moved to leave out the words "twenty-five" ["twenty-five millions"], and to insert instead thereof the words "twenty-four and a-half."

This Amendment reduces the amount which is allocated to the Sinking Fund by half a million The Chancellor of the Exchequer a few days ago said that I had, though I opposed this reduction, voted on previous occasions for a similar reduction. It is quite correct that in 1899 I did vote for a similar reduction, but the circumstances at that time were very different from what they are now. I find, on referring to "Hansard," that I was careful to say when I supported the reduction made in that year that I did so only owing to the exceptional circumstances of the case. The words I used on 1st May, 1899, were these:—

"He had met a good many financial authorities recently, and he had discussed this matter with them, and with hardly a single exception they agreed with him that a partial suspension of the Sinking Fund at the present moment, when the National Debt was reduced and when the national credit was good, was an advantageous circumstance and a good piece of finance on the part of the Chancellor of the Exchequer."

The circumstances now are very different to the circumstances to which I was referring at that time. At that time the gross amount of the National Debt was 637 millions, whereas at the present moment the gross amount of the National Debt is 750 millions, which is a very different thing. At that time the expenditure of the country was 110 millions, whereas it is now 164 millions. The Chancellor of the Exchequer at that time, Sir Michael Hicks-Beach, told us on 13th April, 1899, that the expenditure was £110,927,000, whereas our expenditure at the present moment is 162 millions. Therefore, the two important factors, of the gross amount of the National Debt and the amount of the expenditure, are very different now to what they were then. I may say that, of course, I voted during the war for the suspension of the Sinking Fund, but that was a very exceptional circumstance, and I do not think I need go into that. I find that there was a very interesting Debate upon that occasion in 1899, and that Sir Henry Fowler, the present Lord Wolverhampton, opposed in very forcible language the reduction of the Sinking Fund. He alluded to a speech made by Mr. Gladstone, and said that:—

"There will be a temptation to some Chancellor of the Exchequer, or to some extravagant House of Commons, at some future date, to take this money and to appropriate it."

No truer prophecy could have been made. Here is the Chancellor of the Exchequer and the extravagant House of Commons, which "at some future date," which is the present day, are taking this money. Lord Wolverhampton went on to speak very strongly against the proposal. I find that the late Sir William Harcourt, speaking on that occasion, said:—

"That the time of the largest revenue and the greatest revenue from a fiscal point of view which this country has probably ever known should be the occasion chosen for what I can only call a repudiation of the obligations under which this country has placed itself with regard to the extinction of the National Debt, is, I confess, one of the most serious, and I will call it one of the most disastrous, proposals which has ever been made."

There is no doubt of the largest revenue ever imposed in this country, with the exception of war time, but from a fiscal point of view the prosperity of this country is so great. Those are strong words of Sir William Harcourt, and they come from a right hon. Gentleman who had been Chancellor of the Exchequer at a very recent date. Sir William Harcourt went on to say, in the course of a long speech, that

"He had always held that this provision is one of the greatest sources of strength to the British nation. It gives credit at home and a character abroad."

Could anyone have chosen a better opportunity than the present for doing something to support credit at home? At a time when Consols are at 82½ everything possible ought to be done to bring about that result; and yet this is the moment chosen to destroy what Sir W. Harcourt said was capable of "giving credit at home and character abroad."

I think the hon. Baronet said that Consols were considerably higher then than now. Could he give the figure?

111.

At 2¾ per cent.

Some time after that date they were reduced to 2½ per cent., but the reduction had been discounted in the price. One of the reasons put forward for his proposal by Sir M. Hicks-Beach was that they had then to buy at a high price, namely, 111, whereas they could redeem them in 1923 at 100. The position now is quite the reverse, because you can buy them at a discount of 18 instead of at a premium, and the time to reduce the National Debt is when you can buy Consols at a discount. That is one of the reasons why I voted for the reduction of the Sinking Fund in 1899 and am strongly opposed to it now. On that occasion also the Patronage Secretary to the Treasury (Mr. Joseph Pease) made a very eloquent protest, in which he said:—

"I rise to protest against the tampering with the Sinking Fund which the Government proposes. It seems to me that supporters of the Government are driven to desperate straits when the hon. Member for Central Sheffield has to rise in his place and to contrast 'the bilking of the Bill' with the worst things that have happened in the past."

Why does not the right hon. Gentleman rise now and protest against tampering with the Sinking Fund? The hon. Member for Rotherham (Sir W. Holland) also spoke against the proposal; while that great financial authority, Lord Swaythling, said:—

"I am absolutely astonished that so eminent a financier as the right hon. Gentleman should have taken refuge in such means as these, which can only be justified in times of war or when we have incurred very heavy permanent expenditure."

I think I have said enough to show that at that time all the financial authorities of the party opposite held the view that it was a fatal mistake to reduce the Sinking Fund. I have other striking quotations from a subsequent Debate, with which I will not trouble the House. The Chancellor of the Exchequer himself voted against the reduction, though he did not speak in the Debate. I suppose he was not recognised as a great financial authority then.

A cheap argument.

Not at all. The Members who spoke then were Members with commercial experience, and that the Chancellor of the Exchequer did not possess. As when I last spoke the right hon. Gentleman called my attention to the fact that in 1899 I voted in favour of the reduction, I should like to point out that he then voted against it, although at that time there were sound financial reasons in its favour, whereas the very reasons which could be advanced in favour of the proposal then are reasons which can and ought to be advanced against the present proposal.

I desire to speak because the business with which I am occupied comes within the broad domain of finance, and because the matter of the Sinking Fund has always interested me. Time brings strange changes, and there is nothing more striking than the way in which what is the cardinal principle of a school of politics one day is turned topsy-turvy the next. I have no history in the Division Lobby in connection with this matter. When the question came up in 1899 I had not the honour of a seat in Parliament; and when, since then, it has come up controversially, I do not think I have gone into the Lobby at all. I have recognised that there are arguments to be adduced on both sides, and I have desired to keep my mind open. If there has been one cardinal principle—and it is an honourable principle—of the Radical party for the last 50 years, it has been "No tampering with the Sinking Fund." In 1875 Sir Stafford Northcote first embodied in an Act of Parliament the principle and practice that every year £28,000,000 should be set aside to pay off the interest on Consols, floating debt, and so forth, leaving an ample margin which should go year by year to the reduction of the National Debt. But Sir Stafford Northcote did not initiate the practice. Long before then it had been the custom of all great statesmen to set aside year by year a proper sum for the reduction of the colossal indebtedness, the heritage of the great wars of the past, which we call the National Debt. It is well to look back to some of the dicta of the great men, especially of the Liberal Party, in regard to the matter. In 1871, on the question of the suspension of the Sinking Fund, Mr. Gladstone then let drop this remark:—

"The reduction of the Sinking Fund is borrowing in the strictest sense of the word."

I should like hon. Gentlemen opposite, if they have not recollected that dictum of that great statesman, to ponder for a moment what it means. Pay your way! The next occasion when the matter came up in the House was in 1885, the time of the Soudan War. There was a prospective deficit of nearly £15,000,000. Mr. Childers, then Chancellor of the Exchequer, said this:—

"We propose to intercept the action of the Sinking Fund, so as to produce something over £4,600,000."

It is worth while making this observation upon Mr. Childers' action: that he really was not departing from the practice of the great Liberal financiers, because an exception to the general practice had always been allowed by them if there was a great emergency, such as a war. In that circumstance an interference with the Sinking Fund for the time being was held to be a justifiable operation. Because for a great war you borrow, and taking money out of the Sinking Fund is borrowing, and it is therefore as broad as long. In 1885 there was a strong Debate on the matter. The late Lord Randolph Churchill twice, I think, quoted Mr. Gladstone's great cardinal remark on the matter, not only that intercepting the operation of the Sinking Fund was borrowing, but also the remark of Mr. Gladstone about "paying your way." Lord Randolph Churchill quoted this remark of Mr. Gladstone:—

"I say, if you wish to have honest and sound finance, you must pay your way."

The next year there was a discussion upon the matter was in 1893. Sir William Harcourt was budgetting for a large deficit, and no doubt the temptation must have been great to him to put his hand into the Sinking Fund, instead of imposing further taxation. What did he say?

"It is a fund not to be tampered with in ordinary times and nominal deficiencies; it is the keystone of sound and solid finance. We are not prepared further to weaken its foundation."

Come to 1894. What did Sir William Harcourt say then? He was budgetting for a deficiency of £4,500,000. But he would not touch the Sinking Fund. He said:—

"I will not get the money by abandoning the fixed and permanent provisions for the liquidation of the debt."

Then we come to 1899, the year to which my hon. Friend the Member for the City of London referred to just now. In that year the controversy became fast and heated. Sir Michael Hicks-Beach proposed then in times of peace to reduce the Sinking Fund by £2,000,000. The reason was, I think, a very good one. The hon. Baronet referred to it just now, but I should like to repeat it. Consols then stood at something like 110, and there was no object in buying Consols at 110 which in 1931 the Government will have the option of redeeming at par. It did seem bad finance. As the hon. Baronet has observed, the whole conditions of national finance were entirely different. The National Debt was then at the lowest point in its history. That is a very important factor in the case. In 1899 the total national indebtedness was £635,000,000, as against £754,000,000 to-day. In that year there was a Division taken on the Second Reading of the Bill embodying the proposal of Sir Michael Hicks-Beach to reduce the Sinking Fund. Sir Henry Fowler moved a Vote which was really a Vote of Censure on the Government of the day. The whole of the Front Bench, even if they did not speak against the reduction, went into the Division Lobby against it. That was the action of the Radical party on that occasion. Therefore I am entitled to make this observation—that not only are hon. Gentlemen opposite making a cardinal departure from all the great Liberal tenets of the past in regard to the Sinking Fund, but they are eating their own words, going back upon what they did in 1899.

On the other hand, I am struck by this argument: that the money must be got. On the whole, then, is it fair, in the circumstances in which we find ourselves, in spite of the fact that the National Debt is something like £120,000,000 higher to-day than in 1899—are the Government entitled to put their hands into the Sinking Fund to take out this sum of three and a half millions? I should say "Yes," if the reduction of the Sinking Fund stood alone. But you have to look at this matter as a whole. You have to take first of all the fact that the National Debt, owing to the South African war, now stands at £120,000,000 higher than in 1899. Secondly, that the Death Duties, if if this Bill becomes law, will be at a point of severity absolutely unprecedented in the history of the country. Thirdly, take the Income Tax for the first time stands—in the case of certain incomes at any rate—at 1s. 8d. in the £. You have to take the whole story altogether. It is there that my mind—I speak not in the least as a party politician, but as a man who has taken a great interest in finance—is oppressed with doubt—it is there, when you take the whole of these considerations together, that I ask: Is it wise, in the interests of the State, to take so large a sum as this out of the Sinking Fund? And the further fear arises in my mind that appetite comes with eating, as Mr. Goschen said in 1899, when the Radical party were attacking the action of Sir Michael Hicks-Beach. Mr. Goschen said: I should not be surprised if the Radical party themselves did it some time or other. Well, the Chancellor of the Exchequer did it when he introduced his Budget. What I mean when I use the expression, "Appetite comes with eating," is that the Chancellor finds it so easy to raid the Sinking Fund; he gives annoyance to no one, he treads on no one's toes, and so, when he wants this half-million he goes to the Sinking Fund again. He raided it in April, and, finding it such an easy process, he does the same thing again in November. How do we know he is going to stop at that? We know that the expenditure is enormous if the full "Dreadnought" programme is to be carried out by a particular date, and we know that the temptation is very great. That is why I feel alarmed, looking at the programme as a whole. The national financial situation is so grave, the demands are so heavy, that I fear the right hon. Gentleman may be further tempted to dip into the Sinking Fund.

I am afraid that the Chancellor, now that he has got to the edge of the slippery slope, and, finding it so easy to put his hand into the national pocket, we may find ourselves in a few years with no fund for the reduction of the National Debt. That sums up my fears in the matter. I do not know whether or not we shall go to a Division. Looking at the reduction as it stood up to to-day—£3,000,000—I certainly should not have recorded my vote against it. I agree to that extent with what Lord Cromer said, although I do not go quite so far as he did when he said the right hon. Gentleman might well have taken out more than that sum. I think this matter rises far above party, and we ought to try and look at it entirely from the point of view of the good of the State. It is a matter of national duty and obligation to cut down that immense state of indebtedness called the National Debt. Once you make savage inroads, severe inroads, extreme inroads, upon the Sinking Fund, I do not think those who come after us—and statesmen must have regard for posterity—will find any reason to bless us, and unless we take care, they may have reason to heap imprecations upon our heads.

I do not desire to deal again with that aspect of the case dealt with so fully by the hon. Baronet (Sir Frederick Banbury) and the hon. Member for York (Mr. G. D. Faber), but rather to say a few words upon another aspect of this matter. You were good enough Mr. Speaker to inform us on Friday last the reasons for making this Motion could be discussed when the matter came up again. Of course the main reason why the Motion has to be made is owing to the fact that the Government has discovered that the calculations upon which their original estimates for the Budget were made have turned out to be untrustworthy. The balance sheet which has been circulated shows that the Chancellor of the Exchequer, instead of getting the £162,500,000, which he had hoped to get, will get a sum less than that by several hundreds of thousands of pounds. He has found that not only will he get less revenue than he expected, but also that the expenditure will be increased, and, therefore, he proposes to take another half a million, which the Government estimates will be enough to cover that error in calculation. If anyone looks at this new balance sheet for a moment he will see £500,000 is really a very moderate estimate of the miscalculation or error which has occurred, because there has been the exceptional increase in the Death Duties of £1,300,000, and I venture to submit that it would be most unsafe to build upon the theory that because you have had in these months an increase of the estimate of £1,300,000 in the Death Duties that, therefore, at the end of the year you are likely on the whole to have any increase at all.

Therefore, as I shall submit to the House, the true error has not been £500,000, but £1,800,000. I do not think that any sound finance ought to take into account at all the increased yield of the Estate Duties of £1,300,000. When we come to examine how the diminution occurred we find that apart from the concessions that the Government have granted the two main causes are in the first place there has been a great diminution in the Spirit Duties of £800,000, and in the second place there has been an increase in the cost of valuation which has been raised from £50,000 to £250,000. The Chancellor of the Exchequer in the observations he made on Friday last congratulated himself that it was only in portion of the liquor taxes that a diminution had taken place, and that beer was still doing very well. In any case you are not entitled to look at it in that way, and you must take the whole of the Liquor Taxes together. You cannot single out the Beer Duty and say that is doing well. If the Spirit Duty shows a falling off, that means that a certain number of persons who used to drink spirits are now drinking beer, and the normal consumption of beer but for that fact would have fallen off in the same way. I submit that the Liquor Taxes in these proposals are dealt with in a very unsound way. It is ridiculous to base so large a proportion of our revenue on this particular source of income unless you treat it in the same way as you treat all other taxable articles. To increase to an enormous extent the taxes on a falling industry—the profits of the trade are nothing like what they used to be, and the consumption is considerably less—is flying in the face of all the maxims of all the sound financiers that have ever existed in this country. That seems to me to be an absolutely indefensible proceeding from a financial point of view.

2.0 P.M.

With regard to the Land Taxes there is a great distinction between the four taxes. Two of them—the Mineral Rights Duty and the Reversion Duty—have nothing to do with the great valuation proposals which the Government have submitted to the House. I am doubtful whether you can consider the Mineral Rights Duty as a Land Tax, because it is really an additional Income Tax imposed upon a particular kind of income derived from a particular kind of industry, and I think it is quite plain that it has nothing whatever to do with the proposed valuation. It will not depend in any way upon that valuation, and its yield has no concern with it. The same applies to the Reversion Duty, which depends upon a comparison between the original value of the land when the lease was created—it may be as much as 70 or 80 years ago—and its value when the lease comes to an end. Therefore it has nothing to do with the great valuation proposals which are to be carried out in regard to the whole of the land of this country. I wish to put a question with regard to the Reversion Duty. The Chancellor of the Exchequer estimated the yield of that duty originally as £100,000. I understand that he adheres to that estimate. Why has he made no change? Two modifications of some importance have been introduced. In the first place, agricultural land has been excluded. I agree that that will not make a very great difference, because there is comparatively only a small quantity of agricultural land which is held on leases of more than 21 years. But the other modification is a more important one. The right hon. Gentleman has excluded all reversions which originally had more than 40 years to run. That must have excluded a large number, and I ask the Chancellor of the Exchequer why he has made no modification in his original estimate in regard to these alterations. For the reasons which I have given I do not desire to examine the Minerals Rights Duty or the Reversion Duty at any length. With regard to the other Land Taxes, according to the original estimate, the Increment Duty was to produce £50,000 and the Undeveloped Land Tax £175,000. Each of these taxes it is now estimated will be reduced by £25,000, with the result that the Increment Duty will only realise £25,000 and the Undeveloped Land Duty £150,000. Therefore, instead of bringing in £225,000 together, these two duties are only estimated to bring in this year £175,000. What are we going to spend in order to have the pleasure of obtaining that £175,000? We are going to spend on the Government's own showing no less than £250,000. There is to be a net loss this year in respect of these taxes of £75,000 if you take the whole of the estimated yield. But there is another important point to be considered. Half the yield of these taxes has to go to the local authorities, so that the Chancellor of the Exchequer this year is asking us to spend £250,000, and he will only receive in return for that expenditure under £90,000. That is the state of things for this year. What about the future? We have no information at all as to what the ultimate yield of these taxes will be. All we know from the statement made last Friday is that the changes introduced will make a very important difference in the Increment Duty. As to the cost of the proposed valuation, the estimate of the Government is £2,000,000, but we know that no single surveyor outside the Government will support that estimate for a moment. I know there is a certain gentleman employed by the Government whose advice has been taken on this matter, but I do not think the right hon. Gentleman will find a single surveyor of eminence who will support the estimate which he has given to the House. What security has the House in the face of these grave errors and the astonishing result of these duties this year, that they are ever going to prove to be a source of revenue to this country? We have no security whatever.

On this point two answers were given by the Government in Committee. When we pointed out that the Mineral Rights Duty had nothing to do with the valuation we were told that we were wrong, and did not understand the question. I think we understand it now, and no Member of the Government will say that the Mineral Rights Duty has got anything to do with the valuation, and this duty could have been collected to the same extent whether there is a fresh valuation or not. What was the other answer made? The Prime Minister said, "Oh! yes. But you must not treat this valuation from that point of view only. It is also going to make an important difference in the yield of the Death Duties." That was an answer given in respect of the yield of these duties this year. I notice that that argument has absolutely disappeared both from the Paper which the Chancellor of the Exchequer has now submitted to the House and from the speech which the right hon. Gentleman made last Friday. Therefore we may dismiss the argument in regard to the yield of the Death Duties as the last straw which a struggling Government clutched at in regard to the proposals which they originally made. That is the position which I desire to present for the careful consideration of the House. You are going to spend 250,000 this year, and you are going to get a gross return of £175,000, half of which has to go to the local authorities, and the Chancellor of the Exchequer will get £90,000 in return for that expenditure. This is being done in a year when we have to find a taxable deficit of some £14,000,000. I do say to the House of Commons that that is an absolutely outrageous financial proposal. I do not wish to discuss the details of the taxes which are being imposed with this astounding financial result beyond pointing out that they are undoubtedly causing unrest and disturbance throughout the whole length and breadth of the country. I do not care a bit what political privileges the present Government may have, they have no right to impose taxes which cause a general disturbance and a general feeling of insecurity in the country, and still less when the financial result of those taxes will not produce a profit but actually a loss to the Exchequer. I say that is a scandalous form of finance, and I am convinced that such popularity as these taxes have—and we are always told they have a certain amount of popularity—is based entirely upon a misconception of their financial nature in the country, and that, when the people thoroughly understand what is the real fiscal and financial proposals the Government put before them, they will reject them with the scorn which they deserve.

I should like to support my two hon. Friends with regard to the inadvisability of raiding the Sinking Fund. Some of us, when the Budget was introduced, objected to both the Chancellor's proposal to drop entirely the old Sinking Fund and to take as much as £3,000,000 out of the Fixed Charge. Public opinion has been too strong for him with regard to the old Sinking Fund. He has had to give that up, but we have the Chancellor now, owing to his estimates proving wrong, resorting again to the Fixed Charge, and taking out another half-million. We must remember that the first reserve of this country in case of necessity is the Sinking Fund, and it is most inadvisable for that reason to raid it. The second reserve is to keep a low Income Tax. Unfortunately, this reserve is being encroached upon very largely by the proposals of this Budget. The amount in 1875 was fixed by the late Sir Stafford Northcote at £28,000,000. It has varied a little from time to time since then, but Sir Stafford Northcote fixed it at that sum because, he said, previous to 1860 it had never been less than £28,000,000, and in that year the country was a good deal poorer than in 1875, and could therefore much more afford in 1875 to pay as much as in 1860. That was his argument. If the country could afford to pay £28,000,000 in 1875, I say, a fortiori, it can much more afford to pay £28,000,000 now, because, I believe, the estimate is that the national income has about doubled since 1875. For that reason alone I do urge upon the Chancellor the importance of adhering to the old principle of his party—it has been the strict policy of the Liberal party for the last 50 years—and to keep up the standard of the Sinking Fund. This is, I think, the first occasion on which we have ever had a Government coming down to this House and proposing to meet a deficit by raiding the Sinking Fund in this way. Of course, I quite recognise it is legitimate and proper to take the money from the Sinking Fund during a time of war. That has always been done, and, as I say, the Sinking Fund is our first national reserve. We have a gross National Debt of £754,000,000. Next to that of France it is the largest. The National Debt of France is larger on account of the German war, and I think they have not maintained their Sinking Fund as they ought to have done. In the United States the debt is only £2 per head of population, in Germany it is only £3, our National debt is £16, and in France I think it is £26. With Consols at the low price of 82½—and I am afraid they may go down to still less—and with the state of the finances of the country as they are at present, I do urge the Government to endeavour to keep up the National credit. We are very near the point when our national credit is not going to be the first in the world. I believe, if Consols dropped one more point, they would cease to be the first great security of the world. That is a very serious thing, and for these reasons I do urge the Chancellor to try and maintain the old principles of his own party, and to keep up the standard of the national credit.

I did not intend under any circumstances to detain the House for long on the matter now before us, and it is less necessary that I should do so, because I find myself in very general agreement with the views expressed by my hon. Friends, and notably by the hon. Member for the City of York (Mr. G. D. Faber) on part of the subject and by the Noble Lord the Member for Marylebone (Lord R. Cecil) on other aspects of it. We have before us at this moment three distinct and important matters. The first is the original proposal of the Government to reduce the Sinking Fund by £3,000,000 a year for the purpose of partially meeting the deficit they have created. The second is their recent proposal, now formally before us for the first time, to take an additional half-million in order to make good the gap which has arisen since the Budget statement, partly because the taxes which were proposed have not fulfilled their expectations and partly because of concessions they have felt it right to make and which they were right in making during the Committee stage. Lastly, we have, by common consent as the subject-matter of discussion on this occasion, the revised estimate of the Chancellor of the Exchequer and any considerations to which that gives rise. Those are important matters, and I must say I regret that they should be discussed in a House which is composed mostly of empty benches. I think it after all marks, perhaps dramatically, the strain the Government has put upon the House and the inability of the House satisfactorily to resist that strain. When two of my hon. Friends were speaking I counted the Members present, and there were nine Members on the Government side, one on the benches below the Gangway, and about double that number on the benches behind. The fact of the matter is that, owing to the continuous strain of this prolonged Session and our prolonged sittings, the House is no longer in a position to give its attention to national affairs—such attention which those affairs demand. No one can approach this question without a sense of grave responsibility for themselves and of the serious nature of the proposals which we have to consider. Our taxes are high, compared with anything to which we have been accustomed, and we are making them still higher. Our debt is large. The demands which we foresee in the future are numerous. Our revenue has not shown much elasticity in recent years. And it is at this moment, in a time not of war or of national crisis in any sense, except the sense of an internal financial crisis, that we are asked by the Chancellor of the Exchequer in his original Budget speech to make a very large raid on the Sinking Fund, and still further to increase that raid in order to meet the deficiency that has since arisen. I do not know how far I speak the opinion of those with whom I generally act when I express my own views upon this subject. I said, at an early stage of our discussion, that much as I regretted the necessity I could not find it in me to blame the Chancellor of the Exchequer, under the circumstances to which we have been brought, for making his original demand on the Sinking Fund, and I must add to that now, in the month of October, faced with a further deficit of half a million, I do not feel inclined to blame him for again having recourse to the Sinking Fund to meet that deficiency. I take it that, in his own mind—perhaps he will explain this matter to the House—whereas the original reduction in the Sinking Fund by three millions was intended for a permanency, as far as he sees at present, without prejudice to such changes of opinion as we are all of us liable to under altered circumstances, he does intend that the additional half million shall be merely an expedient for the present. If that is so, I am bound to say, having regard to the period of the year at which we have arrived, I think amongst a choice of evils open to the Chancellor of the Exchequer probably this is liable to as few objections as any other course which he could have pursued. In the month of October, to find an actual tax by means of which he can raise a sum of half a million is, I think, an operation from which any Chancellor of the Exchequer would shrink. And as I look over the list of taxes—the existing taxes—I do not see a single one which I could recommend to the right hon. Gentleman as an alternative resource for a purpose of this kind. Therefore, for myself, it may be said that under all the circumstances, much as I regret the necessity, I neither blame the Chancellor of the Exchequer for taking the three millions originally from the Sinking Fund, under the circumstances of this year, nor for now taking the additional half million.

But I do think the necessity for so doing causes us, as our French neighbours say, "curiously to think." High taxes and a low Sinking Fund—that is the very opposite of what any Finance Minister or any Government would wish to see. Whether you look to our situation at home or whether you have regard to the international outlook, no man can say that this is a time when he can view without regret this double result. It is a time when we are expound, and when we can see that we must be exposed, to increasing competition, both in commercial matters and in defensive preparations. We cannot afford to risk anything in matters of defence. We must provide whatever is necessary to maintain our forces at a relative standard to those of other countries which we have sought to establish. If that be true on the defence side, it is equally true that this is a time when commercial rivalry is becoming year by year keener, when the position of our manufacturers and producers is more and more threatened by the extraordinary peaceful developments of other countries, and when every additional burden, direct or indirect, upon the industry of this country is a thing deeply to be regretted in the interests of our commercial position. It is such a time as would have caused, in the mind of every man, an earnest desire, if it were possible, to lighten the burdens on industry in this country, instead of increasing them, and to lessen the weight of taxation instead of adding to it. I must say I think it is a very serious thing that in order to meet our current needs we should have, under these circumstances, in addition to the enormous burden of taxation which is being added by the present Budget, to make this attack upon the Sinking Fund, and to reduce by two or three millions a year the amount by which we are relieving the nation of its national obligations, and, pro tanto, the efforts that we are making to restore its old national credit. Nobody can look at the price of Consols now, and the state of the Money Market, without feeling that if one of the great crises to which nations are from time to time exposed fell upon us at the present moment we are, I will not say ill-equipped for the purpose of meeting it, but less well equipped than we have been at any recent period. I am not a pessimist. I believe the resources of this country, if the patriotism of the people is appealed to, will, and can be, made to yield whatever the necessities and the existence of the State requires. I do say that we have reached a point which, regarded in this light is less secure, and gives more reason for anxiety and for care than we have reached at any time in recent years—at any time for more than a generation. I know, as everyone who has filled the office which the right hon. Gentleman now occupies knows well how constant are the demands on the Exchequer for new expenditure. I know how irresistible are many of those demands by any Chancellor of the Exchequer who takes a broad view of his responsibility, and does not consider that a Finance Minister exists merely to say "No" to those demands, without considering or weighing their necessity and importance. I know how many are these demands. I look forward to the future and I see how urgent and how pressing they will be and how many new subjects of expenditure are constantly being pressed upon our attention; how much fresh effort, and consequently fresh cost, is demanded of Governments by the people of this country. I do not pretend that it is possible to call a halt; I do not pretend it is possible to say, "Thus far we will go and no further; such a sum will we spend upon national defence and no more; and such a sum will we allocate to social reforms in their widest sense and no more." Much of that growth is automatic, and no man can stop it, but I do say the time and the circumstances are such as call for restraint and moderation on the part not only of Members of this House but our countrymen outside, and I trust that in a state of matters so serious and in a situation which gives so much cause for reflection there will be present in all parties, I do not say a niggardly regard for economy as such, but a real desire not to overweight the State by assuming new burdens, and a real caution in making promises which involve fresh and largely increased expenditure. That is all I wish to say about the position of the Sinking Fund either in regard to the original demand or to the new demand which the Chancellor of the Exchequer has made.

I turn now to the other portion of the subject which we are permitted to debate this afternoon, namely, the revised estimates of the Chancellor of the Exchequer and the lessons which they have for the House, for the country, and not least for the Government. I said the other day, when the Chancellor of the Exchequer made his statement in language which I am not quite certain was sufficiently guarded, that I did not blame the Chancellor of the Exchequer for certain errors of estimate which he had made. I spoke under circumstances of some fatigue, and I am not sure that I did not give the Chancellor of the Exchequer a better testimonial than he deserved. Let me state now what I mean. I do not blame the Chancellor of the Exchequer for the error in the calculation in the Death Duties. The amazing increase in the Death Duties was due to an accident, or one or two accidents, which might have occurred last year or next year, but which happen to have occurred in the course of the last six months. They might have occurred in the next six months instead, and then the Chancellor of the Exchequer would not have dared to come forward, and he would have been in Queer-street at this moment. They were due to an accident which no one could foresee—a very fortunate accident for the Revenue and the Chancellor of the Exchequer. I do not blame him for that or for having underestimated somewhat the returns from the Post Office, or for that underestimate, a more substantial and rather remarkable underestimate in regard to the revenue from stamps. I think that error is open to some criticism, but at the same time I recognise that stamps have been a very unsatisfactory revenue for several years, and the Chancellor of the Exchequer was justified and even wise in taking a very conservative estimate at the beginning of the year. But there is another instance of error which is immense and for which blame does and must attach to the Chancellor of the Exchequer. I refer, of course, to the yield which he expected from his new Whisky Duty. The Chancellor of the Exchequer's answer to that is that we were all as big fools as himself, or bigger. He may get all the comfort he can from that, but, after all, it is not our business to make these estimates, and we do not pretend to have the information which the Chancellor of the Exchequer has at his disposal, and he cannot clear himself by saying that we were wrong. The responsibility for his estimates rests not with us but with him, and it is an error of the gravest kind—such an error as I suppose is almost without parallel in Budget estimates. At any rate, I do not recollect one. I see the Chancellor of the Exchequer shakes his head, but I do not recollect a case where a Chancellor of the Exchequer in any considerable tax—I am not talking of trifling operations—in any considerable tax has found so disappointing a result as that which has occurred in the case of the Whisky Duty, where for every £100 the Chancellor of the Exchequer thought he would get he will not get more than £50, so that in place of £1,600,000 he can only estimate for £800,000 in the course of the year.

That I do conclude is a very grave error in estimating. It shows a very grave misapprehension as to the effects of the tax on the part of the Chancellor of the Exchequer and his advisors. As I am criticising his action, I will say on the part of the Chancellor of the Exchequer only, and I venture to say that if the Chancellor of the Exchequer had been able to foresee at the beginning of the year that the result of this vast addition to the Spirit Duty would only have been £800,000 instead of £1,600,000, he never would have made the proposal which he did. I do not say that he would have made no proposal to raise the Spirit Duty, although I think it would have been wiser to let it alone, but I feel confident that no Chancellor of the Exchequer would have put on the enormous increase of 3s. 9d. to a duty which was already gigantic for so small a result and with so great a consequent disturbance of the trade immediately affected in the first place, and then of all the interests which are indirectly affected by it. The Chancellor is disappointed to the tune of £800,000. Can the House realise what that means to the trade? In the first place, the Chancellor expected a considerable reduction of consumption, and therefore of production. That in itself would, of course, be a serious matter to the trade, but over and above the reduction the Chancellor of the Exchequer had expected and allowed for comes the enormous further reduction indicated by this reduced return from the duty. That means something like a disaster for the trade itself, for all the people whose capital is invested in it, for all the workmen who are engaged in it, and for all the subsidiary and allied trades which are dependent upon it, and, in this particular case, the Chancellor of the Exchequer has chosen a trade the depression of which affects most adversely the manufacturing industries of particular districts where they have little else of a manufacturing character to turn to and where the agriculture of those districts is largely dependent on the prosperity of the manufactures. The right hon. Gentleman has struck a heavy blow at the growers of barley in Scotland and elsewhere, and the evil effects of his tax on the trade, which he cannot but regret as Minister of Finance, whatever view he may take as a politician or temperance reformer, must be doubly bitter when he considers all the subsidiary injury which he has done to agriculture and to other trades. In my opinion the revised estimate of the Whisky Tax is itself a condemnation of that tax. It proves that the foundation on which the Chancellor of the Exchequer builded was rotten, and that the assumptions he made were mistaken. It shows that instead of having selected an industry which could easily bear the increased demand that he put upon it, he has to tax an industry which was unable to support the extra burden. He has inflicted upon that industry an injury out of all proportion to the reduced benefit which he derives from the Exchequer, and even from the point of view of the Exchequer the results which he has obtained are most disappointing.

I agree with every word that the Noble Lord (Lord Robert Cecil) has said upon the Land Taxes. They are not an assistance to the difficulties of the present financial year; they are a burden upon it. The Chancellor of the Exchequer and the Government still believe that at some future time, when we have laid out an enormous sum of money in valuation and collection, a sum of money which the Government are still ridiculously underestimating, even so far as it falls upon the Exchequer, and which in its cost to the country is far greater, because you have to add to that all the burden which falls on individuals, there will be a large revenue to be obtained from these taxes. I see no more reason to accept their prophecy in respect of the yield of the taxes than their estimate of the valuation. But be that as it may, whatever these taxes may or may not mean for the future, for the current year they mean not revenue but expenditure. The Chancellor of the Exchequer and his Friends keep repeating that this is the way rich people are being asked to pay for "Dreadnoughts" or to make their contribution to old age pensions. There is not a penny from those taxes which will go in the present year either to old age pensions or to "Dreadnoughts" or to anything else, and the Treasury would be the richer and not the poorer if the Chancellor of the Exchequer this afternoon moved to recommit the Billl and cut out the whole of these taxes.

What is the position in which we find ourselves? Of the new taxes the Land Tax produces nothing, on the balance, this year; the Whisky Tax produces only half of what was expected, and the Chancellor of the Exchequer would be face to face with a deficit of really serious and alarming proportions, especially occurring as it does in the month of October, were it not for what was for him a happy accident which produced an enormous increase in the Death Duties. It is rash to take full credit for that sum. The Death Duties are a very uncertain factor. They are liable to great fluctuations; they average themselves out on the whole less well than any other tax, and the Revenue authorities find them more difficult to estimate than any other tax. If the particular deaths which caused this great accession of income under this head in the first six months of this year had not occurred, the Chancellor would not have dared to take the credit for them in the expectation that they would occur in the next six months, and just as he has had a peculiarly fat six months in the past he may yet have a very lean six months in the future, and the new estimate which he makes may be falsified on the wrong side of the account just as easily as the old estimate was falsified on the right side. But assuming that his expectations are fulfilled and that owing to this happy accident he gets the increased revenue which he expects under this head, the facts remain that he is saved by the old taxes and he would have been ruined if he had trusted to his new ones, that his new proposals are condemned by results, as far as we have gone, that it is not the new departure which he has made which is enabling the country to pay its way, but the old resources which he inherited from his predecessors.

The Government have no reason to complain of the tone of the criticism of their proposal to reduce the Sinking Fund. I will take the last criticism which the right hon. Gentleman directed against our proposal, that is the criticism which he made of our estimates. He suggested that the Government were forced to resort to this expedient of further reducing the Sinking Fund because their estimates had proved wrong. That is not the case at all. For the purpose of the estimate you have to treat the Budget as having been carried in its original form. Well, supposing we had made no alterations at all—and that is the only way you can check the accuracy of my original estimates—what would have been the position? I should have had increase from taxation of £1,800,000. I should have had a decrease on one item of £800,000, so that, so far from having over-estimated I would have under-estimated by £1,000,000. I would have been £1,000,000 to the good, instead of being £200,000 to £300,000 to the bad. Therefore, I am forced to the expedient to-day of asking that there should be a further reduction in the amount set aside for the Sinking Fund. It is not because the estimates were wrong. Quite the reverse. I should have had a balance of £1,000,000 had no alterations been made in the Budget, and I am driven to this purely and simply because of what took place in the course of the discussions on the Budget. The Government made concessions—very substantial concessions, and some of them I think very liberal concessions—to the criticisms which were directed to our proposals, not from one side of the House only, but from several quarters. It is purely and solely for that reason that I have been driven to-day to ask another £500,000, in addition to the million which the surplus provided. Besides, there are some supplementary estimates which were not foreseen at that time.

It is not because our estimates were wrong that we are moving this reduction. I say so, not so much because of what has been said in this House, but because of the unfair criticism in some of the more responsible papers of the Opposition. They take the line of saying that the Government made a mistake in the estimates, and that we are now coming to the House of Commons and asking them to redress it, by taking this sum out of the Sinking Fund, whereas the fact is that we estimated for a surplus of a million. There would have been no necessity to have recourse to the Sinking Fund if we had not made substantial concessions. I foresaw that we might have to do so. I foresaw that we could not possibly get a Bill of this kind through with the many new proposals in it which would excite opposition, without making numerous concessions here and there. I do not mind admitting quite frankly that when I fixed the Sinking Fund at £3,000,000 I was under the impression that I would have to ask for another £1,000,000 in order to meet the criticisms in the House. That was my view at the time. I was saved the necessity of asking the £1,000,000 I originally estimated purely and simply because of what the right hon. Gentleman (Mr. Austen Chamberlain) calls the happy accident of the increase in the Death Duties. The increase in the Death Duties, I may say, is not entirely attributable merely to the fact that one or two big estates have come in which might have come in any year. It is attributable partly to the very cause pointed out by the Prime Minister, namely, the improvement already effected in valuation. One of the first things we did this year was to reorganise the Valuation Department. It is part of the permanent staff, and has at its head a very able and experienced officer, who has re-organised this Department. And the mere fact that we have not accepted too freely some of the accounts submitted to us has had a very appreciable effect, and in the course of a single week it has added £100,000 to the duty. I do not say that it has added that amount every week. That fact shows that there is a great deal in the criticism of the Prime Minister, namely, that a revaluation would make a very substantial difference even in the Death Duties. Land which has been passed as agricultural land we have discovered is valuable building land, and that has made a difference in the Death Duties, and a very substantial portion of the £1,300,000 is attributable to the fact that we have got an efficient Valuation Department. I am not criticising the old Department, because it was inadequately staffed, and could not do its work properly. The right hon. Gentleman (Mr. Austen Chamberlain) and the Noble Lord (Lord R. Cecil) said, Are you quite safe in assuming that you are going to have £1,300,000 as well at the end of the year? The first period of six months of last year was a lean period. The remaining period of six months of the year was a fat period. The right hon. Gentleman says, and very properly, from his experience of this Department, "You may reverse the order. You may start with a fat six months and end with a lean six months." We have reckoned on that. What we have done is this: We have taken the remaining six months of this year at an average of the last five years, and in making the estimate of £1,300,000 we take it with the figures we already know, and we take for the next six months an estimate by striking an average of the last five years. I think on the whole that is a very sound principle on which to estimate. You may find yourself out of the reckoning either way. You may find yourself much better off or much worse off. You cannot reckon on what estates will come in. So much for the Death Duties.

Now we come to the Post Office. We could not possibly estimate that the Post Office was going to do so much better. Trade was very bad at the time, and the fact that the Post Office has done so much better is due to an appreciable improvement in trade. After all, the Post Office is the first place that feels that swelling in trade. It is the very first place where it counts. During the last few years there have been in connection with the Post Office certain adventitious aids to the revenue. We have not had this year these adventitious aids which we had two or three years ago. It is a perfectly healthy revenue. It is revenue that depends on the increase of business, and to that extent it is very gratifying that I should be in a position to announce that I am expecting an increase of at least £200,000 in the Post Office revenue by the end of the year. The same thing applies to stamps. I did anticipate an increase from stamps, but I could not possibly foresee the increase which we have had. It is very largely due to a movement in some branches of Stock Exchange business. There has been a very exceptional run on certain securities. The increase has been very largely attributable to that. Then the right hon. Gentleman says: "Look at the very startling drop in whisky." The Noble Lord's theory of estimating is an extraordinary one, if I may say so. He says, "Had it not been for the fact that you have had this increase in the Death Duties you would have been £1,800,000 out of your reckoning." In reply to that I would say in the first place that we would not have been out of our reckoning at all. For this reason, the fact that we knew that this money was in hand enabled us to make larger concessions. We abated our taxes accordingly. He is reckoning the concessions as if they were part of the estimate which a Chancellor of the Exchequer ought to make when introducing his Budget. Surely that is a very preposterous thing to suggest. Apart from that, why should the Noble Lord simply say, "You have no right to take into account those branches of the revenue which have increased above your estimate?" A Chancellor of the Exchequer must get all the discredit from an over-estimate, but he is not to get any credit from an under-estimate.

Hear, hear.

Then all I can say is that the Noble Lord is really very severe. I should like to know who escapes? Can he name any Chancellor of the Exchequer of modern or more remote times who escaped from that very severe, stern rule which he has laid down for the guidance of present and future Chancellors of the Exchequer? I think that the right hon. Gentleman (Mr. Austen Chamberlain hardly endorses that view. He might really like to take advantage of the more indulgent and more sensible rule that has applied to the question up to the present. After all, what happens is that in some branches of the revenue you will find that you were rather too sanguine, while in other branches of the revenue you will find that things have turned out better than you anticipated, and between them, somehow or other, the revenue balances. That is all you can hope for. It is the same in any branch of business you may go to. Take the law. The Noble Lord for years has been reckoning up his revenue. He says, "I think this year I will get so much from such and such cases, and the fees for such and such cases will be so much." He would find at the end of the year that probably the process had been reversed. Curiously enough, all barristers tell me that it is somewhat about the same at the end of the year. There is a gradual increase, it is true, but you cannot possibly estimate in any branch of business how it will be distributed. Take any branch of business, wholesale or retail, every man who is engaged in business will tell you that sometimes business is very much better in one branch than he ever expected, while another branch of the business, for some reason or other, does not do so well, but at the end of the year things are balanced—at least let us hope so. And that is really what has happened in my case. My grocers' licences have gone rather badly; I have not sold as much liquor as I anticipated. But the undertaking business has done very much better, and at the end of the year I find myself with a balance of about a million. That has really been the experience of every Chancellor of the Exchequer, and I do not think that it is right for the Noble Lord simply to take the £800,000 and to say that the other is purely an accident. That is not the case. Now I come to the question of the Whisky Duty. It is rather ominous that the year the Whisky Duty went down the Death Duty should have gone up. It is true that I overestimated the Whisky Duty. It is equally true that I stood almost alone, I think, in the estimate which I put forward. The right hon. Gentleman says that I had special information with all my officials and all the statistics at my command, and therefore I was in a better position to estimate than any other man in this House. I could estimate forestalments more accurately because I had information. I might perhaps be able to estimate what stocks there are, though not nearly so well as those in the trade, as they had much better information than I had on that point. But one thing I could not estimate better than anyone else was the effect on consumption. The whole point is: To what extent does the addition of a halfpenny in the £ operate as an inducement to people not to drink? I had no more means of estimating that than any other Member of this House. In estimating it is perfectly true that I made a very liberal allowance for decrease in consumption, so liberal that nobody, either in or out of the House, I believe, agreed with it. They said it was absurd. I remember a Member getting up and saying that it was perfectly grotesque. Even the hon. Member for Ayr Burghs——

I did think so. I stated in the House, I think, that my calculation was that there would be a drop of 14 per cent. in consumption, whereas the drop has been much greater.

If the hon. Member for Ayr Burghs, who has a better opportunity for judging than I have——

No, I have not.

At any rate, he represents a constituency which has a great distillery, and to that extent he is more in touch with the trade than I am. There was only one Welsh distillery ever started, and it failed because nobody would drink its products; so, therefore, I have no special information on that point. That shows how difficult it is to estimate. The officials could not estimate, and no Minister could estimate it accurately; and the more you think of it the more remarkable it is. I might reckon that a working man had so much money to spend on liquor and that if you increase the cost by so much he would restrict his expenditure on it. But it has gone beyond that, and gone considerably beyond that, and I do not think that the great regrets which the Noble Lord indulged in——

I look at it from the strictly financial point of view. It is nothing exceptional. It is what all the masters of finance have indicated—that if you impose large additional burdens on a falling industry you will not only not get more but you will get not quite so much as you got out of the lower tax.

I think we will get more, but we will get more on a diminishing consumption, with the double result that you benefit the revenue and you benefit the country. I talk quite frankly about these things, because——

I was very anxious to hear what you meant by your interesting observations that it rather went further than the amount that you had expected to get from the halfpenny a glass.

I remember, in making my calculation, I assumed that the people who could afford it would not look at a halfpenny at all, and that they would buy exactly the same quantity of whisky, whether it was 3½d. or 6½d.—in quantity I mean. But the working classes, I assumed, would probably purchase a smaller quantity. If a man had half-a-crown a week to spend on liquor, he would not spend more, but would consume less. I made a rough calculation, with such information as I had at my disposal, as to how that would affect the consumption of whisky as a whole, but I find the diminution has gone beyond that, and my information is now that not merely that there are thousands of people drinking a percentage which, in proportion to the increase, is less, but some of them are dropping it altogether, and some of them are barely drinking half what they were drinking before. Altogether it is a most extraordinary effect on the habits of the people. I am not here to apologise for that at all. I have heard of some districts in Ireland where the drinking of spirits has gone down by 70 per cent. I am informed that there are districts in Scotland, again, where it has gone down by 50 per cent., and I have had a communication in regard to the distillers of Glasgow that the consumption there has fallen by 36 per cent. during the month of September.

I want to ask the Chancellor of the Exchequer whether he can at this stage tell us the results of the inquiry which he promised to make some time back as to the extent to which people have taken to drinking other liquors in lieu of whisky, such as Hamburg port?

I quite agree that I did undertake to do that. I thought really that they would have been driven to substances of that kind, and that they might simply be driven from alcoholic liquor produced in this country to alcoholic liquor produced abroad. That was certainly not the object which anybody had in view, and it was decided to recommend the Government to submit, if necessary, proposals to Parliament to prevent such a result. But we find that it has not been appreciable. We find that the people have not even been driven to drinking beer. It is really almost unaccountable. It is not they are being driven from one kind of alcohol to another, but that they have been driven out of alcohol altogether. That is very extraordinary, and I do not mind saying that it has gone beyond anything I anticipated. We thought at first it might drive people to lighter alcoholic liquors like beer, but beer is going down.

What about wines?

As far as wines are concerned there is no appreciable difference. We thought at first that they might be driven to some stuff called Hamburg port, but there is no appreciable difference at all. The House of Commons will see what it really means. This is a very interesting matter, quite apart from the fiscal effect. I trust the House will regard this, I will not say from a purely party point of view, because it is a bigger thing than really arises out of the mere controversial aspects of the question; but let us look at what will happen, as far as we can see. Our anticipations now are that the consumption of spirits, both of foreign and home manufacture, will go down by something between 20 and 25 per cent. That means that the decrease in the quantity of spirits consumed in this country will be reduced by eight or nine millions of gallons during this year. Anybody who considers what that means must realise that it involves an enormous improvement in the habits of the people. That is not made up by the fact that there may be an extra few gallons of Hamburg port; they are infinitesimal; they do not come into the reckoning compared with that enormous reduction. On the other hand, in regard to beer, they are drinking less than we anticipated. So the improvement all round is something gigantic.

You mean from the social point of view?

The right hon. Gentleman says the drop in the consumption of spirits this year will be 9,000,000 gallons. Does he realise that the fall for this year is apparently going to equal the total drop during the last ten years?

That is a very interesting fact. I know that the Chancellor of the Exchequer's first consideration ought to be a financial one, but that is not strictly accurate so far as this tax on alcoholic liquor is concerned, and never has been. If hon. and right hon. Gentlemen will look at the whole history of the taxation on alcohol, they will find that every Minister has used the weapon of finance for the purpose of countering some excess in the drinking of some particular spirit. I think that was the way gin-drinking was destroyed in this country. Whenever it was found that there was an excess in some particular form of alcoholic indulgence, it was, through the Chancellor of the Exchequar for the time being, that legislation was introduced, and, what is more, legislation of that kind has always been more effective than purely restrictive legislation. I am only stating that as having been the fact up to the present. Somebody told me, I do not know whether it is true or not that Scotland is supposed to have been a whisky-drinking country from the days of the Deluge, but Scotland has only quite recently taken to drinking whisky, and that until modern times it used to be a beer-drinking country. It was driven from beer to whisky by taxation.

It really was a claret-drinking country.

They were driven from strong ale to stronger whisky, and now they have been driven from whisky by the tax to lighter beer. It looks at present as though there might be no drinking of intoxicants at all—however, I am not quite so hopeful as that. That really has been the case with all Chancellors of the Exchequer in the past. They have not arranged their taxation upon alcoholic liquor merely from the revenue producing point of view. Why do you charge port wine and the heavier alcoholic wines more than the lighter clarets? It was done as a temperance measure, and not as a fiscal measure. Mr. Gladstone always claimed that as one of his objects. It is true that there was some dealing with regard to French wines, no doubt commercially, but Mr. Gladstone always managed to use high principles, and at the same time make them pay as he went along. Undoubtedly it had a good temperance effect, and did drive people out of drinking alcoholic wines into the lighter wines. At any rate there is no reason why whisky should be charged such a very heavy duty, apart from this 3s. 9d., eleven shillings on its alcohol, and beer on its alcohol an infinitesimal amount. That is not done for purely fiscal reasons, it is done because it is recognised on the whole if there is any discouragement to be introduced as an element of taxation it is rather better that you should encourage the drinking of lighter alcoholic beverages, rather than that they should drink whisky. I am sure it will appeal to everyone that it is much better if alcohol is to be indulged in that it should be indulged in in the lighter form rather than in the stronger form. That is the view taken by the Government. We are getting enormous taxation either "in malt or in morals." I have lost £800,000 of estimated revenue, but undoubtedly it has effected a very great improvement in the habits of the people. Whether it is going to be permanent or not is a totally different matter. I believe a very considerable part has come to stay, and that is the view of those who are engaged even in the trade, that probably as much as 20 per cent. of the reduction in the consumption of spirits in this country will be permanent so long as they are not driven to those expedients of drinking Hamburg port. If they are, then that has got to be dealt with, and must be. I think there is no danger of that. A right hon. Gentleman said last night that it was purely the moderate drinker that had given up drinking whisky. That is not the case, as anyone will see on looking at the results as far as arrests for drunkenness in Glasgow show Those are not moderate drinkers; on the contrary they are men who have done themselves well, and who have got to be taken care of by His Majesty's Ministers in Glasgow. The arrests for drunkenness have gone down by something like thousands in Glasgow alone. That shows that while the Whisky Tax falls short of the estimate by £800,000, as far as the revenue is concerned, it has given us something more infinitely valuable from the point of view of the improvement it has effected in the habits of a very large proportion of the people. That is bound to react on the revenue; I do not mean to say in tea drinking and sugar and other commodities, but generally in the improvement of the condition of the people. That counts to the revenue in the aggregate. The only other word I have to say is that I regret very much that any man should be thrown out of work. Whether it is in barley-growing or malt distilling it will cause a good deal of temporary distress, and one must regret it, but at the same time you must take into account what it all means. Eight or nine millions gallons less of whisky spirits consumed by the people may mean less work for a few thousands, I should say a few hundreds, of people, probably——

You are only talking of direct employment.

Agriculturists, barley growers, and those working in the malt distillers; but it will increase enormously the comfort and the happiness of hundreds of thousands of homes; and from the point of view of employment the money that is saved in this, after all, goes into employment. [An HON. MEMBER: "Better employment."] If men do not spend their money on whisky they spend it on clothes and food, and all that means employment, and means more employment. From that point of view, although one really regrets that there are even a few hundreds of people out of their living, it will mean so much more employment to the rest that, although I quite recognise that I am £800,000 out of my reckoning, I cannot pretend that I really regret it.

I apologise for detaining the House, but I thought they would like to know exactly the position as far as those taxes are concerned. With regard to the Land Taxes I have nothing to say except what I said before, that the money raised out of the Land Taxes, and that the Land Taxes are not raised merely for the sake of the £100,000 which we have as a surplus this year upon them, but they are raised, they are simply laying the foundation of a big future revenue. The Noble Lord (Lord Robert Cecil) seems to think that that is unparalleled, but every Succession Duty that you ever passed is not revenue for the current year, but revenue for the next years. When Mr. Gladstone brought in his Succession Duty Bill in 1853 it was not for raising the revenue for that year, but for five years. He thought it would get rid of the Income Tax, and it was part of a great five years' scheme. That is the principle of the Legacy Duties. Whenever you imposed them you imposed them not for the current year, but for the next year. I said when I was introducing my Budget that I had taken not merely the expenditure for this year, but the expenditure certainly for the next year. Even in the case of the "Dreadnoughts" which you are laying down this year the real expense will be next year, so that when the revenue comes in from the Land Taxes next year it will be revenue that will be used just as much for "Dreadnoughts" as for old age pensions. I think the revenue has turned out extraordinarily well, in spite of the criticism of the right hon. Gentleman. Whisky alone has disappointed us. All the other taxes, Income Tax, Tobacco, Stamps, Death Duties; all those other taxes, most of them taxes that show growing wealth and prosperity, those are doing well. Those are exceeding our anticipations, and had it not been for the fact that in the course of putting this Bill through the House of Commons that the Government had made concessions to various demands made upon them it would not be necessary for me at all to move this. On the contrary, I should be rejoicing now in the prospect of a very handsome surplus; but I do not regret that those concessions have been made. We have done our best to meet every case of hardship pressed upon us. We met a very considerable number of them, and for that reason I have no hesitation in saying that the House of Commons would do wisely at the present moment to reduce the sum from 25 millions to 24½ millions.

The House has just heard one of the most interesting statements that has ever been made in connection with the financial estimates. There are one or two points I should like to dwell upon. It has been said that the right hon. Gentleman (Mr. Lloyd-George) has been indiscreet in some of his estimates. May I point out that in no connection could there be more doubt in framing an estimate than there is in connection with protective taxation. It has been said by hon. and right hon. Gentlemen that my right hon. Friend miscalculated the yield of the Death Duties, but a Chancellor of the Exchequer must always do that unless he takes luncheon with the millionaires, and puts pyrogallol in their tea. What is the position of hon. and right hon. Gentlemen opposite. They tell the country that they have a scheme of taxation which will infallibly produce revenue. They have just won an election in which their chief promise has been to enact a leather duty. I should like the party opposite to tell us how they will estimate the yield of a leather duty, or, indeed, how they will frame one. For example, they will have to tell the House of Commons what they will decide as between foreign leather and Colonial leather; they will have to decide what sort of preference they will give to Indian leather, or whether they will shut out Indian leather altogether; and if they decide to shut it out, how they will persuade the Indian people to be content with that unless India is provided with a tariff to shut out British iron, British cotton goods, and the other manufactures which we pour into India. When they have settled these important points, they will have to decide by how much—whether 10, 15, or 20 per cent.—the consumption of leather in this country will fall; by how many pairs of boots the feet of the people will be ill-provided with leather after they have imposed their tax. Having decided all these things, they will put before the House of Commons an estimate of what they expect the tax to yield It is well known that in every protectionist country the uncertain items in the revenue are not those which correspond to our taxes—the Free Trade taxes. For example, in the German Imperial revenue, where the taxes correspond to our taxes, that is, the Free Trade taxes, the yield is comparatively clear. It is when the yield is dependent on protective influences, when there is all the grave doubt involved as to how much of a particular commodity will be consumed because of trade reasons and fluctuations in trade, that the German Imperial Government are in doubt as to the revenue they will receive. It comes to this, that hon. Members opposite, if they ever come to frame in this House a Tariff Reform Budget——

They will keep out Chinese pork, at all events.

That is a characteristic interruption. They will have to decide by how much the consumption of the articles will be decreased. They will have to decide not merely such interesting questions as those with which my right hon. Friend has dealt, but also by how much particular trades will be hit in the consumption of raw materials, and so forth. Therefore it certainly does not lie in the mouths of hon. Gentlemen opposite to reproach my right hon. Friend for the inaccuracy of his estimates. On the contrary, I think he is to be congratulated upon the yield of the taxes which he has framed. Statements have been made, not so much in this House as out of it, with regard to the expectation of the revenue generally by the end of the financial year. If anybody believes that we are likely to end the year with a revenue deficit, I think they will be agreeably, or disagreeably, as the case may be, disappointed. It is not only that the Death Duties have yielded more than was anticipated; I think it will be found that the Income Tax also will yield considerably more than was reckoned in the Budget statement. However that may be, there can be no question whatever that my right hon. Friend has, in the words of "The Times,"

"Laid deep the foundations of revenue for future years."

And that is, above all, what is necessary in the present condition of the finances of this country. We have to look forward to a time not merely of such expenditure as now obtains, but of an expenditure very much larger, whatever party may be in power. With regard to the Death Duties, between the new inter vivos arrangement to which the House has consented, and the fact that we shall in future have a reliable estimate of the value of the land of the country, there is little doubt that the yield of those duties will be considerably more in the future than it has been in the past. In other words, the House may confidently rely upon the yield of the Free Trade taxes, framed in the present Budget, meeting every reasonable requirement that they may be called upon to fulfil.