I hope the Committee will allow me, as a new Member of the House who has spent many years in Parliaments over the sea, to register one or two impressions derived from my recent experiences. I realise more vividly than ever that the younger Parliaments of the Empire follow with singular fidelity not only the rights and traditions, but also even the forms and ceremonies of this, their illustrious ancestor. In each and all of these Parliaments I find the same healthy, keen, but also carefully disguised sensitiveness to public opinion, real or imaginary. I also find in all of these Houses an invaluable contingent of independent units who often, to the public advantage, specialise in every conceivable form of grievance or abuse, real or imaginary. There is one point in which I think this House stands honourably pre-eminent. I am entirely surprised by the number of excellent speakers in this House who do not speak; their effacement, in spite of so many opportunities suggestive of personal ambition, in the interest of the dispatch of public business, is not too clearly recognised. I think the brightest chapter in the history of these Parliaments is being written now. When this War broke out all party considerations which seemed to be the very bone and sinew of our political life suddenly disappeared, and hon. Members gave up their undoubted rights so that the whole force of our collective wisdom should be utilised in order to avert the threatened destruction of our Empire. Every line of the Budget speech of my right hon. Friend suggests how supremely important it is in this critical time that every Member of this House should endeavour to strengthen the hands and stimulate the energies of His Majesty's Government. I have heard it rumoured that there are some War Committees in this House who meet somewhere and are discharging that useful function, and I am sure their desire is to strengthen and help the Government at every point. I have only one fear—I hope it will not be realised—a fear that the Coalition in office may breed a Coalition out of office. If any considerable number of members of the Unionist party cease to feel confidence in the Unionist leaders in the Cabinet, and if any considerable number of members of the Liberal party cease to feel confidence in the Liberal leaders in the Cabinet, it would be a thousand times better if we had never had a Coalition at all. But I feel sure that the pressure of this great crisis will prevent any possible division in our councils, because, if there be, the Mother of Parliaments will set a very bad example which is not likely to be followed in any other Parliament in the Empire.

There is one thing I am glad to notice, in view of the staggering figures of the Chancellor of the Exchequer, that there is not a single doubt as to the wisdom of our declaration of War against Germany. If we had kept quiet, our Budget might have been full of good things. If our race had become decadent we would have kept quiet. If our sense of national honour had become corrupted we would have broken faith with Belgium, we would have deserted France, and we would have been blind to the most elementary principles of self-preservation. But the doom of this Empire would have sealed, and this country would soon have perished miserably between three consuming fires—the triumphant scorn of our enemies, the undying execrations of our friends, and the overwhelming contempt of other nations, including, above all, our loyal Dominions. I want to congratulate the right hon. Gentleman upon, his clear statement and his courageous proposals. There is a legend abroad that England breeds an abnormal percentage of grumblers. But as I sat in this House yesterday and saw the evident and almost boyish delight with which the Chancellor of the Exchequer unfolded the staggering debts we have already incurred and are likely to incur—when I saw the cheerfulness with which hon. Members in this House received the intelligence of new and unprecedented loads of taxation, I felt the legend to be a gross libel on the English character.

But there were two grave omissions in the right hon. Gentleman's speech to which I should like to ask the attention of the Committee. That speech contained no assurance that a monster grievance which exists—and I think it only affects people who belong to other parts of His Majesty's Empire—the grievance that people who visit England, not to make money but to spend it, are to remain subject to the infamous injustice of paying this horrible war tax twice over. I can imagine what a thrill of indignation would go through the breasts of many of my wealthier Friends here if they were told suddenly that they had to pay 5s. in the £ once and then again. If these Dominions did not bear the expense of their own magnificent reinforcements to the British Armies the basis of my observations might disappear, but, thanks to the patriotism of the country from which I come, they are paying the expenses of their troops. Millions and millions of debt are accumulating on the Federal Parliament, which before the War had no debt at all, and my unfortunate friends have to pay war taxes in Australia and war taxes here on their expenditure, not on their opportunity for making money, not on war profits, but on their own expenditure, when, as a matter of fact, as I have said, the only wrong they have committed is that of obeying an impulse which I hope will continue and increase in future years—the natural impulse of the children of this country to visit their ancestral home. It seems as hard to get justice out of the Treasury in this matter as it would be to tear a portion of one's garments out of the teeth of a British bulldog. I do not know any British bulldog which has a firmer set of teeth than His Majesty's Treasury in England. I do most seriously ask the Chancellor of the Exchequer not to mock these visitors with some vague assurance about some future time, when they will not be here. I reject with scorn the proposal that these new increases shall not apply to these visitors. I look upon it as a confession of guilt and not as a spasm of liberality. I do hope that these anti-Imperial and absolutely unjustifiable exactions will not continue.

There was another singular omission which I wish to bring to the notice of the Chancellor of the Exchequer. Our mouths watered for the moment when we heard of the millions upon millions that were to be received by the Treasury from some mysterious source known as the taxation of the excess war profits. What a stupendous amount of money must be taken from the people of this country in the time of its greatest need represented by extra profits made out of the War! That is nothing upon which to congratulate ourselves. I should like to have heard from the Chancellor of the Exchequer some expression of concern and indignation that at this time such exorbitant profits are being made out of the necessities of the nation and out of the people of this country. It is really not revenue; it is "conscience money," compelled to be returned to the Treasury. Even in going to the Treasury it does not always go to the pockets to which it belongs. There are only one or two things to which I should like to refer in regard to the public service. I do not for a moment say it is so here—I do not know—but I do know that in other services in the world with which I have been familiar you can always find a number of gentlemen to whom my observations will apply. I hope that our great public service is being vitalised up to the highest point of efficiency. I hope, if there be any men in the public service of England who mistake reverence for red tape and a superior manner for ability and efficiency, that they will get short shrift and be compelled to make room for better men. The next remark I wish to make is this: There never was a time when inventions played a more important part than in this War. I hope it is true—I cannot believe it is not—that there has been a change in the methods of the War Department since the War began. I have no reason to believe that it has not taken place. We all know that most of the proposals of inventors are of no earthly use. We also know that most of them are very poor men. I hope that the utmost vigilance will be exerted in order that every suggestion in the shape of a new invention which will help on our Armies or our Fleets will be fully tested at the public expense, and, more than that, that the rights of these people, if anything comes of their inventions, shall be fully protected. The third thing I wish to speak of is this: I refuse to believe that the Headquarters Staff of our Air Service—

On the present occasion, in Committee of Ways and Means, we are dealing only with the raising of taxes. In Committee of Supply and upon other occasions, we deal with the expenditure of the money.

I am delighted, Mr. Whitley, that you have showed your perfect efficiency. I was testing it. I wish to say, with reference to the demands which are now being made upon us in the shape of increased taxation, that I never felt more grateful for the political truce than when I listened to the right hon. Gentleman's statement. But for the political truce we could not possibly grapple with the tremendous problems with which we are confronted. I want to go a little further, Mr. Whitley, if you do not pull me up, and to say that I think a political truce will be a thousand times more wanted after the War than it is to-day. I will give my reason. It is not a personal one. Large problems of reconstruction will press upon us the moment this War is over —problems which will affect every division of the Empire, industrially and politically, and every part of the Empire in relation to all the rest of the world. In dealing with these problems of finance, I hope that every school of political economy and every school of practical experience will be mobilised, in order that we may form in this truly national emergency a truly national policy. Nothing more closely concerns the Budget than the interests of our trade, upon which to a large extent this Budget is founded. We cannot begin too soon to prepare for the reconstruction of our policy of trade. Those who clamour for a declaration of policy from the Government on such matters at this time seem to me to mistake the letter Z of the alphabet of reform for all the rest. The letter A of the alphabet of reform is the most careful and exhaustive inquiry. The letter B of the alphabet of reform is the most thorough mutual consultation, and again I say I hope the theorists will all be put at the bottom of the list instead of the top and we shall send to keep company with them every kind of fiscal maniac. Here is a matter which I hope will come out of this financial situation. I hope we shall be able to establish a system of preferential trade. There are several shades of treatment even here. There are British interests, there are Dominion interests, there are Dependency interests, there are Imperial interests, there are the interests, of our Allies, our treatment of neutrals, and our treatment of our enemies. I wish to say at once that if we can rule Germany out altogether she deserves it. The open door of trade which 435,000,000 of the King's subjects out of 450,000,000 have given to Germany has been most treacherously abused.

The right hon. Gentleman will observe it is my duty to administer the same law to all Members of the House. On this occasion we are discussing the financial statement of the Chancellor of the Exchequer. I really cannot allow a discussion which would naturally follow amongst other Members of a topic which is not included in the financial statement of the Chancellor of the Exchequer.

I am so glad I have finished that branch of my remarks. I have a complaint to make which I believe will be perfectly in order. I think the Chancellor of the Exchequer would have given greater satisfaction to the country if he had announced to us in his Budget speech that he proposed to set aside a special grant of £10,000,000 in improve English methods of education. There is not a child in the world who more needs a better system of education than the English child. There is no tiller of the soil on the face of the earth who does not need at some time technical education more than the farmers and the men of England do. I will take another opportunity of dealing with that.

I should like to thank you, Sir, for your generous indulgence. I should like, in closing these remarks, to make one or two observations which I hope will be permitted, too. Who can be insensible in this crisis to the magnificent heroism of all our Allies? Who does not feel a thrill of pride when he thinks of our bluejackets who command the German Ocean and all the other oceans of the world? We feel nothing but admiration and gratitude when we think of those millions of our fellow citizens who rushed into the armies of their country and who now form a wall of unbreakable steel across the face of the German legions. But I feel a broader satisfaction in the triumph of our arms, which is certain. The triumph of our arms will not only give back to us the fruitful blessings of a peaceful time, but will rescue the world's civilisation from many infamies. It will restore chivalry to her throne and will gladden the eyes of mankind with clearer and wider vistas of liberty, safety and happiness.

4.0 P.M.

We all appreciate the right hon. Gentleman's remarks, and we welcome him here in our midst. I want, if possible, to confine my observations to criticism of the Budget. I do not propose to occupy time in complimenting the Chancellor of the Exchequer. We have grown accustomed to his exceedingly clear and interesting way of stating financial and statistical facts, and I am sure he has not lost anything of our admiration by his exposition of the Budget yesterday. No observations that I have to make on the present occasion are made in a personal or even a party sense. I do not think that what I propose to say corresponds to party differences as they were expressed before the War.

There are some points raised in the Budget upon which I have a few criticisms to make, and upon which I confess that I feel some little anxiety. I will take them seriatim. I do not quite know why the Chancellor of the Exchequer is raising so much money. According to all the calculations which have been made before the Budget was introduced, it really is not necessary. We do not want all that money. You are raising many millions too much. It is very important, in view of the various remarks which have been made upon the financial burden we are bearing as compared with our ancestors, to point out that the revenue which the Chancellor of the Exchequer proposes to raise during the next year carries us far beyond the proportionate burden if we compare it with the Napoleonic Wars. The fact is, we should have been bearing quite as large a burden so far as revenue is concerned as our ancestors did in that famous struggle if the Chancellor of the Exchequer had left the taxes exactly where they were. I do not quite see why at this time, when, as the Chancellor of the Exchequer admitted, business firms have got to face in the future a tremendous degree of competition from abroad, they should be hampered in providing for the future by the exceedingly heavy direct taxation which the Chancellor is im- posing. As the Chancellor of the Exchequer is aware, we have reached a point in direct taxation where it ceases to be a question of merely taking money directly out of the pockets of wealthy people. The direct taxation under which we are living at the present time, as was pointed out in Debate on the Budget of 1914, is now affecting the price of articles to the consumer. That is an important consideration, because it breaks down the old economic argument about the relative merits of direct and indirect taxation. I merely refer to that matter. I do not want to enlarge upon it. As the Chancellor of the Exchequer knows, we are all willing during this War to do everything we possibly can, and even more, but I do not think it is at all improper to point out that in your financial provision you should take account of the future, and that you should have some policy behind what you are proposing at the present time. When I come to the particular taxes I would ask, is it really worth while for a great Empire like this to have such futile taxes as the Match Tax, the Railway Ticket Tax, and taxes upon amusements? There is something to be said in theory—of course, there is always a good deal to be said in theory—for a tax upon amusements, but how much is it going to cost you in the expenditure of ability in collecting it? Have you formed any idea as to the organisation of amusements in this country? How many men are you going to employ? Who is going to take the accounts in these matters? Is it worth while going out of your way to put on a tax of that kind? Similar conditions apply to some of the other taxes. They will create a great deal of irritation, and I think some of these new taxes will probably have to go before the Budget passes.

I come now to a very much more important and serious matter. I listened to the Chancellor of the Exchequer's speech with very great care, and I want to know from the Chancellor of the Exchequer, or his representative, why it is that in the middle of a great war such as that we are waging at the present time they choose to throw down the gage in a great controversy? We have been extremely careful on this side of the House to avoid controversy. I have suppressed hundreds of questions and done my best to discourage debates on these controversial topics. Then the Chancellor of the Exchequer comes down to the House, as he did yesterday, and makes an announcement on a particular controversy, which I am going to take up.

It was thrown down last year.

The hon. Member does not really know what is in my mind. He is quite mistaken as to what is in my mind. I understood the Chancellor of the Exchequer to say yesterday that the Cabinet had come to the conclusion that it was better to have a system of prohibition for dealing with certain import problems than it was to have a considered policy involving the imposition of tariffs. I am not giving the exact words. I thought I had them with me, but I find I have left them behind. I listened to the Chancellor of the Exchequer with very great care and I looked up the OFFICIAL REPORT this morning to find exactly what he said so that I might quote it. My memory was— I have consulted some of my Friends on the point—and it struck me very much at the time, that he said that in the Cabinet Ministers had come to a unanimous conclusion on this matter. He said "unanimous." Unanimous was the word he used, but when I look at the OFFICIAL REPORT I find that the word "unanimous" is not there.

made a remark which was not audible in the Reporters' Gallery.

Then am I to assume that it was not unanimous? It is the conclusion that matters and not the exact words. This question of the relative merits of a considered policy and the policy which the Chancellor of the Exchequer associated with the President of the Board of Trade I cannot quite understand. He rather gave us to imply that the President of the Board of Trade had upset his Budget. That is the impression I got from his introductory remarks. Certainly, it is the fact that the President of the Board of Trade is particularly associated with this question of prohibition. This prohibition policy raises a large number of very important questions. For the satisfaction of my hon. Friend opposite (Mr. Hogge), I would point out that I myself, as the House knows, have always been what is called a Tariff Reformer, but I would like to point out that I had no expectations whatever that the Chancellor of the Exchequer would extend the list of tariff duties on this occasion. I had no expectation for the simple reason that the only course open to the Chancellor of the Exchequer, if he was to adopt that policy, was to select particularly large articles of importation which would yield considerable revenue, and he certainly could not do that without raising a great many questions which I do not care to raise at the present time. But the Chancellor of the Exchequer has raised another controversy which, speaking for myself, I would very much rather had been settled privately, and that is the controversy about this prohibition policy of the President of the Board of Trade. We know that these prohibition steps were taken without proper consideration. They began with the prohibition of the importation of wood pulp for paper. When that prohibition was put on the great trades concerned were not consulted. That prohibition was put on after consultation with certain people, but not with the people who knew most about it. The changes that have taken place in regard to these prohibitions since they were put on show how very little consideration the Government had given to the question. I will take the case of fruit. Nothing could be more absurd than the course of procedure adopted in regard to fruit. First we had a sort of general prohibition of fruit announced. Then we find they are obliged to give a preference in regard to fruit to the Colonies. Then a question is raised with Spain and so on. Take every one of these prohibitions, and, as the Chancellor of the Exchequer knows, they have raised extremely controversial and dangerous points. I speak not of controversy among ourselves, but I speak of the international situation and the relation of the Allies with one another and with ourselves. That is a far more important question. I do not think that controversies amongst ourselves are of very much importance, but I think it is of very great importance that we must keep everybody absolutely united on the policy of the War in regard to these matters.

In regard to these prohibitions we have newspapers this morning saying that the policy is a triumph for Free Trade. I do not know why. That seems a most absurd observation. Still we have a number of newspapers saying that this morning. I do not attach any importance to it except to point out its futility. What is the position? Here you have these great questions, and here you have a Government who will not come forward with a considered policy on tariffs, but who are quite prepared to prohibit. Here is a Government, and I take it in its essence as a Liberal Government, which was elected for the purpose of maintaining Free Trade. This Government would not consider duties of any kind, but they are now prepared to put on prohibitive tariffs on raw materials that are essential to industry. After all, prohibition is only a tariff in an extreme form. Here is a Government which objected to import duties of 5 and 10 per cent. on manufactured articles coming into this country, but it has no objection to putting on 250 or 500 per cent. on essential raw materials, and the House of Commons takes that line. It is a very remarkable change of opinion. I take another point. I do not know who is the person who inspires these articles in the daily Press upon these subjects. I do not agree with them, and I am only stating their opinion to bring out the particular objection I have. I will refer to a paper which presumes sometimes to know the mind of the Government. It is stated that the Government has a strong hostility to anything like a considered tariff, but they are quite willing to put on prohibitions because the idea is that after the War it will be easier to take off prohibitions than it will be to take off tariffs, and that you can in that way resume those normal trade relations with Germany which were so dear to the heart of some people. Let us look at that. I think that a policy of prohibition is wrong in principle and mischievous in application. Go back to the Napoleonic wars. The people who know anything about history at all date the high tariffs of the nineteenth century to the prohibition policy of the Napoleonic era. After the War you will not take off the prohibitions. They did not take off the prohibitions at the end of the Napoleonic wars. On the contrary, they put on additional prohibitions, and the prohibitions did not begin seriously to be repealed until twenty or thirty years after the Napoleonic wars were over. It will be the same when you come to the end of this War. By these prohibitions you are building up great vested interests. Those vested interests will grow during the War, and you will not be able to modify the prohibitions after the War. That is the radical objection I have to them, because I am, heart and soul, against anything in the nature of high tariffs. I do not believe in high tariffs. But the Government, in its precipitancy, and in its unwillingness to face the real issues of the present War on these economic considerations, is putting on these prohibitions, and the result of putting on these prohibitions will be that at the end of the War, and for years and years after the War, you will have an absolutely intolerable tariff which will be one of the disgraces of the Western world. You are doing a permanent injury to the commercial resources of this country by embarking upon a policy which will certainly have such result.

I come to another point. I really do not think that there was any burning necessity why this Budget should be introduced on the 4th of April. It might have been a little later. I cannot understand why on earth the Government did not wait for the Prime Minister's return. The Prime Minister has been engaged in one of the greatest and most important Conferences which have ever been held in the history of the Western nations. The Conference recently held in Paris has issued certain declarations which cover the whole economic field. The Prime Minister in Paris has talked to French and other foreign statesmen, and he has been in Rome. While the Prime Minister is away, I presume after discussion in which there was not complete agreement, we have submitted to the country this scheme, which pays absolutely no attention whatever either to the needs or wishes of our Allies, or our Empire, or has any regard to questions which are of vital importance. Why not wait for the Prime Minister's return and ask him what are his views, before rushing along like that? Look at the meaning of the policy of prohibition to which the Government has given its imprimatur at the present time. Has the House any idea of what this prohibition means? We have prohibition of paper, wood pulp, tobacco, cigarettes, furniture wood, hard wood, motor cars, cotton goods, manufactured woollen goods, china, earthenware, cutlery, and a whole heap of articles. I am perfectly certain that the House has not the least idea of the extent to which the Government has carried this policy, which is adopted solely on the fiat of the President of the Board of Trade. Is there any evidence that the question has been considered?

Yes.

I watch these things very carefully. I am not complaining in any sense of the efficiency of the Cabinet. I have no party view in what I say, but the organisation of the Government, especially in these economic affairs, is far too Departmental. There is no evidence that the measures which have been adopted represent the considered views of the Cabinet as a body. I do not feel at all sure that the Prime Minister necessarily knows anything about it. Certainly the Cabinet could not have had the Prime Minister's considered views upon the result of the proceedings in Paris. I have mentioned some of the articles which have been prohibited. I can understand the Government coming to the House—and I should sympathise with them a great deal—and saving, "If we consider the question of tariffs a great many of our French friends would rather that we did not alter the course of trade at the present time." I could quite understand that. You have got a most admirable people—some of them what I should call old-fashioned Protectionists. They are accustomed to certain trade relations with this country, and they do not necessarily want those relations affected, though they would not object to anything which we desired to do in our own interests and necessities. I could understand the Government saying, in view of these considerations, "We do not think that we will embark upon a tariff policy at the present time." But why embark upon a policy of prohibition?

Shortage of tonnage.

It does not relieve the pressure at all. Besides, you can do that by a tariff just as well. The point is that these prohibitions do not and will not relieve the problem of tonnage in regard to most of the articles affected. The idea is based upon a pure abstraction, that there is some necessary relation between the total tonnage of the country and the total amount of goods imported, and it takes no account whatever of the course of business. Long before any prohibitions takes effect in that sense, you may find a different set of questions altogether, and this step is taken notwithstanding the fact that a great many of these articles are imported in neutral bottoms, over which you have no control whatever. Why embark on prohibition when we know very well that some of these prohibitions have already caused a certain amount of feeling among certain of our Allies? I am not going to specify further.

Then I come to my final observations. I want to know, have the Government really decided to reject the fundamental idea which is embodied in the resolutions recently come to at the Paris Conference? Those resolutions affirm complete economic solidarity and unity between the military and economic requirements. That principle has always been laid down as one of the essentials of war by the German staff, but has never been adopted here. That is now affirmed by the Allies and the Prime Minister and his colleagues who are parties to this agreement. What is there in the Budget which we have just heard announced to assist in the mobilisation of the resources of the British Empire and of our Allies, for the purpose of this wart The policy which the Chancellor of the Exchequer announces, pure prohibition, is a mere policy of insular negation. Prohibition is not a policy. It simply says, "We do not know how to solve any of the problems."

The Chancellor of the Exchequer said that the reason he did not embark on a wider review of our financial system was that he had not got the staff—the machinery. With the greatest respect, I must differ from the Chancellor of the Exchequer. I do not think that there is the slightest foundation for that. If the Chancellor of the Exchequer tells me that, at the present moment, he does not know exactly on whom to lay his hands, that he does not know how to organise for this purpose the resources which undoubtedly the Government possesses, I should accept his opinion with the greatest confidence; but when he tells me that those resources are not there, I dissent absolutely. All the resources necessary for carrying out in the spirit and in the letter the declarations of this House and of our Allies on these economic subjects at the present time, are available, either in the Treasury or the Board of Trade or the Customs. If the Chancellor of the Exchequer wants to know, I am perfectly willing to tell him. That is a plea which will not hold water at all. The Chancellor of the Exchequer is a member of the Ministry, for whom I have the greatest admiration. I am quite sure of his official efficiency. I do not believe that it is his opinion that he could not carry out a revision of the kind, if the Cabinet decided to have it done. At any rate, the resources are there and the urgency is great.

The Government has decided to go into an Economic Conference with our Allies. It was originally to have been held in April. I understand that it has now been postponed until May. That Conference is of the utmost importance in the conduct of the War. Whether we win or lose the War will depend in no small degree on what we do with regard to that Conference, not only at that Conference, but before the Conference. Now, this Budget as it stands—I trust that it will be, altered—is a declaration to the Allied Powers that you do not mean to do anything at all. The Chancellor of the Exchequer knows that, if that great combination is to come off, the initiative really rests with France and England. He knows, as well as I do, that France is keen to the point of enthusiasm. He knows that there is no single part of the British Empire, including our own country, which is not as keen as France. He knows perfectly well that, if we take the initiative, that Conference and the steps leading up to it will have been one of the greatest landmarks in history. What I want to know is whether the Committee of Ministers who compose the Cabinet, and who differ in their views on this important subject, are prepared to take the responsibility of embarking upon a course which may spoil the effect of that Conference? No questions of party and no questions of politics influence what any of us say or do in reference to these things. I see the Liberal Chief Whip laughing. If he thinks that any of us want to displace the Gentlemen on the Treasury Bench he is very much mistaken. We do not care two straws about that; but this is a matter of life and death to our Empire and to our Allies, and the Government have no right to embark upon a policy of trying to block a policy which may be necessary for the carrying out of these objects without consulting the country and the Empire about it.

We have heard a very interesting speech from the hon. Member, but I should like to ask him, if he does not regard this Budget as a triumph of Free Trade, which of the Protectionist countries of Europe could present a Budget like this?

I regard this Budget as a triumph of futility.

From the point of view of the hon. Member it is so, but the busi- ness of the Chancellor of the Exchequer is to get money for the purposes of the country, and our Chancellor of the Exchequer is raising an unprecedented sum on Free Trade principles, while all the belligerent Protectionist countries of Europe are in a difficulty as to the raising of their money, and none of them are attempting to raise it on the same scale as we are here. I cannot but think that the hon. Member has chosen his moment badly for pressing the plea that he did before the House. The chief comment that I have heard made upon the Budget is that it is a very interesting Budget, and that it presents therefore a great temptation to discussion, a temptation to which the right hon. Gentleman the Member for Hanover Square (Sir G. Reid) yielded to the full in the very interesting and brilliant speech which he gave us. But the Chancellor of the Exchequer set us a good example, and I shall try to follow it, in not wandering at all from his Budget. I was glad personally that the Chancellor of the Exchequer has not yielded to the temptation which, he said, presented itself to him, in the willingness of the people to be taxed, to raise more than £502,000,000. The hon. Member for Hereford (Mr. Hewins) complains of the Chancellor of the Exchequer raising so much money now, but he did not go very fully into the reasons for that. For my part I think that the Chancellor of the Exchequer has chosen the proportions very justly. He is raising, towards an expenditure of £1,825,000,000, some £502,000,000 in his revenue this year. Of that about 27½ per cent. is raised from revenue and the balance from loan. The hon. Member for Hereford (Mr. Hewins) said that we are far exceeding what was done in the Napoleonic War. I think that is not so. At any rate, I looked at the figures this morning, and I found that out of a total expenditure of £830,000,000 the amount of £230,000,000 was paid out of revenue and about £600,000,000 out of loan, which is exactly 27½ per cent., nearly exactly the proportion which the Chancellor has raised in the present year. As a matter of fact, last year we had only £337,000,000 of revenue towards an expenditure of £1,559,000,000, or only 22 per cent. out of revenue, the balance being raised by loan. So that up to the present we have not bettered the Napoleonic example in the total, although we began sooner to deal with the question than Pitt did in his day.

My hon. Friend is forgetting the loans which are included in the total expenditure.

I have included the loans, but there would be a better proportion if I left out those loans, and it will be some years before we get those loans back. It is perfectly true that the loans to the Allies are included in my calculations, and therefore the totals paid out of revenue are no doubt greater than they were in the Napoleonic War, if those loans are left out. But even so, we do not reach the Crimean War in this regard, though that war need hardly be mentioned in view of the colossal figures with which we have to deal now; but, as a matter of fact, in the Crimean War we paid 54 per cent. out of revenue, leaving the balance to loans. Another point to which I desire to call attention is the proportion in this Budget of direct and indirect taxation. In 1905–6, when the Liberal Government came into power, the balance was almost equal between the revenue from direct taxation and indirect taxation. The proportion of direct taxation has been since steadily rising. By the present Budget I find that 70 per cent. is from direct taxation and only 30 per cent. arises from indirect taxation. In the new taxation which the Chancellor of the Exchequer is putting on this year he is raising £43,112,000 by direct taxation and only £21,000,000 from other sources. I am glad that the Chancellor of the Exchequer has made no further experiment with import duties. I do not know that those which he has tried have been very satisfactory to him, but that, at any rate, is not the reason which he assigns for not going further with the experiment. I was interested to hear the announcement made with regard to the opinion of the Cabinet in this matter, and I will read to the House the exact words used by the Chancellor of the Exchequer in regard to the decision which was taken: the members of which hold various; opinions on this most burning question They have put it aside, and Free Traders and Tariff Reformers alike recognise that we have neither the men nor the machinery to deal with this matter now. I think it is far better for us to pursue the old course, the well-defined lines of our finance, the lines on which we have been, able to go so far in matters of expenditure and on which we have been able to raise such vast amounts. I think it is far better to remain on those lines while the nation is at war than to take other lines, which may be better, but which, at any rate, this is not the time to fully explore or discuss. As to the new taxes, the hon. Member for Hereford dismissed them as trifles. Surely no Tariff Reformer should talk about taxes being trifles, because in the time of the scientific tariff many of the results of it in the way of revenue would have been of a most trivial character; and I am glad that the Chancellor of the Exchequer has very definitely abided by the canon laid down that he would not put any tax on in this Budget which might not yield to him a substantial sum. I do congratulate my right hon. Friend most heartily one of his new taxes, and that is the Match Tax. It has always been historically painful to me that Mr. Lowe was frightened out of his Match Tax, which would have brought in money, by the procession from the East End of London which came to Westminster to protest against such taxation. I think our nerves have become harder, and that in these days Mr. Lowe would not have been so easily frightened by people saying that they were going to be unemployed as a result of the tax, more especially when there is plenty of work for them in other directions. I think my right hon. Friend is very much to be congratulated upon his Match Tax, from which he will get £2,000,000; it may have a small tendency to check the waste of matches, which is universal, and I do not think that anybody will really feel the tax.

I cannot say as much for his tax on railway tickets. I cannot see the purpose of this tax. There is little money in it, but, if it is intended to discourage travelling, I think that is unfortunate. I do not think that people are having joy rides in railway trains at the present time. Personally, I travel a great deal, and the tax will hit me to a certain extent, but it is not on that account that I protest. I certainly take no journeys by rail that I can avoid, but the business of many of us necessitates travelling by rail, and I think it is a pity to impose a tax which is going to make it more difficult for people to get about in pursuit of their business. My right hon. Friend will see, too, that the tax interferes with the growing tendency of people to go into suburbs outside London and outside large towns and cities. Though the tax is small at the beginning, still it will mount up and increase, besides which I think it will have the unfortunate tendency to counteract that which we all view gladly, namely, the spreading out of the population for ten, fifteen, or even twenty miles from the great centres. I hope my right hon. Friend will reconsider that tax. I think that everyone that I have heard has protested against it. It will not hit the workers most, but it will hit people with incomes of £150 to £250 a year, who have to travel to and from their business. Such persons will be very badly hit by this tax, which comes upon them in addition to the increased cost of living.

I see that the Chancellor of the Exchequer is going to get about £2,000,000 out of mineral waters. I congratulate him upon that, but I do not think that he should flatter himself that he has thereby got hold of the elusive teetotaler. I think the Mineral Water Tax will be far more largely paid by those who consume whisky with mineral waters than by those who are abstainers like myself, and my right hon. Friend will find it really difficult to tax a man who does not drink and does not smoke, but that man has the advantage of rapidly becoming richer, and it may be that he might have to pay the Super-tax which my right hon. Friend is now levying. I now come to a point on which I wish to ask my right hon. Friend to give me some explanation. There is nothing in this Budget on beer or on spirits. I confess that surprises me very much, and I think it will surprise the country. I am not making any complaint for a moment; I am really asking for an explanation from my right hon. Friend. As I understand, the Beer Tax automatically rises by 1s. a barrel this year, and the consumption was considerably down last year, though not as much as my right hon. Friend estimated. He calculated that there would be a 30 per cent. reduction, but there has only been an 18 per cent. reduction. I do not understand how the Chancellor of the Exchequer expects to get so much revenue. This year he estimates the receipts from beer at £31,000,000, and that is putting them down-about 9 per cent., and the President of the Board of Trade announced in the House that there were going to be restrictions on the output of beer during the year by some 28 per cent.

I have allowed for the reduction.

Then the amount is due to the 1s. a barrel extra tax? I come now to the Spirit Tax, and here my right hon. Friend allows for a reduction of nearly 25 per cent. The taxes and Customs last year were £5,300,000, and the estimate for the present year is £3,850,000. The whole of the spirits last year was £21,750,000, and this year we only expect to get £16,400,000—a reduction of exactly 25 percent. My right hon. Friend says that forestalments cover that reduction. He expects to have £2,000,000 reduction and £2,000,000 forestalments, and I ask my right hon. Friend why he has contented himself with this reduction on spirits? He used very remarkable words in regard to spirits, to which I will call attention:

"As regards spirits, I estimate a decline in the true revenue of over £2,000,000 owing to diminished consumption. …. I am bound to say that should there be an increase of price not warranted by the additional restrictions on the trades, I shall feel it my duty to ask the Committee to absorb this increased price for the benefit of the public in the way of new taxation."—[OFFICIAL REPORT, 4TH April, 1916, col. 1063.]

I do not understand those words. Does my right hon. Friend pose now as an advocate of cheap whisky? If so, it is a new guise for him to appear in.

expressed dissent.

Then what is the meaning of those words "should there be an increase in price"? Why did he not take it beforehand? He must know that drinking has very much increased. I am sorry to say that in spite of all appeals for economy, and in spite of the crisis in which the country finds itself, the drink bill last year was seventeen or eighteen million pounds more than the year before, and though most of that has gone in taxes to the Government, the country has expended that amount on drink with results with which the Government are perfectly familiar. Though beer is down by several million barrels, 18 per cent., spirits were up by three million gallons last year. Hon. Members may explain that as they like, but with every desire on the part of the Government that there should be frugality and care in spending, and in spite of all the appeals that were made, the actual consumption of spirits went up by three million gallons last year. I think that is a state of things which calls for action on the part of the Government. What action have you taken about spirits? [An HON. MEMBER: "The Board of Control."] It has been acting for at least six months, and so far it has not produced that reduction of spirits which is desirable. I put before the Chancellor six months ago the fact that as things stand at present the tax has the effect of diminishing the consumption of beer and increasing the consumption of spirits. Whatever views hon. Members may hold with regard to the liquor question, I do not think they can regard with complacency prices arranged artificially as the result of taxation which have the result of driving men from drinking beer to drinking spirits.

The time has, I think, fully come for an increase of the Spirit Duty. I believe the country expected it, and the trade expected it. The forestalments, of which the Chancellor spoke, show that the trade expected it, and I do not understand on what ground my right hon. Friend has based his action. Certainly I think it is a blemish upon his Budget, and the popular judgment would be that he might have got the four millions he is going to lose out of spirits instead of allowing the revenue to suffer and the injurious consumption of spirits to go on. The right hon. Gentleman talks of dealing with the question again. Are we going to have another Budget in a few months? I do hope he will give this matter careful consideration. I am not speaking solely as a strong advocate of temperance, which I am, but viewing the taxation of liquor as a whole, I say the time has come for a revision of the Spirit Duty and the raising of the Spirit Duty relatively to the Beer Duty. I appeal to him to look into the matter. I congratulate my right hon. Friend on the courage with which he has faced this £500,000,000 Budget. I think he is raising a reasonable and proper proportion of the National Expenditure out of revenue. I think the people can and will cheerfully bear it, and I think he need have no misgiving about his old Free Trade principles and the strength of the foundations on which they rest.

While I feel some sympathy with the hon. Gentleman who has just spoken in his complaint that the Spirit Duty has not been raised as compared with beer, in the figures which he gave us he spoke of an increased consumption of £18,000,000 during the past year, but I think it would have been more important if he had given us the amount of liquor consumed rather than the price paid for it.

I can give you that.

It is not that I quarrel with the conclusioin arrived at by the hon. Gentleman, but clearly in view of the enhanced prices the quantity is more important than the total price paid.

The beer consumption was down by 18 per cent. and the actual increase in the consumption of spirits was 3,200,000 proof gallons.

I think everybody who hears those figures must share in the regret that during a time of national peril and danger so great a consumption of spirits should have taken place in this country when in other countries there has been a marked diminution of that consumption brought about by legislation.

If the right hon. Gentleman would like the positive figures, I have them here. British spirits consumed in 1914 amounted to 25,941,000 gallons, and in 1915 to 28,378,000 gallons, and other spirits 5,732,000 gallons in 1914 and 6,642,000 gallons in 1915. The total spirits in 1914 amounted to 31,694,000 gallons, and in 1915 35,020,000 gallons. Beer consumption in 1914 totalled 35,741,000 barrels, and nearly 31,000,000 barrels in 1915 (30,960,000).

If my remarks have done nothing else, they have elicited from my hon. Friend figures which are very important. I think I should do no injustice to the statement which was made yesterday by the Chancellor of the Exchequer by saying that the most important part of it was in the concluding words. Clear and lucid as that statement was, it seemed to me that he might have laid much more stress than he did—and no doubt he deliberately refrained from doing so—if he had made some comparison between the financial position of this country and of Germany at greater length. Perhaps, in strictness, there was no necessity to do so, because the neutral markets of the world have already drawn attention to the extraordinary difference which they as neutrals attach to the relative financial stability of this country and that of Germany by the price which they are disposed to give for the German mark. So far as I have been able to follow those fluctuations in all the four principal neutral countries of the world which are now open to English and German commerce, there has been a diminution of from 22 to 27 per cent. in the value of the German mark; whereas, with regard to the English sovereign, there has been a diminution below the limits of normal variation of, I think, only 1 or 2 per cent., and it is 2 per cent. at present, which is a very marked contrast as to the relative opinion of neutrals as to the future as well as the present stability of English and German finance.

My right hon. Friend referred to what was likely to happen to lenders of money in Germany in the future when he told us that the only security for loans to Germany was the £24,000,000 of new taxation which they felt able to impose upon themselves. But he omitted to state, and I rather wish he had done so, that not only is that the only security for loans to Germans for the lenders, but that part of that £24,000,000 of taxation must in itself go towards making good the deficits which were habitual in German finance previous to the outbreak of War. So that there is not a free £24,000,000 applicable to the £1,500,000,000 or £2,000,000,000 which Germany is supposed to have borrowed; but even a portion of that very slender provision has already been mortgaged for past debts which she was unable to pay. The right hon. Gentleman rightly emphasised that the security for every loan made to this country is provided in advance by the taxation which has been imposed either last year or this year, so that every lender finds himself with the provision made by the taxation of the people of this country for both sinking fund and interest in advance of his loan. I should like to have said something on the question of direct and indirect taxation. There has been very great disturbance of the proportion between those two principles. My hon. Friend who preceded me has drawn attention to the figures, and I should be only wasting the time of the Committee if I referred to them again. I should like an explanation from my right hon. Friend about the surplus of last year. Part of the surplus was due to savings and part was due to under-borrowing.

Increased revenue.

There were £31,000,000 due to increased revenue and £31,000,000 due to savings, but the savings, as I understand it, were not really savings. There was really an increase of expenditure, but the saving is represented by under-borrowing.

No, no!

I want to get that point made clear, and perhaps if the right hon. Gentleman addresses the House again he will explain it.

Under-spending.

As I understand, there was under-borrowing of £107,000,000, and there was also a sum of £70,000,000 which was wrapped up in payments for American securities borrowed. Somewhere between those two sums there is the sum of £31,000,000 which is supposed to have been saved, and if I followed the figures correctly that £31,000,000 has not in truth really been saved, but has not been borrowed.

Under-borrowed by the Allies.

And, therefore, not spent by us. So that in reality there has been an increase of expenditure upon the normal expenditure foreseen by the Chancellor in September last, and there has been, therefore, no real reduction.

The real reduction in expenditure is greater than appears on the face by the figures, because not only have we actually reduced our issues by £31,000,000 below what the total estimate was, but of the actual issues a considerable number of millions have not been spent. They have been used to buy American securities, which have been shipped to New York and are now lying in New York, either in the form of cash or securities, at the present moment. Therefore, though the money has been issued, it has not been spent, and the true saving is more than £31,000,000. A saving is effected by not having to lend as much as we anticipated. We cannot regard that as a permanent saving, because in the main the under-lending was due to bills not becoming due for payment, but still there has been a very material saving.

5.0 P.M.

I am very glad to have been able to elict that, because I find that these figures puzzled not only myself but a good many other people as well. The only other question I want to ask on this matter is to what extent has the Chancellor of the Exchequer still in his possession unrealised American securities? He may not feel able to give us that information; if so, I shall not press him. Then with regard to the total borrowings, which I understand amount at present in round figures to £1,500,000,000, while next year, if the right hon. Gentleman borrows what he expects to do, he will have borrowed £2,600,000,000.