I object.

I understand that the object of my hon. friend in objecting to this Bill being proceeded with is to get an assurance that nothing shall be done in another place to interfere with a certain clause. I am authorised to say that as far as the promoters can do so they give that assurance. The objection, therefore, will only have the effect of hanging the Bill up for twenty-four hours.

I want more than that. I want an assurance that the promoters will resist the clause being struck out.

That would be a very unconstitutional assurance for me to give.

I want the pro-motors to undertake not only that they will not themselves strike out the clause, but that as far as possible they will resist any proposal to do it.

It would be unusual and irregular for me to give that assurance.

It would be for the convenience of a great number of Members if the right hon. Gentleman the Chairman of Committees will state when it is proposed to put down the Irish Railway Amalgamation Bills. Also, will there be a Report stage?

It is proposed to put them down for to-morrow, but if objection is taken they will in the ordinary course go over till Wednesday morning. If more convenient they could be fixed for Thursday. With regard to further stages, if the Bill receives the assent of the House on the motion for the Second Reading I shall propose to move the suspension of the Standing Orders, which would obviate the necessity of sending the Bills to a Committee, that stage having already been taken in another place. The Third Reading might, if that were done, be taken at once.

Will it be competent for Members to move new clauses or amendments?

Not if there is no Committee stage.

Will the Leader of the House state the course of business for this week.

The Bill of my right hon. friend the Chancellor of the Exchequer will be introduced to-night in Committee of Ways and Means. As I have before suggested to the House, I think it would be most convenient to take the discussion on the Second Reading, and if that is understood I will put the Second Reading down as the first Order on Wednesday. It is very important that the House should make progress with the Companies Bill, and I hope that immediately after the resolution has been taken in Ways and Means the House will continue with that Bill tonight and to-morrow until it is finished. After that the Military Lands Bill and the Money lending Bill are the chief measures the House will have to deal with. When I was asked for facilities for private Members' Bills, I said that those which were really wholly unopposed; should be starred according to practice; and become Government measures. I have endeavoured to make out what these Bills are. First, there is the Ancient Monuments Protection(North Wales) Bill. Then there is the Tramways (Ireland) Bill, and if, as I understand, there is not to be any discussion on that Bill, there is no reason why it should not be starred. There; are two other Bills which have not reached their Second Reading—the Diocesan Registration Bill and the Members of Local Authorities Relief Bill. If these Bills are opposed, they will ipso facto be lost, but I have not heard of any opposition to them as yet. Then there is the Copyright Bill, which has been very earnestly pressed upon my attention by gentlemen on both sides of the House, and which I believe is important in connection with certain discussions between Her Majesty's Government and Canada. I should be very glad if that Bill could pass, and if it is unopposed it may have a chance. That Bill has not reached its Second Reading, and it is evident that it is in great peril, but I would not like its chance to be entirely destroyed at this instant.

I believe that a private Bill which will give rise to considerable discussion is to be taken this week. If it is put down for Thursday it would be something between a calamity and a scandal, because Thursday is the last day upon which Supply is to be taken.

As the House knows, I have no control over the arrangements which the promoters of private Bills think fit to adopt.

Will the Town Councils (Scotland) Bill, now before the House of Lords, be starred?

I am not aware of the position of that Bill. If it has passed through this House, I think it would be very proper to star it, unless the Lords Amendments are of a kind to convert it into a controversial measure.

I have to intervene for a short time in order to raise a question which is important constitutionally, since it affects the powers of this House. Let me state at once what my grievance is. It is that, instead of the whole of the receipts for the public accounts being paid into the much as£18,000,000 of or nearly that amount. Exchequer, as public money, never reaches the Exchequer, and does not appear in the revenue and expenditure accounts. The effect of this is to falsify the accounts, to prevent comparison with former years before this practice was adopted, and to seriously impair the control of this House over public expenditure, inasmuch as this money escapes being annually voted. When I put the motion down the Chancellor of the Exchequer said I had taken an unprecedented course. But even if that be so. I assert that the act is not unjustifiable, This practice of deception is only eighteen years old, but it is growing to such an extent that even an unprecedented course is justified in order to call attention to it. As regards Supply, there is only one Amendment to be put on the motion that you, Mr. Speaker, leave the Chair, and the subject must be restricted to Supply, but when the House proposes to go into Committee of Ways and Means any number of Amendments may be moved, and you sometimes got as many as fifteen or sixteen, embracing all sorts of subjects, from conventual institutions down to them is deeds of income-tax collectors. There is, in fact, no subject barred, and when, in1861, a Committee sat on the business of the House, it avowedly refused to restrict this right of moving Amendments ongoing into Committee of Ways and Means, on the ground that it was a legitimate opportunity for the introduction of discussions on a wide variety of subjects. The rule itself, too, was enlarged so late as 1891, when the Standing Order was so amended as to allow Amendments on your leaving the Chair to be moved not only with regard to Ways and Moans, but also with regard to a new subject—the Committee on East India accounts. That motion was received with favour by the right hon. Gentleman the Member for West Monmouthshire and by the Vice-President of the Committee of Council on Education on behalf of the Government. I trust, therefore, the Chancellor of the Exchequer will not be angered with me for taking this very first opportunity of drawing the attention of the House to this extremely important subject, especially as I promise to endeavour to compress my remarks into as small a space as possible. The last Return on the subject for which I moved has been made up to 31st March last. It shows that the following public moneys are not paid into the Exchequer:—Customs, £204,000; Excise, £5,000,000; estate duties, £4,200,000. The total is £9,251,160. Then there come the appropriations-in-aid. These are sums which formerly naturally went into the Exchequer, but which, in consequence of the modern system introducedin1891, the Departments are themselves allowed to take in diminution of the amount they ask the House to grant for these expenses. These amount to £6,700,000, in addition to which there are certain payments which the Departments make of their receipts—the Post Office being the chief offender—amounting to £1,575,000.Consequently, the £9,521,160, the £1,575,242, and the £6,702,776 amount altogether to £17,799,178, and that is the sum to which my complaint refers. I am afraid I cannot dispense with a short history of the matter, and I will begin with the appropriations-in-aid. The House will observe that, roughly speaking, one-half the amount consists of appropriations-in-aid and payments out of the revenue by Departments and the other half of sums intercepted from the tax-collector and paid over to the Local Taxation Account. First, as to the appropriations-in-aid. Before 1810, when old naval stores were sold, they were charged with pensions and all sorts of payments. In 1810 an Act was passed to prevent that, and as regards the Navy the right principle was for the first time asserted. Every receipt, whether from old stores or any other quarter, was thenceforward paid into the Exchequer, and the Vote for the Navy included the total amount expended by the Navy, and not the amount less appropriations-in-aid. At that time and until many years later the collecting or revenue Departments of the State—in fact every Department that ever got any money into its hands other than by Vote of Parliament—were accustomed to pay their own expenses, only the balance going into the Exchequer. In 1831 the Commissioners of Public Accounts drew attention to this great abuse, and in their first Report dealt with the larger question of the payment of the gross revenue to the Exchequer, which involved the voting of the charges for the collection and management of the public revenue, which at that time were paid out of the revenue collected, and the net revenue only was accounted for to the Exchequer.

"The Commissioners considered that no branch of administration should be permitted to dispose of any other funds than those specially voted for its service by Parliament"

—these £18,000,000 are not specially voted for its service by Parliament—

"and that all public moneys should be paid in the first instance to the Exchequer."

That is what my resolution reaffirms. That was not the last time the matter received attention. In 1848 the House passed a resolution almost identical with that which I am now moving. This is the resolution of 13th May, 1848—

"That this House cannot be the effectual guardian of the revenues of the State unless the whole amount of the taxes and the various other sources of income received from the public accounts be either paid in or accounted for to the Exchequer."

That, as the House will see, is practically the same as there solution I submit to-day. It embodied the only true and safe principle of public accounts, and the Treasury of that day, foreseeing no doubt: what the resolution was that would be passed by the House, had a few days before made a Minute to the effect of that Resolution, namely, that all extra receipts; should be paid into the Exchequer. They directed that the Government Departments of public expenditure should thenceforward submit their annual Estimates to Parliament without the deductions on account of appropriations-in-aid, that Votes should be asked for the whole of the sums required for the naval and military services, and that the extra receipts should be paid to the Exchequer and be appropriated in the same manner as other moneys appropriated to the Consolidated Fund. That was the resolution of 1848, and it was carried out in 1849. From then the right system prevailed and lasted until 1881. The principle was reaffirmed in 1857, when the Select Committee on Public Money said this—

"Although the Acts 17 and 18 Vic, c. 94, and 19 and 20 Vic, c.59, have removed from the public revenues the charges of collection and management of hereditary and other pensions charged thereon, and the gross revenues are consequently now paid to the Consolidated Fund, yet it is considered that there is no security that the Government may not order payments unauthorized by parliament to be made out of those revenues before they are transferred to the Consolidated Fund."

It was the suspicion of this Committee, on Public Moneys that the Government I might order unauthorised payments. I do not pretend to have such a suspicion now, but in 1857 it was at the bottom of the Committee's minds, and they therefore said—

"…it is essential to a complete Parliamentary control of the public money that no part of it should be arrested in its progress to the fund for which alone it can be issued and applied with Parliamentary sanction. It is therefore suggested that it may be provided by law that the gross receipts of the Customs, Inland Revenue, and Post Office Departments, after providing there out for the payment of drawbacks, bounties, repayments, and discounts, shall be paid or transferred to the account of the Consolidated Fund at the Bank of England and Bank of Ireland."

That suggestion of the Committee was carried out, and in 1866 the "Exchequer and Audit Departments Act," which was a renewed and most solemn affirmation and enactment of the right principle, was passed. By that Act it was provided that the Commissioners of Inland Revenue, of Customs, and the Postmaster General, should pay their gross receipts to the Exchequer—the principle I am now contending for. I would also call attention to the opinion on this subject of a very eminent official of this House—namely, Sir Erskine May, who in 1879 said—

"The propriety of presenting the accounts of public income and expenditure in a correct and intelligible form is universally admitted. They should exhibit, beyond the reach of misunderstanding, the total burthens upon the people, and the actual cost of each Department of the State. Formerly the system of accounts was such as to keep out of sight a considerable portion of the gross receipts and expenditure."

That is what I charge against the present system.

"The charges of collection were deducted from the gross revenue, and fees and other extra receipts were appropriated from the payment of the salaries of several departments, the balance only being defrayed by Parliamentary grants. The gross amounts of income and expenditure were thus apparently reduced—"

Yes, that is the object—to make government appear to be cheaper than it is—

"while large sums were withdrawn from the direct control of Parliament, and a wide financial discretion was left to the Departments."

Then he goes on to tell the story I have just related to the House—that this system was objected to and a remedy found. It was about this time the Treasury first conceived the plan of extending the appropriations-in-aid. Sir Erskine May was not wholly opposed to that, but he attached the very remarkable condition that if the appropriations-in-aid were to be deducted from the gross Estimates, at any rate this House should vote the gross Estimates, and the amended sums be provided in Committee of Ways and Moans. He said—

"If the proposed scheme were adopted, the gross expenditure would still be voted."

My complaint now is that the gross expenditure is not voted. The House votes the net expenditure, and it has no control whatever over the remainder except that it may remark upon the appropriations-in-aid themselves which make the difference between the net and the gross expenditure. Thus from 1810 to 1879 the right way was sought and followed, but the Memorandum of Sir Erskine May to which I have just referred may almost be said to have been the song of the dying swan of finance, for almost immediately after the Treasury with, I am sorry to say, the agreement—though not, I think, the whole agreement—of the Public Accounts Committee, suggested the new method, which has been in operation almost ever since. The reasons of the Treasury were these. In the Minute of 27th June, 1881, they state with regard to the extra receipts that—

"The payment of a large proportion of these receipts into the Exchequer, and the consequent voting or re-voting which they represent have the effect of over-stating both the public revenue and the expenditure, or, as the public understand it, the taxation of the country and the cost of government."

Not at all. Those are two entirely different things. Taxation and expenditure are one thing; the burdens of the country are another. Receipts are receipts, from whatever source they are received; expenditure is expenditure, for whatever purpose it is incurred. Your receipts may be one sum, and your taxation another. You may come, as it were, into a fortune; you may inherit a large death duty, which may enable you to make your taxation less, but nevertheless that is all receipt, and it seems to me that the Treasury confuse expenditure and revenue with what is quite a different thing—namely, the burden of taxation on the people. However, that is the reason they gave. They said, further, that it would involve re-voting. But that is a necessary incident of our system of accounts. The national system of accounts is a strict and annual cash account, and therefore when you have cash to be expended in the course of the year, and you have not expended it, it must go over to the next year, and the next year if you want to expend it it must be re-voted. So long as you hold to your system of an annual cash account without a balance brought forward, and without a balance carried forward, so long must you either spend what you have in the year or re-vote it. This very Treasury Minute recognises the true principle while proceeding to violate it. It says—

"Every penny coming into the hands of a Department is to come under the view and control of Parliament."

But then it recommended the system which we now have, by which many many pennies are taken out of the control of Parliament, and that system was adopted. This wrong system, therefore, was adopted so recently as 1882, and its extension has been so enormous in the eighteen years since then that appropriations-in-aid now amount to eight and a half millions. Now I come to the effect on this House. Of all these appropriations-in-aid not one penny appears in what is called the Revenue Account. When my right hon. friend rises to make his statement, what he deals with is what he calls the receipts of the Exchequer. No part of this £18,000,000 appears in these Exchequer receipts. Again I say that every penny of those appropriations-in-aid escape all control by this House. When I asserted that fact once before in October last in a question, the Chancellor of the Exchequer said he thought the statement was too broad. I should like the right hon. Gentleman to explain how it is too broad. I got a considered answer to a question which I put on this point to the Chairman of Committees, by whom I was told that the appropriations-in-aid were not grants made in this House, but were made under the Public Accounts and Charges Act, 1891, by the authority which the Treasury exercised under that Act. I was told that we could not touch a penny of them, and that "the Committee, in voting the net sum, sanctions the expenditure of the gross sum." Therefore, we are entirely without any control over it. I do not think my right hon. friend will now dispute my point, although he seemed to doubt it when I first suggested it. I think it is absolutely true. Now I come to my second head, which is the interception of taxes for the purpose of being paid over to the Local Taxation Account. These taxes amounted in 1898–99 to £9,521,160 and in 1899–1900 to £9,916,825, or close upon £10,000,000, which is taken away from the taxes collected on their way to the Exchequer, and handed over to the Local Taxation Account for local purposes. This plan is only twelve years old, for it was in 1888 that the new method of intercepting these taxes was first initiated in connection with the Local Taxation Act of that year. It was never contemplated then that the total would reach £10,000,000, and the present First Lord of the Admiralty at that time estimated it at £5,500,000. Part of the increase is due, I know, to some extent to the Agricultural Rates Act of 1896, but there has also been an increase in other portions of the grant. If you want to make gifts or doles to local governing bodies you should make it a certain fixed annual sum. It is one of the vices of this system that the local people never know what they are going to get and we never know what we shall have to pay. It is, therefore, bad in principle. It is contrary to the resolution of 1848, which provided that all the revenue should go into the Exchequer, and I believe that to be the only sound principle. It is opposed to the Exchequer and Audit Act of 1866, which enacted that all gross receipts should go into the Exchequer. This alteration was made in 1888, and I think the House is more to blame for agreeing to this change than the Treasury or the Chancellor of the Exchequer of the day. In 1888 the House tore up the resolution of 1848 and destroyed in all its essence the Exchequer and Audit Act of 1866. Since then, interception of a new kind has gone on, and what I want the House to know is that again and again the Department have attempted to get control over the money over which this House should have control; again and again this House has resisted them and re-established the principle upon which the money should be dealt with. It is only during the last eighteen years that this attempt has grown up, and as a student of finance I invite the House to affirm the true principle and say that all this money should go to the Exchequer. Under the present system this money escapes every one of the safeguards which this House and the wisdom of our ancestors has devised in dealing with public money. You do not need a Minister to propose an interception of this sort, for it may be proposed by any private Member. I often expect to find an hon. Member from Ireland standing up to propose that several millions shall be intercepted in order to support some excellent Irish agricultural scheme. It escapes the Committee, and there need be no resolution in Committee. It is not subject to an annual grant by Parliament, and is not subject to annual review, but once done it remains a perpetual first charge, not definite and fixed, but of varying amount. This second head of interception by Act of Parliament for Local Taxation account is much worse than the first head, because appropriations-in-aid, although they cannot be touched by Parliament, yet they can be discussed on Estimates; but the interceptions that are made out of the Customs, Excise, and Death duties for Local Taxation cannot even be discussed. The appropriations-in-aid appear in the Appropriation Bill, and there again they may be discussed, although I believe that the rule of the House is that no Amendment can be moved, but the interceptions for Local Taxation do not appear in the Appropriation Bill at all—they are permanently charged by a permanent Act. In this way control over nearly £10,000,000 has gone from us for ever. I will not enter upon the objections that might be made with regard to the system of sops and doles, and gifts to local authorities from the Imperial Revenue. I think they lead to local extravagance and waste, and often do more harm than good. That is not part of my argument to-day. My argument to-day is that it is essentially wrong, false finance, and essentially mischievous to intercept any portion of the public revenues from coming to the Exchequer; and if this is done as it is done to-day to the tune of £18,000,000, I think the time has come when some attention should be paid to it. This House should remember that this is £1,500,000 more than the whole of Mr. Pitt's revenue in 1792, which was £16,500,000. Therefore we are withdrawing from the financial control of this House a sum larger than the whole of the national revenue of 1792, and I do not think that I need make any apology for drawing the attention of the House to this question. I am sorry for having detained the House so long, but I am approaching the end of my remarks. The result of this system is to falsify the accounts and prevent a fair-comparison. How can you compare the accounts in which £18,000,000 are omitted with the accounts for years when no such omission has taken place? I think I am right when I say that the constitutional theory as to finance is that there should be annual grants in Committee of Supply; that we should annually find the money in Committee of Ways and Means; and that all the money so found shall be paid into the Exchequer and only be capable of being taken out by Act of Parliament; and finally that we should have annual accounts. I hold that if you touch any part of that system you destroy the whole. What I feel most strongly of all is that you destroy the control of Parliament. Let me dwell for a moment on this question of national accounts. There are various methods. In France they treat each year as though it were a separate entity, and whatever expenditure belongs to the year, whether contracted before or after, comes into that year. That is not our case, for we have deliberately adopted the system of an annual cash account in which no balance is brought forward and from which no balance is carried forward. No doubt this has its defects. It might, perhaps, with advantage lie supplemented with a national balance-sheet. You would have to put on one side many assets, including the Suez Canal shares, and on the other not only your national debts, but also your liabilities to foreign countries, which are very enormous. This makes the present situation more serious than it otherwise would be. I want once more to point out to the Committee that this Interception of Revenue is not an ancient abuse or a well-considered method, but it is entirely new. The first appropriation-in-aid began in 1882, and it is now £8,500,000. The first interception for local taxation began in 1888, and it is now nearly £10,000,000. My contention shortly is that all these sums ought to be paid into the Exchequer, and what I fear is that unless some attention be called to this matter, as I have endeavoured to do, this system will go on as it has been going on, increasing to a large extent, and the result will be that the Minister will have at his disposal a large sum entirely independent of Parliamentary control. As I have said, the House may justly be blamed for this, but Parliament did not foresee that it would grow to such an extent when it adopted this system. I affirm that all public money should be paid, in the first instance, into the Exchequer, because it is essential for a complete Parliamentary control of that public money that no portion of it should be arrested in its progress to that fund from which alone it can be issued and applied with Parliamentary sanction. I affirm the propriety of presenting the accounts of public income and expenditure in a correct and intelligible form, and finally I affirm the resolution of 1848, which declares—

"That this House cannot be the effectual guardian of the revenues of the State unless the whole amount of the taxes and of various other sources of income received for the public accounts be either paid in or accounted for to the Exchequer."

Hon. Members may think that this is merely a question of accounts, that the money does not get embezzled, and that it is all spent on the State. It is much more than that. It is a question of the power, the authority, and the duty of this House. Every halfpenny of this £18,000,000—it will soon, I think, be £20,000,000—ought to be controlled by this House. Let me beg the House to remember that it is the control of the purse that has made this House what it is, and can keep it what it is. This House has no power to make peace or war, or to make treaties, but as long as it holds the purse-strings it will remain one of the most potent bodies in the British Empire—aye, in the world. But if the House is content to part with its control over large sums of money, then I say it is parting with the most important of its duties and the greatest of its powers. I move, Sir.

I rise to second the motion, and will only say that I think a few words from the Chancellor of the Exchequer with reference to the somewhat complex machinery by which our financial arrangements are regulated would be appreciated by the House.

Mr. Speaker, I do not deny the importance of this subject, but I think the House will agree that a more unsuitable occasion for bringing it under our notice could hardly have been selected. We are within a few days of the end of the session, when the time of the House is particularly valuable, and it was generally expected that the earlier part of the evening would be devoted to another subject. In and out of season during the last five years the hon. Member has brought the matter before the House, and his own opinion of the urgency of the motion is best shown by the fact that he allowed it to remain on the Notice Paper of the House for more than four months without moving it.

I could not move it before.

I have been puzzled to understand what, under such circumstances, could have been the motive of the hon. Member in bringing forward this matter to-night, but in the earlier portion of his speech the hon. Member explained his motive, and it appeared to be this: that it was desirable to reassert a forgotten principle. For nearly the whole of the last forty years there has been no occasion on which an Amendment has been moved on the motion that the Speaker do leave the Chair on going into Committee of Way and Means; but the hon. Member, with his accustomed ingenuity, has discovered that, though preventing such motions on going into Committee of Supply, the House omitted to deal with them on Committee of Ways and Means, and I trust that the House will take the earliest opportunity of remedying that defect. I do not complain of the hon. Member for exercising what no doubt is his technical right—[Mr. SWIFT MACNEILL: Technical!]—but I shall be excused, if I deal with the motion very shortly indeed. The hon. Member said a good deal about what he considered to be the iniquity of intercepting the revenue for the purpose of the Local Taxation Account. Parliament deliberately did that by the Act of 1888 and subsequent Acts, and neither the Treasury nor any resolution of the House can interfere with those Acts, or alter the practice established by Parliament. It may be right or wrong—I am not going to argue that now—but it is one of the subjects which is under the consideration of the Local Taxation Commission, and when that Commission reports will, undoubtedly, be the time for the House to consider any recommendation which may be made in regard to it. But the main part of the hon. Member's speech was devoted to the appropriation of extra receipts in diminution of the gross expenditure of the Department to which they belong. The hon. Member attached great importance to cer- tain opinions which were expressed and resolutions arrived at in past days, but he attached no importance at all to the result of the later consideration which altered the practice which it was found impossible to continue, and established the practice which now prevails. What are the extra receipts the appropriation of which by the several departments to which they are paid is so unjustifiable in the view of the hon. Member? They are moneys incidentally realised or recovered by Departments in the process of conducting the services charged on Imperial funds, and they are of all kinds. They are payments from India or the colonies for military or other charges, or for stores or war materials supplied, with which we have nothing whatever to do. They may be proceeds of sales of old Admiralty or military stores, or they may be receipts from fees, fines, penalties, rents or tolls, or they may be payments for coinage from our colonies, or receipts from Government publications. What happened in regard to them? For a long time, while the resolution referred to by the hon. Member was in force, there was no uniform practice in regard to those receipts. They were, in some cases, paid into the Exchequer; in other cases they were treated as transfers between Votes without appearing in the appropriation accounts; in other cases they were applied by the Department which received; them in diminution of their expenditure without any regular authority or proper financial control; and the result of that was that about the period at which the hon. Member ended—in the early seventies—the Comptroller and Auditor General called the attention of the Public Accounts Committee of the House of Commons to the want of uniformity of practice with a view to a remedy being provided, and the Public Accounts Committee, in their turn, called the attention of the Treasury to the matter. A Treasury Departmental Committee sat on the subject in 1876 and 1877, and the result of their inquiry was a scheme, which was framed by the late Lord Frederick Cavendish, who was then Financial Secretary to the Treasury, and who had been Chairman of the Public Accounts Committee, under which the departments to which these payments wore made were allowed to take those extra receipts in diminution of their votes on three conditions—first, that the gross amount of expenditure should be shown to Parliament; secondly, that the Department should not by these means be able to expend money unknown to Parliament; and, thirdly, that the system should be carefully watched by the Audit Office. That scheme was applied, with the sanction of the Public Accounts Committee, in the first place, to the Army and Navy expenditure in the year 1881, and in l883 the Public Accounts Committee approved of its extension to the Votes for the Exchequer and Audit Departments. They expressed their general concurrence with the view that one uniform system should, as far as possible, be observed throughout the service, and they said they would therefore be glad to see a gradual extension of the system as occasion offered to those Civil Service Votes which readily admitted of it. The system was gradually extended, and has been gradually extended to other Votes since that time, and it has statutory sanction, if I may say so, in the second section of the Public Accounts and Charges Act, 1891, which provided that all money declared by any Act of Parliament or by the Treasury to be an appropriation-in-aid should be dealt with without being paid into the Exchequer. The result to my mind is that uniformity of procedure has been to a great extent secured, and that that uniformity has been accompanied with strict Parliamentary control. When the hon. Member says that there is no Parliamentary control over these extra receipts, what control does he want. Does he want Parliament to direct the Departments to refuse them? It is not a question of granting or withholding expenditure, and why should a Department refuse receipts offered to it?

What I want is simple. I want these receipts paid into the Exchequer and controlled by Parliament.

The hon. Member wants that all these extra receipts should, in the old fashion, be paid into the Exchequer and that the House should vote the gross expenditure instead of the net expenditure. Does not the hon. Member see how misleading such a course would be? Take the Army or Navy, or Mint expenditure. The tax- payers of the country have nothing whatever to do with the expenditure of the War Office or of the Admiralty which is recouped to those Departments by the Colonies for troops, ships, guns, or whatever it may be.

They are the masters of the Government.

The hon. Member does not see the point. If the House were to vote on all these occasions the gross instead of the net expenditure a completely false conception would be spread abroad of the amount of the total expenditure which was paid for by the taxpayers of the country. The hon. Member for King's Lynn said something about the change of system having interfered very much with a proper comparison of our financial accounts from year to year. The hon. Member desired to go back to the old system, but in doing so he would introduce a double complication of accounts, and to my mind there is nothing more certain than this that in dealing with matters of account, we should as far as possible retain the existing system, so that proper comparisons can be made from year to year. It would take very strong reasons indeed to induce Parliament to change the present system for a method which would make it extremely difficult, if not impossible, to keep correctly all the national accounts. The hon. Member is a member of the Public Accounts Committee of this House, and this is a matter primarily for the consideration of that Committee. Hitherto that Committee have for years past uniformly supported the existing system and desired its extension. If the Public Accounts Committee were to express any opinion upon this subject, desiring that the present system should be reconsidered, or that any change should be made in it, it would undoubtedly be the duty of the Treasury to consider it from any point of view which they might urge. For the present I think the existing system should he maintained, and I hope the House will reject the motion of the hon. Member.

In proposing the resolution which I have placed in your hands, Mr. Lowther, I think my first duty is to remind the Committee of the statement which I made on the 6th of April last in regard to the expenditure and revenue of the country during the present financial year. On that occasion I stated that the estimated expenditure for the current financial year would be £150,061,000 and that the revenue would amount to £127,520,000, showing a deficit for the year of £22,541,000. That, added to the deficit of £13,882,000 for the previous year, made a total sum of£36,423,000, and I proposed to provide for that sum by borrowing, as I have already done, through Treasury bills to the extent of £8,000,000 and through the War Loan of £30,000,000, issued at a price of 98½, yielding a net proceed of £29,550,000. In all, therefore, I borrowed £37,550,000, as against a deficit of £36,423,000, so that the deficit was more than covered by £1,127,000. That was the statement which I placed before the House on the 6th of April last. I need not detain the Committee to-day with any fresh remarks as to the revenue of the country. I stated then that owing to the large anticipatory payments, under the heads of Customs and Excise, in the last quarter of last year there must necessarily be a very heavy falling off in the earlier part of the present year as compared with a similar period of the year preceding. My anticipations were realised, as hon. Members are aware who have seen the return of the yield of the first quarter, but they were not more than realised, and the process of recovery is now going on. I see no reason to anticipate that the yield of this year's revenue will be less than I anticipated last April. But, of course, there is another tale to tell with regard to the expenditure. Hon. Members are aware that since the original Estimates of the year were laid on the Table large Supplementary Estimates have been presented and voted by the House. I do not propose this evening to say anything about some of the minor Supplementary Estimates. They would not in the ordinary course necessitate the provision of Ways and Means to meet them. But I have to remind the Committee that the House has voted £3,000,000 towards the expenditure that may be required in China, £200,000 towards the Ashanti Expedition, £1,250,000 Supplementary Navy Estimates, £7,440,000 for purposes connected directly with the war in South Africa, and £1.060,000 for other military purposes, a total in round numbers of £13,000,000. Of course, of those items the Chinese and Ashanti expenditure could not be anticipated in March last, when our original Estimates were framed, and I warned the House at that time, in introducing the Budget of the year, that some provision would have to be made for the additional reserves of guns and ammunition which form a very large part of the Supplementary Naval Estimates. The £7,440,000 for what I may call strictly South African purposes is due, of course, to the unhappy prolongation of the war in South Africa. In March last we advisedly took nothing in our Estimates on account of that war for the return transport of troops, or for the gratuities to be given to them at the end of the war. We omitted to do so for two reasons—in the first place because it was impossible to tell what might be the duration of the war, and I do not think we could at that time have come down to the House and asked Parliament to make provision for such purposes as that. In the second place it was possible that the war might terminate earlier than it has done, and that some of the funds which Parliament had provided for carrying it on might have been devoted to the return transport of troops and to the gratuities to be given to them at the end of the war. So that, in that case, any further provision would not have been required. But all this was explained fully to Parliament at the time, and there was no concealment whatever in regard to it. Of course it is now clear, in the first place, that more will be required for the South African war than we anticipated last March. My hon. friend the Under Secretary for War on Friday last fully explained the nature of the requirements—how the Vote included provision for contingencies as well as for certain special services, which had not been provided for in the original Estimates. I do not think I need dwell upon that subject, except, perhaps, to say that, so far as I have been able to ascertain—and it is, of course, no easy matter when a war is carried on on the other side of the world—I believe, having due regard to the number of troops employed, that the rate of weekly or monthly expenditure on the war has certainly not been more, and has probably been less, than we anticipated when our Estimates were made. Therefore, what I have to ask the Committee to consider to-day is a sum of £13,000,000. Now, how much of that do we require to provide in Ways and Mean? I have already reminded the Committee that my borrowings through the War Loan left me with something more than £1,000,000 beyond the Estimates that were laid on the Table in March, and I may also remind the Committee that at the same time I took further borrowing powers to the extent of £5,000,000 beyond the provision necessary for these Estimates, so that I have a margin of £6,000,000 towards the £13,000,000 now required. According to the Estimates laid on the Table then, £7,000,000 has still to be provided. I do not propose, and I think hon. Members will not be surprised to hear it, to ask Parliament for additional taxation towards providing it. I take that course for precisely the same reasons that weighed with me, and were, I think, accepted by the House and the country last autumn. I do not think that the middle of the financial year is a convenient time to increase taxation, having regard to the interests of trade. I propose to ask powers to borrow the sum which I require, but I will ask the Committee to confide in me to a larger extent than the £7,000,000 to which I have referred—I will ask them, in fact, to allow me a considerable margin, as I asked for a considerable margin in March last. Of course, if happily it should not be required it will not be borrowed. I shall do so for two reasons. In the first place, hon. Members are aware that under our financial system in an ordinary year the yield of the last quarter is more prolific than that of any of the preceding three quarters. The great bulk of the income-tax comes in then, and it is especially the case when, as in the present year, a great part of our additional taxation will arise from the addition to the income-tax. The result is that in an ordinary year the Chancellor of the Exchequer of the clay has always to provide, by temporary borrowings from the bank on Ways and Means, or on deficiency advances, for the financial requirements of the country while the revenue is accruing during the first three quarters of the year. That has been, of course, more necessary this year than in an ordinary year, because the war expenditure so far has been very heavy, and our present indebtedness to the bank is as much as £8,500,000. They have taken £3,000,000 of Treasury bills, half of which fall due on 30th September, and the remaining half on 30th December, and have lent us £3,000,000 on deficiency advances, and £2,500,000 on Ways and Means. Therefore I want a margin of borrowing power by which I may be able to go to the market to relieve the financial exigencies of the moment, through some form of borrowing that would not increase my indebtedness to the bank, which I do not think in the general interest ought to be increased beyond what I have named, and which would provide for temporary requirements pending the falling in of the revenue in the latter part of the year. But I have a still stronger reason for making this request for a large margin to the Committee. As I have told the Committee, throe millions of the Supplementary Estimates are for purposes connected with China. Well, what is happening or may happen there, or even what is past, is absolutely uncertain. We cannot tell what expenditure it may be necessary for us to incur on account of events that have happened or may happen in China. We do not yet know as an absolute certainty—though I fear there is very little reason to doubt—that the terrible outrage which is alleged to have been committed at Peking has actually occurred; but, if so, of course it is our duty, together with other Powers whose representatives have suffered in that terrible tragedy, to exact reparation from China for that outrage, because that is the only way to obtain security for the future. I think we may expect that the sum of three millions, already voted by the House, will suffice for operations that may be necessary in regard to this matter. With regard to our general policy towards China, I am sure there will be general agreement with that policy in the House and in the country when I say it is not one of territorial conquest. But we must remember that our main interests in China are not in the north of that Empire. We have great and most important interests in other parts, and, although the three millions already voted will probably be twice what is likely to be the cost of the expedition now on its way, or under orders, yet I do think Parliament would desire not to separate without entrusting to the Government of this country, in the circumstances before us, ample provision to protect our interests in China generally in whatever circumstances may occur. Therefore, on this ground, even more than on the ground of the temporary financial exigencies already alluded to, I ask the Committee to concede to me an extra margin of borrowing power. What I propose is that I should be authorised to borrow up to the extent of thirteen millions. I would ask the Committee, as they did in regard to the War Loan, to grant me the option of deciding the best mode of placing that sum on the market, in the way and at the time which may seem to mo most convenient. In the War Loan Act, I was empowered to borrow by bonds, stock, or Treasury Bills. The bonds and stock under the War Loan, the Committee will remember, were not to exceed in duration a term- of ten years. I do not propose to ask for any permanent borrowing powers; I desire to adhere to the principle established by the War Loan Act, that we should, as far as possible, ear-mark our borrowing for the purposes of this war as temporary borrowing, and that it should automatically almost point out to the Chancellor of the Exchequer of the day—whether I occupy the position or it is occupied by anybody else—that it is his duty at the earliest possible time to make provision for the redemption of the loan. I do not say anything now, I cannot say anything now, as to the mode in which provision should be made; that must form part of the first financial statement after the war in South Africa is happily concluded and we see what the total cost of the war has been to us and how much we are able to recover from the Transvaal. As to that latter point, our Estimate will become more definite as time goes on, but we may already note one important particular, that the mines in the Transvaal have escaped material injury. I ask the Committee to give me another option on this occasion besides the issue of War Loan or Treasury bills. It may not be convenient at present to add to the War Loan. On the other hand, we have outstanding eighteen millions in Treasury bills, including the £8,000,000, which may be considered the normal issue, and the market for Treasury bills might well be overstocked. I therefore ask for powers in this resolution to raise the money either by further issue of War Loan or issue of Exchequer bonds for three or five years or by further issue of Treasury bills. I think it is extremely probable that the issue of Exchequer bonds might commend itself to those who might not be desirous of taking Treasury bills, and, on the other hand, I should be glad, I confess, if my loan were for a shorter term than the ten years War Loan. I think I have concluded all that is necessary for me on this occasion to state to the Committee in regard to the resolution. I am afraid it is not an agreeable statement to the Committee; I am certain it is not agreeable to myself. It is much pleasanter to announce a surplus, but I have to ask the Committee to provide for a deficit, and they are well aware of the reasons for that deficit. They have without objection or opposition voted the Supplementary Estimates the Government have proposed, and therefore I cannot anticipate there will be objection to making provision in Ways and Means for those Estimates. I think my proposals to-day will have been generally expected, and I commend my resolution to the Committee.

The right hon. Gentleman has made a most clear and at the same time a most important statement to the Committee. But I gathered early in the evening that the House generally agreed with the proposals of the Leader of the House that the discussion which will be necessary on the policy of the Government should be deferred until we come to a later stage—until we come to the discussion of the Bill itself; and as that is to be taken on Wednesday I think it the general desire of those on this side of the House is to content ourselves with expressing our gratitude to the right hon. Gentleman for the lucidity of his statement, and reserving to ourselves the liberty to discuss the policy upon the next occasion.

In reply to the right hon. Gentleman I should like to say, what I ought to have added before, that I have very carefully considered the matter, and it is my decided belief that the borrowing powers asked for will suffice until the end of the current financial year.

said he did not rise to continue the discussion, but merely to ask one or two questions. The right hon. Gentleman in his statement said he had provided for a sum of £61,000,000 up to the 31st of September, and ho anticipated that that would be sufficient for the cost of the war to that date. It was a rather curious fact that although by the resolution before the House another £7,000,000 or £8,000,000 had been added, and there had been a further live months war, necessitating the movement of some 40,000 or 50,000 more troops than it was anticipated would be necessary, the amount now asked to be voted was still £61,000,000 only. He thought some explanation was necessary.

said the Under Secretary for War explained on Friday that the original Estimates made a considerable provision for a continuation of the war beyond the date of the 30th September. The latest news received encouraged the hope that the war would lie over by the end of September.

Will the right hon. Gentleman be good enough to make clear what will be the exact amount of the £61,000,000 which he estimates will be thrown on the taxes of the present year?

I gave the original Estimate in March, but owing to circumstances which were not then anticipated, another Estimate was given which the lion. Member will find in my statement of the 6th April.

The right hon. Gentleman told us a moment ago that he estimated that £3,000,000 would be sufficient in respect of the expedition to Peking, but we have learned from the Paper just circulated that a financial guarantee was offered to Japan in respect of the part Japan was to take in the prospective expedition. My question is whether the £3,000,000 covers only the cost of our own troops in the expedition to Peking, or whether it also covers the financial guarantee which we understand is to be given to Japan.

Financial assistance was offered to Japan, as appears in the Papers laid on the Table of the House, provided that Japan sent a much larger number of troops than she had already sent at an earlier date. Time was the essence of the offer; that offer was not accepted, and there is no liability with regard to Japan.

said he would move the Amendment standing in his name on Sub-section (k) of Clause 12, which dealt with the disclosure required in the prospectus with regard to contracts. The provision in this Bill was to take the place of the clause in the Act of 1867 which they were repealing. It had hitherto been customary to insert a clause in applications for shares whereby the applicant waived his right under that clause, the object being to render it harmless to the directors. They were in the present Bill making such a waiver absolutely void. In the Grand Committee he moved the insertion of the words "in writing," but that was objected to on the ground that the words were unnecessary. He thought the words ought to go in to make the sub-section clear.

I hope the House will not accept this Amendment. If it were accepted it would amount to an invitation to have contracts other than in writing. There are contracts which would be binding although not in writing. It is desirable that every contract of this kind should be in writing.

admitted there was considerable difficulty in fixing an altogether satisfactory period. The original Bill provided a period of five years, but after discussion the Committee came unanimously to the conclusion that it would be better to make it two years. On the whole he thought two years would be as satisfactory as any other period, because the class of contracts it was desired to have disclosed were contracts made and entered into immediately before the formation of the company, such as contracts for the purchase of the subject-matter of the company. Such were really the material contracts about which it was essential the public should know, and certainly the cases would be rare in which that class of contract would extend over a period longer than two years. In the vast number of cases what the public wanted to get at were really the series of deeds which culminated in the bringing out of a company, and for that a period of two years would generally be sufficient.

regretted the Government were not prepared to revert to their original proposal of five years. The policy of the clause was that intending subscribers should be given notice of all material contracts. If that was the true policy of the clause, and there was a contract older than two years, why should that contract, being avowedly material, not be disclosed? There were very good purposes for the Statute of Limitations, but he could not see why, if it was acknowledged that all material contracts should be disclosed, such a contract, which was ex hypothesi material, was not to be disclosed merely because it was made two years before. He admitted that his argument went further than the Amendment, but in any case a period of five years would be bettor than one of two years.

hoped the Government would accept this most reasonable Amendment. The alteration to two years was a very retrograde stop, and could not be justified by the false analogy of the Statute of Limitations. The basis of that statute was that owing to the lapse of time evidence might not be forthcoming, and doubts might exist as to liability. But here, presumably, the contract was material and existing, and, though material, was not to be disclosed for the guidance of the investor. If a material contract existed and was disadvantageous to a company, what relevancy was there between that condition of things and a limitation in point of time? The principle of the Bill was publicity and the fullest information for the exercise of a reasonable judgment on the part of the investor; and yet the House was told that too much information would be confusing. One thing to be learned by investors was that they must take trouble for themselves, and if a prospectus gave the information it was for them to go through it, and form their own judgment. But the information, so far as material, must be given. He hoped the Government would restore the period of two years, as two was much preferable to live.

said the reason the Government altered the period from five to two years was that in the discussion in Committee many illustrations were given of the great difficulty in which those who desired to give full in-formation would be placed. It would be very difficult for anyone, with every desire to give full information, to be sure that every material contract over so long a period as five years was announced to the public. It was considered that two years would be quite sufficient, as it was hardly to be supposed that anyone would enter into contracts which it was not desirable to disclose three or four years before the company was formed, with the idea of withholding from the public the knowledge of those contracts. There was nothing very sacred about five or two years, and if the mover of the Amendment eared to accept three years as a compromise the Government would agree, but otherwise the two years would be adhered to.

thought the right hon. Gentleman was under some misapprehension. The subsection did not compel a company to disclose every contract, but only every material contract. When it was urged that there would be great difficulty in filing material contracts over a period of five years, it appeared to be forgotten that that had to be done under the present law, and so far as he knew, no difficulty had been experienced. Another matter to be considered was in connection with the reconstruction of companies. The reply of the Solicitor General did not really touch that point, as he seemed to think that the object would be secured if material contracts for two years before the formation of a company were required to be disclosed. A reconstructed company would be a new company in the eyes of the law, but it was quite possible that a company requiring reconstruction might have been in existence for five or ten years, and many of the contracts might be of five, six, seven, or ten years standing. Was it not material that investors who were invited to put their money in the reconstructed company should have notice of those very material contracts? Under the Bill those contracts would not be disclosed at all. By accepting a period of five years the Government would really not be imposing any greater task upon directors than was at present the ease, and therefore he hoped the period would not be cut down to two or even three years.

thought the Government hardly appreciated the fact that under this sub-section persons who did not disclose material contracts were given an absolute protection which did not at present exist. If there were no provision enacted, as now proposed, any promoter or director bringing out a company would be bound under the ordinary law to disclose all material contracts, whatever they were; but to insert a provision dispensing with the necessity of disclosing a contract if it was more than two years old positively gave an encouragement to concealment which did not at present exist, and the intending investor was subjected to a danger from which he was now exempt. Under the ordinary law, if a material contract was not disclosed it would be possible for the investor to claim that he had been misled and deceived. He thought, therefore, it would be a pity to narrow the time for disclosure and to depart from the period approved by both the Departmental Committee and the House of Lords. The danger was not so much that persons would begin to construct their designs two years before a company was brought out, as that, when they had made up their minds to bring out a company, if it was found there were some contracts they would rather not disclose, they would postpone the time for issuing the prospectus for a month or two in order to bring those contracts within the protection of this clause. The whole basis of this Bill was to secure the intending investor by giving him the maximum of information, and it would be a pity if, merely for the sake of making the prospectus in some cases a little shorter, that protection should be materially lessened.

reminded the right hon. Gentleman that it was only if there was actual fraud, if the omission of any reference to a material contract was part of a suggestion or untrue statement with regard to the condition of a company, that there would be a common law liability. Apart from that, there would be no liability for mere omission. He asked the House to appreciate the consideration which weighed with the Committee when this matter was discussed. It was pointed out that if a period of five years were adhered to a very difficult task would be imposed upon those who were responsible for bringing out the prospectus. If there was no limitation, or if the limitation was as wide as five years, it would be a very serious matter to go through all the contracts for the purpose of ascertaining which were and which were not material. No one wished this Bill to bear so hardly upon those who might be in the position of directors as to prevent persons of the respectable and solid class assuming the responsibilities of that office. The matter had also to be considered from the point of view of the intending investor. Sometimes the easiest way of conveying practically no information to a man was to be so extremely copious that he overlooked that which it concerned him most to know. Whether the matter was looked at from the point of view of the directors or from that of the investing public, it seemed that two years was a reasonable period, and he therefore hoped the Amendment would not be agreed to.

supported the Government view. While it might be right to go back two years to cover the possibility of contracts having been entered into with the fraudulent intention of concealing them, it would be very unreasonable to enforce the publication of every contract which might be material in the eyes of an investor extending over a period of five years. He therefore hoped the two years would be adhered to.

intimated his willingness to accept the suggestion of the President of the Board of Trade that the period should be three years.

explained that the object of the Amendment he was about to move was to render it unnecessary, in the case of a prospectus published more than a year after the date at which a company was entitled to commence business, to comply with the requirements of paragraphs (e) and (h) of Sub-section 1 of the clause. The provision as it stood applied not only to companies which had been in existence and carrying on business for one year, but also to companies which had been carrying on business for twenty or more years. There were a large number of very honest companies which had been formed by taking over industrial concerns, a certain number of paid-up shares or debentures being given to the vendor as purchase money. There were a number of excellent companies in which a man carrying on an industrial concern had found himself unable to pay his way, and had called his creditors together and formed a limited liability company, the creditors being paid in preference shares and he himself taking a certain number of ordinary shares for his own good-will. Some such companies paid exceedingly well; the creditors had got all their money back, and the man himself had been able to get on his legs again and, by good management, his ordinary shares had become of considerable value. If twenty years later such a company went to the public for more capital, what possible object could there be in stating the particulars required under paragraphs (e) and (f)? Such information would be utterly valueless to the investor, and he hoped the already numerous difficulties which lay in the way of issuing an honest; prospectus under this clause would not be added to in the case of a company which had been in business for more than one year.

expressed his unwillingness to omit any of the requirements which had been considered necessary by the Departmental Committee by whom this subject was very carefully considered. It was quite possible to conceive cases in which this information would not be really necessary to enable an investor to make up his mind, but there were also cases in which it would be very important indeed. He therefore hoped the Amendment would be rejected.

The House will recognise that there is a very material difference between the two cases. In the case of a new company the appeal to the public is not upon the results of previous business operations, but altogether upon facts which are drawn from the previous existence of the business formed into a company, and also all matters connected with the formation of the company. All these are very necessary and proper things for an investor to know, as well as contracts, in order that he may be in a position to judge for himself as to what the prospects of the company are. Things are very different after a company has been going on for many years, for many of the things which were material in the original prospectus sink into the background, and the material points are the manner in which the business has been conducted, the profits made, and many other considerations of that kind. It must be borne in mind that with regard to the disclosure of contracts up to one year, those who desire to make themselves acquainted with contracts before that date could make themselves acquainted with the contracts made for three years previous to the formation of the original company. So that in the case of a company coming out a year after its formation, while they would only have to disclose material contracts for one year, the investor would have the guidance of three previous years, and would practically have four years. The Committee of the House of Lords considered that this limitation of one year was sufficient in the case of new issues, and I hope the House will agree to it.

said it would be a very great pity if this clause was marred by limiting it to one year. The right hon. Gentleman had given way on this point in the previous clause, and he could not see what the difference was here. He had stated that in the latter case the company would have had the experience of one year's trading, but there was no such provision in the clause, and there was no necessity to trade at all. He would put a case in point, of which there were many to be found in the dark history of companies during the last fifteen years. Take the case of a man who had a thoroughly bad business, and who turned it into a company. The person who had a thoroughly good business was, as a rule, most reluctant to part with it to a company. The Board of Trade records were full of instances of men parting with rotten businesses to companies in order to cheat creditors. This thing was one of the most common evils in connection with company frauds. A man made a material contract of such a character that nobody would be induced to take up shares if he knew all the facts. If this clause was passed, the man with a thoroughly bad business would start his company, take a sufficiently large number of shares himself, and qualify himself to commence business. Of course, he would take very good care that nothing important happened for twelve months, and then he would offer the business to the public in the form of a company. By virtue of this clause, which was intended to make the law more rigid in order to avoid cheating, he would be entitled to have recourse to the limitation of one year; therefore he would not be compelled to disclose what might be the most material thing in the world, and which, if known, would have spoiled the chance of any shares being taken up. Thus by waiting for a year he would be able to get out of his obligations. He thought if the right hon. Gentleman considered this carefully he would see that it was a thing that would very commonly happen. He hoped the right hon. Gentleman would show the same willingness to meet them in this matter as he had done in the previous case, and allow the period to be three years.

said upon this question he shared the views which had just been expressed by his hon. friend. He felt sure that his right hon. friend would perceive on reflection that the Amendment suggested would not in the least interfere with legitimate companies, and he had not established clearly the difference between cases of old and new companies.

The House will remember that in the House of Lords the Committee made a very clear distinction between the two cases. I am willing to make a concession with regard to this point, but it is one which will still retain the distinction, and I am willing to alter the limitation from one to two years.

Then I will withdraw my Amendment.

said he had not the faintest hope of inducing the Government to accept this Amendment, but as an old-fashioned free trader he wished to vindicate his character. Business people very often availed themselves; of contracting-out clauses, and such a clause as this was necessary in order that people might, if they thought fit, contract themselves out of any further legal obligation in the matter.

As I understand that my hon. friend has had the opportunity of vindicating his character as a free trader—which I understand is his prime object—and as he says he does not expect the Government to accept this Amendment, I do not wish to disappoint my hon. friend. For reasons which hon. Members will well understand, I think they will agree that this Amendment is one which would make a change which the House is not prepared to accept.

said he proposed to ask the House to accept an enlargement of Clause 12—

I rise to a point of order. The Amendment of my hon. and learned friend is to insert at the end of line 15 the words—

"Nor shall any condition purporting to relieve a director from the obligations imposed upon him in his capacity as a director, or as an officer of or trustee for the company, under the general law be valid unless the same be approved by the court or a judge as fair and reasonable."

I submit that that proposal is out of order. Sub-section 5 deals with the proposal to waive compliance, and this is really a new clause. I think it was down on the Paper as a new clause, but my hon. and learned friend was unfortunately absent when it was reached.

I do not understand that this Amendment applies to Articles of Association, which was the effect of the new clause set down by the hon. Member for South Leeds. The words "nor shall any condition," I understand, mean any condition in the prospectus; the words are used already in that sense in this very clause.

It is quite true that in the new clause I put down I sought to do away with the making of fictitious contracts by means of the Articles of Association. I propose by this Amendment to put an end to the practice of making contracts equally fictitious by means of the prospectus. It is also a common practice to insert in prospectuses themselves language of waiver for the purpose of creating implied contracts and of relieving directors from the obligation of disclosing contracts. That is now a very common practice, and it was foreseen by the authors of this Bill that that practice will be extended when the Bill comes into operation, because the many requirements with which directors will be called upon to comply will naturally lead to the practice of inserting in the prospectus clauses by which they may be waived, thereby depriving the shareholders of their right to enforce compliance with this section as against the company or the directors. Inasmuch as that practice will be largely increased, I think it is not unnatural to suppose that we shall find also on the face of the prospectus a clause relieving the directors under the general law, and not merely of the obligations prescribed under this section. I have seen Articles of Association providing that the directors may enter into contracts without any of the obligations of the existing law attaching to them. Such a clause is never discovered until the company goes into liquidation, and a number of discreditable transactions are disclosed. I hope a clause such as the clause I proposed will be introduced in another place, but I am anxious now to get a small instalment of a beneficial reform. If, however, the Attorney General will give me some assurance that the whole subject will receive proper consideration elsewhere, I shall be very pleased to withdraw the Amendment. Meantime I beg to move.

I hope the House will not accept this Amendment of my hon. and learned friend. The other Amendment, which he embodied in a new clause, was an Amendment directed against what was in some cases undoubtedly a very considerable evil. That was that the Articles of Association should guard against the directors being enabled to do things which under the law would otherwise be illegal, but the present Amendment of my hon. and learned friend would be almost entirely useless, and is only in order because it is directed against a state of things which can hardly be said to exist. I do not say that conditions of this kind may not have been included in certain prospectuses, but I have never seen them. I would ask the House moreover to consider how this Amendment would work if inserted in the Bill. It is that the conditions contained in the prospectus purporting to relieve a director from the obligations imposed upon him under the general law, shall not be valid unless the same be approved by the court or a judge as fair and reasonable. What is the moaning of "approved by the court or a judge "?

When the condition is relied on to relieve a director, the court will have an opportunity of determining whether it is fair and reasonable.

That is not so, because the Amendment says "approved by the court or a judge." What it should say should be "disapproved by the court or a judge." I submit to the House that my hon. and learned friend has put down his Amendment not with any idea of its being adopted, but in order to ventilate another subject which cannot be dealt with because it is not in order.

said that what his hon. and learned friend was pressing for, and what he also ventured to press for, was that the Attorney General should be good enough to inform the House that when the Bill appeared in another place they would be helped out of their present dilemma. The Bill was building up a new code imposing certain duties on directors and other officers of companies, which experience had shown to be necessary in order to prevent fraud. The Bill prevented shareholders from waiving the benefit of those necessary precautions; but was it not equally necessary to prevent the directors from escaping from the effect of those precautions? It was no use preventing shareholders from waiving the now conditions if the directors were able to escape by a clause in the Articles of Association. The necessary corollary, therefore, was to make some corresponding addition preventing directors by a clause in the Articles of Association from escaping. If the Government looked upon the Amendment from that point of view they would see that it was essential in order to carry out the policy of their own clause. If the Amendment was not accepted directors would be able by a clause in the Articles of Association to give the go-by to the whole of the provisions of the Bill.

So far as the principle of this Amendment is concerned, I think it would be a very bad thing if, having imposed certain obligations on directors, which we think ought to be imposed on them in the interests of the investing public, they should be permitted to set them aside by some course such as that which has been suggested. But I agree also that the Amendment is one that cannot properly be accepted. The hon. and learned Gentleman asked me whether I could give any pledge with regard to the action to be taken in another place. I am afraid I am not in a position to give any pledge of that kind, but I am quite sure that the object the hon. and learned Gentleman has in view is one that must commend itself to the Lord Chancellor, and all I can say, is that I will take care to draw the attention of the Lord Chancellor to the Amendment, but of course I must leave the whole of the responsibility with him.

asked leave withdraw the Amendment.

The Amendment which I now move was put down with a view to meeting a point which was raised in the Grand Committee. There was a very unanimous feeling that something should be done to reduce the enormous expense that would be involved if the whole prospectus had to be set out in every advertisement, and this is a proposal by which an abridged prospectus may be published as a newspaper advertisement, provided that reference is made to a convenient place where the full prospectus can be seen and obtained.

I am afraid I cannot accept my hon. friend's Amendment. We do want the provisions of this section to apply in a sense to an abridged prospectus—that is to say, it must be an honest abridgment. It must be governed to some extent by the provisions of this section, and the Amendment, to my mind, is one which would have a somewhat misleading effect, and I hope it will not be pressed.

On the Amendment of the right hon. Gentleman, I should like to point out to the House the very great danger that would be created by it. The object of this Bill and the principle upon which the Bill has been built up, in the Departmental Committee, in the Standing Committee, and up to the present in this House, has been the principle of the fullest publicity, in order that investors may have full knowledge of the facts for forming a fair judgment. What is proposed by this Amendment is that an abridgment of the prospectus may be inserted as an advertisement on one condition, namely, that reference must be made to a convenient place where the full prospectus may be seen and inspected. We know what the present practice is with regard to contracts mentioned in prospectuses, and the places where they may be seen. I venture to say that the number of cases in which investors take the trouble or incur the expense of informing themselves by reference to these documents is almost infinitely small. It may be said that it is their own fault; but the whole of this Bill presupposes unwillingness to incur trouble and expense, and the purpose of the Bill is to be an instrument by which persons may be protected against frauds contained in documents which they will not take the trouble to peruse. I venture to think that a similar practice will grow up in connection with prospectuses if this Amendment is accepted. What would prevent the abridged prospectus being reprinted and issued? I think this Amendment will kill the publication of the full prospectus, because people will object to going perhaps long distances and incurring expense in order to examine the complete documents. I hope, notwithstanding the desire of the right hon. Gentleman to meet the objection raised in Committee, that he will not press the Amendment, because it would lead to the suppression of information, and would be the means of perpetuating that fraud which this House is so desirous of preventing.

said he should like to suggest a way in which some of the obvious dangers of this new sub-section might be avoided. It might be found that an abridged prospectus was in form a full prospectus, but that it left out, perhaps, one thing which might be material. What he suggested was, that it would be quite easy to specify the things which might be abridged. He would therefore move to leave out in line 2 of the sub-section—

An Amendment to add at the end has been already negatived, and we cannot now go back. If the hon. Gentleman intended to move an Amendment he should have moved it before the Amendment of the hon. Member for Preston.

said he was not aware that that rule applied to Amendments of Amendments as it did to Amendments of clauses, but he would suggest his proposal to the consideration of the Government, as it would be quite easy for them to carry it out if they thought fit. His suggestion was that certain things should be specified, such as the Memorandum of Association, which might appear in an abridged form. Some things were short and terse, and could not be abridged at all, and other things might be omitted, which, although making the prospectus an abridged prospectus, would put the public off their guard. He hoped the Government would carry out his suggestion.

I quite recognise the disease which we are trying to cure by this Amendment, but it appears to be that the remedy is worse than the disease. If the principle of having two prospectuses is once admitted, a very serious blow will be struck at the efficiency of this whole Bill. The real argument in favour of the Amendment is the saving in expense in newspaper advertisements, and there is no other advantage. But if we are to admit the principle that there are to be two classes of prospectuses, one complying with all provisions we have been elaborating with such care, and I believe with sound sense, but which is only to be found somewhere else, and the other class in an abridged form, you will find that the general rule will be, as has been pointed out by the hon. Member for South Islington, that the newspaper advertisement will be reprinted and sent round through the country. The Amendment states that where any such prospectus is published as a newspaper advertisement it shall be sufficient to publish it in an abridged form; therefore, it can be published by reprinting it. I would appeal to the right hon. Gentleman not to persist in the Amendment, which would be a dangerous loophole leading to the evasion of the law.

In answer to what has been said I will point out that this sub-section would only apply where the prospectus is published as a newspaper advertisement, and would not apply if that advertisement were reprinted and sent round as a circular. The expense of printing all the particulars required by this section in every newspaper advertisement might be overwhelming, and in some cases would prevent a company advertising in newspapers altogether. I would further point out to the House that the abridged prospectus must be a fair abridgment, and that it would not do to insert statements that might suit the company. Any such abridgment would be evidence of actual fraud; it would not be in an abridged form at all but in a selected form, and would not comply with the requirements of the clause. Further, there must be in the abridged prospectus a reference to the full prospectus, with a statement as to where it can be inspected, so that anyone wanting further information has only to apply personally or by letter in order to obtain the full prospectus. It has been suggested that certain particulars damaging to the company might be left out. All I can say is that such an omission would be evidence of actual fraud. If some particulars damaging to the company were left out, it might go hard with the persons responsible. It has also been suggested that there should be some enumeration of the matters which might be abridged, but the House will be sensible that that would lie quite impossible. Unless the Amendment be accepted, many honest companies may be prohibited altogether from advertising.

said he thought that after the statement of the Attorney General the House would regret that this new provision was proposed. Who were the persons who took shares in a company? Some took them for the purpose of dealing and gambling with them, and those gentry required no protection of any sort or description. It was the honest investing public that required protection. A large number of people would not take the trouble to examine a full prospectus if they saw an abridged prospectus, and would take everything for granted. People of simple good faith (erroneously enough, Heaven knows) imagined that corresponding good faith existed on the part of others. All such possibilities had to be met. The Attorney General had stated that it was enough that the abridged prospectus should specify a convenient place where the full prospectus might be inspected. So it was under Section 38 of the Companies Act of 1867, which provides that all particulars of contracts might be examined at certain stated places; but everyone knew that such contracts were never examined. Then the Attorney General said that it was necessary that the abridgment should be a true abridgment, and that if any matter of importance were omitted it would be evidence of fraud. Nothing of the kind. The Attorney General himself laid down the law that the non-disclosure of a material fact was not evidence of fraud unless it were a fact which if known would make untrue a statement which had been made. That would not be the case in connection with the proposed abridgment, and to his mind the arguments of the Attorney General did not prevail. Why was the House labouring this clause about prospectuses? It was because they wished that in the interests of the investing public certain things should be stated. They wanted whenever the public were invited to subscribe for shares to be sure that the person invited should have brought to his notice certain particular facts. That was the whole object of the clause. But an Amendment was now proposed stating that an abridged prospectus, from which every single thing the House had been insisting on might be omitted, might be published. That, in his opinion, would be fatal to the whole clause. He did not dare to hope that the right hon. Gentlemen would give way, although he trusted he would; but, if the right hon. Gentleman would not, he would propose an Amendment, if he were in order. It was to add at the end of the proposed subsection the following words, "Provided that none of the matters required to be disclosed by this section are abridged in such advertisement." Newspaper adver- tisements contained copious laudations and glowing descriptions of the property to be floated, and a great deal of such matter might be abridged, but what he objected to being abridged were matters which they now said ought to be disclosed.

We cannot possibly accept the hon. and learned Gentleman's Amendment, because it simply proposes to add at the end of the proposed Amendment that the Amendment shall have no effect.

said it was impossible for anyone to apply for shares in a company without having the full prospectus brought before him, which always contained the application form. That was the answer to the objections which had been taken.

said that the Government had drafted a long measure setting forth the particulars which should appear in every prospectus for the protection of the simple-minded persons to whom the hon. and learned Gentleman opposite had referred. They then reflected that every prospectus advertised in the future would run into about five columns, and that if a newspaper contained very many prospectuses it would be impossible for it to contain anything else. The Government, having with great ingenuity and much culinary skill concocted their salad, came to the conclusion that they would throw it out of the window. What was the use of saying that certain particulars should be set out with the utmost minuteness in a prospectus, and then saying in this Amendment that a promoter need not do anything of the sort, and could adopt the beautiful device which the House of Commons frequently resorted to—namely, the device of reference? Then the hon. and learned Gentleman opposite, seeing that the Government had thrown over their own proposals by the Amendment of the President of the Board of Trade, moved an Amendment allowing things to remain as they were before the Amendment of his right hon. friend. If he might be permitted to say it to his right hon. and learned friend, his best way would be to vote against the Amendment now proposed. Speaking as a person who had never promoted a company, he maintained that it was absurd for the Government, after the Committee upstairs had spent a great deal of time in setting forth all sorts of particulars which ought to be disclosed to the public, to come down here and say, "After all, an abridgment and a reference will do." That was not the right way of treating the subject under discussion or the Bill, and he hoped the right hon. Gentleman the President of the Board of Trade would withdraw his. Amendment, which would destroy the whole effect of this clause.

trusted the right hon. Gentleman would withdraw the Amendment, which the Committee upstairs had not had an opportunity of discussing, and which had met with such diverse criticism. No need of such a clause had ever before been suggested. What had been suggested upstairs was that the Memorandum of Association was often so prolix in length and full of immaterial matter that it would be to the advantage of the newspapers that a document of that kind must be incorporated in every newspaper advertisement; and it seemed to be the view of the Committee that there should be some provision for relieving the directors of a company from publishing the Memorandum of Association. But the Committee never for a moment thought of relieving the directors of the obligation of furnishing the very material particulars embraced in the prospectus. The Amendment assumed that it was necessary to insert an advertisement of the prospectus of a. company in a newspaper in order to advertise that company, but it was quite possible to have a newspaper advertisement which did not indicate that it was a prospectus; and if the advertisement did not say it was a prospectus, the public might not be misled, but if the advertisement appeared as a prospectus as such, though abridged, it was obvious that it might lead to misconception in the minds of the public. It was evident that the word "abridgment" offered considerable latitude. It might not be complete from an analytical point of view, and it might be said to be unfair for not bringing before the public all that was necessary to be known. It was impossible to imagine what litigation might result to determine whether the abridged prospectus was fair or not, or what actions might be brought charging directors with fraud. So that by this Amendment they were inducing a company, in publishing an abridgment of a prospectus by means of advertisement, to lead intending shareholders to undertake the exceedingly difficult duty of distinguishing between an abridgment and the larger prospectus. Could anything be more effective in bringing about litigation? Then it was said that the full prospectus was to be inspected at some convenient place. Suppose an inquiry for an inspection of the prospectus was met with a refusal? A few years ago a Rhodesian company was registered in Ireland; indeed, Ireland seemed to be a favourite place for registering certain companies. If an address was given in some Irish county as the place where the prospectus might be inspected it might be convenient from the company's point of view, but inconvenient to the proposed shareholders. He hoped the House would reject the Amendment for another reason. It was a very important derogation from the existing law. Under the existing law, if the directors of a company published an abridged prospectus they did so at their peril, and any contract entered upon on the faith of that abridged prospectus might be voided by the shareholders. It might be said by the directors if this Amendment was passed, "We abridged the prospectus, it is true; but we are entitled to do so. We may have abridged it badly; but we did our best. We left out important parts, it is true; but that did no harm to the shareholders, because at some convenient place there was the full prospectus for them to inspect." In fact, the moment the Government allowed two prospectuses—one which complied with the Act and the other not—the most stringent provisions of the Act would be obviated and become a dead letter. He trusted the Amendment would be withdrawn.

said he would withdraw his Amendment, as he thought it would be more convenient that the division should be taken on the Government Amendment.

could not help thinking that there was some confusion in the mind of the hon. Gentleman who had just sat down, and of others who preceded him, as to the purpose and scope of the Amendment. The House, in the clauses already passed, had laid down the most express conditions as to what was to be in the prospectus, and the company must get it filed with the registrar of joint stock companies, and until so filed it was not to be issued. There could be no doubt what the Bill meant by the prospectus. Then Section 12 went on to say what the particular document must contain. But there arose a very serious difficulty, which the hon. Member for South Leeds himself recognised—namely, the difficulty of enacting not only that the prospectus should contain a vast amount of information, but that every public notice drawing attention to that prospectus should also contain all that detailed information. As he understood the Amendment, it was for the purpose of meeting that difficulty. Then came another question. In the issue of a prospectus it was customary to call public attention to it through the medium of the press. That might be done in a dozen different ways. The advertisement might be an abridgment, referring the reader to where he could see the full prospectus. As an illustration, John Smith and Co. issued half a million of preference shares; they advertised that fact, and added that the full prospectus might be obtained at the office of the company at so-and-so street. The hon. Gentleman would say that that was not the prospectus; but if he looked at the definition clause he would find that a prospectus meant "any prospectus, notice, circular, advertisement, or other invitation offering to the public for subscription or purchase any shares or debentures of a company." One might imagine from what had been said that the public subscribed for shares without reading the prospectus. [An HON. MEMBER: Yes.] It was very rarely that they did not read it, and he said that with some knowledge of the general practice of companies. The object of the advertisement was to call the attention of the public to any undertaking, and the practice of the public was to apply for a full prospectus and an application form. He knew that the practice had grown up recently, to a limited extent, of filling in the application form before the prospectus reached the hands of the proposed investor, but that was very rarely done. The hon. Gentleman spoke as if, by passing the Amendment, they were going to deprive the inquirer of the opportunity of knowing the contents of the contract. He said that in practice nobody ever went to see the contract. But how was the Bill going to affect that?

said that what he did say was that, except in the smallest number of cases, people did not go to inspect the contracts, and that would be equally the case with an abridged prospectus in which a general reference had been made to the full document, to be consulted elsewhere.

said there was no analogy between the cases. He agreed that certain classes of people did not take the trouble to read a prospectus, and never would. But these people did not need any protection, and did not deserve it. They thought the shares in a company were going to a premium, and they applied for a certain number in order to throw them on the shoulders of somebody else. There could be no doubt that in the absence of the Amendment the expense of inserting the advertisement in the newspapers would be so great that it would never be put in practice.

hoped the Government would show some backbone, and insist on the adoption of the Amendment. They had had arguments from both sides of the House in defence of the investors, but it seemed to him that the object of the Bill was to secure large incomes to the lawyers and large profits to the newspaper proprietors. An abridged prospectus, however short, would lead to much expense. If every line of the prospectus and every detail of an agreement had to be advertised, it would be impossible for anybody but a millionaire to bring out a company, and the result would be that company promoting would become a millionaires' monopoly. He thought the Amendment a very fair one, and he trusted that the right hon. Gentleman the President of the Board of Trade would not give way upon it. The right hon. Gentleman had already made too many concessions to the lawyers. He was sorry to say that there were more lawyers present that night than any of the rest of hon. Members.

agreed with the hon. Member opposite, and hoped his right hon. friend would not give way on this Amendment. In his judgment it did not go quite far enough, although it was a concession to good sense and general convenience. It was quite evident that there had been a good many fingers in the pie in framing Clause 12. No doubt those who framed the clause had in mind the initial prospectus, which was put forward when the company was first started, and in which all the particulars which might reasonably be asked for were required to be disclosed. But the word "prospectus" included every notice issued by the company after it had started, inviting the public to subscribe for shares. He put it to the House that when a company wished to increase its capital by the issue of debentures or additional shares, it did not desire to go in for an immense advertising campaign, but only put a modest line or two in such papers as it was thought would bring custom, pointing out that full information could be obtained at the company's office. It would be preposterous to demand that all the full information that was demanded in the original prospectus should be set out in extenso in these advertisements. It would put an end altogether to the practice of advertising for subscriptions, and thereby inflict great inconvenience on honest, struggling companies. The concessions which the Government had made had not gone beyond what was intended in Committee.

said that, having regard to the very wide terms of the definition of "prospectus," it was difficult to avoid the conclusion that some such Amendment as that pro posed by the Government was necessary. Apparently "prospectus" was to include not merely the ordinary advertisement by which the company invited the public to subscribe, but if a man concerned in the promotion of the company, no matter how long previously, had shares and wished to sell them, he would be compelled to advertise the full prospectus. But in endeavouring to meet the difficulty that existed the Government had selected a singular way to do it. They limited it to an advertisement published in a newspaper. It was not the advertisements in the newspapers that ought to be treated the most leniently. If any distinction was to be drawn it ought not to be in favour of the way which drew most money into the pockets of the company. A differentiation ought to be drawn between the mode of publishing the advertisement and the character of the advertisement. Some Gentlemen had addressed the House from the point of view of the investor, some from the point of view of the company promoter; he would say something from the point of view of the lawyer. If this Amendment passed into law he should never be entrusted with the duty of drawing an abridged prospectus, because he would say that the prudent thing to do was to publish the prospectus as a whole. It was possible to test this matter in a very simple way. Would the Government tell them what class of matter it would be safe to omit from the abridged prospectus? The difficulty was to tell what was to be abridged; if matter was not material it need not appear in the abridged prospectus at all; if, on the other hand, it was material, could it be omitted from the abridged prospectus? Was it intended to protect people who deliberately omitted from a prospectus something that was material? It the clause was examined it would be found that nine-tenths of the matters could not be abridged. It was plain that by unduly enlarging the scope of Clause 12, the Government had got into a very great difficulty. Some amendment was necessary, but, looking at it from a lawyer's point of view, this Amendment was most dangerous.

said he did not propose to follow the arguments which had been urged in respect of the clause, although he was satisfied that no answer had been given to them by the Government; he merely rose for the purpose of making a suggestion. If the clause were carried upon a division the House would have no opportunity of amending it, but in another place there would be an opportunity, and as the clause seemed to be ill-fitted as it stood to attain the objects of the Government he suggested that the clause should be carefully considered by the Law Officers of the Crown in order to see whether its form could not be improved with a view to its amendment in another place.

thought the suggestion of the right hon. Gentleman was one well worthy of consideration.

expressed the opinion that the Amendment was a most important one. It struck at the root of the section, and rendered nugatory all those provisions which the section provided. The section provided that the prospectus of a company should contain many things, and laid down certain penalties in event of its not containing them. The difficulty which was sought to be met by the Amendment ought to be met in the interest of all honest companies. No one wanted to kill legitimate enterprise, but it was going to be seriously hurt unless some provision was made to insert in a newspaper such an advertisement as would be necessary. The only difference with regard to the newspaper advertisement was that the expense would be enormously increased, because the prospectus would contain a great deal of common form matter which nobody required to see and which was never read. Of such a character was the Memorandum of Association, which contained in legal phraseology every power which a company might think fit to exercise. The public at large did not desire to see that, and would not read it if it appeared in a newspaper; but the extra expense of printing it in a newspaper would mean thousands of pounds to every company which was brought out; the difficulty might be obviated by omitting Memorandums of Association from the advertisement. The only other point in which it would be proper to abridge the prospectus was in the schedule of contracts, which in the case of a largo company like Lipton's, with an immense number of establishments, would mean a tremendous cost to the company. He ventured to suggest, therefore, that instead of the words "in an abridged form," there should be inserted, "without inserting the Memorandum of Association and schedule of contracts."