I beg to ask the Under Secretary of State for Foreign Affairs if he can inform the House how far the works contemplated by Article 57 of the Treaty of Berlin for the removal of the obstacles which the Iron Gates of the Danube place in the way of navigation are now complete; and if the Foreign Office have any report from our Consuls that the charges proposed to be raised by the Austro-Hungarian Government from 1st May on the navigation coming; up stream are prohibitory; and whether the charges in question purport to be the provisional tax to cover the cost of the works, which the Austro-Hungarian Government is enabled to levy by Article VI. of the Treaty of London, 1871, and Article 57 of the Treaty of Berlin, as a temporary exception to the provisions of Article XV. of the Treaty of Paris, 1856, which declared that there should not be any toll levied solely on the part of the navigation of the river, nor any duty on the goods which may be found on board of vessels; and, if any communications have been received from foreign Powers on the subject?

A communication has been received from the Austro-Hungarian Ambassador at this Court, in which it is stated that the works for regulating the rapids at the Iron Gates on the Danube, which were entrusted to Austria-Hungary under the Treaty of Berlin, were completed in the autumn of last year and opened for navigation. A draft tariff of dues, which the Austro-Hungarian Government proposes to levy in accordance with Article VI. of the Treaty of London of 13th March 1871, was submitted with this communication for the consideration of Her Majesty's Government. These proposals have been submitted to careful examination with a view to their bearing upon treaty stipulations and upon the interests of British shipping, and it is not found that they violate any treaty rights. A dispatch has been received from Her Majesty's Consul-General at Budapesth reporting a discussion which took place on 10th April in the Vienna Chamber of Commerce, when criticisms were passed on the proposed tariff; and it is understood that the date of imposition of the new dues has been postponed by the Hungarian Government. These dues are only of temporary application pending repayment of the cost of the works.

I beg to ask the Under Secretary of State for Foreign Affairs whether Her Majesty's Government have sought and obtained from the Yamen an assurance in writing, similar to that given to France, as to the non-alienation, ceding, or leasing by the Chinese Government of any territory in the province of Kwang-si to another Power?

No such demand has been made upon the Chinese Government. The province of Kwang-si does not affect British interests in the same way as the provinces of Yun-nan and Kwang-tun, in regard to which assurances as to non-alienation were asked for and given.

I beg to ask the Under Secretary of State for Foreign Affairs whether Her Majesty's Government have received from the Yamen the assurance in writing, demanded on the 25th of April 1898, that the Chinese Government have not yielded to France any exclusive privileges with respect to railways or mining in the two provinces of Kwang-tung and Yun-nan, and that no territory in the said provinces shall be alienated to any Foreign Power; and, if so, will be communicate the same to the House?

The honourable Member will see from the Blue Book China, No. 1, 1899, page 71, that on 3rd May 1898 Her Majesty's Minister reported that the Yamen undertook to grant the demands referred to, and these assurances are held to be binding on the Chinese Government.

I beg to ask the Under Secretary of State for Foreign Affairs whether he is aware that the railway survey officers in Southern China report that they have discovered a good railway route for the extension of the Burma Railway from Kunlon Ferry to Chung-King on the Upper Yang-tsze; and whether the right, admitted by the Chinese Government, to extend the Burma Railway system into China as far as the Yang-tsze has been embodied in a duly ratified agreement authorising the construction of this railway on equally favourable terms and conditions to those granted to France in Southern China?

AS I informed the House on April 24, it is understood that what is considered a practicable route into Yun-nan has been found, which may perhaps be extended to the Upper Yang-tsze, but we have no particulars at present. The Answer to the second Question is in the negative. Assurances were given to Her Majesty's Minister by the Yamen with regard to the extension of the Burma Railway as soon as it reaches the frontier, and no written agreement on the subject was considered necessary.

resumed the Debate on the Second Reading of this Bill. Last night, he said, the Chancellor of the Exchequer defended the proposed alteration of the wine duties on the ground that it was the least interference possible with the course of trade. He demurred altogether to the opinion of the right honourable Gentleman. He said that wine was not produced in this country as beer and whisky were, and for that reason the tax on wine would cause the least interference with trade. That was a very imperfect and unsatisfactory view of what interference with trade really was. Interference with foreign trade must necessarily be an interference with domestic interests, and interference with the wine duties severely affected trade relations with foreign countries and our Colonies. The Government proposed to increase the wine duties by £480,000, or about 35 per cent. on existing duties, taking them all round. On cheap wines in bottle it was to be from 1s. to 3s. a dozen, and it that was intended to check the importation of wines in bottle it meant a disturbance of the natural course of trade by the fiscal action of the Chancellor of the Exchequer and the defence of that policy by a protective argument. He next came to the action of the Chancellor of the Exchequer in dealing with the Sinking Fund. His right honourable Friend said last night that the arguments of his opponents pointed to the conclusion that under no circumstances and at no time should anything be done to interfere with the reduction of the Debt. It was not for him to defend or explain the language embodied in the Amendment of his right honourable Friend the Member for Wolverhampton, but he should have thought that it was a commonplace of Parliamentary action that all their pronositions were relative to the time and the circumstances in which they were acting. If an honourable Member objected to any action proposed being taken by a Minister he was objecting in the circumstances of to-day; he thought that such action ought not to be taken, situated as they were, at the moment. It was impossible to lay down that at no time and under no circumstances should they limit, reduce, or abandon the policy of reducing the Debt. It must depend on the condition of affairs at home and our relations with other Powers, on the policy we were engaged in, the national action we were pursuing, whether or not we should modify or abandon the policy of reducing the Debt. Now, his right honourable Friend had abandoned the point, which, after all, was very small; but at the close of his speech on the previous day his right honourable Friend brought forward a more serious argument in favour of his policy of reducing the amount of the Debt. He said—

"If I do not reduce the amount applicable for the Debt by £2,000,000 I shall have to impose taxation, to increase direct as well as indirect taxation;"

and then he turned round to honourable Members behind him and invoked their sympathy in resisting any suggestion that direct taxation should be increased. Now, he thought that was a very dangerous line to take. H demurred altogether to the assumption underlying the speech of his right honourable Friend that because we had increased direct taxation we had increased it too much, and disturbed the balance of taxation unjustly as regarded those who contributed to direct taxation. They did not, however, prove anything by citing such figures as those mentioned by his right honourable Friend; and he had heard them cited for a different purpose with the same complacency by his right honourable Friend the Member for West Monmouth. Nothing whatever was proved by such figures except this—they had changed the adjustment of taxation as it existed now from what it was 20 years ago. The taxation was different now from what it was then, but whether it was just now or unjust then was not at all proved by citing such figures from which no conclusion whatever was drawn. The real question was, "Is your adjustment of taxation now just or not?" That was the whole question to be decided, and it could not be decided by getting out the gross totals raised by direct or indirect taxation. They must make a careful and accurate estimate of what was paid by normal classes in order to arrive at the exact proportion of taxation paid by those with £100, £500, £1,000, or £100,000 a year. Only in that way could they ascertain whether the taxation now imposed was or was not approximately just, and only upon that basis could they make such a balance as his right honourable Friend had made. The House, taken as a whole, was a House of income-tax payers. Everyone in the House paid income-tax but to appeal to a House of income-tax payers to resist taxation would be one of the most injudicious things that any Chancellor of the Exchequer could indulge in; and to appeal to either side of the House as the special protectors of property, as against an equal adjustment of taxation, would be, he was sure, far from the thoughts of his right honourable Friend. As far as he could ascertain from the investigations made by statisticians into the subject—although he confessed that those investigations were not of a recent character—he should say that the adjustment of taxation now was pretty fairly distributed between different classes of taxpayers. If the balance erred at all at present, it erred in still overtaxing the poor. The rich, as compared with the poor, were not subject to the same burden of taxation. This had been of late in course of correction, partly owing to the legislation of his right honourable Friend opposite, and partly owing to the said income tax; but if they reduced that tax in any serious degree and increased indirect taxation, he thought that the suspicion even now that the poor were overtaxed would become something like a certainty. He should like to suggest one broad view supporting the conclusion which he had offered. Even now, although the discrepancy was in process of correction, and although the error was probably passing away, there might be some ground for assuming that the poorer classes were relatively overtaxed. Two or three years ago investigation was made into the relative taxation of Great Britain and Ireland. As to the practical conclusions from that investigation there were large differences of opinion, and he for one was one of those who thought that Great Britain was not undertaxed compared with Ireland. It was common ground with all who were engaged in the discussion, that if it were not for the set-offs we claimed to take into account, Ireland would be paying too much. Broadly speaking, if they had the same taxes in the two countries, how came it about that they could extract a relatively greater proportion from Ireland than from Great Britain, unless it was owing to the fact that they had in Ireland a greater proportion of poor people, and a lesser proportion of rich people to make up the balance. His right honourable Friend argued that he could not undertake to impose fresh taxation to keep up the standard of the reduction of Debt which had hitherto existed, because that fresh taxation would involve an increase of direct taxation, and he allowed it to be inferred that the payers of direct taxation were paying more than their proper contribution at present. He then came to the second argument put forward in extenuation of the policy of reducing the amount applicable for the reduction of the Debt—namely, to use the phrase of the honourable and gallant Gentleman the Member for Woodbridge (Captain Pretyman) that we were living in a time of precarious peace and were exposed to something like the expense of war. No doubt we were living in a state of precarious peace, or had been so living. He was sorry to say that we had been on the point of serious differences with one country, but he was glad to think that Lord Salisbury has made that peace somewhat less precarious, if he had not altogether removed any danger of peace being broken, first, by his Treaty with France relating to West Africa; secondly, by the Treaty with regard to the Soudan and the Nile; and lastly, by the arrangement with the Tsar of Russia with respect to China. He himself thought that peace had at all times been regarded as more precarious than it was. There was not in the nature of things that danger of war between this country and other countries of the Continent which was represented. The danger, such as it was, had, in his opinion, been augmented by men who ought to have done their best to lessen it, and in this respect he could make no difference between Members of both political Parties. Lord Salisbury had been bent on making reasonable and just Treaties with our neighbours on the Continent, but his hand was certainly not helped. The temper of diplomacy was not sweetened by the action taken by prominent men of both Parties. No steadying voice came from those who, in opposition and in independence, might have helped the Prime Minister in his progress in peaceful diplomacy. Instead, they had voices rather of threat- ening exhortation, sometimes adjuring Lord Salisbury to be more forcible than be was supposed to be, epithets and arguments used which would make peace precarious, and which did not facilitate the actions of the Foreign Minister. But in relation to the question now before the House he would suggest that, however precarious the peace was, until the peace was absolutely broken there was no reason for arresting or diminishing the reduction of the Debt. Until war was declared let them go on reducing the Debt, make themselves strong, and in that way prepare for war. Instead of arresting the reduction of the Debt, in view of possible war they should maintain it more resolutely, because thereby they were making the best preparation for war should war break out. It was not as if in this process of paying off the Debt they tied their hands. The thing to be remembered throughout these discussions was that the arrangements which had been made, and which could have been made, did not in any degree fetter the liberty of this Parliament to stop the payment of Debt at a moment's notice. These arrangements only bound ourselves. They imposed no obligation of justice towards anybody. It was essential, in view of the financial situation, that they should recognise that the whole matter of terminable annuities, the new Sinking Fund, and what not, was mere hocus pocus. It was a payment taken from the Chancellor of the Exchequer's one pocket to put into the Chancellor's other pocket. The right honourable Gentleman might treat the matter with perfect freedom, or he might ask the House of Commons to modify the arrangement, augment it, or diminish it. In fact, the whole thing was completely under his power. It reminded him of what his honoured friend, the late Lord Bramwell, used to say when they were wont to discuss this business together—

"After all, these Sinking Funds, and terminable annuities and what not, are they anything more than the child's savings bank? You put your money in a box, but you always have the key in your pocket."

The Chancellor of the Exchequer had always got the key in his pocket. The reason for reducing the allocation of money towards the redemption of Debt which he found told most, which was used by the Chancellor of the Ex- chequer, and with great effect by the First Lord of the Treasury, was that under present arrangements it was in-provident to buy up Debt, because it would have to be bought up at a premium; that in order to get rid of the nominal capital of £100 something like £111 was spent in doing it; and that we were wasting our resources in redeeming Debt so long as Consols were above par. Now, was there not a fallacy in that argument? He ventured to suggest that there was. His honourable and learned Friend the Member for Launceston did something the previous night to expose that fallacy, but he was afraid his argument did not arrest the attention it deserved. What was the cardinal fact in the present situation round which all arguments must turn, and upon which action must rest? It was that at present the rate of interest in the open market on the best Government securities was but little over 2 per cent. That was a fact, not a more arrangement of figures made by the Chancellor of the Exchequer on a slate which could be wiped out as soon as made. That was a fact of practical experience out of doors. The rate paid on Treasury Bills for some long time past had been less than 2 per cent. But, of course, it would be said that the rate on Treasury Bills was no final criterion as to the rate on Government loans. There was some truth in that, although he thought the rate on Treasury Bills did, in some measure, indicate the standard rate of interest at this moment on the best Government loans. But he would turn to the 2½ per Cents. They were not a very large sum, but still by no menas an insignificant sum. They were redeemable in the course of five years, and were selling in the market at 103 plus. What was the rate of interest which a man investing in the 2½ per Cents. at this moment got when allowance was made for the redemption at a premium. It was £1 16s. 3d. per cent. That was a Government stock which did to some extent attest the real measure of Government securities. Consols paid a little more, but then Consols were free from any kind of interference until the year 1924. Until that year they had no power to redeem them, and the question really was—Was it, or was it not, an imprudent thing, when Government stock paid a little over 2 per cent. to the investor, for the Chancellor of the Exchequer to give £111 to redeem the liability of paying £2 15s. for a certain number of years, and £2 10s. afterwards up till 1924? Now, it was true that they could not redeem the Debt until 1924, that was to say, they could not reduce the rate of interest that was paid on the nominal capital of £100 until what date; and that was what caused the price of Consols to be so much over £100. But that fact did not establish any reason whatever for interfering with the redemption. He had heard it said that it was very imprudent for the First Lord of the Admiralty to have tied his hands up till 1924 and to commit himself to such a restriction for so long a period. It was very easy to make such a complaint after the event. His right honourable Friend had to consult the conditions of the hour, and it was impossible for him or for anybody else to tell exactly what would happen after 15 or 20 years. Under the circumstances of the time, and in which he was bound to work, he was not warranted in making any other arrangement than he did. He had, when he made that operation, to deal with Consols above par, but he had a very large sum to deal with, and he had to offer the strongest inducement to agents to facilitate the action of their principals to come in. If the House would pardon him, he would mention a fact as an illustration. He was trustee for a small sum in Consols. The Cestuis que trustee and himself had so consider whether they should accept his right honourable Friend's offer or not. He himself did not see they would get anything by accepting his right honourable Friend's proposals to give them a certain number of months before they were paid off. He could not see any likelihood of the Funds at the end of that time being any worse than now. So instead of accepting the transformation offered they waited until the end of the period, got their money, and reinvested it. As events turned out, as the time for paying off came Consols dropped, and they were able to reinvest the money, making an addition of something like 3 per cent. to the capital. No doubt, therefore, it was inconvenient that the hands of the Chancellor of the Exchequer should be tied at the moment, but that was an inconvenience from which they could not escape, and he ventured to ask whether it would be imprudent under present circumstances to enter on redemption by purchasing Consols at 111? In order to facilitate the understanding the elements of the problem, he invited honourable Members to consider this. Suppose that at this moment we could redeem Consols instead of having to wait until 1924. What would happen? Of course, we would not redeem, but having regard to the state of the money market we should say to holders—"Unless you consent to a reduction of interest from 2½ per cent. to 2 per cent. or 2⅛ per cent., we shall pay you off, because we can get others to come in and take the obligations which you now hold from us." In fact, if at this moment we were free to deal with Consols, we would be able to reduce the interest to 2 per cent. probably, but certainly 2⅛ per cent. Consols would, under these conditions, be at par, but what would be the situation of the Chancellor of the Exchequer as the redeemer of the permanent national burden of today? He would pay £111 in order to escape the burden of £2 15s. per cent. for a number of years, and £2 10s. per cent. for the remainder of the period. Under the imaginary circumstances he had put, the Chancellor of the Exchequer would pay £100 in order to escape a burden of £2 2s. 6d. or £2. The cost of the redemption of the national burden as measured by the circumstances of to-day was precisely the same as the cost would be in 1924 if the condition of the money market was then the same as today. Therefore, there was no more reason against redeeming it to-day than there would be in 1924. He thought that his argument had exposed the fallacy which lurked in so many minds, and which the Chancellor of the Exchequer and the First Lord of the Treasury seemed to entertain, that there was at this moment an imprudence in buying Consols at £111 in order to reduce the Debt. The cost of redeeming Debt now was not greater than it would be in 1924. He knew it was said that the rate of interest as shown by Government securities did not really exhibit the rate of interest under natural circumstances, and that we were forcing up the rate by buying in the open market. The price of Consols had gone up because the normal rate of interest had fallen. If his analysis of the situation was true, the solution of the Savings Bank problem was not to be found in hunting about for fancy modes of investment for the Savings Bank funds. It would be found in the reduction of the interest on the Savings Bank deposits. His right honourable Friend the Chancellor of the Exchequer the previous night said very bravely that he was sure the working man did not want any assistance in the way of charity in the interest on his deposits. He felt inclined to say, What a valuable man the Chancellor of the Exchequer would be on the Old-Age Pensions Committee. If they could only recast that Committee they should certainly put him upon it; but at all events they had this satisfaction, that the right honourable Gentleman was there to carefully watch over the conclusions of the Committee whatever they might be. Savings Bank deposits no doubt affected the rate of interest realisable on Government securities, but the fact was that that was an indication of capital growing and accumulating and seeking investment, and the rate of interest was falling in consequence of this great increase of capital. Now, with that long preface it might be supposed he was still very far from the real question, Why should he reduce our Debt? If his argument had proved anything is amounted to this, that the particular objection laid stress upon by the Chancellor of the Exchequer and the First Lord of the Treasury against the present measure of reducing Debt as being too costly had no weight, unless they were prepared to say that the process of reducing Debt was always too costly when the rate of interest on Government Stock was about 2½ per cent. It would be an objection if Consols were at par, supposing the rate of interest on Consols was 2 per cent. The seasons for reducing the Debt deserved to be stated afresh. In the first place, in the reduction of Debt we made the best use of the present condition of peace. We prepared ourselves for the contingency of war. In consequence of having reduced our Debt while we were flourishing, we created a reserve power of borrowing, which would enable us to meet the calls of war. Moreover, inasmuch as the sum we applied to the reduction of Debt was entirely under our control, we could at any moment arrest the redemption of Debt, and the sum so saved could be ap- plied to the usages of war without adding a penny to the taxation of the country. In the next place, by reducing our Debt we established credit, and could borrow again when the need came with greater facility. But to what extent might we anticipate the necessity of borrowing if war came upon us again? Wars were so costly, the expenses of the materials of war and the operations of war were so enormous now, that the Debt we should have to run up, do what we liked, raise our revenue as much as we pleased, would make good, or bad rather, all the recovery we had made in the years of peace. Look at the American Civil War. It was not a very costly war as war now went, in respect of the armament employed, but it caused the creation of a debt of £600,000,000, or 3,000 millions of dollars. He need not refer to the debt of the Franco-German War, and the debt piled up for that. This apprehension of the cost of war was a great reason for reducing our Debt now, because, if war came, we should have to raise the Debt to, and probably above, the level it reached in the worst period of the Great War, certainly above it when the Great War closed. He should be doing injustice to the case if he stopped here. He would go on further and say that, even if we were assured of perpetual peace, he would still urge with all the earnestness in his power the duty of the guardians of the Exchequer of the country to persevere in the reduction of Debt. He sincerely hoped that war was not so near us, nor so probable as many persons were apt to think. Peace had been unbroken for a long time past so far as we were concerned, and we might hope from what had happened in the way of treaties concluded by Lord Salisbury, and from what some hoped might happen at The Hague, that we might have peace for years to come. But if peace were perpetual, if we could be assured against any risk of war through the coming century, he would still urge that the policy of reduction of Debt should be persevered in. He desired to recall the circumstances under which Mr. Gladstone first entered upon his great work of reducing Debt. Mr. Gladstone entered upon that policy not because he apprehended the recurrence of war, but because he foresaw an actual danger coining in due course of time in spite of peace. It was not a war in arms, not a military struggle which he apprehended, but an industrial struggle which would try this nation in no very distant future. Mr. Gladstone had been reading the speculations of Professor Jevons, who had pointed out with convincing logic that the circumstances on which our commercial predominance depended were necessarily transitory, that in the struggle for industrial supremacy our resources, which we had in such abundance compared with other countries, would become less, while theirs would become more abundant than ours, and that by-and-by these other nations would compete with us on terms of equality, and after that again our condition would be that of inferiority instead of a condition of equality. He knew it was said that the speculations of Professor Jevons had been exploded, and that Mr. Gladstone had been carried away by a too strenuous impulse, by too quick an apprehension of something that had no substantial foundation in fact. He ventured to say that instead of these speculations being exploded, the circumstances of the hour confirmed them, and justified the action of Mr. Gladstone, and demanded the maintenance of the same policy on the part of whoever might be the Chancellor of the Exchequer. In the past our commercial and industrial supremacy had depended upon our reserves of coal and iron being superior and more accessible than those of any other rival Power. We knew—the facts were about us if we opened our mind to see and to reason upon them—we knew that that predominance was past, and that the particular reason which gave us our superiority had ceased to exist. We had the command of cheap coal, but in the United States at the present moment coal was brought to the pit's mouth of as good quality as ours but at a cheaper rate. In Pennsylvania iron was cheaper than in Great Britain, and the same could be said of steel. With these resources in iron and coal at the command of the Americans, with their manufacturing industry and energy, which they shared in common with ourselves, we saw that our supremacy was passing away. Why was it that steel bridges were being furnished for the Atbara river, why were bridges and material being sent to the Siberian railways from America? Why was it that the United States were supplying us here at home with machinery which our own people could not produce? Did not all these things support the statement that the particular predominance was a thing of the past? American energy was the same as ours, their inventive faculty was the same as ours, but their material resources were richer and greater with them than with us, and therefore in the race of rivalry they must go before us. At home here we were overburdened by impediments from which they had hitherto been free. We ought certainly to use our situation so as to make us more equal to continue the struggle even if other circumstances were adverse to it. He knew that it had been said that the industrial struggle in the United States would be waged in the future under different conditions, and that was true. It might be that the fire water of Imperialism which the Americans had tasted would so interfere with their competition with England as to make England's position not so much in danger as it was. He did not take much comfort from that consideration. He hoped they would not realise any advantage from the evil befalling another country. It appeared to him that the whole circumstances of the hour, apart from those to which he had referred, showed that in the United States they had industrial competitors most seriously threatening their present and endangering their future. As he had previously stated, they had plenty of coal and iron, but upon those prime factors all their great industries rested, and they might see that, in respect of the manufacture of cotton, the United States last year worked up more cotton than we did. That was only a step in the competition in shipbuilding for which iron and steel are great factors, and in respect of both they had beaten us. It was no use concealing the future from themselves, or trying to escape comment. The statesmen of the next generation might have the most difficult of all tasks to enter upon. They were already feeling the pressure of the underlying fact which was at the bottom of this discussion about the redemption of Debt, and that was the low rate of interest which was now prevailing. What did it mean? Why, that they were accumulating capital, but that the modes of profitably occupying it were ceasing amongst them. It was not in England, but elsewhere, that the most profitable mode of employing capital was to be found, and they were in danger of falling into the position of a rentière nation—living upon a capital which they lent to others, but which circumstances prevented them employing profitably at home. They had seen in Ireland in their own generation in the last half of the nineteenth century a population, through economic causes, dwindling and passing away. If the economic causes which prevailed in the case of Ireland affected their industrial population they might have to deal with a similar phenomenon, and he knew of no more difficult task for a statesman of the future than that of having to control the destinies of this country if at some future time their population and industries diminished. It might be said, and said truly, that this was too broad a base upon which to place a small matter of £2,000,000 in connection with the redemption of Debt. He admitted that it was too broad a base, for the question of the £2,000,000 in itself was a comparatively small matter, but it was the symbol of a great deal more. It regarded the future which they ought to have in view. They might diminish the cost of the National Debt and they might carry on the redemption of the Debt and get rid of the £17,000,000 which they were now paying for interest. That would be a very small gain if the £17,000,000 spent on the reduction of the Debt was a mere substitution of £17,000,000 spent on armaments. If they piled up one useless expenditure in the place of another they got nothing back. It was necessary in the present situation to insist, if they realised the conditions of their industrial life, and if they had any apprehension of what lay in the future in the struggle for industrial supremacy between England and other nation, to say that now when they were still safe, when they had abundant occupation for their people, when they were most prosperous, they should use every endeavour in order to prepare for the future by removing the impediments which might become serious obstacles to their continued progress. It might be said that those were the anxieties of the closet and the mere fears of the doctrinaire. Those anxieties were with them in their markets both at home and abroad, and having such a serious view of what they ought to do with respect to the future in arranging the finances of the day he must express his profound regret that his right honourable Friend the Chancellor of the Exchequer did not rise to the height of the occasion, and did not meet the difficulty of keeping up the small amount, after all, which was set aside for the redemption of the Debt, and did not determine that he would do nothing which would cause the coming generation to be still fettered by difficulties which they did not feel now, but which they could relieve now with no great strain, but which, when their time came, might be indeed felt as an impediment keeping them back in the race for existence and the struggle for life.

The House has just listened with the attention it deserves to a speech of singular ability and close reasoning, followed by warnings which will be long remembered, in a protest against the financial proposals of the Government. There is no doubt that we have arrived at a very grave condition which deserves and demands the consideration of this House, which is responsible for national finance; and on national finance depends national prosperity. What is that situation? At a time when we have realised a heavier revenue than this country has ever known, in a year in which the Chancellor of the Exchequer calculates upon an increase of £2,000,000 to his revenue on the existing basis beyond that of the year that has passed—in that condition of things the Finance Minister of Great Britain and Ireland presents himself to the House of Commons and the country and declares that he is unable to meet the financial situation except by recourse to despoiling the fund for the liquidation of Debt. That is the situation, one of the gravest which has ever been presented to the House of Commons. I am speaking not of a temporary suspension to meet a temporary evil or temporary embarrassment, for a temporary embarrassment does not exist: I am speaking of a proposal which is to affect not us of this generation alone, but, as my right honourable Friend opposite has just said, is to affect future times in reference to our financial policy, and I think we ought to consider what we in this Parliament and this Administration have done to bring about such a situation as that. Therefore, considering how elaborate and how sufficient has been the examination that has been made by my right honourable Friend the Member for Wolverhampton, and my honourable and learned Friend behind me, and still more, perhaps, by my right honourable Friend the Member for Bodmin, of the details of this particular proposition, I would ask the indulgence of the House while I endeavour to recall to their recollection what has been their own work in this present Parliament, and how far it has tended to bring about this unhappy result. The Chancellor of the Exchequer up to this time has had a pretty easy life. He was the heir of a highly solvent estate. He has reduced it to a declaration of partial insolvency. He has diverted in successive years the old Sinking Fund, which, according to our principles of finance, should have gone to the liquidation of the old Debt. He alleges, it is true, that he has used it, not for that purpose, but for averting new things. But it is a Debt all the same, whether you apply it to the extinction of the old Debt or use it for a new Debt which he himself has created He has had what may be called plain sailing. He has been fortunate in having inherited a large revenue, and he has disposed of it merrily among a favoured few. It happens that the funds in which he now stands in need and for which he is going to rob the fund for the liquidation of the Debt amount almost exactly to the sums which he has bestowed on agricultural rates and upon Voluntary schools. We all remember very well how in the case of the grant to agricultural rates we did not even wait for the report on the condition of the agricultural industry, an interim Report being rushed through for that particular appropriation, which, when the Report appeared, was shown to be entirely unjustifiable, and ever since that appropriation was made in each Budget the Chancellor of the Exchequer has congratulated himself and his friends on the prosperous condition of agriculture. That is the first method he has taken to dispose of his surplus. Then Voluntary schools he has allotted £600,000 or thereabouts, and we have been assured this Session that the first result has been what we all predicted— it has redounded to the advantage of Voluntary subscribers, and probably—for, of course, this process is infectious—it will be a result largely extended in the future. I am told also it has been appropriated to the payment of rents and not to the improvement of education. It has in a considerable degree been diverted from the purpose for which it was avowedly intended. Well, with these great surpluses, which if you calculate them one way amount to £9,000,000, the right honourable Gentleman has enjoyed, according to my calculation, £2,000,000 more, by anticipation of surpluses, and during the whole period the taxpayer of the country has enjoyed only one relief from taxation, in the abortive tobacco duty, from which the consumer derives small advantage, and in which the Chancellor of the Exchequer has been largely disappointed. Then we have had four years of immensely increasing revenue attended also by exaggerated expenditure, which has exceeded the growth of revenue. Now, the right honourable Gentleman last night—and I was a little bit surprised at it—treated me as if I had been habitually a captious and partisan opponent to his finance. Well, I think that the right honourable Gentleman could not have intended that, because I have never found him an unfair advocate. As long as the right honourable Gentleman was an adherent of the old established school of finance—of orthodox finance—and I am as much attached to orthodoxy in finance as I am to orthodoxy in other matters—but when I find the Chancellor of the Exchequer indulging in most malignant heresies, of which I believed him to be entirely innocent, he must allow me to oppose him upon this occasion. On other occasions I have been rather disappointed with his proposals, but I have endeavoured to give him what protection I could against the raiders upon the Treasury who sit around him, and we have fought many a good battle together against those who have endeavoured to plunder the treasure of which he is guardian. Up to this I have certainly admired and done what I could to support his standard, and when he strayed from the right path I thought I saw in the interesting explanation of the position which we had last night a true account of the present situation. We were told that a department—and I am sorry to think the Treasury should be such a department—are, after all, subordinate instruments of the Cabinet, by which they are controlled. That, I think, was the departmental doctrine that was preached to us by the Vice-President of the Council on Education, and I deeply regret that the Chancellor of the Exchequer should find himself in a similar position. Well, the Chancellor of the Exchequer began with a surplus of £4,000,000 or £5,000,000, and after four years he presents himself to the House with a deficit of £3,000,000. I remember very well in his first Budget in 1896 he lectured me on the offence of a Chancellor of the Exchequer who left a surplus behind him.

No, no!

Yes, he said it was a feather in the cap of a Chancellor of the Exchequer when he had only a nominal surplus. Well, then, are we to suppose it is an added feather in his cap when he has an actual deficit? He said it was the proper thing for a Chancellor of the Exchequer to be accurate in his Estimates and not to take more from the taxpayers than was necessary. Well, I suppose my example was demoralising, because for two or three years he went on adding surplus to surplus as the result of a system of finance he found in existence, but now he comes down this year and at the commencement of his Budget says—"Ah, at last I have got the right manner of dealing with finance. I have no surplus to speak of. There is a trifle of £186,000, but everybody thought I was wrong though I know better than that. I am right, and I was always right." Well, Sir, there is an old copybook maxim—"Self praise is no recommendation," and in this case I venture to point out to the right honourable Gentleman that the result of his balance for the year just concluded is not the result of accurate estimates but of inaccurate estimates on both sides of the account. As to the accuracy of his estimated revenue, the right honourable Gentleman received £1,200,000 beyond his estimate of revenue, but to make it all right he exceeded his estimate of expenditure by almost exactly the same amount, and therefore he achieved the financial triumph of making two blacks into a white, getting a microscopic surplus as the result of two erroneous actions. On the whole I prefer the method that he denounced to that which he has adopted. The right honourable Gentleman exceeded his estimate of expenditure by great supplementary estimates, and I do not think any Government has ever exceeded in the form of supplementary estimates the expenditure to anything like the degree which has been practised in this Parliament. It is a very dangerous and a very evil practice. It deprives the House of that regular control it ought to have over expenditure; it confuses the financial balance upon which Parliament is called upon to determine at the time the Budget is presented. But the right honourable Gentleman was saved from disaster by two sources of revenue; his salvation was due, first of all, to the great increase in the yield of the death duties beyond his estimate. The right honourable Gentleman says I have always envied him the yield of the death duties, but I can assure him that is not the fact. I have rejoiced in his prosperity and the greatness of his revenue, partly from personal regard for himself and partly because it has been an advantage to the country to which I belong; but the real truth is, I think, the Chancellor of the Exchequer has been demoralised by the predictons of the honourable Member for King's Lynn.

And your own.

It has slightly exceeded my own, but it largely exceeded the estimate of the honourable Member for King's Lynn, who, on the Third Reading of the Bill said that less would be received.

The First Lord of the Admiralty said the same thing.

And the House could not follow a worse example, for the First Lord of the Admiralty was not fortunate in finance. But, Sir, I am very glad if I have contributed in the slightest degree to rescue the right honourable Gentleman from the deficit which he apprehended. But there was one other thing which saved him, and that was the increase in the yield of the income-tax, which I agree with the right honourable Gentleman who has just sat down the Chancellor of the Exchequer held up to the Party behind him as a source of taxation which was to be deplored and resisted, and upon which I shall have something to say in relation to the language used—the most formidable and dangerous that has been used by a Chancellor of the Exchequer. The right honourable Gentleman was saved by the increase of the income-tax yield, but he dropped one sentence which to those acquainted with the Treasury conveyed a great deal. He said that that yield of the income-tax last year was due to a "closer collection" than there was in the year before, and anticipated part of what would be expected this year. Well, we know at the Treasury very well what that means—when a Chancellor of the Exchequer is trembling in anticipation of a deficit he has a closer collection of the income-tax.

No, no!

Then I must have misunderstood the right honourable Gentleman.

If the right honourable Gentleman implies that I issued instructions for a closer collection of the income-tax he is mistaken.

I carefully avoided saying that.

I never did anything of the sort, and I don't believe any Chancellor of the Exchequer has ever done so.

No; but how came there to be a closer collection than in the year before?

A collection of arrears.

It had reference to arrears. Well, I do not wish to misrepresent the right honourable Gentleman, but, knowing what I do of the Treasury, I confess I thought otherwise. Allow me to state to the House what is one of the most remarkable features of these four years during which the Conservative Party have been responsible for Her Majesty's Government. In 1895, the last year for which I was responsible, the right honourable Gentleman quite truly stated that my estimate of the revenue of that year was £103,000,000—that is to say, £96,000,000 of revenue to the Exchequer and £7,000,000 to local taxation. In 1899, in four years of the present Parliament, the revenue has been £110,300,000, and £9,000,000 to local taxation. That is in round numbers £120,000,000. This means that you have had in those four years a growth of revenue of £17,000,000 a year. There is one sentence in the right honourable Gentleman's Budget speech in which I can cordially concur. He says that this immense growth of revenue "may warn us to be careful how we pass from the old-established financial policy of the country and embark on a new departure in the matter of our fiscal system." If ever there was an argument to convince a reasonable House of Commons and an intelligent nation of the soundness of their fiscal and their currency system it is the fact that in four years the progress of the revenue under that system should have been £17,000,000. What has that been caused by? It has been caused first of all by the free trade of this country, what we may call "the open-door." It has been caused by the well-being of the mass of the people produced by the reduction of indirect taxation. It has been produced by that policy which was inaugurated by Peel, which was extended and expounded and acted upon by Gladstone, and which has been followed up with unequal steps by those who trod the road which they have pointed out. It is a policy which has placed you in possession of this superb and gigantic revenue. It is right that the Chancellor of the Exchequer should make that observation upon the great revenue which he has at his disposal, because it is, I am ashamed to say, not unnecessary in these days when we see organs of opinion which ought to know better propounding the superannuated heresies which distinguished the evil financial days of the early part of the century, when we see advocated the repetition of those financial blunders when people thought that they could raise a great revenue by imposing a multitude of duties upon a great variety of articles. No, we have been taught by the masters whom we have followed that the foundation of a great revenue is simplicity of taxation, that this gigantic edifice rests upon a few great columns, and that it is not dependent for its support upon a rotten scaffolding of petty impositions of the character of which we have been delivered within the last half-century. The growth of this revenue has not been the invention of any new system of finance by the present Administration. It has been due to the fact that the right honourable Gentleman has been content, and wisely content, to adopt and act upon the financial system which he found in operation at the time he came into office. But then we have to look at the other side of the account. Now, the expenditure of the country is the work of the Administration. Let us see what has been the growth of that expenditure. The last year of the expenditure for which we were responsible in our Government was £103,000,000. Last year in his Budget speech the right honourable Gentleman called special attention to the fact that it was £116,000,000; and to that this year he adds £6,000,000 more; so that the expenditure has grown—as he stated last night—

Estimated.

Yes, estimated. I am afraid that the real expenditure will be a good deal more. The estimated expenditure is the minimum, but we have to add to that the Supplementary Estimates. I will, however, take the estimated expenditure as £122,000,000. Now, that is an increase in the four years of £19,500,000 in the annual expenditure of the country. There is a point to which I desire to call the attention of the House and the country—that this Parliament and this Government have added to the annual expenditure of the country a sum exceeding by £2,000,000 the whole charge of the National Debt. I venture to say that this is a figure and a statement which the House and every man in the country ought to ponder and have upon his conscience. I am a little surprised to hear my right honourable Friend the Member for Bodmin repeat the vulgar error as to the National Debt, as to speak of the capital of it. There is no "capital" of the National Debt. The National Debt is an annuity and an annual payment of an annuity. The annual payment is £17,000,000 a year. By the prudence and self-denial of those who have gone before us we had reduced that annual payment by almost a half. It was at one time £33,000,000. What have we now? Though you have relieved the country of a payment of some £15,000,000 of that animal payment, you have added in four years £19,500,000 to be charged on the taxpayers of the country. Is that a situation which the House of Commons or the taxpayer can view with equanimity? I do not wonder that the Chancellor of the Exchequer is staggered by it. In his Budget speech the right honourable Gentleman said—

"One thing is quite clear—that it is impossible, however great the prosperity of the country may be, for such increases as £5,000,000 or £6,000,000 a year to be met by an automatic increase of our existing taxation, immense as that has been. The country must make up their minds to a great increase of existing taxes, and also to the discovery of new sources of revenue."

He did not say, though he might have said, "to the abandonment of all attempts to reduce the National Debt," which is the example he has shown. Then he says—

"I venture to prophesy that the result of this will be necessarily a reaction against this great expenditure."

Yes, Sir, I devoutly hope that that will be the result, and when the facts of the financial history of these last four years sink deep into the heart of the country, that there will be a reaction against this vast, this unlimited expenditure. I confess I think that I see some symptom in the country of the beginning of that reaction. I know the right honourable Gentleman deplores it, for he has begun to minister to it by cutting off the fund for the reduction of the Debt. That will only serve him for a very short time, and when he has also swallowed up the other £5,000,000 still left, then he will at last have recourse to increased taxation, and he has promised that that shall not be direct taxation.

I never said that.

I will quote his words directly, and I should be happy if the right honourable Gentleman would give another explanation which differs from that which the words appear to convey. To what is the immense expenditure due? It is due in the first place to that hunger which seems to have been propagated in the minds of the country—it is the discontent with your existing possessions. It is due to those ruinous enterprises which are stated to be made on commercial grounds. It is due to those trade principles according to which you put down a sovereign in order to take up half-a-crown. That is the character of those enterprises. It has been due to that spirit which Lord Salisbury has wisely and gravely condemned—that desire to fight everybody and to take everything. That is the meaning of this vast and intolerable growth of expenditure. There is a calculation which I think conveyed to me the true mind of the Chancellor of the Exchequer uncontrolled by his colleagues; and I would like to restate it to the House, because it has a considerable bearing on this question. In his Budget speech last year the right honourable Gentleman gave a very interesting calculation of the expenditure on the Army and Navy of Great Britain and the Powers of Europe. He said that the total expenditure of the British Empire on the Army and Navy was £63,500,000. This year you add £3,000,000. That is £66,500,000. Then he gives France. Their expenditure on the army and navy was £36,400,000; Germany, £35,250,000; Russia, £38,500,000. The average of the three great military Powers of Europe is therefore very little more than half your expenditure. Then the right honourable Gentleman proceeded to explain why it was necessary and justifiable to have such an immense expenditure, and pointed out that Great Britain has 80,000,000 more population than the three empires put together. That is the little England of which we are called upon to be ashamed, and which he desires so much to extend. He said we had 11,250,000 square miles of possessions, and that the three Great Powers had 13,750,000, and therefore our geographical extent was not much less than that of all these other Powers put together, and our population is 80,000,000 more. And yet we are not satisfied. We must extend our territories at the risk of war. We must go on taking possession of vast deserts, occupied only by savage tribes; not a useful population, such as was found in India, but a population unused and unwilling to labour, whom you can only hold by force. We are justly proud of what is called the "thin red line of England," but when you extend the "thin red line of England" from the Cape to Cairo it will be a very thin red line indeed, and the distance between the files will be very great indeed. Hitherto we have been dealing with colonies of men of our own race and blood, who are used to industry and labour. We have had our trade among a wealthy and docile people like those of Hindustan. We have desired, and justly desired, to secure our commerce amongst great and rich populations like those in China; but you are going to effect a great commercial speculation at the Equator. I take leave to doubt whether that is likely to be a good commercial speculation. No, Sir, the right honourable Gentleman is quite right to say that he only spoke of estimated expenditure, but will he give us his idea of the expenditure five years hence upon the liabilities which he has undertaken to-day? The history of this policy which has reduced us to the condition in which we now find ourselves is a policy of "wilds immeasurably spread," which seem lengthening as we go. As there is no limit to this ambition of what is called expansion, so there will be no limit to the expenditure of the country and the calls upon the taxpayer. If you believe the taxpayers of the country desire that expansion, why have you not had the courage to call upon them to pay for it? Do you mean to deceive them into the belief by suspending your Sinking Fund that they may have it "dirt cheap"? They will not have it dirt cheap. You know the estimates which were given at first for the occupation and for the railway to Uganda. You know what they are now. The enterprise in Africa was to cost us nothing at all. I congratulate and I thank the Chancellor of the Exchequer that he has made up his mind not to pledge the credit of the country for these wild-cat speculations. What will happen? We know that these estimates which begin with a few thousands very soon mount up to millions. These speculations may be excused and condoned in individual gambling land-grabbers, but they are not enterprises which should be entered upon by wise and prudent statesmen. It is the ambition of a policy of this kind which accounts for the growth of the expenditure. Then the Chancellor of the Exchequer tells us he has no hope of reducing this expenditure. He hopes that it may not increase, and his confidence lies in the conference which Russia has summoned. I share the hope of the Chancellor of the Exchequer, but I should like to know how much he expects from that Conference. No doubt it is an extremely good thing that Russia should have summoned this Conference. I ventured almost the last time I addressed the House of Commons, on the Appropriation Bill last year, to urge upon the Government that the policy they ought to pursue was to come to a good understanding with Russia, a policy of conciliation. I deeply regret that that suggestion upon my part was met by the First Lord of the Treasury with language of courteous contempt.

No.

He declined my suggestion that the real solution was reconciliation and conciliation with Russia, instead of a long spoon policy. That is what I call courteous contempt. There was language which conveyed the idea that it was preposterous. It was absurd to suppose that the question, especially of China, could be solved by an arrangement with Russia. If I misunderstood the right honourable Gentleman I withdraw the observation, but Lord Salisbury has had the courage and the skill to come to an arrangement with Russia, which is of good omen. And no difference of political Party shall prevent me from offering my testimony to the work he has done in coming to a good understanding with France and in making arrangements of a friendly character with Russia. I at least will not come under the condemnation of my right honourable Friend the Member for Bodmin, who said, and truly said, that there were persons, without distinction of sides in this House, who would not promote a conciliatory policy, but rather adopted a policy of aggravation and defiance. I believe, though I have no authority to speak for anyone but myself, that I am expressing the opinion of the great majority of the Gentlemen who sit upon this side of the House when I say that their desire would not be to weaken, but to strengthen the hands of the Government in carrying out a policy which will be approved and supported by all those who seek peace to insure it. Well now I wish, if I am not wearying the House, to say something upon the proposals of the Budget itself. Yes. I venture to say that it is not inappropriate commentary on the Budget to inquire how the situation which leads to the result has been brought about. In one of the comments which I saw last week it is called niggling and petty finance. The Budget seems to me to labour under the same error which in former times I have criticised in the Budget of the present First Lord of the Admiralty. It is an endeavour to raise money of small amount by methods which are vexatious and disturbing to the industry of the country. That is bad finance. You ought to trust to some great items upon which you can rely. That is the sound finance which has produced these great revenues. It is not the old finance which was properly called petty and niggling. Take first of all the wine duties. I have carefully considered this question, because it was during my first term at the Treasury that I reduced the duty on cheap wines, the wines of low alcoholic strength, from 2s. 6d. to 1s. The Chancellor of the Exchequer proposes to reincrease those duties by 50 per cent. I think he will disturb the trade very much, and he will get very little out of it. We have a superb revenue. By what process? We have simplified our Customs, we have struck off items by the hundred, and we have received as much or more from the Customs than ever we did before. We have reduced our Excise, and our Excise, in spite of all you have given away, is still highly profitable. We have consolidated the death duties, and you have lived upon their proceeds for four years. All that teaches the lesson of what I call simplicity of finance. As regards the duty on high- priced wines, I have nothing to say against it. It is a duty upon a commodity which is consumed by the wealthy classes who are able to bear additional taxation; but to put an additional tax on the lighter and cheaper wines is, in my opinion, an extremely impolitic proceeding. As to stamps, I do not profess to offer an opinion with any confidence. I know very well I found in existence a tax on foreign securities imposed by the present First Lord of the Admiralty. It was known in the City by the name of the "Goschen blister." I do not know whether it was every week, every month, or every year that a man had to take a piece of paper and put an additional stamp on it. The right honourable Gentleman said, "You should not tease the merchants." There is another thing I have learned with regard to the Stock Exchange, and that is that you ought not to provoke them. Well, Sir, I removed that tax and replaced it by a shilling contract note which I learned would not be objected to and which has produced a great deal more than the original blister. No doubt the principal feature of the Budget is this lamentable invasion of the fund for the liquidation of the Debt. This has been from many points so largely and ably discussed that I shall not attempt now to repeat the arguments. The Chancellor of the Exchequer has assured us that it has no connection whatever with the Debt. I always accept the assurances of the Chancellor of the Exchequer, though I think it would have tried the credulity of the Jew of old who went by the name of Apella. I accept that assurance on the same ground as the man of great faith in old days—credo quia impossibile. That, no doubt, is the great test of faith. The impossibility of the thing tries your faith and at the same time proves it. But what makes it more difficult to understand is that only last year, when Consols were higher, and when the arguments the right honourable Gentleman has used this year were in full force, he appealed to the House not to deal with the reduction of the Debt on the ground of the great growth of local taxation, and it is difficult to believe that he had it in his mind all the time to reduce the fund for the liquidation of the Debt this year. Many attempts have been made to justify this course. The tu quoque argument is the most popular of all argu- ments with the right honourable Gentleman, and he has resorted to it. He said it is only what Mr. Gladstone did with reference to the long annuities. That has been disposed of by my right honourable Friend the Member for Wolverhampton. Mr. Gladstone condemned absolutely the process which the right honourable Gentleman has followed. In 1860 Mr. Gladstone said this—

"Are we to be told that, when a sum of £2,000,000 which we have hitherto been obliged to pay to the National Debt comes into our possession, it only remains for us to cast it into the great gulf of expenditure there to be swallowed up and disappear."

You quoted Mr. Gladstone as the example you have followed. He said—

"That sum is mighty as an engine for the proposed relief, while for purposes of expenditure such as expenditure now is, it is comparatively unimportant."

Mr. Gladstone used that fund for the entire reconstruction of our financial system which has been the root and foundation of all this great revenue which you enjoy. Then the right honourable Gentleman said I have done the same thing. What I did was done in 1886 when the revenue was falling and not increasing. When I did not feel sure of the revenue coming up to the mark, I suspended as a precaution for that year, and that year only, three-quarters of a million of the fund, and as the revenue increased I recovered that amount, and the amount I paid out of my Budget that year was the whole of the sum originally contemplated, and nearly a million more than my successor with a sufficient revenue paid for redemption of the Debt for the three succeeding years. But when we came into office in 1892 they were not easy times for us. We had not a majority of 50 at our backs. We had not a rising but a falling revenue, and we had every temptation to have recourse to such expedients as those to which the right honourable Gentleman has resorted. But in the year 1893, on behalf of the Government of that day, I made this statement—

"We cannot recommend the Committee to meet its liabilities by encroaching further on the funds set apart for the liquidation of the Debt. In our opinion that is a fund not to be tampered with in ordinary times and normal deficiency, but reserved for great emergencies. This is the keystone of sound and solid finance, and we are not prepared further to weaken its foundations. These are courses which the Government are not prepared to recommend. They only serve to encourage extravagance by concealing and palliating for the moment its effects, and therefore promoting its growth. There is, in our opinion, only one sound and straightforward means of meeting this deficit, and that is by increased taxation. This is the only policy which is worthy of a solvent and wealthy nation which finds itself over-spending."

That was our policy and we acted upon it. That was the policy of the Budget of 1893 and the Budget of 1894. We are told that it would be very unpopular to impose taxes. Indirect taxes are unpopular. Direct taxes will be more unpopular in the view of the right honourable Gentleman. We propounded to the House of Commons a scheme for indirect taxes. An honourable Gentleman said last night that no Government could be expected to court unpopularity by imposing taxes. Do you suppose we risked no unpopularity when we imposed taxes on beer and spirits? Do you suppose we risked no unpopularity when, in the face of a powerful Opposition, we proposed the scheme of the Death Duties? A Gentleman said last night that no Government would risk its existence. But we did risk our existence upon what we believed to be sound and solid principles of finance, and we were supported by the House of Commons and were approved of by the country? [Cheers and Ministerial laughter.] Were we not approved of by the country? [Ministerial cries of "No."] Why, then, have you not reversed our policy? The Chancellor of the Exchequer himself has stated that the result of that policy is such as to warn everyone against departing from its principles. In my opinion, one of the great sources of our success with all the feebleness of our resources was that we had the courage to meet the situation. I believe that, in spite of your apparent strength and your great majority, you will not derive support when the people understand and believe that you have shirked the liabilities which your great expenditure demands that you should meet. I cannot think, Sir, that the Chancellor of the Exchequer has derived much consolation from the financial organs of this metropolis, who are supposed to understand the feeling in financial circles. This is what the "Economist" said last week of his Budget—

"As to the raid on the Sinking Fund, the Chancellor of the Exchequer is not likely to continue to put forward the hollow pretence that his object in despoiling it is to safeguard it against possible future depredations. That sham has been exposed and is not likely to be persisted in. For in reality Sir Michael Hicks Beach does nothing to protect the fund in future, and merely sets an example of robbing it, which, if sanctioned by Parliament, will constitute an evil precedent."

It goes on to say—

"But, in virtue of having thus disposed in advance of the amount which would fall in during 1902–3, he holds himself justified in robbing the fund of £2.000,000 a year. Now he maintains that it would be a financial sin to leave the fund in danger of being reduced by £2,000.000 a couple of years hence, but claims it as a financial virtue to reduce it by £2,000,000 at once. That is what he calls safeguarding the fund, since, as we have said, it is only the annuities that come to an end in 1902–3 that be is now dealing with. As regards those expiring in 1904–5 and 1905–6, all that he has done is to set an example of spoliation. And, in these circumstances, talk about acting in the best interests of the Sinking Fund is pure cant."

I think that is an accurate description of the policy recommended by the Government The Treasury minute, professing—but, perhaps, I ought to refer to the statement of the First Lord of the Treasury to the ladies of the Primrose League. We all know that with ladies a very little arithmetic goes far, and that it does not signify whether you talk of thousands or millions. The First Lord of the Treasury drew a terrible picture to them of the loss of £800,000, which would build an ironclad and do all sorts of other things. That was what he said we were losing. He was wrong to the extent of a quarter of a million.

The right honourable Gentleman has repeated the blunder of the "Economist." I have corrected it, and the "Economist" has acknowledged it. I made no blunder.

No blunder in arithmetic. Well, Sir, he explained away, as I understand, his statement by saying that the statement he intended to make was one that was different from that which he did make.

No. The right honourable Gentleman is not a lady of the Primrose League, and, I presume, has no direct experience of what I did say. What I have said I said is what I did say.

Then the fault was with the reporters?

Yes.

Then we will put it in that way.

Does the right honourable Gentleman indicate I did not make the statement I said I made?

Oh, no. I am reminded of a warning that was once given to me when I was at the Bar by a Judge. He said—

"Never be afraid of the Judges; they are sitting up there, and they can't come down.

Well, at all events I will address myself to the argument to which the right honourable Gentleman did address himself, which was in the Treasury Minute. He now says that the loss would be £180,000. I think you will find that in the corrected statement. Whose arithmetic it is I do not know, but the whole loss upon this investment would be £180,000. This is all owing to the fact that Consols are so high. But then the Chancellor of the Exchequer tells us that Consols will become higher still. Well, then, what is the use of adducing an argument of that kind now. It will be much stronger next year or the year after, when Consols do rise, for reducing the fund than it is to-day. The third argument is that there are less Consols in the market. You say Consols are becoming scarcer in the market every day and will ultimately disappear. That will be a conclusive argument for every Chancellor of the Exchequer to come forward and say it is his first duty to diminish the Debt Fund, relying on precisely the same argument that you have relied upon to-day. Therefore, the only conclusion that we can draw from the Treasury Minute is that every Chancellor of the Exchequer ought to take the phrase of the First Lord of the Treasury and pro tanto diminish the fund for liquidating the Debt. Then the Chancellor of the Exchequer has another ground, a far stronger ground than these pretexts—we cannot call them arguments—of the Treasury Minute. He says he took the £2,000,000 in case that in the year 1902 there should arise some evil Chancellor of the Exchequer who might apply it to the reduction of indirect taxation. That is the ground upon which he says he will bespeak this sum. He says he will bespeak this £2,000,000 in order to prevent an operation which might take place in reference to this fund in the year 1902.

Will the right honourable Gentleman allow me. I said I proposed to bespeak the £2,000,000 now, and, in order to prevent the sum already bespoken being appropriated again, to extend the term of the terminable annuities.

To prevent the Chancellor of the Exchequer in 1902 from dealing with that sum.

It is already appropriated.

He appropriates the £2,000,000, and appropriates it to expenditure. That is the point. I am not complaining of his continuing the annuities. Well, now, it has been said that there is great mischief and inconvenience in the investment of the Savings Bank money as raising the price of Consols. I admit that. The right honourable Gentleman has been invited to appoint a Committee of this House to settle the question. I am against referring a question of that kind to a Committee. I do not know how the Committee would be constituted or who would preside. I have seen the suggestion that the Chair would be taken by the fidus Achates of the Colonial Secretary, that the Under Secretary of the Home Department should preside over a Committee to ascertain in what securities you should invest the money of the Savings Bank instead of in Consols. I entirely agree, and I have always agreed—the Chancellor of the Exchequer knows it well—that the remedy is not to take inferior securities. In regard to the Savings Bank, the Government is a banker and nothing else. It is a banker in this peculiar position—that it has 150 or 170 millions sterling at call. It has no reserves at all. Bankers have often complained of competition, that they are obliged to keep reserves. The Government has no reserve. The right honourable Gentleman the First Lord of the Admiralty, when he discoursed on the subject of reserves, referred frequently to this matter. He was alarmed lest there should be a run at some time on the Savings Bank. I do not share that fear; but this I do say—that the Government, holding 170 millions sterling upon deposit, have no business to invest that money in anything except the very best security they can get. I am old enough to have known occasions when it was impossible to realise in the market anything except Consols. They were the only securities upon which money could be had at all. The Chancellor of the Exchequer has said he wished to have opinions from everybody upon that subject. He knows mine, for we have frequently discussed the matter. The Government, as bankers, offer great advantages to the depositors. It gives them a branch everywhere, they can carry their deposit wherever their labour goes, it offers them every species of advantage, and it has no right to call upon the other taxpayers of the country to give them any advantage, except that which the money will yield. The interest that you pay upon the savings ought to correspond accurately with the cost. That is the only principle upon which you can or ought to proceed. The right honourable Gentleman has asked my opinion before upon it, and he knows what my opinion is; it is that, if necessary, you ought to lower the interest you are paying. It is suggested you ought to invest in Indian securities. We do not know what may happen in India. We have had mutinies and famines there, and we cannot treat Indian securities as of the very first class. Then it is said there are Colonial securities. What a mess you would be in if you invested more in one Colony than in another. You would have every kind of jealousy. Everybody knows that if a few years ago you had invested in Australian securities, you would have felt very uneasy indeed; and, therefore, you have no business to take any securities except Consols. It is said that you should take municipal securities. There, again, all sorts of jealousies would arise. I protest against that system, and I believe the First Lord of the Admiralty will agree with me. I have never known anybody who has been responsible for the administration of these funds who has not seen the dangers of which I have spoken, and therefore that is not a method which can be adopted. There was one point referred to by the honourable Member for Bodmin to which I must allude. I regret, of course, the result that in the midst of abundance the right honourable Gentleman should present a Budget of deficiency, a scheme of finance which, in my opinion, shows an unwillingness on the part of the country to meet the expenditure by taxation. My right honourable Friend the Member for Bodmin condemned that policy; and his condemnation was not received with entire disapproval even on his own side of the House. I was glad to hear the protest against the treatment of the Debt which was made by the honourable Member for Islington (Mr. Cohen) in a previous Debate. He is a great financial authority, and, though I have seldom enjoyed the advantage of his vote, I have always valued the adherence of his opinion. Another financial authority on the other side of the House, the honourable Member for Brixton (Mr. Hubbard), said there was a danger to the country lest the anxiety of a Government to avoid the unpopularity involved in the proposal of new sources of taxation impelled them to a system of cowardly, niggardly, and paltry finance. That is exactly what this attempt to avoid unpopularity has caused the present Government to do. The evil precedent was set by a former Chancellor of the Exchequer of the Party opposite, the present First Lord of the Admiralty, who, in a time of abundant revenue, laid his hands upon two millions of the Sinking Fund for the purpose of gaining popularity by diminishing taxation. The right honourable Gentleman the Member for Bodmin, turning round to his Friends behind him, said—

"If you are to have additional taxation, why don't you go upon the lines of direct taxation?"

He addressed the Unionist and Conservative Party as if they were the natural enemies of direct taxation. He charges us with the intention in the future of diminishing indirect taxation. Well, I accept the impeachment. On this side of the House we are the opponents of indirect taxation. In the Debates on the Budget of 1894, the present First Lord of the Admiralty said to me—

"You are providing a fund larger than you require this year,"

and he asked me what I was going to do with the surplus. I said—

"If you do not waste it in extravagance, I hope we will have an opportunity of employing it to reduce the burdens of indirect taxation."

My own opinion—and I am supported by the right honourable Member for Bodmin—is that the good work which was commenced by Sir Robert Peel when he imposed the income tax in order to do away with the Debt has been a wise policy so far as revenue is concerned. At that time the great burden of taxation fell upon those who were less able to bear it. We have been engaged for 50 years in redressing that balance and in placing the heavier burden upon those who are more able to bear it; and if it should in the future become an issue between the two sides of the House—between the enemies of direct taxation and the opponents of indirect taxation—I do not fear the result, though I should regret the issue very much, for a more dangerous feud it would be impossible to raise in this country. I entirely agree with the right honourable Gentleman the Member for Bodmin that the lesson taught by the inquiry into the financial relations of Ireland is that a disproportionate burden of indirect taxation is a great injustice to a poor community. What is true in the case of Ireland is true of the poor communities scattered about in every part of the United Kingdom, and if we have a great and growing revenue, it is for the relief of the burden of the poorer classes of the community that our wealth ought to be distributed. We have done something in that direction, but there is still more to be done. I say there are classes of property which are still undertaxed; and, therefore, I protest against a Budget which endeavours to evade the responsibility of the great liabilities which the framers of that Budget have themselves created. We know what the result of the Division will be, but we on this side of the House shall have the opportunity of entering and recording an emphatic protest against a Budget which is founded upon unsound finance, and which contemplates taxation which I believe to be impolitic and unjust.

said that when he moved the rejection of the Finance Bill of 1894, the right honourable Gentleman characterised his action as a proposal more extreme than the stopping of supplies, and yet the right honourable Gentleman was going to vote for a similar Motion now. There was only one principle involved in the matter, and that was that we should pay our fair share of the Debt of the country. If we went on paying off the Debt at the rate we were paying it off at the present time, we should have paid off the whole of it 50 years hence. Could anyone imagine a Chancellor of the Exchequer of such immaculate virtue, such a devotee of the cult of the figure 25, proposing to raise £25,000,000 for Debt purposes in 1949 in order that in 1950 there should be nothing to pay on this account? Such a proposal was ridiculous, and the only way in which the reductio ad absurdum could be avoided was by reducing from time to time the amount of the fixed debt charge. As to the argument of prosperity, the estimated national receipts fell short of the estimated expenditure of £2,600.000. That was the state of financial prosperity of which they heard so much. So much, then, for the argument about prosperity. He next came to the question of posterity. It was, of course, true that if we did not pay off these two millions, someone else would have to pay the money. But whose debts were they? These were the debts of our ancestors. He did not blame them for incurring them for a moment. They left a wide Empire, but they did not leave it only for us; they left it for posterity. The expenditure which rendered the reduction of the fixed charge necessary had been made in making the Empire wider quite as much for those who came after us as for ourselves. We were engaged in pegging out claims for posterity.

Hear, hear!

said he was glad to find the right honourable Gentleman cheered those words. They were the words of Lord Rosebery, who was a recognised authority on such matters. It was not a hard thing that we should ask posterity to pay off some part of the mortgage left upon the estate by their ancestors. The crux of the whole matter was, Were we paying a reasonable share of the Debt that was charged upon this country? He had looked into the figures, and he found that in the last 62 years our national indebtedness had been reduced by £124,000,000, or at the rate of £2,000,000 a year. He thought the proposal of the Chancellor of the Exchequer would satisfy the country, and render it difficult for right honourable Gentlemen opposite to persuade the taxpayers of the present day that they ought to pay more than £6,000,000 a year for the sake of relieving the taxpayers of the future.

confessed that he was not able to share the surprise of the right honourable Gentleman the Member for Poplar when he expressed astonishment that the Chancellor of the Exchequer had not undertaken the reimposition of the tobacco duty, recollecting as he did that the right honourable Gentleman represented a division of Bristol, which was one of the great centres of the tobacco industry. He agreed with the honourable Member for Peckham, who laid down the proposition that either the condition of the country warranted the suspension of the Sinking Fund or it did not, but he arrived at quite the opposite conclusion, because he considered the condition of the country at the present time was not such as to warrant the suspension of that Fund. As a nation we were prosperous enough; if we were suffering from adversity there might be some justification for the reduction of the Sinking Fund. He did not wish to say anything offensive to honourable Members opposite, otherwise he should have declared unhesitatingly his opinion that this was an electioneering Budget. If the Government had paid their way during the year, then extra taxation would have been quite unavoidable, and to have imposed extra taxation would inevitably have incurred odium, and that would never have done for a Government in quest of popularity; and that quest of popularity had been the guiding principle underlying every proposal which had emanated from the Treasury Bench. The Chancellor of the Exchequer seemed to begrudge the position of the Chancellor of the Exchequer who, in 1902, might be in a position to remit taxation largely, from which it was quite clear that he himself did not expect to be in that position in 1902, nor, indeed, did he understand that he desired to be. Honourable Gentlemen opposite had inquired what the Opposition would do if they were in their places, and they had asked, "Can you propose an alternative?" He recollected that during the last Parliament the right honourable Gentleman the Secretary of State for the Colonies intervened in one Debate, and when asked what he would do under certain circumstances, retorted that he declined to prescribe unless he was called in and paid the fees, and so a similar retort would be open to the Opposition on this occasion; yet it could be indicated that there was an open field of taxation in the existence of ground values whenever any Government chose to take up that fruitful source of revenue. He listened with great interest to the remarks of the right honourable Gentleman the Member for Bodmin on the condition of trade at the present time. The right honourable Gentleman took a pessimistic view of the prospect of our national trade, and his reason for doing so was that American firms had taken orders which should have been placed in this country. He (Mr. Holland) would like to point out to the right honourable Gentleman that under certain conditions that state of things was by no means a disadvantage. It had arisen now, not because American was necessarily beating English manufacture, but because the books of British manufacturers were so very full of orders that they could not possibly undertake any additional work, so that the acceptance of those orders by American firms was not necessarily a proof that America was beating us, but rather that America was less well supplied with orders than we were. He thought that British traders on the whole were decidedly on the alert at the present time, and were alive to any dangers which might accrue to them from foreign competition. He considered we had had an enormous advantage conferred upon us by our Free Trade principles, and he hoped that it would be a long time before any departure from those principles was made. The right honourable Gentleman the Member for Bodmin had referred in tones of anxiety to what he considered a proof of the decline of our cotton trade. He said the United States were now using more cotton than we were in this country, but that bald statement was one which was liable to mislead those who listened to it, because, although we might, as a matter of fact, use less weight of American cotton, we made a much finer class of goods out of that cotton, and in that way employed far more labour, and occupied much more machinery. On the return of Mr. SPEAKER after the usual interval,

said that certain interesting results had arisen out of the Debate. It had brought forward certain differences of opinion, which they on that side of the House suspected, amongst honourable Members on the Opposition side. Take, for instance, the question of the difficulty of the redemption of the Debt owing to the high price at which Consols stand. The right honourable Gentleman the Member for Wolverhampton would get over that difficulty by extending the investment of the Savings Banks Funds, while the right honourable Gentleman the Member for West Monmouth looked upon that as an economic heresy. In Committee of Ways and Means the right honourable Gentleman the Member for West Monmouth inveighed against the proposals of the Government for reducing the fixed Debt charge with vigour of rhetoric, and exhibited a wealth of adjectives which some of the minor critics of the Government were not disposed to imitate. On what was this superstructure of invective founded? He ventured to think it was founded on prophecy and assertion. The assertion was that, except in some extreme cases of national emergency and for temporary purposes, the fixed Debt charge should not be reduced. There was something so sacred about the present figure that it should not be reduced. What was the prophecy? It was that the proposal of the Government to reduce the fixed Debt charge from 25 to 23 millions was certain to end in the abolition of the Sinking Fund altogether. Well, that prophecy would be much more alarming were it not for the fact that the same prophet on a similar occasion 12 years ago uttered almost the same prophecy, and that that prophecy had been falsified by the event. The right honourable Gentleman told the First Lord of the Admiralty when he proposed to reduce the fixed Debt charge from 28 to 26 millions that that proposal was a fatal blow at any attempt to discharge the Debt. But during the 12 years since that prophecy was uttered the Debt had been reduced by 100 millions, and the Sinking Fund now stood at eight millions. The assertion or assumption that the fixed Debt charge could not be altered was entirely contrary to the expressed intention of Sir Stafford Northcote. When he proposed the charge in 1875 he said that if circumstances should alter the fixed Debt charge should be reduced. The only question now was whether the circumstances had in fact altered, and whether the moment was ripe and the occasion opportune for revising the fixed Debt charge. Well, if Sir Stafford Northcote was right the whole basis of the right honourable Gentleman the Member for West Monmouth was gone. He (the honourable Member for York) had made a calculation of what some of the results would be if the fixed Debt charge were kept at its present amount until 1923, and certainly the figures were rather astonishing—for the Sinking Fund in that year would be no less than 14¼ millions. He asked whether the taxpayers of the country could be reasonably expected to provide—apart altogether from other taxation, which was an increasing taxation—a sum of money which would not only pay for the expenditure of the year, but 14¼ millions for the purpose of paying off a debt over a century old. He was certain that if the taxpayers realised that that was what they were asked to do, they would refuse to do it, and they would be perfectly right. They might fairly ask would the virtue of the Chancellor of the Exchequer stand the strain of the temptation to deal with it? It must result in a breakdown long before 1923 arrived. But there was another result that must occur. The investment of such a sum as 14 or 15 millions in buying up Consols would long before 1923 have become an impossible transaction. More than that, in addition to those 14 or 15 millions, they would have to invest 10 millions a year on account of the Savings Banks, or a total purchase of Consols of 24 or 25 millions per annum. Now, what would be the total amount of Consols in the market at the time? It would be only 355 millions. He had calculated that keeping the fixed Debt charge at the present figure they would have paid off 205 millions in 1923, reducing the amount of Consols in the market to 105 millions. That would not, however, represent the amount of free Consols, for if the present rate of investment in Savings Banks were continued, the amount of free Consols would be only 23 millions. But, supposing the amount bought by the Savings Banks was not 10 millions but six millions, the average of the past few years, they would have 85 millions Consols free. As against that they would have to purchase in the market 14 millions in respect of the Sinking Fund and from six to 10 millions in respect of the Savings Banks. Did not these figures show that long before 1923 was reached that would be an impossible financial operation. It would be absolutely impossible to carry on the system, because they could not get Consols to buy. But the right honourable Gentleman the Member for Wolverhampton said that they should not continue to invest the Savings Banks Funds in Consols, but should invest that money in other securities. Be that so; but it was certain that they would have to hold 100 millions in behalf of the Savings Banks, and that would leave only 255 millions of free Consols in the market, out of which the Government would have to purchase very large sums for the Sinking Fund and the Savings Banks. Again, he said that before 1923 arrived the system would have broken down, and they would have to give up the theory for which the late Chancellor of the Exchequer had so strenuously contended—that they must keep up the fixed Debt charge at the present figure. Taking another aspect of the question, look to what money would be wasted in buying up Consols at the high premium at which they stand. Assuming that the average between 1906 and 1923 was 5 per cent. premium—in other words that the premium gradually sank from 113 to 105, they would have the result that while 205 millions Consols were bought for the reduction of the Debt, they would be absolutely throwing away 10 millions, whereas if they had waited till 1923 they could have bought at a price 10 millions cheaper than under the present system. That fact alone showed that they must reduce the fixed Debt charge from time to time according to the circumstances of the case. Those figures satisfied him, at any rate, that the principle on which the right honourable Gentleman the Member for West Monmouth held that the fixed Debt charge should be maintained without alteration could not be supported. He quite admitted that it was convenient to fix from time to time some standard of the amount that should be applicable to the redemption of the Debt, and also that the amount of the fixed Debt charge should be revised from time to time according to the circumstances of the case. But what were the circumstances which ought to be taken into consideration? The first consideration, he thought, should be that the amount devoted to the reduction of the Debt should not be unreasonably large. The taxpayers of the country would resent the imposition of fresh taxation for the purpose of paying off Debt at a rate of from eight to 15 millions a year. They must have a war chest, it was true, but was not six millions, as they would have under the new proposals of the Chancellor of the Exchequer, a sufficient war chest, when it would enable them to raise 250 millions a year without the imposition of any fresh taxation at all. There was another consideration when they came to the fixed Debt charge, and that was that they should pay some regard to the existing burdens of the people. If they found that the nation was expending vast sums of money on the Army and Navy for the purpose of insurance against war, then that fact should be taken into consideration when asked to pay a fixed amount. At the present moment they were paying 22 millions more than in the time of Sir Stafford Northcote, and that supported his argument that the circumstances had altered. Again, when Consols stood at 110, and might possibly go much higher, they should consider the question of premiums, and how soon they could pay off at par. Lastly, he held that they must consider the amount of free Consols in the market, and the proportion it bore to the sum they wanted to spend in redeeming Debt. The general conclusion to which he had come was that they could not proceed on what he would call the crude and ill-considered assumption that they must never reduce the fixed Debt charge, but that they must, from time to time, according to the circumstances of the case, revise that amount, and have regard to many considerations, some of which he had endeavoured to enumerate. He asked the House to accept that, judged by such considerations, the proposal of the Chancellor of the Exchequer was a fair and reasonable proposal. It provided a Sinking Fund of a substantial and reasonable amount, it ensured the maintenance of the Sinking Fund at a figure which could be defended as ample, and finally it offered a security for the continuance of a system which all parties desired to see continued, by which, year by year, they could set aside a large special amount for the redemption of the National Debt.

said that the Amendment of the right honourable Gentleman the Member for Wolverhampton was not confined to the single topic of the financial expedients that were involved in the Finance Bill. He understood that it gave a wider range than that adopted by mere financial experts. He trusted that the honourable and learned Gentleman who had just sat down would not think he was wanting in respect to him if he ventured to call his very able, instructive, and interesting speech unconvincing, and if he did not attempt to follow him from an opposite financial point of view. He desired to discuss the Amendment from a point of view which had not been noticed in the Debate—the point of view of the great masses of the people of the country, although it was to a certain extent touched upon, by implication, in the great oration delivered that night by the right honourable Gentleman the Member for West Monmouth—a speech which would have a very great effect on the country. There was one thing which he did not think they would be able very clearly to follow. They had heard elaborate lectures from past, present, and future Chancellors of the Exchequer, but he thought the whole still appeared very much like a Chinese puzzle. He thought that with the assistance of a "Whittaker" a man of average capacity could become au fait with all the financial law and erudition with which they had been so copiously belaboured; but unfortunately art was long and time was short, and the average man did not put himself to the trouble of comprehending those matters either from want of inclination or want of time or interest. But there was one thing which the average man—whether he be the blackcoated or the fustian-jacketed man—could very easily take in, and that was the simple but very large fact that 121 millions sterling annually was a very considerable national expenditure, and that to add to it at the rate of 20 millions in four or five years was really doing the thing on the scale of liberality that looked risky even in the most prosperous period, and that might prove to be ruinous in those periods of depression which were perfectly certain to come some day. On the whole it looked altogether too much like an audacious endeavour at applying that famous maxim of finance, which directed them when in difficulty to "hang the expense," and he thought the people of this country were very likely to ask whether all this vast expenditure could really be necessary for their welfare, and they would certainly, in his opinion, be disposed to agree with the Amendment to this Finance Bill, even though the effect of it should be to refuse the Government the power to raise that amount of money. He knew what the Government would say. They would say that the people perfectly approved of the uses to which they were going to put the money, and that they were delighted with the Government's policy. His experience of that matter was directly the reverse. Whatever might be said to the contrary by aristocratic or military or commercial Jingoes on this subject—who, by the way, were not wanting on either side of politics in this matter—he for one, and many much better observers than he was, had not yet forgotten the Omdurman and Fashoda deliriums which were indulged in by many enthusiasts, amongst whom were certain of his own self-appointed leaders, whom he could not bring within his present range of vision, even with the assistance of the largest telescope. He scarcely believed that the Govern- ment themselves could be of opinion that they had the confidence and hearty approval of the people in this matter. If they were satisfied that they had that approval, he thought they would go straight to them and ask the people to pay the bill which they had been compelled to run up. If they were certain that the people thought they were the splendid creatures which they gave themselves out to be, and that they were the real defenders of the people's existence, and were covering themselves with glory and filling their pockets with honourable and conscientiously acquired plunder, then they would be perfectly convinced that the people would be even willing and anxious to pay them all that was at present in demand. But the fact was that they were concealing or attempting to conceal from the people what they actually wanted to do. They knew that in equity lawyers held that concealment was generally a note of fraud, and he used the word fraud in connection with Her Majesty's Government in a strictly Parliamentary and even Pickwickian sense. The Government were undoubtedly seeking to conceal what they were doing from the ordinary observer, who could not see through the mask of financial technicalities. When the people saw the uses to which the Government were applying this large sum of money, some of them positively mischievous and evil, they would certainly condemn such a policy. They were neglecting technical education, and he did not say that some blame was not attachable to both parties in regard to this matter. It was, to a considerable extent, a question of armaments. If they went on as they were doing at present, they would not be able to maintain those armaments without resorting to the old system of the press-gang, or organising the new system of conscription in this country. Their armaments were being used for the purpose of the cruel and sanguinary conquest of other races, under the pretence of civilising them, whereas the very first step in asserting the brutal right of the strongest was a step which was an outrage upon the most elementary principles both of duty and of justice and of international morality. Under the pretext of hastening or accelerating civilisation they were, by a sort of hothouse civilisation of their own, changing these tribes into positive monsters of dependence and backbonelessness and artificiality, and they were compelling them to support our own greed, and they were exploiting the lands which once belonged to those people. The armaments which were used in another respect were used for the defence of Colonies which proceeded to repay that kindness by shutting out their commerce by means of high tariffs. They were perpetually expending upon armaments for the defence of the Empire large sums, without any possible limit or possible end, and if they went on the time would come to pass when the Empire would entirely smother the United Kingdom under the boundless weight of its infinite self-expansion. He thought the wisest course for them to take was to diminish their Imperial responsibilities as much as they possibly could. He did not know why they should continue to adhere to the exploded economic heresy that trade followed the flag, and that it did not only follow the demand for the cheapest and the best goods. It was not only in those matters that the people of this country were scandalised by what was going on, for they saw them making ducks and drakes of the millions which they desired to be spent in other ways. They saw them throwing away the money and wasting it in what they called the pampering of the landlords, by means of eleemosynary distributions. They saw them wasting their money upon rabid, tyrannical and self-exterminative ecclesiastical sects for the purpose of ruining national education. They saw them also giving to mendicant municipalities a regular schooling in wastefulness at the fee of £9,000,000 a year, which would possibly be an increasing sum. He had tried to state in the briefest manner what he thought was the condition of the mind of the people on the real subject matter of this Finance Bill. The great mass of the people perfectly understood the comparative operation of the direct and indirect taxation. They knew perfectly well that although direct taxation hit the rich man, it ultimately hit the poor man also, and they understood with perfect clearness that any diminution of capital was harmful to all classes, and that every shilling taken directly from the rich man had the effect of diminishing the capital of the country, and caused less to be divided among the wage-earn- ing classes. He regarded this as a correct summary of the feeling of the masses of the people of this country in regard to the way in which the Government were dealing with the money that was taken from the pockets of the people both rich and poor. Holding those same opinions himself, he considered that it was his duty, however unpleasant it might be to have to perform it, to record his vote against the Budget proposals in toto, as a protest against the sort of thing that was going on, and which threatened to be continued.

said that in the few remarks which he would address to the House he would not attempt to follow the remarkable speech which they had just heard. It was certainly very full of adjectives, and it was very difficult to follow what was meant. It was simply against the Government, and that was sufficient for the honourable Member opposite. In considering this question, the Member for West Monmouth had spoken at considerable length upon the subject of increased taxation. That was a matter which concerned everybody, and which must be considered in the future. Looking at affairs as they stood, it was obvious to all that the chances were that their expenditure was not going to decrease, but rather to increase. But although that was the case he thought it was idle to say that this state of things had been brought about by the present Government. It had been brought about by a policy which the country approved of, and which was essential to the welfare and existence of this Empire. That expenditure had been brought about by foreign and domestic affairs combined. It was easy enough on a political platform to talk about an increase of many millions, but, to be fair and honest, it must be acknowledged that even in their civil expenditure the enormous increase had been in regard to the subject of education, and it was not fair to put it on the shoulders of this or any other Government, for it was a national want, because the country was growing and expanding at a great pace. As regarded the enormous increase of armaments, they all regretted that this expenditure was necessary, but they firmly believed that this great increase of expenditure was the wisest and safest way of protecting this and other countries from the calamities of war. He had been led to make those remarks by the speech of the honourable Gentleman who had just spoken, but he wished to refer to two other points. He desired to say a few words in regard to the proposed increase in the wine duties. He never drank wine himself, and therefore he could look at the question from an impartial standpoint. He thought this was an irritating alteration which would bring in very little money, and which would affect their intercourse with other countries in an unpleasant manner, more especially in regard to their Australian Colonies, where they had been talking about federation. He had been conversing with an Australian gentleman, who had informed him that this alteration would only produce about £20,000 from Australia, although it would do an infinite amount of mischief there, because the wine industry was being developed, and the irritation caused would be enormously out of proportion to the benefit which would accrue to the Exchequer. It did seem to him to be a pity that this Government, which prided itself so much upon its Colonial policy should go out of its way to produce this irritation for so small a result. He did hope still that this question would be altered, and that even at the last hour the Chancellor of the Exchequer would see that the settlement of this matter is very important, and that he should not produce this irritation by such a comparatively unimportant change. The second point he desired to allude to was the Sinking Fund. He acknowledged at once that it was with great regret that he heard that the Sinking Fund was to be reduced. He was one of those who believed that it was the duty of this country in the day of their prosperity to do their utmost to reduce that Debt. From a financial point of view, in the days of their prosperity they were bound to reduce that Debt, with a view of getting rid of it altogether. He recognised that the Chancellor of the Exchequer had some excuse for the action he had taken, owing to the very complicated state of affairs which existed with regard to the high price of Consols, and other complicated affairs connected with this great subject. The Member for Bodmin had given them a very interesting discourse upon the subject of Consols. He took it for granted that the present price of Consols was the natural price, but that was a mistake; the price of Consols had been artificially raised by the fact that the Government had to buy so much every year. Unfortunately the fact that Consols had been forced up of late years had also raised the price of other securities. But he thought it was possible to so deal with them that Consols would fall to their normal value. If that was the true bona fide market value of Consols, very good, but he thought that it would be found, if any system could be established by the Chancellor of the Exchequer by which these enormous purchases could be stopped, Consols would fall to their natural value. That disposed of the argument that it was all the same whether they were paid off now at their present price or whether they were paid off at a lower rate. It was admitted that to pay them off at that present price was extravagant, and it was a good excuse for the Chancellor of the Exchequer to deal with them in some other way. There was one question, which was whether a larger area could not be used for investments. He saw great danger in allowing the money of the Post Office and Sinking Fund being put into other securities. Directly the State became a large holder in a particular Stock Exchange security it would raise the price of that security. It was, however, to get over that difficulty that it was suggested that Indian, Colonial, and local loans should be taken up by this fund; but taken up in such a way that the State took the whole of the stock issued at one time, so that there should be no competition with the public. He thought that such a system might tend to check the rise in the price of Consols. He believed with a reduced Sinking Fund and a reduced amount of Savings Bank money there would be an opportunity to lend money at a lower rate than at the present time. If such a system was taken advantage of in 10 or 12 years the difficulty would be got over, because by 1923 Consols should fall to their normal value. It had been suggested that the whole subject should form a topic of investigation by a Committee, but in his opinion it was a matter for the Chancellor of the Exchequer to settle. It was for him to take expert opinion, and make up his mind as to the best course to pursue. It was an impor- tant matter, however, which he trusted would be considered very shortly. He regretted the action of the Chancellor in reducing the Sinking Fund, but did not agree with the right honourable Gentleman the Member for West Monmouthshire that it struck at the root of the whole Fund. He did not see that it would permanently affect it. He thought that there was some excuse for the reduction, having regard to the present enormous price of Consols. But when they remembered what had been done in the earlier part of the century it could not be said that £25,000,000 a year was an excessive sum to apply to the reduction of Debt. It was not a satisfactory state of things, and he thought that at the end of the most prosperous century the country had had that they should do something to remove the incubus which had lain on them for so many years. Some alteration was necessary in the application of the Sinking Fund, and he thought if the Chancellor of the Exchequer would turn his attention to the proposals which had been made it would be a great step in advance. He regarded the postponement of the payment of Debt as the most cowardly and mean action which could be taken towards our posterity.

said his knowledge on the subject of the Sinking Fund was infinitely less than the knowledge of those who had spoken upon that matter, but it appeared to him that the whole weight of the argument was against the proposals of the Government, and the general feeling of the House was summed up by the Member for East Islington, when that Gentleman regretted that "for the second time it was a Conservative Chancellor of the Exchequer who had reduced the Fund for the payment of the National Debt." The subject to which he wished to address the attention of the House was the wine duties, with regard to the Parliamentary and secret histories of which he had probably a wider knowledge than anyone in the House. He had been, in Mr. Gladstone's second Administration, charged by Mr. Gladstone with the subject in which Mr. Gladstone took the deepest interest, and he possessed a detailed correspondence of 1880–1885 and of 1888, in which Mr. Gladstone's views were set forth. They were diametrically opposed to the proposals of the Government. Some speakers appeared to have fallen in with the view of the Chancellor of the Exchequer that it would be more convenient to discuss this matter in the Committee stage of the Bill, but his view was exactly the opposite. His only regret was that the House did not attack it more definitely on the first night of the Resolution, because unless it was attacked then no very great result could be obtained after. If there was one subject on which the Budget proposals could be attacked it was that of the wine duties, because in a former Budget of the First Lord of the Admiralty these proposals were first put to the House, and they had subsequently to be withdrawn when they came into the Bill. The subject of the wine duties was not a domestic matter only; it concerned great interests abroad with which our trade was very greatly mixed up, and the Vote ought to have been challenged at once, because in the Committee stage it would be too late to fight the question. When the Resolution was before the House he had alluded to the fact that the trade in Australian wines with this country was steadily increasing, and the Chancellor of the Exchequer contradicted that statement. He had now looked up the authorities which he thought bore out the statement he then made.

I referred to the total Colonial wine trade with this country. The figures of the last three years showed that that is practically at a standstill, but probably the trade of South Australia and Victoria had rather slightly increased.

said that the figures to which he had referred showed that the total importation of Colonial wines into this country had increased from £428,893 in 1894, to £640,712 in 1895, to £731,000 in 1896, and to over £741,000 in 1897.

Read last year's figures.

said they had not got last year's figures before them, so that it must be taken that the total Colonial wine trade for the last three years had been practically stationary. But there was no doubt that the Australian wine trade had increased, and was increasing still. Very similar proposals to those before the House in respect to the wine duties were made in 1888 by the right honourable Gentleman the present First Lord of the Admiralty when he was Chancellor of the Exchequer, but they were withdrawn. He (Sir C. Dilke) hoped that when the First Lord of the Admiralty addressed the House, he would explain why those proposals were withdrawn, and whether the reason which necessitated their withdrawal in 1888 did not exist at the present time with regard to the proposals of the Chancellor of the Exchequer. The First Lord of the Admiralty was now a party to a reversal of the policy he adopted in 1888, and he (Sir C. Dilke) wished to know why it was wise in 1899 to adopt a Measure which was in 1888 considered unwise. After the proposals had been withdrawn in 1888, Mr. Gladstone, who was by far the highest authority upon the subject of the wine duties, and who made them a special study, expressed his views in a single sentence. He said, "We were on the edge of a great national misfortune." He supposed that they would be told with regard to Mr. Gladstone, as they were told of Lord Beaconsfield, that he is dead, and that things could be done now which could not be done before; but those who held free trade views did not believe that it could be safely done. It was not as though the wine duties had always been handled as severely as at present, when the right honourable Gentleman the Chancellor of the Exchequer said he did not believe in bargaining with the wine duties. The wine duties had always been used for the purpose of bargaining with foreign countries. They were so used in 1860, 1880, and 1886, and were the subject of negotiations in 1888, and to raise the duties now without negotiating with foreign countries seemed to him to be as dangerous to the trade of the country as it was in 1888. In the case of Australia, it was equally dangerous because they had hit a growing industry at a time when, in all probability, a federal tariff was about to become an accomplished fact. It was the very worst moment which could have been chosen for raising the wine duties, and he doubted whether, as regarded foreign powers, the moment was much better chosen. We had had political differences with them which were now drawing to an end apparently, but which had excited some exasperated feeling, and just at the moment that things were settling down, it was proposed to raise these duties. It seemed to him to be playing into the hands of the Protectionists, and if the proposal was carried out, we should run a great risk of dislocating our trade. They were met with somewhat academic arguments, but they all knew that the bulk of our French trade was affected by those duties, especially the trade with great cities like Rheims and Bordeaux. There had been a great deal of agitation recently on the subject of the sugar bounties, and it had only lately been made quite clear that those who desired to deal with this subject by countervailing duties had not got their own way. When they were trying to deal with those countries by argument, how would those opposed to them receive the new duties? The Members of this House often spoke as though all their trade was with their own possessions, and as though foreign Powers excluded our trade to such an extent as to greatly reduce its volume. Their trade with foreign Powers had been greatly increasing, and they sent £45,000,000 sterling of their own produce to the great wine-producing countries of the Continent, apart altogether from what they sent to their own Colonies. The bulk of the trade involved was so enormous and the imposition of these wine duties would be so irritating that he confessed that it seemed to be unwise for the small amount of money involved to jeopardise the trade which was of far more importance to this country than the duty. With regard to the large amount of money which had been spent in Africa by this country, he did not think they were ever likely to see that money back again, or that those districts in Africa would ever repay the amount of time which the House had bestowed upon them. Those honourable Members of the House who had consistently opposed this policy had always taken up that line of argument. If they were unable to make the West Indies, which had a perfect soil and open sea communication, pay their way, how could they hope to make those countries in the heart of Africa, which produced the same products under more disadvantageous circumstances, a profitable undertaking? His right honourable Friend had criticised the military and naval expenditure. He confessed that for his part, supporter as he was of the increased expenditure upon the Navy, he had always believed that they could have a stronger and more effective army for a far less sum of money than was spent upon it. He knew that the Member for West Monmouthshire and the present Leader of the Opposition were of the opinion that it was impossible for the House of Commons to adequately grapple with a subject of military reform, but that was only because honourable Members would not give their minds to the question. It was, including India, which could not be excluded, a larger branch of their expenditure than that upon the Navy. The Chancellor of the Exchequer had attacked him the other day for the terms of the Notice which he had placed upon the Paper upon this question, and said that all he desired to bring before the House was that plan upon which he opposed the increase of the Army which the House had rejected. The right honourable Gentleman himself held exactly the same view, for he made a great speech on the subject at Bristol, and there was not a single word which fell from the right honourable Gentleman in that speech in regard to Army reform which he was not prepared to agree with. They should deal with this question as the greatest branch of Imperial expenditure, and demand a reform, for which there was a prima facie reason, for the country did not get full value for the money. Therefore this was a question which deserved the attention of the faithful guardian of the purse strings of the country, the Chancellor of the Exchequer. The argument addressed to them was that this great Empire threw upon them the duty of having a highly efficient Army, but it also threw upon them the duty of considering whether or not that Army should be organised upon a plan of their own entirely different from the German and other foreign plans which were imposed upon them by the military authorities imitating the systems which existed abroad. There were grounds for asking the Chancellor of the Exchequer, instead of deploring the large naval and military expenditure and fighting against the policy of his colleagues, whether the time had not come when he should look into the subject of Army reform, and whether they did not believe that it would be possible, by calling in technical opinion to support them, to set the seal of their approval upon some great scheme of military reform.

said they had heard that evening two very remarkable speeches. There was one remark made by the right honourable Gentleman the Member for Bodmin to which he should like to allude. The right honourable Gentleman said that there was a great danger of this nation, instead of living by its own industry, and by industry carried on within the boundaries of this country, becoming a nation of rentiers and living by lending money to other nations. What did not appear to strike him was that the course now being taken by this country was being adopted under the impulse of that very feeling. How could that difficulty be best met? Why, only by such an expansion of the Empire as had been brought about by the manner in which that money was being spent, which enabled them instead of confining themselves to the limits of these shores to deposit their money and use their brains and energy in that expanded Empire, and this was the only way in which the danger of becoming a nation of rentiers could be avoided. That was the most complete answer that could be given to the Member for West Monmouthshire when he objected to this large expenditure, for he must feel that it was impossible within the boundaries of Great Britain that there could possibly be room for the vast increase of population. Now, why had this question arisen on the Budget? It was because the Chancellor of the Exchequer was dealing with the fringe of this question. The attention of the House of Commons had been drawn to the creating of a difficulty by the enormous increase in which were called "gilt-edged securities." It was the difficulty of finding a safe and profitable investment within these shores that they had to deal with and it was only by expansion that a profitable investment could be found The expenditure of this country at the beginning of the century was in a very different position. It naturally cost them more to maintain a large Empire than a small one, and it must be evident to everybody that they were spending money not only for the protection of Great Britain, but also for the protection of the Empire of which this country was the centre. It was quite fair to argue that it was unwise for them to enter upon any such policy, but their own view was that they expected a return for that expenditure in the trade which they would do with these countries when they had been fully developed. That was where they would get the return for their present expenditure, and it was in the light of that fact that this policy must be regarded. Another statement made by the right honourable Gentleman was that the expenditure of this country had increased by no less than £19,000,000 within the term of office of the present Government. Upon paper that appeared to be the fact, but he desired to point out that when they shifted a burden from one shoulder to the other they did not necessarily increase it; and whether one part of the burden was imposed by the local authority and the other by the Chancellor of the Exchequer the burden was the same. It was not correct, therefore, to say that this policy meant an increase of the burden of taxation, and it was not right to say that the £2,000,000 taken from the Imperial Exchequer in relief of rates was an increase of taxation, for it was simply shifting it from one shoulder to the other.

I did not say that it was an increase of taxation. I said it was an increase of expenditure.

said that it was expended by the local authority in lieu of money raised by themselves, and therefore it made no difference. The right honourable Gentleman would allow that a very large increase had taken place in the amount granted in aid of local taxation, although he distinctly agreed with him that it was not a satisfactory form of taxation at all. He believed that the burden upon the Imperial taxpayer in relief of local burdens was an evil, but why had the House of Commons taken that course? It was simply the choice of evils, for it was a still greater wrong when the maintenance of the poor and the keeping up of the roads was unduly borne by one class. It was a choice of evils and a temporary palliative. It was the hope of honourable Gentlemen on this side of the House and also of some honourable Members on the opposite side that when the Commission had reported it might be in their power to distribute the burden of local taxation as fairly as Imperial taxation, and if that could be done there would be no longer any need for this vicious system of applying large grants from Imperial taxation in relief of local burdens. He desired to point out that the right honourable Gentleman, in placing the actual increase at £19,000,000, had greatly overshot the mark. There was one thing which always struck him in the speeches of the right honourable Gentleman the Member for West Monmouthshire, and that was that he often referred to the extremely prosperous condition of the agricultural industry. He scarcely knew which section of the agricultural community was prosperous. It certainly was not the landlord, or the tenant, or the labourer, who had been driven into the town because he could not get a sufficient wage to live upon in the parish where he was born. The right honourable Gentleman once told him that he had had himself some experience of agriculture, and perhaps he was referring to his own experience. He believed there had been a very good season for grass in the New Forest at the present moment, but three acres and a cow there were not quite the same thing as large areas of arable land in other parts of England. If the right honourable Gentleman would extend his rambles a little during his next holidays he would derive some additional experience if he came into his part of the country, for he would find a very different state of things in Suffolk.

I based my statement not upon my own experience, but upon three consecutive speeches of the Chancellor of the Exchequer.

I never made any statement to the effect that agriculture was prosperous, because I know too much about the subject to assert anything of the kind.

said he would leave the late and the present Chancellors of the Exchequer to settle that point between themselves. There were two other points which he wished to mention, and one of them was in regard to the death duties. The right honourable Gentleman congratulated himself upon the amount of the death duties and upon his own courage in levying them, but he desired to say that those duties were a very great and a very severe hardship upon people whose feelings were very much outraged by the very large sums which had to be paid from classes of property which were not easily turned into money. Property was treated as if it were divisible at will. The right honourable Gentleman had said that agriculture was prosperous. There was a form of agricultural ownership which was prosperous, and that was the residential value which had largely increased in this country, but the agricultural value had decreased. It was a great hardship to pay 10, 14, or 15 per cent. upon large estates for death duties when the money had to be borrowed to pay it. He would not go any further into that subject at the present moment, although there were many honourable Members who felt that some reasonable amendment of the death duties might be made. He did not ask for anything very large, but the points of extreme hardship might be remedied. With regard to the proportion of direct and indirect taxation contributed by the two great classes in the State, there was one important factor which was not always borne in mind. It had been generally allowed that the proportion of the actual payment of taxes should be about half to each of the two great sections of the community. It had been accepted as a principle that indirect taxation fell upon what he might call the poorer class, and that direct taxation fell upon a class who were better able to bear it. It should be remembered, however, that the poor classes in this country who paid the indirect taxation received back again in absolute coin of the realm a large proportion of the taxes which they paid in that manner. It might be fairly stated that almost the entire amount of the Education Vote went directly into their pockets, although it was also, no doubt, indirectly a benefit to the entire community. It was certainly a fact that the £11,000,000, or £12,000,000 which was spent upon education went directly into the pockets of the poorer classes of this country. There was another item which seemed to have escaped notice altogether, and that was in regard to the cheap loaf, which was not quite so cheap as was generally supposed by those who discussed this question. There was an item in their expenditure which they had to bear and which was distinctly necessary in order to maintain the cheap loaf, and that was the great cost of their Navy. He thought it was fair to say that at least half the cost of the Navy, namely, about £13,000,000, was necessitated by the absolute necessity for maintaining the cheap loaf and the supply of food which enabled that loaf to be cheap. Consequently it might be said that at least half the cost of the Navy went direct into the pockets of the poorer classes in cheapening their food. Half, therefore of the £50,000,000 paid by indirect taxation went directly back into the pockets of the working-classes of the country. That being so, the Chancellor of the Exchequer was justified in thinking that direct taxation was at present, at least, as high as was equitable, and that any further increase could only be looked upon as a most valuable reserve which should not be exhausted in time of peace, but should remain to be drawn upon in time of extreme national necessity. What the right honourable Gentleman said was that he did not want to milk the cow when the country was not thirsty, but that he intended to reserve the milk. One remark of the right honourable Gentleman the Member for West Monmouthshire struck him very much. He said that the present Administration and the last Conservative and Unionist Administration were on the crest of the wave, and that his own Administration was in the trough of the sea. Did it strike him there was any reason for that? He thought it rather a peculiar coincidence, that when a Conservative and Unionist Government were in power they should be on the crest of the wave as regards prosperity. The explanation was that the methods and language used by the right honourable Gentleman and his friends induced capitalists to believe that direct taxation would be so increased if the Opposition obtained office that security could not be found for capital. The right honourable Gentleman no doubt thought that that was a class of argument heard on Conservative platforms, but there were things said on Conservative platforms which were true. They were entitled to call the attention of the House to the fact that there was a distinct loss of confidence among capitalists and employers when they felt that methods of taxation might be employed which would endanger and interfere with the conduct of the industries with which they were engaged. Though no doubt the feeling obtained most strongly on both sides of the House that it was undesirable to reduce the amount now paid for the reduction of the National Debt, yet he believed that when all the difficulties that had to be met were taken into consideration, and when attention was called to the fact that no alternative policy had been suggested, the House was generally of opinion that the Chancellor of the Exchequer had followed a course which was both wise and statesmanlike, and which would commend itself to the country.

said that the reason he did not intend to move his Amendment was that he could not do so. He might, however, discuss the subject on the Amendment before the House, but the subject was too serious, in his opinion, to be introduced at the fag-end of a two days' Debate, and he would not take the responsibility of putting it in that position. At the same time he wished the Government and the House to understand that the discussion on the subject had merely been postponed. The Irish people believed, rightly or wrongly, that they had a serious grievance, and that their case had been established by a Royal Commission. They believed also that it was not to be met by the petty-fogging devices of Parliamentary Debate or by the fallacies expressed again and again, and he regretted he must say by gross and palpable misrepresentation. That being so, the Irish people would not submit to have the question burked, either in that or any other Session, until it was redressed. He was not himself a firm believer in set Debates in that House, and he had never known an Irish grievance to be redressed by long speeches, however able. In his opinion Parliament would have to be moved in that matter by other ways and other means, and he hoped that, until the Government gave way, it would not hear the end of the subject.

I rise in a spirit of deep humility to address the House upon the question of the Budget, because after what I have heard from the right honourable Gentleman the Member for Monmouthshire I know I am held by him—I wonder whether I am so held by his colleagues or by those who were his colleagues—to be the worst finance Minister possible. But I shall venture very humbly to reply in some measure to the right honourable Gentleman. I shall have to remind him of some incidents which I am perfectly willing shall be regarded as tests as to the rival claims of the right honourable Gentleman and myself. I hope I shall be excused these personal allusions, because honourable Members may have noticed that whatever Budget, whatever financial subject comes up, owing to some unfortunate financial antipathy the right hon- ourable Gentleman cannot make a speech without alluding to me, though it is now 12 years since I had the honour to fill the office of Chancellor of the Exchequer. Now, the right honourable Gentleman gave us a most interesting review of the four years through which we have passed, and he said that at the beginning of the present Administration he left us a solvent estate which we had now reduced to a state almost of insolvency. Well, we are paying off £7,000,000 or £8,000,000 of Debt. That is a curious instance of insolvency. We are doing more as regards paying Debt than any other nation in Europe is doing or has thought of doing, but the right honourable Gentleman, with that splendid exaggeration of which he is a past-master, and which, he introduces into all his speeches, says we are on the verge of financial insolvency. He says he left us a solvent estate; but there were some liabilities attaching to the estate he left us; and though the right honourable Gentleman has gazetted himself out of the firm, he still remains responsible, and he will, I hope, stand by the liabilities of the firm he has left. I do not know whether the right honourable Gentleman remembers that when, I think, he sat as Leader of the House upon this Bench, a statement was made by the Under-Secretary for Foreign Affairs with regard to the Nile. If so, does he stand by the declarations which were made by the Under-Secretary of the Government of which he was a Member? If so, how can he denounce that portion of our expenditure which has been incurred in redeeming the pledges made by the Government of which he was a Member? It is all very well for the right honourable Gentleman to stand up now and point to what we have done during the last four years. For a portion of that he is responsible, for a, portion of that his friends are responsible, and I am glad to say that to a great portion of that to which the right honourable Gentleman objects the majority of those who are sitting around him do not object, but have supported the Government in respect of it. My right honourable Friend the Member for Bodmin spoke of the attitude which has been taken by some noble Lords and right honourable Gentlemen opposite during the last four years. He objected to that attitude, and thought that it had been rather contrary to the interests and prestige of the country and the peace of the world. The right honourable Gentleman the Member for Monmouthshire proceeded to review the finance, and began by speaking of the revenue. A fallacy which ran through a great portion of his speech was that high taxation means prosperity. A form in which the right honourable Gentleman might well put his conjectures is that the more you plunder a class, and, therefore, show what that class can pay, the more prosperous that class is. Throughout these Debates the fact of the high revenue has been cited as a proof of prosperity. So far as that high revenue is the result of larger returns from the same taxes it is a sign of prosperity, but, so far as it results from an increase of the taxes themselves, and it is to that mainly that the increase of revenue has been due, it is not a sign of increase of prosperity; it is a sign that you can get more, that you have got more revenue, but that you have laid a greater burden on the people. To say that an 8d. income-tax, and the receipt, therefore, of £18,000,000, instead of £4,000,000, from income-tax is a proof of prosperity is a proposition which I think no sensible man would possibly assent to. Let us look at this from the point of view of the professional man. He is told by the right honourable Gentleman opposite, and by many others, that the country is so prosperous that there should be no hesitation in increasing the income-tax, which is direct taxation, that we are so prosperous that we must continue to pay off Debt to the full extent. The professional class may say they are now paying 8d. in the pound income-tax instead of 2d., as in Sir S. Northcote's time, but this does not prove the increased prosperity of the country. In the comparisons that have been made the amount of revenue has been compared with that levied before irrespective of the increase of taxation. The taxation per head now is greater than at the beginning of the reign and greater than in 1875, when Sir S. Northcote arranged the Sinking Fund. Therefore we cannot look upon the situation as justifying those extreme measures and rigid purity which the right honourable Gentleman opposite affects, and they cannot be based entirely on the prosperity of the country. The right honourable Gentleman passed from the revenue of the country and approached the expenditure, and here he revelled in his totals, and the more he did so the more powerful his speech was. The right honourable Baronet the Member for the Forest of Dean spoke of the power of the right honourable Gentleman's speech. But the right honourable Gentleman never condescends to details, and we never can get him with regard to naval expenditure to move a reduction. He speaks of £90,000,000, and gives the impression that the whole of our expenditure is a crime, and denounces it accordingly. The amounts given under the Agricultural Rating and Voluntary Schools Acts are in the main the two crimes against which the right honourable Gentleman declaims. But the country determined that relief should be given under those Acts. It was in all our election addresses, and we have redeemed our pledges. If we had not redeemed our pledges the right honourable Gentleman would have been as magnificent in denouncing us as he has been grandiloquent because we have fulfilled them. He says the concessions under those two Acts were made to a favoured few. Are 3,000,000 agricultural labourers a favoured few. I call it a considerable portion of the population of the country, and a very important portion. But the right honourable Gentleman says it is really a dole to the landlords. If so, have the landlords got it? Have rents been raised in consequence of the Agricultural Rating Act? If rents have not been raised, the right honourable Gentleman will perhaps admit that, so far, the agricultural ratepayer, the farmer, has had the advantage of the Act. We have given the money to the favoured few. It is a libel. The favoured few have not received the money. It was not intended that the favoured few should receive it. It has gone to the agricultural ratepayer. If he has not got it, who has? If rents have been raised, in what county is it, in what area? If there has been no general raising of rents, this relief has gone to those for whom it was intended. But Gentlemen opposite will return to their platforms, and we shall hear the same story over again. I would refer the right honourable Gentleman opposite to his colleague the right honourable Member for Wolverhampton. I wonder whether he thinks this has gone to the ratepayers or the landlords? I think he will say it has gone to the ratepayers, because, he said, "the same advantages would be claimed for the urban ratepayer." If he speaks of some relief to urban ratepayers, it is clear he does not mean urban landlords, and I should have thought the right honourable Member for Monmouth would have referred to his right honourable Friend the Member for Wolverhampton for a statement of into whose pocket the relief has gone. Then the next point upon which the right honourable Gentleman was so eloquent was the grant to Voluntary schools, and there again, I presume, he would have us believe the relief has gone to the favoured few. But here, I think, the right honourable Gentleman looks at the matter rather from the point of view of the politician than that of the financier. If we had not given the grant to the Voluntary schools to save them from extinction, does the right honourable Gentleman not see that a great burden would have to be laid on the taxpayers of the country? Does the right honourable Gentleman not see it would have been necessary to purchase at great expense nearly all the Voluntary schools, that we should have been obliged in many ways from the ratepayers or from the taxpayers to find the money? Therefore, as regards this class of the subject, I cannot admit that the right honourable Gentleman is an orthodox financier. In many respects he is the high priest of financial purity; but when you strip him of his vestments, you find an astute electioneer underneath them. I now come to other expenditure. I have carefully analysed these 19 millions of which the right honourable Gentleman speaks, I have spoken of the two millions to agricultural ratepayers, and there was, I think, about £635,000 to save Voluntary schools from extinction and the ratepayers and taxpayers of the country from the enormous burden which would have to be placed upon them if they had to supply the place of voluntary subscriptions. It is no good for the right honourable Gentleman, if he wishes his speeches to have permanent effect—an immediate effect, I admit, he secures by his impressive and charming manner—but if he wishes to make a permanent impression, he ought to go a little more into details, or else he may mislead the country, which, I am sure, is the last thing the right honourable Gentleman would desire. Apart from the question of the grant which has been given to Voluntary schools, there is an increase in the education service of £1,220,000, and, of course, the right honourable Gentleman does not object to that? The Post Office service and the collection of taxes together account for £2,400,000, and had the right honourable Gentleman been in office the increase would have been precisely the same. In miscellaneous Civil Service charges there is nearly £300,000, and for that increase I think both sides of the House are equally responsible. Inspection and every kind of watchfulness over the interests of the people at large are, I think, responsible for that. These are large items, and the controversial items, apart from the Army and Navy expenditure, amount to about four millions, including £700,000 or £800,000 for colonial and foreign services. I think about £760,000 has been spent on Uganda and West Africa, and it is about four millions out of the 19 which are discussable apart from the Army and Navy. Well, then, I come to the Army and Navy, and there I would wish to know a little more of the opinion of the right honourable Gentleman. It is mixed up with 19 millions, but I do not know that he has ever given a vote against the expenditure. I do not know that he really believes we are spending too much. I think he does, but we have not had any public pronouncement to that effect. We have no doubt increased the expenditure of the Army and Navy. Have we had any quid pro quo for that increased expenditure? Have we been obliged to make it by pressure which has come not from one side of the House only, but from both sides of the House? I will examine that presently, but let me remind the House of the comparison which has been made in the course of this Debate between the Penjdeh incident and the Fashoda incident. The Penjdeh incident cost the country 11 millions, and a scare. Our naval expenditure has not cost the country that amount, because it is all represented by that upon which it was spent. It was not frittered away as a great portion of the 11 millions was necessarily frittered away. We have our quid pro quo. We have had our increased expenditure, and no scare. We have increased expenditure, and a result upon which the right honourable Gentleman has generously congratulated the Government and Lord Salisbury. If we have been able to make these satisfactory settlements in different parts of Europe and the globe, we can look back with equanimity upon the expenditure which put us in a position to defend our rights, not for aggression, for aggression was never intended, but for the defence of our rights. Does the country grudge the expenditure which produced that result. As the right honourable Gentleman the Chancellor of the Exchequer said of himself, I do not know what is going on in the mind of the right honourable Gentleman, but as I have had a longer experience of the Chancellor of the Exchequer than my right honourable Friend, perhaps I have a better judgment than my right honourable Friend, and know more what is taking place in his brain. I think that he thought that we have gone too far, and that it would have been better if we had not spent this money. But what has the Navy been called upon to do, not only by those whom the right honourable Gentleman loves to call pseudo Imperialists and Jingoes, but by many of his own supporters; by many of those who sit behind him, and are mixed up in that confusion of schools of thought—I will not say Parties—which exist among the honourable Gentlemen who sit upon that side of the House. Does the House remember that considerable expense was incurred with regard to Crete? I think honourable Members opposite were as responsible as anyone in this House for that expenditure of that year, and those two years' labour ended satisfactorily by the action of the British Admiral there, Admiral Noel. They share that responsibility—I say it to their credit, and not to their discredit—they called upon us, at all events, to take action. I do not know whether the right honourable Gentleman was amongst them, because I am not sure how far he goes in that direction even with his most humanitarian friends. But at all events, it will be admitted that a great number of honourable Gentlemen opposite supported us in the necessary expenditure which we incurred for the pacification of Crete, and by which we have removed one of the elements of danger in the Near East. Then there is China. A great deal of naval money has been spent on China. I do not know whether honourable Gentlemen opposite did not press us very hardly with regard to what was going on in China as well as our own friends. I think they would have been very much disappointed if they had found that the British Fleet in Eastern waters was not so strong a fleet as would be necessary for maintaining that position which now, I am glad to say, has ended in a peaceful arrangement with Russia. Then Fashoda. I was interested to hear the right honourable Gentleman—not in so many words, but by inference—denounce the operations in the Soudan. He spoke of deserts. I think perhaps the recollection of Sir Edward Grey's—I mean the late Under Secretary—declaration passed over the mind of the right honourable Gentleman, but he will not deny that the country thought it was necessary that we should take the action that we did take. If he did not think so, he is in opposition to a great number of the honourable Gentlemen who sit upon that side of the House. As I listened to the right honourable Gentleman's speech, I confess I wondered what proportion—I do not mean in length, but in power and sustained interest—was not directed towards a different school of thought as regards Foreign Policy among his own friends rather than against the Government. No one could listen to the right honourable Gentleman without seeing a certain amount of emphasis put upon the cleavage between the two schools of thought. I hope I am not saying anything offensive in the lease degree because I call them schools of thought and not political Parties. I wish to divest what I say of any personal character, but the cleavage exists, though, both Parties—both schools of thought—unite in opposing this Budget on the Second Reading. The right honourable Gentleman unites the Party on the ground of a review of the last four years, and yet in that review a great many of those who sit upon that side and the majority of those on this, disagree with him. There are two more causes of expenditure due to the Army and the Navy which have happened during those four years for which Her Majesty's Government are responsible. One is connected with the Cape, and the other is connected with West Africa. The expenditure connected with West Africa has not been thrown away, and it will not be thrown away. We have made a settlement with our neighbours the French satisfactory to both nations, and which at the same time enables us to open up most important districts. Then with regard to the Cape. I do not know what honourable Gentlemen and right honourable Gentlemen opposite think; but I venture to say there is scarcely a man on that Front Bench, except, perhaps, at the extreme right, who would not be prepared to say that he endorsed the action that we have taken at the cape to guard our interests and to see that that most vital portion of the possessions of the Crown should not in any way be jeopardised. I hope the House will forgive me for having gone into details in these matters. I have gone into details with regard to the expenditure, and I have gone into details with regard to the policy which has necessitated this expenditure. It would indeed be a great satisfaction to the Government, after all their efforts in these directions, if in the future, the near future, the example which has been now set by these arrangements that have been made, and the better feeling which is now established in consequence with foreign nations, might lead to a diminution of those armaments which hitherto have been necessary, and the expenditure on which has not been unfruitful. I hope, Mr. Speaker, that it will be considered that the speech of the right honourable Gentleman the Member for West Monmouthshire justified me in the references which I have made to these matters in defence of Her Majesty's Government. I turn now to the other part of the right honourable Gentleman's speech, and the speeches of other honourable Gentlemen who have dealt with that action in the Budget which has mainly stimulated opposition. I do not refer now to the wine or stamp duties, but to the suspension of the Sinking Fund. There I do not blame the right honourable Gentleman, who perfectly fairly made me the scapegoat, because it was I who in 1887 took the first step and took £2,000,000 from the Sinking Fund—diverted £2,000,000 from the amount devoted to the repayment of the National Debt. I am glad of the opportunity which that gives me, because in one sense it throws light upon the present action of Her Majesty's Government, and it will show how it sustains the argument of the Chancellor of the Exchequer that it was not simply in order to provide for the deficit that he has taken the step of taking £2,000,000 from the amount provided for the repayment of the National Debt. When £2,000,000, upon my proposition, were taken from the amount set aside for the reduction of the National Debt in 1887 I urged it upon two grounds; one ground is practically the same as that now urged by the Chancellor of the Exchequer, and which has been derided by the right honourable Gentleman the Member for West Monmouthshire, and which I can understand being derided, although the speech of the Chancellor of the Exchequer shows the extreme injustice of that derision. I used the argument that the Sinking Fund could be touched and £2,000,000 be taken from it without compromising the existence of the Sinking Fund. The speeches of the right honourable Gentleman the Member for West Monmouthshire and the honourable Gentlemen who supported him were precisely the same as they are now. They said all chance of going on paying off the National Debt would be lost. That shows what false prophets they are, for we have been paying off the National Debt since that time to the extent of £17,000,000 a year. In the 12 years which have elapsed since the time when the prediction was made we have paid off more Debt than we paid off in the 12 years previous to that time, and yet the right honourable Gentleman thinks he is a true prophet. The right honourable Gentleman is very fond of little proverbs and copybook sayings, the chief of which is, "Self-praise is no recommendation." That is the proverb, the saying upon which he has always acted; but, Mr. Speaker, there is one phrase which I would venture to recommend to him in which there is some little truth, and that is, "If you overdo a thing, you may underdo it." That is the proposition which underlies the attack in the speeches of to-night. They do not admit underdoing it. The action I took in 1887 has not compromised the safety of the Sinking Fund, and we have gone on reducing the Debt. The feeling that we should and ought to go on paying the Debt is just as strong in this House now as it was in the House then. That cannot be denied. That action did not then compromise the Sinking Fund, or constitute any real danger to it, nor will what we are doing now constitute any real danger to the Sinking Fund, as is now suggested. I have no doubt when the Party opposite hold political power their whole political power will be thrown into the scale to defend the Sinking Fund and it will be established again in full force. That is one argument I used. The other argument is one I am anxious to lay before the House, and even at this late hour I ask the House to follow me in regard to the argument that I am now going to use. It is an old-fashioned argument perhaps, but I can assure the right honourable Gentleman opposite that it is an orthodox argument. It is an argument drawn from the school of Mr. Gladstone, and, if he accepts some of his propositions, I hope he will accept some of those which were deeply engrafted on the mind of Mr. Gladstone as regards finance. It related to the income tax. Mr. Gladstone looked upon the income tax, not as the right honourable Gentleman and his Radical friends at the present day do—as a means by which you can avoid any increase upon indirect taxation—not from the narrow point of view as between classes as the right honourable Gentleman has been studying and elucidating it to-night, but he looked upon the income tax as a great engine of power, as a reserve to be used and as having as important a use as the Sinking Fund itself. Every penny of the income tax represents £2,000,000. I was educated in that school, and I thought in 1887, as I think now, that to maintain the income tax at 8d. in the pound in time of peace is straining your resources for time of war. The right honourable Gentleman, in his Budgets, has, on two occasions, put on a penny to the income tax. He found it at 6d. and he put it to 7d. He found it at 7d. and he put it to 8d. As I think I remarked at the time, you simply put a penny in the slot and out would come £2,000,000. That was the finance of the right honourable Gentleman, but it was not the kind of finance that Mr. Gladstone would have approved according to the doctrines he held. Let me ask honourable Gentlemen opposite to carry their minds back to the year 1874. What did Mr. Gladstone propose? He proposed the total abolition of the income tax. Now honourable and right honourable Gentlemen opposite think they will denounce us and hold us up to the obloquy of the people if we resist in any way a further imposition of the income tax. So far as I am concerned, I say frankly that my objection to the retention of the income tax at 8d., certainly to increase the income tax from 8d. to 9d., is not an objection to its being a direct tax and not an indirect tax, but it is as weakening the one tax which, like the Sinking Fund, would be the one by which we could suddenly raise in time of war such sums as might be needful to carry on operations during a war. That is the point of view I take as regards the income tax, and from that point of view I think it would have been absurd if in his Budget, in time of peace, the income tax had been raised from 8d. to 9d. not only on account of the inconvenience it might cause to the few—the favoured few, perhaps, in the view of the right honourable Gentleman opposite—but because we should have made a further inroad on what I look upon as one of the chief resources of the financial strength of the country. I know this was the opinion of Mr. Gladstone—you have weakened your income tax by its height.

Will the right honourable Gentleman excuse me? As he has referred to my putting 1d. on the income tax in 1886, and has gone back to Mr. Gladstone's principles, I should like to remind him that at that time Mr. Gladstone was Prime Minister.

That may be, but that does not alter in the slightest degree what I said about the orthodox view of Mr. Gladstone. It may have changed in 1886, but Mr. Gladstone had a very long career, and during that long career one of his great points had been to preserve the income tax for time of war. Perhaps what happened was this. The right honourable Gentleman looked at Mr. Gladstone and said, "I can find no other way of raising £2,000,000, let me put on the income tax," and I expect that is what happened. And I will tell the right honourable Gentleman why. The right honourable Gentleman shall go into the witness box himself. In April, 1886, I think it was, he said, "I know of no class or interest that would bear an increased burden." If he used such language to Mr. Gladstone, the right honourable Gentleman being Chancellor of the Exchequer, I am not surprised that Mr. Gladstone ultimately assented to 1d. being put on the income tax. But the fact remains that in 1874 Mr. Gladstone proposed the abolition of the income tax altogether, and I claim, though the right honourable Gentleman was associated with Mr. Gladstone in his later years, that I have an equal insight into what was the view of the right honourable Gentleman over a considerable period of time. Well I have given these two reasons for my action in 1887; one reason being that you must not overdo it because you might undo it; and the other, and the chief reason, being the income tax. The right honourable Gentleman the Member for West Monmouth said I did it for the sake of popularity. I am not in the habit of doing things for the sake of popularity. I will not accuse him of doing anything for the sake of popularity, but I can assure him, as he has done his best, according to his lights, to strengthen the finance of the country, so I believed I was doing my best, according to my lights, in 1887, to strengthen the finance of the country by the course I took. That was my conscientious belief, and it is equally untrue what was suggested by the right honourable Member for Wolverhampton last night, on the authority of Lord Randolph Churchill, or, rather, not on his authority. Lord Randolph Churchill said he suspected I had taken that course in consequence of pressure from my Conservative colleagues. It was absolutely incorrect. Of course, it was only surmise; he had left the Government and did not know what passed. My Conservative colleagues would have been too generous to put pressure on a new-comer to renounce any financial views he held on joining them, and the new-comer would, perhaps, have been too firm to yield up those views. See how this case I have mentioned bears upon the present situation. At that time the right honourable Member for West Monmouth knows it was not only my view, but it was the Treasury view, that it was a sound piece of work. We do not quote heads of Departments in this House. The right honourable Gentleman, however, introduced the subject himself—not to-night but on previous occasions—and regretted that the Treasury had changed its views. The Treasury took that view in 1887, the Treasury take that view in 1899, and the House will therefore see how erroneous it would be to put upon my right honourable Friend the view that it was simply a cowardly way of meeting the deficiency that induced him to take the step he has taken. He has assured the House that two years ago he had this matter in view. It has been in view constantly in the Treasury, and it has been developed this year. There may be two views with regard to it, but it is not poltroonery, it is not the fear of facing the country and asking it to pay for that expenditure we have incurred, but a genuine belief that what he has done is financially sound, that has induced the Government to assent to the proposals of my right honourable Friend. Might I be permitted to say one word with reference to the conversion to which allusion has been made to-night? It is said that my right honourable Friend and myself—I being the original robber and the Chancellor of the Exchequer the succeeding robber—have taken away altogether from the amount set aside to pay the National Debt £5,000,000, if this proposal should pass into Act—namely, £2,000,000 in 1887, £1,000,000 in 1889, and the £2,000,000 proposed now. But out of that £5,000,000, the sum of £2,600,000 represents the reduction in the interest on the National Debt. There is £2,600,000 of interest saved. I am not sure whether the right honourable Gentleman has ever thoroughly realised that point. I do not know whether he has ever realised that the conversion which it was my good fortune to be able to achieve has relieved the country of the payment of £2,600,000.

Will relieve it.

Practically it has done it. You see it in the price of Consols, in the credit of the country, and in every way, because the result of that conversion has been in the interest of the country far beyond this £2,600,000 which has been saved. But the right honourable Gentleman, for some unexplained reason, has never been able to approve of that conversion. His great Leader, Mr. Gladstone, on the contrary, has always in the most generous manner admitted, may I say, the greatness of the achievement. But the right honourable Gentleman has never been able to force himself to say one word in its favour. The only action he has taken with reference to it has been to taunt me at the time with the fall in Consols, as he actually reminded the House a few nights ago, and to point out that the whole of that, interest ought to go into the amount set aside for the payment of National Debt. I do not know whether the right honourable Gentleman knows exactly and can calculate what £2,000,000 of a Sinking Fund means as regards the amount that you can borrow upon it. That is a calculation which has often been put before the House, but I have never dwelt upon it previously. I have let the story tell its own tale; but when time after time the right honourable Gentleman denounces me and speaks of me as the worst of financiers he knows, perhaps I may be pardoned for reminding the House that £2,600,000 is the equivalent to the cancellation of £100,000,000 of Debt. Consols fell some time after I had proposed the conversion. That was not unnatural. But what did the right honourable Gentleman do? He said, "What do the Consol-holders think of this?" He endeavoured, in fact, to set the Consol-holders against the bargain I had made, which was too favourable to the country and against them. Let me say this on the issue between myself and the right honourable Gentleman. I have set my conversion of the Debt against his Finance Act, and I am content to leave the judgment to posterity. Besides the effects I have mentioned the conversion of the Debt had the general effect that the rate of interest both in this country and elsewhere fell, and I believe it is through the reduction of the rate of interest on Government stocks that corporations and sanitary authorities can borrow more cheaply, and in that way I maintain that the conversion of the Debt has assisted borrowers in every part of the kingdom. I am sure that if the right honourable Gentleman and his Party had accomplished that conversion it would have been said that it was a great democratic Measure by which capital had been cheapened, by which traders had been able to borrow on cheaper terms, and by which the people generally had been benefited. The conversion of the Debt had one other effect. The right honourable Gentleman, as I have said, emphasised the temporary fall of Consols at the time. But why did they fall? Because, naturally, the rate of interest having been reduced on the Consols held by the people, the people sought other investments. I had to pay off £40,000,000 of Consols; that money went into other securities; and there was, as a consequence, a temporary fall in the price of Consols. But ultimately the conversion justified itself even in that respect, for Consols soon went up to par, and now they are at a rate far higher than I or anybody else expected at the time. The right honourable Gentleman the Member for Bodmin spoke of the difficulties of paying off Consols at the present high rate of interest, being practically higher than the rate of interest which was current at the present moment. My right honourable Friend's argument about the 10 per cent. was this—that it was no loss paying the 10 per cent. because we would save our interest during the next 20 years. I think the right honourable Gentleman is mistaken in that. No banker would advance money on such terms in order to secure against a ¼ per cent. during 20 years. The right honourable Gentleman also dealt with the question of paying off Consols in 1923. This is a point which is of some historical interest, though I would not feel justified in introducing it at this late hour except to show the great difficulty of conversion. You had under the old system to give a year's notice before you could pay off the Consols. The Chancellor of the Exchequer would not dare, face to face with a twelvemonth's notice, to pay off 500 millions, and therefore I introduced the new arrangement of the stock, so that when 1923 comes you will be entitled to pay off Consols in any amounts, on any notice, and in any manner the Treasury would desire. We secured to the taxpayers that if we have only 50 millions or 10 millions we can pay them off. We shall not be faced with the necessity of paying off 500 millions with a year's notice. That is the advantage which we shall have, and Consols can scarcely be above par in 1923. But for that they would be above par. It would be possible, no doubt, for the holders to say, "The country cannot find £400,000,000 or £500,000,000, and we shall hold out." The Measure which I was fortunate enough to be able to pass has deprived the Consol-holders of that terrible power, and when the time comes the Chancellor of the Exchequer at that time—Heaven knows whom he will be; I hope it will be some talented and comparatively young Member of this House—will be able to deal with this question at his discretion, and get such a reduction of interest as he may be able to exact. But who knows what the cost of interest will be during the next 20 years. We talk now as if it was certain that the present state of credit will continue to exist. Let me make one remark about the credit of the country. While it is deplorable from the point of view of having to pay off the Debt, I do not agree with my right honourable Friend the Member for Bodmin in this respect. While it is deplorable that we have to pay a premium of 10 per cent., let us rejoice that the Consols of this country stand at 110, giving a measure of credit, of power, and of resource financially to this country which, I think, has never been shown before. There is a desire to substitute in the Savings Banks other securities for Consols. I hope it will not be carried too far. There I agree with my constant opponent, the right honourable Gentleman the Member for West Monmouth. The House has not sufficiently grasped the fact that Consols are the one stock which is always saleable in all circumstances, and that you may get Indian securities or municipal corporation stock, you may get the safest stock in the world, but in a time of crisis they will not be available. That is why Consols in our operations of buying at a great pace may be forced up, because banks, foreigners, and other persons will hold them in all circumstances because they are the one stock that is realisable. And I hope that we shall never be such bad bankers as a State that we shall not hold sufficient of that stock, which is always saleable, to enable us to meet any crisis that may occur. I tremble when I hear it said that we have got the key of the Savings Banks' money. That key is in the hands of Parliament. I hope Parliament will stand pretty firmly in holding that key, and will not give the Government too much opportunity of using and diverting, I may almost say, the Savings Banks' money to any purposes which would weaken that great reserve which it constitutes, and which would strike a blow at Consols. I must leave, I fear, to the Committee stage the discussion of the wine duties and many other interesting points which have been raised in this discussion. There is only one more point with which I will deal very briefly, and that is the final subject which was treated by the right honourable Gentleman the Member for West Monmouth—namely, the case of direct and indirect taxation. He taxed my right honourable Friend the Chancellor of the Exchequer with putting forward views and statements which were very far from his mind. He was putting a hypothetical case to the Opposition, and with that skill which is always exercised by the right honourable Gentleman, he put it as if it were an enunciation of his own theory on the question of direct and indirect taxation. The right honourable Gentleman dealt with that question to-night briefly, but very significantly. He thought that the Chancellor of the Exchequer had pinned himself to theories of direct taxation, which meant that we should in no circumstances increase indirect taxation; we should put it on direct taxation. If I were to inquire I should probably find that my views on indirect taxation differ from those of the right honourable Gentleman. I should like to know, does he count beer as indirect or direct taxation? The right honourable Gentleman prudently does not answer. I will tell you why. I will show the methods of the right honourable Gentleman. When we are in power and when he wishes us to tax the brewers then it is a direct tax; and when he urges us to impose it on the brewers then it is not paid at all by the working classes. But when he comes to add up the whole system of indirect taxation I have observed that every shilling of the beer duty is included in indirect taxation which is paid by the working classes. It is just on a par with the agricultural rate; sometimes it is on the landlord, sometimes it is on the ratepayers, according as it suits the argument. Sometimes it is "Put it on the brewers," at other times it is "Look at this gigantic tax which is being paid by the consumers of beer." But I warn the right honourable Gentleman that when he addresses his fervent orations on the platform as regards the iniquity of the Conservative Party, taxing them with that which they are not going to do with reference to direct taxation, he may be asked for some explanation of his views with regard to beer and brewers. My right honourable Friend the Member for Bodmin spoke of the danger of bringing antagonism into this House between direct and indirect taxation. The right honourable Gentleman the Member for West Monmouthshire did his utmost, from a passing phrase of my right honourable Friend the Chancellor of the Exchequer, to initiate that discussion and give it all the importance—I might say all the virulence—of which it was capable. He began by speaking in a comparatively calm manner—not very calm, but comparatively calm—but as he became more animated he turned his back upon us, as he often does when he wishes on special occasions to suggest an electoral cry—he turned his back upon us, speaking to the honourable Members behind, and said, This is the important thing, that there ought never to be a controversy between direct and indirect taxation. Well, the right honourable Gentleman, I say, wished to give virulence to that discussion. We will not follow him on those lines, we will not follow him on the lines of discussing upon a question like this what are the precise payments which are to be made by direct and indirect taxation. It does not arise on this Budget, or on anything connected with this Budget, unless, indeed, honourable Members opposite are terribly disappointed that we did not put a penny on the income tax, an event to which I believe they looked forward with the greatest possible pleasure. The right honourable Gentleman and honourable Members have been very severe upon our Budget; they believe that we have struck a blow at the Sinking Fund from which it can never recover; that we have introduced a Measure which will endanger the finance of the country. Let me make a suggestion to them; let them fight the next General Election upon the question of the increase of the Sinking Fund and the withdrawal from the agricultural ratepayers of the money which has been granted to them at the end of the five years; let them in that way replace the two millions now withdrawn. Right honourable Gentlemen opposite have said that this ought to be a temporary suspension. Let them make it a temporary suspension. Perhaps they will be in office three years hence, or two years hence—Heaven knows when they will be in office, nor can we tell which school of thought at that time will be the determining body in the operations which will take place. But this I will say—that the unanimity with which the leaders, and followers, and independents, and every class of honourable Members opposite have united in support of the Sinking Fund and against the proposal of the

I move that this House do now adjourn. In response to the appeal of the honourable Gentleman opposite at the commencement of the proceedings, I beg to say that, as far as I can discover, I think it will be for the convenience of honourable Members if on Friday we took Votes 8, 9, 10, 11, 12, and 16, in Class II., and other Votes, that is to say, the Votes of the Board of Trade, Mercantile Marine, Bankruptcy Department of the Board of Trade, the Board of Agriculture, Charity Commission, Local Government Board, and other Votes.