt to conceal these differences among themselves has deprived the Opposition of the opportunity of challenging the policy of the Government.

The right hon. Gentleman opposite has brought us back to a clear issue; he has spoken with no uncertain voice. We know now what is the question which is before us; it is not a question of a little more or a little less; it is not a question of £5, £10, or £100 which the Leader of the Opposition thought that a Financial Secretary by more careful study might pick up here or there from the salary of some official; it is not a cheese-paring examination of each Vote in turn; it is a question of the policy which the Government has pursued, and of the means which they are to employ to attain these ends. Well, that is an issue which is worthy of the House, and on which we shall not hesitate to meet the right hon. Gentleman. The right hon. Gentleman has repeated in no sparing terms his condemnation of the war in which we are engaged, and of the whole policy which led to it; he has declined for his part to have any lot or share in it; he has repudiated all responsibility for it; he has foretold disaster and misfortune to this country as a result of it, and has placed the burden of its consequences, whatever they may be, upon our shoulders who have been responsible for the policy pursued. Yes, upon our shoulders in the first place, but we no longer stand alone. What is the attitude of the party opposite, who throughout the autumn were protesting with an almost united voice? I except the right hon. Gentleman, frank then as always, but the great majority of them were as anxious to support the King's arms, as ready to vote the money, and as anxious to uphold our honour in South Africa, as the Government had been. I should be very glad to hear hon. Gentlemen opposite reconcile the attitude which they adopted then with the attitude which they are going to adopt now if they vote against the means which are taken to meet the charges of the war. It is true that the right hon. Gentleman the Leader of the Opposition declined to accept the policy of the war in the main, and spoke of reductions which might be made in our ordinary expenditure as justifying him in refusing his support to this Finance Bill. But he did not indicate very clearly the directions in which we are to look for such reductions. He intimated that we might save something on education, and a moment afterwards, to save himself from the rebuke which might await him from his own side, he added that we should spend a good deal more. He said that we spent too much upon the Army with its huge and numerous staff; that thirty millions was an enormous sum which ought to be reduced; but reduction of expenditure is not always the same thing as economy. It is cheaper to pay thirty millions, if we must, in order to obtain an efficient army equal to the needs of the Empire, rather than to go on paying eighteen millions for an army which events have shown was not prepared to meet the emergencies for which it was required and which would give us no guarantee for security in future. If it be necessary, as we think it is, to increase the Army and to maintain the Navy according to the standard which successive Governments have upheld, is any right hon. Gentleman opposite prepared to make an attack on that policy and deliberately to refuse the Government the resources and the support which they consider necessary for the defence of the country? The right hon. Gentleman who has just spoken is prepared to take that responsibility; he thinks that the fears of the Government are exaggerated, and that to follow the advice of experts is the sure road to ruin. And for his part he would decline, no matter what facts and arguments might be adduced in favour of it, to support an increase in the Army and Navy. I understood him to say that that places a very dangerous weapon in our hands, and encourages the country to embark in such enterprises as the war in South Africa which he himself so strongly condemns; and then he comes back to the old issue which is the foundation of this Budget Bill.

The right hon. Gentleman says that we have suppressed two little States which, by public law, had as much right to govern themselves as we ourselves had. But was it an unprovoked war on our part? Did we draw the sword? The history of the last twenty years is one of patience and long-suffering on the part of this country.—[Opposition cries of "Oh!"]—under reiterated provocation, and every circumstance steadily growing from worse to worse, which has no parallel, I believe, in the relations between a great and powerful State with a small State such as the Transvaal. We bore with all this. We sought peace urgently. I would remind the right hon. Gentleman and the House that he himself in a public speech approved of the last despatch which was sent by this Government to the Transvaal. He described it moderate despatch, a despatch more moderate than he had ventured to expect, and he himself recommended its acceptance to the Government of the Transvaal. What was the reply to that moderate despatch? It was the issue of an ultimatum to the Government of this country that the Queen's troops were to be withdrawn, and that those on the high seas were to be brought back. It was not we who invaded their territory; it was they who invaded our territory. After all this the right hon. Gentleman tells the House that time and patience were all that were needed to avoid the war How much time, Sir? How much patience? I do not think it was time or patience that was wanting on the part of our Government, but goodwill on the part of President Kruger and his advisers. If he had been willing for a settlement on any terms, surely no terms could have been easier than those which were offered to him. He had it in his power to insure to his country its continued independence, and, if he wished it, to obtain every guarantee that this country could give. He deliberately broke off negotiations, and refused all concession, even when we had reduced our demands to a minimum so small that it has been a constant taunt against this Government that it was not enough to justify us in quarrelling with the Transvaal. If our demands were not enough to justify us in quarrelling with the Transvaal, they were not enough to justify the Transvaal in taking up arms against us; still less did they justify the action of the Orange Free State. This contest was forced upon us. Our view, as we held then, and as we hold now, was that we could not shrink from the challenge; that we could not have deserted the cause of our fellow-subjects which we had taken up, and that we could not leave that constant source of friction, unrest, intrigue, disloyalty in South Africa to continue in the future. We were bound to meet the challenge which was thrown down, and having once entered into the struggle we are going to see it through.

The right hon. Gentleman says that peace is our greatest need. No one undervalues the blessings of peace, but there are things that are even more valuable to us than peace. We cannot sacrifice our good name and reputation, and the honour, respect, and loyalty of our colonies. To have turned back from the work before us, to have turned a deaf ear to the men who were vainly seeking redress for their wrongs in the Transvaal, to have submitted to the constant attacks by the Transvaal on the few small rights reserved to this country under the Convention, would have put a lasting blot on our name.

The right hon. Gentleman has totalled up the cost of this war, he adds to that the increase in the Army expenditure, and he says that our policy has involved us in an equivalent of £470,000,000 added to the National Debt. I venture to say that the increase in the Army would have been just as necessary without this war. It would be just as much needed without the war, though the war has brought home to us defects in our military system which otherwise would not have been found out. But what we have got to look at is not merely the total expenditure. We have to set against that the value of what we receive. We have to consider whether what we get is worth the money spent on it. You might apply the same calculation that the right hon. Gentleman has made to education. We are spending something like £13,000,000 a year on education. That, too, is an equivalent of £470,000,000 added to the National Debt. I think that shows that the right hon. Gentleman's illustration is a very absurd one, and that it really does not carry us a step farther. What we have to consider is not merely the amount we spend, but whether we could afford to do without the expenditure, no matter how high it is.

In one thing at any rate I am in agreement with the right hon. Gentleman. I think that when a policy such as this has received, as in this case it has received, the support of the vast majority of the people and every class and rank in life, it is only right that the sacrifices needed to maintain it should be borne by all in due proportion. I agree with the right hon. Gentleman in that. I agree with him that it would be a bad day for this country if it came to be supposed that one class of the population alone was to pay all the expenditure. I do not believe—we have shown that we do not believe—that anything will be allowed to interfere with the execution of our policy. We believe that the people who supported us in this policy will support us to the end, and will support us in the means by which we propose to raise the money required for the war. We have no hesitation in calling on the people to make sacrifices, and we believe that these sacrifices will be readily made. We feel that in a matter of this kind, where so much is at stake, where the future of this country, as the right hon. Gentleman rightly said in his speech, is at stake, that the people have a right to be plainly told what is involved, and have plainly put before them the sacrifices required of them. No one can say that my right hon. friend the Chancellor of the Exchequer has attempted to hide the facts. He has put them fully and clearly before the country, and we believe that we have every assurance of the confidence and support of the people. We have tried this issue under different forms in the House during the last six months, but I shall look with interest to see what attitude the party opposite will adopt towards this Budget, which is based upon the war, which has been necessitated by war, and which provides the means for waging the war which they assured their constituents and us that they would give every assistance to bring to a conclusion.

MR. ROBSON (South Shields)

said he did not desire to detain the House, but he felt it his duty and his right to enter respectfully an emphatic protest against the assumption, which underlay the last two speeches, that we ought in a debate on the Finance Bill to consider, and consider only, the question of the policy which necessitated the expenditure. He ventured to submit that although the question of policy could not be called irrelevant, yet it was not the question which the House should consider. No matter what that policy might be, it was a totally different question from the principle on which expenditure should be raised. That was the question which the House had now to consider.

The Government were now introducing what was a fiscal revolution of the most extraordinary character. Where had a tax been laid on, certainly during the last fifty years, by any Chancellor of the Exchequer that had not apparently sought to reach as far as possible the whole of the community? That had always been the aim of every tax. It was the aim of the tax on tea, sugar, and other articles of general consumption. Now a tax was proposed which they were told was to be the first of a series of taxes under a fiscal policy which did not seek to touch the whole community, and which, on the contrary, it was contended, most idly and foolishly, did not touch the community at all. Instead of being a tax on the whole community it was a tax on a special trade, on a special branch of two businesses, and on the way in which two great industries had chosen to conduct their affairs. He referred to the coal tax, and did not intend to touch on any other part of the Budget. He asked the House to consider more carefully than it had yet done the significance of that tax. It had not yet been fully debated, and it would seem as though a great revolution in the fiscal policy of England were to be carried without any adequate discussion. It was said that the policy on which the Budget was based ought not to be distinguished from the policy which led to the Budget, but the two ought to be distinguished; and whatever his hon. friends might have thought as regards the war, they could, as Liberals, have only one opinion on the financial policy of the Government. He was amazed to hear the Chancellor of the Exchequer, in introducing his Budget, claim to be a free trader, and he seemed to be wholly unconscious of the fact that he was destroying in sentence after sentence the very first principles of free trade. He actually told the House that he did not agree with the Committee which sat on the question many years ago, that one of the special advantages of the export of coal was that it tended to cheapen imports. He seemed to think it an advantage that if goods were sent abroad the goods received in exchange should be as few as possible and as dear as possible. That certainly was not free trade. The Chancellor of the Exchequer was pursuing the old Conservative policy of seeking to maintain taxation on industry for the purpose of relieving the burdens on property and a special class of property. Over £10,000,000 were given in relief of local rates, which was a most wasteful method of spending money. The Chancellor of the Exchequer, in one of the Budgets he introduced in the late Parliament, pointed out that the country was getting near the limits of direct taxation, but shortly after he was found supporting the Agricultural Rating Act. The right hon. Gentleman's policy was to relieve land at the expense of industry, and he ventured to hope that the Liberal party would be absolutely united in its opposition to the Budget.

Question put.

The House divided:—Ayes, 236; Noes, 132. (Division List No. 203.)

Ackland-Hood, Capt. Sir A. F. Fitzroy, Hon. Edward A. Macartney, Rt Hn W. G. Ellison
Agnew, Sir Andrew Noel Flannery, Sir Fortescue Macdona, John Cumming
Allhusen, Augustus Henry E. Fletcher, Sir Henry MacIver, David (Liverpool)
Arkwright, John Stanhope Flower, Ernest Maconochie, A. W.
Arroll, Sir William Forster, Henry William M'Arthur, Charles (Liverpool)
Atkinson, Rt. Hon. John Galloway, William Johnson M'Calmont, Col. H. L. B (Cambs
Bagot, Capt. Josceline FitzRoy Garfit, William M'Iver, Sir L. (Edinburgh, W.
Bain, Colonel James Robert Godson, Sir Augustus Frederick M'Killop, James (Stirlingshire)
Balfour, Rt. Hn. A. J. (Manch'r) Gordon, Hn. J. E (Elgin & Nairn) Malcolm, Ian
Balfour, Capt. C. B. (Hornsey) Gordon, J. (Londonderry, S.) Manners, Lord Cecil
Balfour, Rt Hn Gerald W (Leeds Gorst, Rt. Hon. Sir John E. Maple, Sir John Blundell
Balfour, Maj K R (Christchurch Goulding, Edward Alfred Martin, Richard Biddulph
Banbury, Frederick George Graham, Henry Robert Massey-Main waring Hn W. F.
Barry, Sir F. T. (Windsor) Gray, Ernest (West Ham) Max well, Rt Hn Sir H. E (Wigt'n
Bathurst, Hon. Allen Benjamin Green, W. D. (Wednesbury) Maxwell, W. J. H. (Dumfriessh.
Beach, Rt. Hn. Sir M. H. (Bristol Greene, Henry D. (Shrewsbury Melville, Beresford Valentine
Bentinck, Lord Henry C. Greene, W. Raymond- (Cambs.) Mildmay, Francis Bingham
Bigwood, James Gretton, John Milward, Colonel Victor
Blundell, Colonel Henry Greville, Hon. Ronald Molesworth, Sir Lewis
Bond, Edward Groves, James Grimble Montagu, G. (Huntingdon)
Brassey, Albert Hain, Edward Moon, Edward Robert Pacy
Brodrick, Rt. Hon. St. John Hambro, Charles Eric Moore, William (Antrim, N.)
Brookfield, Colonel Montagu Hamilton Rt. Hn. LdG. (Midd'x Morgan, D. J. (Walthamstow)
Brymer, William Ernest Hanbury, Rt. Hon. Robert Wm. Morrell, Georg, Herbert
Bull, William James Hardy, Laurence (Kent, Ashf'd Morton, A. H. A. (Deptford)
Bullard, Sir Harry Harris, Frederick Leverton Mount, William Arthur
Butcher, John George Haslam, Sir Alfred S. Mowbray, Sir Robert Gray C.
Carlile, William Walter Hay, Hon. Claude George Muntz, Philip A.
Carson, Rt. Hon. Sir Edw. H. Heath, Arthur Howard (Hanley Murray, Rt Hn A. Graham (Bute
Cautley, Henry Strother Heath, James (Staffords, N. W. Myers' William Henry
Cavendish, R. F. (N. Lancs.) Heaton, John Henniker Newdigate, Francis Alexander
Cavendish, V. C. W. (Derbyshire) Hickman, Sir Alfred Nicol, Donald Ninian
Cecil, Evelyn (Aston Manor) Higginbottom, S. W. O'Neill, Hon. Robert Torrens
Cecil, Lord Hugh (Greenwich) Hoare, Edw Brodie (Hampstead Palmer, Walter (Salisbury)
Chamberlain, Rt. Hon. J. (Birm Hobhouse, Henry (Somerset, E. Parker, Gilbert
Chamberlain, J Austen (Worc'r Hogg, Lindsay Parkes, Ebenezer
Chaplin, Rt. Hon. Henry Hope, J F. (She'ffield, Brightside Pemberton, John S. G.
Chapman, Edward Howard, John (Kent, Fav'rsh'm Penn, John
Charrington, Spencer Hudson, George Bickersteth Platt-Higgins, Frederick
Churchill, Winston Spencer Hutton, John (Yorks., N. R.) Plummer, Walter R.
Collings, Rt. Hon. Jesse Jackson, Rt. Hn. Wm. Lawies Powell, Sir Francis Sharp
Compton, Lord Alwyne Jessel, Capt. Herbert Merton Pretyman, Ernest George
Corbett, T. L. (Down, North) Johnston, William (Belfast) Purvis, Robert
Cox, Irwin Edward B. Johnstone, Heywood (Sussex) Pym, C. Guy
Cranborne, Viscount Kenyon, Hon. Geo. T. (Denbigh Randles, John S.
Cripps, Charles Alfred Kenyon, James (Lancs., Bury) Rankin, Sir James
Cross, Alexander (Glasgow) Keswick, William Rasch, Maj. Frederic Carne
Cross, H. Shepherd (Bolton) King, Sir Henry Seymour Remnant, James Farquharson
Crossley, Sir Savile Lambton, Hon. Frederick Wm. Renshaw, Charles Bine
Cubitt, Hon. Henry Law, Andrew Bonar Renwick, George
Cust, Henry John C. Lawrence, Wm. F. (Liverpool) Ridley, Hon. W M (Stalybridge
Dalkeith, Earl of Lawson, John Grant Ridley, S. Forde (Bethnal Green
Dairymple, Sir Charles Lee, Arthur H (Hants., Fareh'm Ritchie, Rt. Hn. Chas Thomson
Davies, Sir H. D. (Chatham) Lees, Sir Elliott (Birkenhead) Robertson, Herbert (Hackney)
Dickson-Poyuder, Sir John P. Legge, Col. Hon. Heneage Robinson, Brooke
Dorington, Sir John Edward Leveson-Gower, Frederick N. S. Rolleston, Sir John F. L.
Douglas, Rt. Hon. A. Akers- Loder, Gerald Walter Erskine Rollit, Sir Albert Kaye
Doxford, Sir William T. Long, Col. C. W. (Evesham) Ropner, Colonel Robert
Duke, Henry Edward Long, Rt Hn. Walter (Bristol, S. Rutherford, John
Faber, George Denison Lowe, Francis William Sackville, Col. S. G. Stopford-
Fardell, Sir T. George Lowther, C. (Cumb., Eskdale) Sadler, Col. Samuel Alexander
Fellowes, Hon. Ailwyn Edw. Lowther, Rt. Hn. James (Kent) Scott, Sir S. (Marylebone, W.)
Finch, George H. Loyd, Archie Kirkman Seely, Charles H. (Lincoln)
Finlay, Sir Robert Bannatyne Lucas, Col. F. (Lowestoft) Sharpe, William Edward T.
Fisher, William Hayes Lyttelton, Hon. Alfred Simeon, Sir Barrington
Sinclair, Louis (Romford) Tufnell, Lieut.-Col. Edward Willoughby de Eresby, Lord
Smith, Jas. Parker (Lanarks) Tuke, Sir John Batty Wills, Sir Frederick
Spear, John Ward Valentia, Viscount Wilson, A. Stanley (Yorks, E. R.
Stanley, Edward J. (Somerset) Vincent, Sir Edgar (Exeter) Wilson, John (Glasgow)
Stanley, Lord (Lancs.) Walker, Col. William Hall Wilson-Todd, Wm. H. (York.)
Stewart, Sir Mark J. M'Taggart Warde, Col. C. E. Wodehouse, Rt. Hn. E. R. (Bath
Stock, James Henry Warr, Augustus Frederick Wortley, Rt. Hn. C. B. Stuart-
Stone, Sir Benjamin Wason, John C. (Orkney) Wrightson, Sir Thomas
Stroyan, John Webb, Col. William George Wyndham, Rt. Hon. George
Strutt, Hon. Charles Hedley Welby, Lt. Col. A C E (Taunton Young, Commander (Berks, E.)
Sturt, Hon. Humphry Napier Welby, Sir Chas. G. E. (Notts. Younger, William
Talbot, Lord E. (Chichester) Wharton, Rt. Hon. John L.
Thornton, Percy M. Whiteley, H. (Ashton-u.-Lyne) TELLERS FOR THE AYES—
Tollemache, Henry James Whitmore, Charles Algernon Sir William Walrond and
Tomlinson, Wm. Edw. Murray Williams, Colonel R. (Dorset) Mr. Anstruther.
Abraham, William (Cork, N. E. Fitzmaurice, Lord Edmond O'Brien, P. J. (Tipperary, N.)
Abraham, William (Rhondda) Flavin, Michael Joseph O'Connor, James (Wicklow, W.
Allan, William (Gateshead) Flynn, James Christopher O'Kelly, Conor (Mayo, N.)
Allen, Charles P (Glouc., Stroud Fuller, J. M. F. O'Kelly, James (Roscommon, N
Ambrose, Robert Gilhooly, James O'Malley, William
Ashton, Thomas Gair Gladstone, Rt. Hon. H. John O'Shaughnessy, P. J.
Atherley-Jones, L. Goddard, Daniel Ford Partington, Oswald
Beaumont, Wentworth C. B. Grey, Sir Edward (Berwick) Pearson, Sir Weetman D.
Bell, Richard Griffith, Ellis J. Power, Patrick Joseph
Boland, John Hayden, John Patrick Price, Robert John
Boyle, James Hayne, Rt. Hon. Chas. Seale- Priestley, Arthur
Brigg, John Hayter, Rt. Hn. Sir Arthur D. Rea, Russell
Broadhurst, Henry Healy, Timothy Michael Reddy, M.
Brown, George M. (Edinburgh) Horniman, Frederick John Redmond, John E. (Waterford
Brunner, Sir John Tomlinson Joicey, Sir James Redmond, William (Clare)
Bryce, Rt. Hon. James Jones, Wm. (Carnarvonshire) Reid, Sir R. Threshie (Dumfries
Burns, John Joyce, Michael Rickett, J. Compton
Burt, Thomas Labouchere, Henry Roberts, John Bryn (Eifion)
Caldwell, James Lambert, George Robson, William Snowdon
Campbell, John (Armagh, S.) Langley, Batty Roe, Sir Thomas
Campbell-Bannerman, Sir H. Leamy, Edmund Scott, C. Prestwich (Leigh)
Carvill, Patrick George H. Leese, Sir Joseph F. (Accrington Sheehan, Daniel Daniel
Causton, Richard Knight Leng, Sir John Shipman, Dr. John G.
Channing, Francis Allston Levy, Maurice Sinclair, Capt. J. (Forfarshire)
Clancy, John Joseph Lloyd-George, David Spencer, Rt. Hn. C. R (North'nts
Cogan, Denis J. Lundon, W. Sullivan, Donal
Colville, John MacDonnell, Dr. Mark A. Taylor, Theodore Cooke
Condon, Thomas Joseph M'Arthur, William (Cornwall) Thomas, Alfred (Glamorgan, E.
Craig, Robert Hunter M'Crae, George Thomas, David A. (Merthyr)
Crean, Eugene M'Dermott, Patrick Thompson, Dr E C (Monagh'n N.
Cremer, William Randal M'Govern, T. Thomas, F. W. (York, W. R.)
Cullinan, J. M'Kenna, Reginald Tomkinson, James
Davies, M. Vaughan- (Cardigan Mather, William Trevelyan, Charles Philips
Delany, William Mooney, John J. Walton, Joseph (Bamsley)
Dewar, John A. (Inverness-sh. Morley, Charles (Breconshire) Warner, Thomas C. T.
Dillon, John Morto'n, Edw. J. C. (Devonport) Wason, Eugene (Clackmannan
Donelan, Capt. A. Moss, Samuel White, Luke (York, E. R.)
Doogan, P. C. Murphy, J. White, Patrick (Meath, North)
Douglas, Charles M. (Lanark) Nannetti, Joseph P. Whiteley, George (York, W. R.)
Edwards, Frank Nolan, Col. John P. (Galway, N. Whitley, J. H. (Halifax)
Elibank, Master of Nolan, Joseph (Louth, South) Williams, Osmond (Merioneth)
Evans, Samuel T. (Glamorgan) Norman, Henry Wilson, John (Durham, Mid.)
Farquharson, Dr. Robert Nussey, Thomas Willans TELLERS FOR THE NOES—Mr. Wallace and Mr. Lough.
Fenwick, Charles O'Brien, Kendal (Tipper'ry Mid
Ffrench, Peter O'Brien, Patrick (Kilkenny)

Bill read a second time, and committed for Thursday, 6th June.