NEW CLAusE. — (Repeal of Imperial Preference.)

Orders of the Day — Finance Bill. – in the House of Commons on 16th July 1920.

Alert me about debates like this

Section eight of The Finance Act, 1919, and the Second Schedule of that Act are hereby repealed.—[Captain Wedgwood Benn.]

Brought up, and read the First time.

Photo of Sir William Mount Sir William Mount , Newbury

Before we proceed with this Clause, can I be informed with regard to the new Clauses dealing with charitable gifts to hospitals and university colleges which of them it is proposed to take?

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

There are six or seven Clauses dealing in different ways with questions of charitable gifts, some wider and some narrower in their scope. I propose to select for the purpose of discussion the one standing in the name of hon. and gallant Member for Bury St. Edmunds (Lieut.-Colonel Guinness) and along with that I hope there will be discussed in particular one standing in the name of the hon. Member for London University (Sir P.Magnus) and other hon. Members which deals with the more limited aspect of hospitals and universities. Taking these together will, I think, enable us to cover the whole ground.

Photo of Sir William Mount Sir William Mount , Newbury

That is the course which I think it most convenient to adopt.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

Would the right hon. Gentleman mind stating now whether there are any of the new Clauses which he does not propose to call upon by reason of their being redundant or otherwise? It really would help us very much if we could know that.

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

There are a great number of Clauses on the Paper. Some of them have already been discussed in connection with the Excess Profits Duty. I was going to ask the hon. Member for the Chippenham Division (Mr. Terrell) if he will be good enough to indicate to me which amongst his numerous progeny is the one for which he has the most affection, as I then may confer my favour on it. With regard to the first three Clauses on the Paper ("Repeal of Imperial Preference," "Preference not to apply to mandatory territory," and "Repeal of reduction in Excise Duty"), if any amount of time is taken on the first, I shall be obliged to pass over the next two which, while dealing with practically the same subject, affect lesser points.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

When we come to those, perhaps you will hear what we have to say on them.

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

The third one is really consequential on the first. The second one, no doubt, deals with a separate point, and I really think it is a rather more practical point than is raised by the first. I shall be anxious to preserve an opportunity for discussing the second if too much time is not taken on the first. The fourth Clause on the paper deals with the total repeal of the sugar duty. We have already had this question of indirect taxation discussed at considerable length, and I think it is undesirable to repeat it here on the Committee stage.

Photo of Captain William Benn Captain William Benn , Leith

On a point of Order. While, of course, we have no desire to reiterate our arguments, I hope you will allow us an opportunity of recording our views by a vote on the sugar duty.

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

To some extent I must be guided by what happens on the earlier Amendments.

Mr. TERRELL:

I understand that your remarks refer to all my Amendments on the Order Paper?

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

I was asking the hon. Member to indicate to me privately before we reach his proposed Clauses dealing with deductions from profits. amendment of law as to calculation of capital, extension of powers of Commissioners hearing appeals, and provision as as to remuneration of persons concerned in management, which is his favourite. I may say that the last-named deals with a matter which has already been disposed of.

Photo of Captain William Benn Captain William Benn , Leith

I beg to move, "That the Clause be read a Second time."

This new Clause deals in a wide way with the whole question of Imperial preference. I should like to say at the outset as regards the second new Clause standing in my name "Preference not to apply to mandated territory," I do not propose to deal with that point in the course of the remarks I am now about to make, because I am in hope that I shall be able by avoiding prolonged discussion on the question of the duties in mandatory territories to be enabled by your ruling to discuss that point in detail. I shall deal briefly with the general question of the policy of Imperial preference as embodied in this Bill and as inaugurated in the Finance Bill of last year. The arguments we bring forward on this subject are more or less familiar to Members of this House, but there is this about it, that they grow in force in our judgment from year to year, and we think we can show by what has happened between the time the Finance Bill was introduced and the present time that the evil of these impositions has been aggravated by the circumstances that have taken place. The first argument is that if you are going to have a system of Imperial preference the machinery of these duties and of this tariff is absolutely unsuitable for the purpose. Their imposition is just an accident grafted on to a system created for a totally different purpose. The duties on sugar and tea, and so forth, were intended of course for revenue purposes, but as to the other duties, which are known as the McKenna duties, and which were imposed during the war, they were put on for totally different reasons; mainly, I believe, at the outset, to save tonnage and partly with the view of correcting the adverse balance of exchange. It was never contemplated that they would be substantially an essential part of the Tariff system in which preference would be given to various parts of the Empire. Our first object is that the system is lopsided, and I might almost say, absurd.

The second objection is, if you do give preference under these accidental duties you are doing something to perpetuate their existence. That may be very desirable in the case of some duties, but I do not think that even the most ardent advocate of the protectionist system would have selected beautiful boxes and clocks, watches, motor cars, cinematograph films as a basis on which to elaborate a scientific tariff. They were, as I say, accidental duties, and, if you use them for the purpose of giving preference to products from various parts of the Empire, you, in fact, make them a continuing part of the tariff system of the country, for the very obvious reason that if you give a preference you begin to establish vested interests. Supposing a man establishes in some part of the Empire a factory for the manufacture of clocks and watches. He invests his capital, he employs his staff, he puts up his buildings. Then he finds that there is a proposal for the abolition of the preference. Surely he would have a very strong case if he complained that he had been induced to risk his capital and was now being betrayed by the abolition of the preference. Therefore, the first objection that we have is that this is not a suitable basis for a preference, and that, by giving a preference on these articles, you are perpetuating the duties. When these duties were introduced, it was said by the Government, of which the right hon. Gentleman was a Member, that there was no intention that they should be anything but War duties. I have not the quotation by me, but I think the right hon. Gentleman then said that no one could conceive that such duties would be perpetuated as a permanent part of our fiscal system. That, however, is exactly what this Government is causing to be done.

The second objection that we have is that they involve a sacrifice of revenue at a time when there are so many clamant needs which should be first satisfied. I cannot elaborate this point except by the most casual example. The Unemployment Insurance Benefit is a case in point. I believe that the amount of money required to make the Unemployment Benefit 20s. per week instead of 15s. would be more than covered by the amount of revenue which the Chancellor of the Exchequer is sacrificing by means of these preferential duties. I can understand the right hon. Gentleman asking why we complain when he remits taxation on tea, to reduce which we ourselves have moved Amendments. He will see, if he looks at the answer which he gave on 24th June, showing the yield of the taxes at the preferential and at the full rate, that the largest amount of taxation gathered at the preferential rate was on tea, amounting to £13,000,000 as against £1,700,000 at the full rate. When we complain that he is losing revenue by this preferential system, he will say that really he is making a conces- sion to a class of the community on whose behalf we have ourselves often raised our voices. It lies with the Government, however, to show that the benefit of this concession is in fact being reaped by the tea consumers, and the figures which I have—it is a very complicated commercial topic on which it is unsafe to speak with great definiteness—do not show that there has been any corresponding reduction in price on account of the reduction of the tax on tea grown in the Empire. Unless the Chancellor of the Exchequer can show that the retail price of tea has been reduced by approximately the amount that he is remitting in the form of Imperial preference, we are entitled to say that it is not a concession to the tea consumer, but merely an advantage to a particular interest, namely, the Mincing Lane importers of tea.

I would call attention to some of the absurd results of these preferences. In the old days, when a large number of duties were swept away—I am speaking of the early part of last century—one of the main facts revealed by the investigations of a committee was that there were scores of duties of a complicated and harrassing character which were yielding nothing substantial or really worth collecting at the ports. I contend that the same is becoming true of these preferential duties. It is natural that it should be so, because, instead of selecting articles suitable for preferential treatment, the right hon. Gentleman has selected the adventitious list composed by Mr. McKenna for totally different reasons. I wish the Committee would look at the yield of these duties in the answer to which I have already referred. During the whole of the year the duty collected on cinematograph films only amounted to £400, and the duty collected on clocks and watches to £600. The Chancellor of the Exchequer would be very hard put to it to tell us that the expense of having different systems of registration or whatever the machinery may be in order to determine whether a clock or a watch comes from an Imperial factory or not does not amount to more than £600. It is obvious that the cost of collection must be considerably in excess of the yield of the tax. It is also obvious, if only £400 in one case and £600 in the other be collected, that the advantage to any one manufacturing these articles in the Empire is nugatory. Therefore, you have duties which confer no benefit upon anybody in the Empire and which cost more to collect than they yield to the Exchequer. I submit therefore that there is a very strong case against some of these duties. I come now to the third point which is the effect on prices. We contend that the tendency of these preferential duties is not to lower prices to the consumer of colonial produce, but to make the consumer pay the same and enable the colonial importer or merchant to pocket the difference. I would ask the Committee to bear in mind the report of the Committee on Trusts, a very important report dealing with a subject of growing importance, and, in fact, of prime importance in economics today. In the Addendum signed by four members of the Committee, paragraph 2, I read these words: In considering the prevalence of capitalistic combinations in British industry, it is impossible to leave out of account the check upon profiteering which may be afforded by foreign imports. This operates, however, only so long as the foreign producers are not also brought within the combination. The report goes on to say that free trade is not a complete safeguard, but that it tends in the direction of making trustification of industry and the control of prices more difficult. The most important ground on which we object to these duties is that, however trifling and absurd they are in many ways, they are on the showing and by the avowal of the Chancellor of the Exchequer himself, a part of a larger and definite scheme to Imperial policy, to which we on this side of the House utterly object in principle. On the occasion of the last Budget the Chancellor of the Exchequer said that this was part of a larger policy, and that in the view of the present Government preference was not to be confined merely to customs duties. What has happened since? We find that in dealing with the Crown Colonies and various other parts of the Empire an attempt has been made to force those parts of the Empire to participate in this system of preferential treatment. An example of this is to be found in the £2 duty on palm kernels from West Africa which is part of the general principle that the Chancellor of the Exchequer is endeavouring to embody in the fiscal system of this country. I am aware that the right hon. Gentleman can say that, strictly speaking, this is not in the Finance Bill, but at any rate I am dealing with the principle which he says is the basis of these proposals.

Then there is a preferential duty on the export of hides from India. There was a reply given to me about a month ago by the Colonial Office stating that an invitation to consider the practicability of giving a preference to goods of Imperial origin had been addressed to all the Colonies, and this amounts to pressure being put on the Crown Colonies to force open their door in return for keeping our own door ajar. I wish to point out to Free Traders opposite, who are always contending that this thing is so small that it is of no importance, that it is in fact the principle that is forming the policy of the Government, and it is a principle which will lead them into supporting a full-blooded system of Imperial preference and tariffs for the whole Empire.

I have given India and West Africa as examples, and I have shown that we are trying to bring pressure to bear on the Crown Colonies in regard to this matter. On the question of mandatory territories, I think it would be better that we should have a distinct Debate. What is our objection to this preferential rate, and to the system generally. It is that it sets up economic friction and is adverse to the system of world peace which we wish to see established. War in the past has been initiated by many causes, but often by causes of economic jealousy. The policy we have adopted is already beginning to set up this very friction. Take for example the export duty on hides from India. In the answer given by the Secretary of State for India on this point we were informed that three of our Allies, France, Italy and the United States, have already protested against this preferential duty directed against themselves. Hon. Members opposite may say that that is a small matter which is of no account, but it does show that the result of our embarking on this system of Imperial preference is to set other people by the ears, and cause friction even amongst those who have been our Allies in the Great War. We hear protests against what the French do in the way of restricting imports. We have heard something about the United States giving a preference in the matter of shipping, and the result of all this will be to draw us into economic jealousies with other great Powers, and it will tend to destroy what has been the greatest asset of the British Empire, namely, the goodwill of the world, and the belief that where British rule was all countries had an equal opportunity for disposing of their wares.

This controversy is not a new one. It is in essence the same point as that which was involved in the great fight of 150 years ago which resulted in the loss of the American Colonies. It is the conception that your Empire is to be built up somehow on the basis of a cash or material connection, but that we entirely repudiate. We say there is something far stronger as a basis. I will not weary the House with quotations, but I would remind hon. Members that this very topic has been the subject of some of the most moving periods of our history. Burke said: Do not entertain so weak an imagination as that your registers and your bonds, your affidavits and your suffrances, your cockets and your clearances, are what form the great securities of your commerce. Then he went on to say: Do not dream that your letters of office, and your instructions, and your suspending clause are the things that hold together the great contexture of this mysterious whole. These things do not make your Government. Dead instruments, passive tools as they are, it is the spirit of the English communion that gives all their life and efficacy to them. It is the spirit of the English constitution which infused through the mighty mass, pervades, feeds, unites, invigorates, vivifies every part of the Empire even down to the minutest member.

Photo of Commander Hon. Joseph Kenworthy Commander Hon. Joseph Kenworthy , Kingston upon Hull Central

I beg to second the Motion. I do not intend to follow the ground which has been covered by my hon. and gallant Friend, but I support this Motion on the very widest possible ground. We fight preference not because it is such a great matter at the present time, not because we believe it is so positively harmful to the trade of this country, as a full-blooded tariff war would be, but because it is the beginning of a theory of Imperialism which, if carried to its logical conclusion, will end in a great world catastrophe, and a war which will dwarf the late war into insignificance. It will be the end of civilisation as we know it, and the end of the whole social system that has been built up in this and every other Western country. We believe that giving of Imperial preference will be setting our foot on a very slippery slope, and if we take that false step we shall be landed with an enormous zollverein in which attempts will be made to corner all the raw materials in the whole of the territories forming our Empire, as well as in the new great mandatory areas of which we are accepting the guidance and care. We have the greatest and most populous Empire in the world. I believe we control, roughly, a quarter of the world's surface, and that we have approximately one-third of its inhabitants. In our Empire we have very great natural riches in the shape of raw materials which are essential for modern industry. If we are going to adopt preference and its natural conclusion, namely, a full-blooded tariff system, we are going to have a fight, because the other great industrial nations —including a revivified Germany, an industrial Austria or Poland or Bohemia, the new democracies that are beginning to flourish and advance in South America, and, even more important, the great new democracies that are presently going to arise in the East—are going to say, "Unless we have a free market in these great rich territories which you control, we shall be forced, inevitably, to fight, otherwise we shall find ourselves in economic bondage to you." I am drawing attention to the ultimate goal at which the Chancellor of the Exchequer and those who support him are aiming. They are aiming at a Zollverein, and the world will not stand it. We may talk about our might and our power, our mailed fist and our shining armour, but we shall follow the thorny and ruinous path that was trodden by the nation we have just beaten, using those very same arguments and threats.

The great curse to-day in Central and Eastern Europe is restriction on trade. All these new little States that have arisen out of the ashes of the great War have set up their Customs barriers and embargoes and their little tariff systems, and they are blockading each other and making war. Those hon. Members who have had the opportunity of reading the remarks of our own officials and of the economists who have travelled on behalf of the Government in Central and Eastern Europe, will have had brought home to them that this is the root of half the present troubles in Europe. As has been admitted in the one or two brief discussions that we have had on the Peace Treaties, we are going to do our best to persuade these new nations that have arisen to modify their action in this respect. Surely we should be the first to set an example. Otherwise, they can point to our differentiation towards the trade of different parts of the world as an example in support of what they themselves are doing. They will say that ours is a great, wealthy, far-spread world-Empire, while they are little compact States, in some cases landlocked, and in others bordered by hostile neighbours, and they will ask, why should they not do the same as we are doing? Following that argument, you have the cry of the starving children in Vienna and the rioting of unemployed workmen in Bohemia. It is our place, above all, at the present time, to set a great example, as we have so often done before in the history of the world. We are doing exactly the opposite; we are not practising what we preach. This argument as to the need of an example to a misguided fiscal world in Europe is new in our controversies. It is war-born. It is a new argument which reinforces our objection to preference, and I only wish I were capable of doing it full justice. It is more powerful, to my mind, than any argument that has ever been used before. We have now a great new means of transportation. We have not yet begun to visualise the developments that are to come in air transportation. Has the right hon. Gentleman ever thought that he may live, please God, to see the usual route to India an overland route by air?

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

That argument is very much in the air. The hon. and gallant Gentleman is taking a very distant survey of the subject. As we are in Committee, we must keep to the actual matter before us, namely, the repeal of the preference given last year. We cannot go further than that.

Photo of Commander Hon. Joseph Kenworthy Commander Hon. Joseph Kenworthy , Kingston upon Hull Central

I will not pursue the very enticing prospect of air developments in the future, but I would point out that any embargoes, duties, or custome on goods passing between countries are made much more irksome to them because, in the near future—

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

The whole question of Customs on any article whatsoever is far beyond our scope at the present time.

Photo of Commander Hon. Joseph Kenworthy Commander Hon. Joseph Kenworthy , Kingston upon Hull Central

I am among those who wish to see all Customs and embargoes removed on all articles.

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

We do not want to know the hon. and gallant Member's views on all questions, but only on the matter now before the Committee. I do wish he would try to be a little more relevant.

Photo of Commander Hon. Joseph Kenworthy Commander Hon. Joseph Kenworthy , Kingston upon Hull Central

I admit that I was approaching my point by a rather round-about route. Imperial preference, we think, is entirely harmful. Now is the time, above all, for removing all trade restrictions. I do not think it has benefited our people during the last year. The principal preference has been on tea, the preferential duties on which are something like £13,500,000, while the non-preferential duties are £1,700,000. That means, of course, that people who drank China tea before have gone on drinking it, while the poor do not get their tea any cheaper. What we have done has been to irritate China and set a bad example to our neighbours, and I hope that for these reasons the Committee will support this Clause.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

The hon. and gallant Member, in the earlier portion of his speech, built a very large superstructure of assertion on a very small basis of ascertained fact. I think that neither of us can wisely speak very dogmatically as to the effect of preference, seeing that, for the most part, it only came into operation last September, and we have not had a sufficiently long experience of it to measure its results. The hon. and gallant Gentleman raised, in that portion of his speech, two objections to our proposals. He said, in the first place, that they must have added sensibly to the cost of collection, and, in the second place, that our consuming public has received no benefit from them. It is really not worth our while to make the minute calculations which would be necessary to enable us to say exactly what sum should be charged in respect of one particular part of the many functions entrusted to the Board of Customs and Excise. But I may reassure the hon. and gallant Gentleman on this point. I hold here a list of some fourteen new duties imposed by the Board of Customs and Excise since the outbreak of the war, of which by far the most costly in every way—but for my particular purpose I am referring only to the cost of its administration—has been the great extension given to the Old Age Pension system under the Act of last year. In spite of that enormous addition to their duties the cost of the staff compared with the revenue collected, which was 3.24 per cent. in 1914ߝ15, has fallen to 1.39 per cent. in 1920–21. I do not want to lay unfair stress upon it because with a great increase of existing duties you naturally do not require a corresponding increase of staff, nor when you super-impose a new duty on existing duties do you require the new staff that you would require if the new duty was the only duty that was in existence. At any rate the figures I have given are sufficient to reassure the hon. and gallant Gentleman as to the economy of Customs administration. As regards the effect of preference on prices, my information—and I think it is the best information that can be obtained, from people experienced in the trade—is that the benefit of the reduction of the preference on tea, of which 90 per cent. of our consumption comes from India, has undoubtedly gone to the consumer.

Photo of Captain William Benn Captain William Benn , Leith

Why has there been no reduction in the retail price?

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

Prices vary for many reasons, and not only because of any rise or fall in Customs. These things are not capable of mathematical demonstration, but I believe if the hon. and gallant Gentleman will put aside prejudice and go to competent people who are unprejudiced and ask them as a matter of fact what they think has happened, he will get confirmation of the information which I have received, that the benefit of this reduction has gone, as he would expect it to go under such circumstances to the consumers in this country. I believe the same is true of the preference in Colonial wines. In the case of sugar, where a very small portion only comes from within the Empire at present, I think the benefit has gone to the Empire producers and not to the customers in this country. I am content whether it goes the one way or the other. After all, the object of the preference is in the first place to give a practical exemplar in this sphere of Imperial unity and in the second place to promote Imperial development. We draw no tribute from any of our dependencies.

Photo of Captain William Benn Captain William Benn , Leith

Surely the preferential duty on the export of palm kernels is tantamount to drawing a tribute.

1.0 P.M.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

No, of course it is not. I beg pardon, if my retort seems discourteous. It was not so intended. I cannot even understand what the hon. and gallant Gentleman means, that because a dependency or a protectorate levies an export duty on its produce when exported at different rates according as that produce goes to the Empire or elsewhere, that we draw a tribute from-that country. It seems to me that language has no meaning when it is applied in that way. We draw no tribute from any portion of our Empire. We have received contributions from them. Do not let me be thought to be unmindful or ungrateful for what they have done. But they have been voluntary contributions in the great War in which we have been engaged or voluntary contributions for the maintenance of the naval forces of the Crown. But the advantage that we derive is in their growing prosperity and in the resulting increase of the trade they do with us. If therefore this preference goes in certain cases to encourage production in those countries our practical benefit will be none the less real if it would encourage the development of Imperial trade and increase the amount of business that we do.

I come now to the real point which the hon. and gallant Gentleman wanted to raise. It was not disputable and comparatively trifling points of the kind I have been discussing, but it is the great principle whether Preference is a good thing or a bad thing. There we are divided, as we always have been. The hon. and gallant Gentleman considered that any preference which we afford to an Imperial product in our market is a cause of friction and a disintegrating element in our Imperial life. For many years we have enjoyed Preference for our goods in the markets of our Dominions. Have we ever found that it was a cause of friction or a disintegrating element? Our manufacturers know how much they have owed to it and have in the main expressed their preference for it, and whilst the Dominions have never sought to interfere in our domestic affairs, and have indeed carefully eschewed any appearance of intervening as parties in our domestic differences, every leader of every party in every Dominion has expressed his approval and his desire for a system of Imperial Preference. At last under the impulse of the war and of the sentiments which it evoked a Government was found to give effect to it. No one can say, whatever you might have said before the last election, that we have not authority to do it. It was plainly put before the country as part of the policy on which they were asked to return us, and the majority by which we were returned was sufficient to carry out the promise we made in this respect.

The hon. and gallant Gentleman (Lieut-Commander Kenworthy) who the other day intrigued the House by speaking with confidence and apparent authority as to what we would do when we came into power, has to-day taken to himself an even wider mandate. He has undertaken to tell us that the world will and will not stand. I wonder that the hon. and gallant Gentleman, speaking with so much authority, does not occasionally visit other portions of the world and impart his advice and directions to them. His contention, and that of the hon. and gallant Gentleman (Captain Benn), is that this country alone may not do what every other great Power does and has done for years. The hon. and gallant Gentleman is afraid that if we show any preference to the Dominions of the British Crown we shall outrage the sentiment of America. Has he ever heard of their commercial relations with Cuba on a preferential basis, although Cuba is not part of the United States?

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

When the hon. and gallant Member spoke for the world, I presume that he did not mean to confine himself to one hemisphere.

Photo of Commander Hon. Joseph Kenworthy Commander Hon. Joseph Kenworthy , Kingston upon Hull Central

I do not think the hon. Gentleman quite grasped my point. I was referring to the great democracies on the Continent, and that when they recover they will have no colonies.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

The hon. and gallant Member says he was referring to the great democracies, and he appears to think that that excludes the United States of America. That is a reason for an early visit on his part to that country. The hon. and gallant Member (Captain Benn) appeared to think that there lies a danger to the future peace of the world in any such proposed friendly arrangement among the different portions of the British Empire.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

If the whole of the British Empire were contiguous no such question would arise in the minds of either of the hon. and gallant Gentlemen, but because we are communicating across the ocean that which is possible to any other empire is to be forbidden to us. It is nonsense. How many times has it been said that the sea unites the spirit of the British Empire, and yet we have here in this House what remains of the Liberal party now in Opposition, erecting the ocean as a barrier instead of a highway between the scattered portions of the Empire. What basis is there for these fears, or for the optimistic conclusions which are their correlative? In the days when this controversy was a live controversy and not a dead issue the hon. and gallant Gentleman used to say that if we had a preference it would bring about war. We used to ask them whether if we maintained Free Trade it would avert war. Did it? We were told that we were irritating Germany. Did Free Trade save you from war?

Photo of Captain William Benn Captain William Benn , Leith

Did Protection save us?

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

I will tell you what saved you in the War.

Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

I will tell you what saved you in the War, or at any rate helped you magnificently to the victory you won. It was the loyalty and voluntary assistance of those Dominions and Protectorates beyond the seas, the slightest commercial concession to whom is obnoxious to the party opposite.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

The conclusion of the Chancellor of the Exchequer's speech was quite reminiscent of the old Tariff Reform days, and it received the usual applause from the Tariff Reformers, who now crowd the opposite benches. The Chancellor says that we are attempting to revive a dead issue, and that it has been settled. What is settled? The policy of his distinguished father is settled, which was this: It is no good fiddling with these little things. They are of no value from the major point of view. Colonial preference means taxation upon food, upon corn— I can well understand the hon. Gentlemen opposite do not like this— and upon other commodities which the Dominions send here in large quantities and in regard to which they compete in our markets with foreign countries. The Chancellor of the Exchequer said that nobody could say that a surprise had been sprung upon the country; that it was part of the policy of the Coalition Government when they went to the last General Election. It was part of their policy, and I should like to know what the colleagues of my right hon. Friend would have thought if they were here to-day listening to the settled policy. Now we know. The Secretary of State for War in other and, I think, better days, said about this system of duties that it is a working model of the full practices of the Colonial preference policy fought for in 1903 and beaten, as we thought finally, in 1906. It is quite evident to me that the more this thing is discussed the clearer it becomes.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

The Tariff Reformers have won. For the time being they have won. There is no question about it, and I hope that every Liberal in the Coalition will take due note of the fact and what it means. It is the logical consequence of the association which they have formed. While I do not intend, in pursuance of your ruling, Mr. Whitley, to further elaborate the arguments on this matter, I would conclude by saying, on behalf of those for whom I speak, that so long as we are in this House we will go on fighting this issue, steadily fighting it, certain as we are that better days are coming, better days for the country and the world, when better ideas emanate from this House than at the present time. That is what the world is wanting, and not the setting up of barriers, confining one great Empire and fighting the rest of the world in this way. One of the main causes of the difficulties among the new nations in the Near East is the setting up of Customs barriers. A fine example we are setting to them, when one of the first things we do is to set up these barriers of trade and commerce! Though the numbers that go into the Lobby against the renewal of this section in the last Finance Bill may be small, they will by no means represent the feelings of the country with regard to the maintenance of complete Free Trade in the whole sense of the term. That is what we are going to fight for o the end.

Photo of Mr Ronald McNeill Mr Ronald McNeill , Canterbury

I should like to congratulate my right hon. Friend, because if he has not exactly displayed the British virtue of never knowing when he is beaten, he can take his beating like a man. He takes it in very good humour, and one cannot help being amused by his attempt to throw a fly across the other side of the stream, in the hope of getting a "rise" from a Coalition Liberal. I have no doubt that by his good humour he hopes to create a certain amount of trouble in those waters. Let us take note that right hon. and hon. Gentlemen opposite who come forward with this old, stale controversy, and say they are going to stand for the full doctrine of Free Trade, are now supporting statutory wages, statutory control, statutory rent, and every conceivable thing that is the absolute

negation of everything that was understood by Free Trade. The one thing they are relying upon now is unsound economics and bad history. Because I suppose that my right hon. Friend endorses the view of my hon. and gallant Friend (Captain W. Benn) that the policy of colonial or dominion preference is the same sort of policy as that which brought about the war with America. Could there ever be a greater travesty of historical truth? It is the exact opposite to the policy which brought about the American war. That was a policy of control and coercion, and imposing from here upon the Colonies a fiscal policy which they repudiated and hated. That was the opposite to this, which is giving reciprocity to colonies who have already offered us preference, and entering into it in a spirit of free and unfettered union.

Question put, "That the Clause be read a Second time."

The CHAIRMAN (collecting the voices):

The "Noes" have it.

Photo of Captain William Benn Captain William Benn , Leith

The "Ayes" have it.

Photo of Mr Ronald McNeill Mr Ronald McNeill , Canterbury

On a point of Order. Have you not already collected the voices?

Photo of Mr James Lowther Mr James Lowther , Penrith and Cockermouth

Very nearly, but the hon. and gallant Member woke up in time.

The Committee divided: Ayes, 39; Noes, 130.

Division No. 220.]AYES.[1.18 p.m.
Barnes, Major H. (Newcastle, E.)Hallas, EldredParkinson, John Allen (Wigan)
Benn, Captain Wedgwood (Leith)Hayday, ArthurRobertson, John
Brace, Rt. Hon. WilliamHolmes, J. StanleyRose, Frank H.
Briant, FrankJohnstone, JosephSexton, James
Brown, James (Ayr and Bute)Kenworthy, Lieut.-Commander J. M.Short, Alfred (Wednesbury)
Carter, W. (Nottingham, Mansfield)Kiley, James D.Spencer, George A.
Clynes, Rt. Hon. J. R.Lyle-Samuel, AlexanderWhite, Charles F. (Derby, Western)
Davison, J. E. (Smethwick)Macdonald, Rt. Hon. John MurrayWignall, James
Edwards, C. (Monmouth, Bedwellty)Maclean, Neil (Glasgow, Govan)Wilson, W. Tyson (Westhoughton)
Entwistle, Major C. F.Maclean, Rt. Hn. Sir D. (Midlothian)Wood, Major M. M. (Aberdeen, C.)
Galbraith, SamuelMills, John EdmundYoung, Lieut.-Com. E. H. (Norwich)
Graham, W. (Edinburgh, Central)Morgan, Major D. Watts
Grundy, T. W.Newbould, Alfred ErnestTELLERS FOR THE AYES.—
Guest, J. (York, W. R., Hemsworth)O'Grady, Captain JamesMr. G. Thorne and Mr. T. Griffiths.
NOES.
Adair, Rear-Admiral Thomas B. S.Bowyer, Captain G. E. W.Cautley, Henry S.
Agg-Gardner, Sir James TynteBrassey, Major H. L. C.Chamberlain, Rt. Hn. J. A.(Birm.,W.)
Atkey, A. R.Breese, Major Charles E.Clay, Lieut.-Colonel H H. Spender
Baldwin, Rt Hon. StanleyBridgeman, William CliveCobb, Sir Cyril
Barnes Rt. Hon. G. (Glas., Gorbals)Briggs, HaroldCohen, Major J. Brunel
Barnston, Major HarryBruton, Sir JamesConway, Sir W. Martin
Betterton, Henry B.Bull, Rt. Hon. Sir William JamesCooper, Sir Richard Ashmole
Birchall, Major J. DearmanBurn, Col. C. R. (Devon, Torquay)Davidson, Major-General Sir J. H.
Blair, ReginaldButcher, Sir John GeorgeDavies, Thomas (Cirencester)
Borwick, Major G. O.Campion, Lieut.-Colonel W. R.Dawes, James Arthur
Roscawen, Rt. Hon. Sir A. Griffith-Casey, T. W.Dockrell, Sir Maurice
Edwards, John H. (Glam., Neath)Jones, Sir Evan (Pembroke)Samuel, A. M. (Surrey, Farnham)
Elliot, Capt. Walter E. (Lanark)Jones, J. T. (Carmarthen, Lianelly)Sanders, Colonel Sir Robert A.
Eyres-Monsell, Commander B. M.Jones, William Kennedy (Hornsey)Scott, A. M. (Glasgow, Bridgeton)
Fell, Sir ArthurKing, Commander Henry DouglasSeddon, J. A.
Fisher, Rt. Hon. Herbert A. L.Law, Rt. Hon. A. B. (Glasgow, C.)Shortt, Rt. Hon. E. (N'castle-on-T.)
Ford, Patrick JohnstonLloyd-Greame, Major Sir P.Sprot, Colonel Sir Alexander
Foxcroft, Captain Charles TalbotLocker-Lampson, G. (Wood Green)Stanley, Major H. G. (Preston)
Fraser, Major Sir KeithLocker-Lampson, Com. O. (H'tlngd'n)Steel, Major S. Strang
Gibbs, Colonel George AbrahamLorden, John WilliamStevens, Marshall
Gilmour, Lieut.-Colonel JohnLyle, C. E. LeonardStewart, Gershom
Goff, Sir R. ParkM'Curdy, Rt. Hon. C. A.Sturrock, J. Leng
Grant, James A.McLaren, Robert (Lanark, Northern)Sugden, W. H.
Green, Albert (Derby)McNeill, Ronald (Kent, Canterbury)Surtees, Brigadier-General H. C.
Green, Joseph F. (Leicester, W.)Macquisten, F. A.Sutherland, Sir William
Greenwood, William (Stockport)Malone, Major P. B. (Tottenham, S.)Talbot, G. A. (Hemel Hempstead)
Greig, Colonel James WilliamMitchell, William LaneTaylor, J.
Gretton, Colonel JohnMolson, Major John ElsdaleThomson, F. C. (Aberdeen, South)
Guinness, Lieut.-Col. Hon. W. E.Montagu, Rt. Hon. E. S.Waring, Major Walter
Harmsworth, C. B. (Bedford, Luton)Mosley, OswaldWarren, Lieut.-Col. Sir Alfred H.
Haslam, LewisMount, William ArthurWatson, Captain John Bertrand
Henderson, Major V. L. (Tradeston)Murchison, C. K.Williams, Lt.-Com. C. (Tavistock)
Herbert, Hon. A. (Somerset, Yeovil)Neal, ArthurWilloughby, Lieut.-Col. Hon. Claud
Hinds, JohnNewman, Colonel J. R. P. (Finchley)Wilson, Daniel M. (Down, West)
Hood, JosephOrmsby-Gore, Captain Hon. W.Wilson, Colonel Leslie O. (Reading)
Hope, James F. (Sheffield, Central)Perkins, Walter FrankWilson, Lt.-Col. Sir M. (Bethnal Gn.)
Hope, Lt.-Col. Sir J. A. (Midlothian)Philipps, Sir Owen C. (Chester, City)Wood, Hon. Edward F. L. (Ripon)
Hope, J. D. (Berwick & Haddington)Pinkham, Lieut.-Colonel CharlesWood, Sir J. (Stalybridge & Hyde)
Hopkins, John W. W.Preston, W. R.Woolcock, William James U.
Howard, Major S. G.Prescott, Major W. H.Young, Sir Frederick W. (Swindon)
Hunter, General Sir A. (Lancaster)Raw, Lieutenant-Colonel N.
Hurd, Percy A.Rees, Sir J. D. (Nottingham, East)TELLERS FOR THE NOES.—
Hurst, Lieut.-Colonel Gerald B.Remnant, Sir JamesLord E. Talbot and Mr. Dudley
James, Lieut.-Colonel Hon. CuthbertRichardson, Alexander (Gravesend)Ward.
Jodrell, Neville PaulRobinson, Sir T. (Lancs., Stretford)