He moved the reduction of the Vote by £50. see what a clever man I am." But form. Motion made and Question proposed, "That a sum, not exceeding £50, be granted for the said Service."—(Sir F. Banbury.) He was astonished that such an innovation should have been introduced by the Party who posed as economists and financial purists. He was glad to see *MR. MORTON (Sutherland) said that present the Chancellor of the Duchy of no one would object to the £20,000 which Lancaster, because that right hon. Gentle- was to go to compensate the people man had a thorough knowledge of the of Woolwich for loss caused by the subject, and he hoped that that right hon. explosion at the Arsenal, and therefore Gentleman would get up and justify, if he he would not discuss it, but he agreed could, his own colleagues in having in condemning the way in which this taken £500,000 from his own Sinking so-called Supplementary Estimate was Fund. The right hon. Gentleman con- brought before the Committee, and in sidered that the reduction of the new saying that it was exceedingly objectionSinking Fund at the time of the Boer War, able. No doubt a similar course had when this country was in a very awk- been pursued on other occasions, and by ward position, was wrong. But now, in the late Government many times. He did a time of peace, when there was a surplus not think the late Government were any of £5,000,000 or £6,000,000, the Govern- better than they ought to have been. ment proposed to devote £500,000 But what they were asked to do was which ought to go to the reduction of Debt to vote £100, while really the sum of to paying off the debts on Volunteer drill £458,900 was involved. Why should halls. The right hon. Gentleman had said not the business of the nation be done that it was not a payment of debt but in a businesslike manner? Why, if merely a transfer from one page of the the Government wanted £458,900, ledger to another; that the War Office should it not be put on the Paper instead received £27,000 a year instead of the of a Vote of £100? He quite agreed Public Works Loans Commissioners. He tha the Volunteers were not to get hoped that the right hon. Gentleman, in any benefit from this Vote, which order to maintain the reputation of his seemed to be the consequence of a sort Party, would wait for three weeks and of speculation by the War Office in add this item to his new Army Estimates. buying up the debt which was due to They must not forget the item when they the Public Works Loans Commissioners, saw the Army Estimates for next year, and in themselves undertaking to collect otherwise they would not know where the money and pay it off, because it was they were. Perhaps he would not be said in the memorandum that the Volunjustified in saying that this was a piece teers were to go on repaying the money, of jugglery, but at all events the sum and whatever they paid next year would be would be taken out of the income for put into account as an appropriation-in-aid. forthcoming years. He did not think Therefore as far as any real business was the right hon. Gentleman knew exactly concerned, there was nothing on the face what he was saying when he gave his of it involving any real expenditure. explanation of the scheme. It appeared Why, therefore, should they trouble to him that what it amounted to was that about it at all? Why should the War here was £500,000 flying around and Department undertake the work, unless the right hon. Gentleman did not see they had something up their sleeve? why he instead of the Chancellor of the Why should they be troubled about that Exchequer should not have it. He sum of money when they were told that hoped that the right hon. Gentleman, it was a mere transfer which had no unless he could prove he was wrong, effect whatever? The principle which would withdraw the Estimate and bring had been recognised by all Parties up the question later in an amended and Governments ought to be followed, Sir F. Banbury. and that was that all monies unexpended at the end of the year should go to the reduction of the National Debt. They were entitled to ask, therefore, that this £458,900 which had been unexpended should be devoted to that purpose. They had been specially told during the last year or two by experts that their great object should be to reduce the National Debt if they wanted to get the finances of the country into a proper condition, although the Party now in power were not responsible for the way in which that debt was accumulated, or for the way in which the money was squandered by the late Government. He did not accuse his right hon. friend the Secretary for War or anyone else of doing anything wrong, but he did think that the right hon. Gentleman had been misled by someone at the War Office, and that, in spite of his experience in other places, he had been entrapped into using his position and the great authority he had in the House to do something which in other moments he would be the last man to do. He did not want in any way to hurt his right hon. friend's dignity, because that was a great thing with those who reached the front Government Benchthey all thought of their dignity and importance-but as a Member of the Liberal Party, he wished to see the national finances in a better position than they now were. He hoped the right hon. Gentleman would withdraw this Vote and allow the £458,900 to go in reduc ion of the National Debt. He was sure that if he did so the right hon. Gentleman would find in the long run that his character as a War Minister and as a leading Member of the Liberal Party would be better established than it would be by carrying out the proposal now before the Commi tee. MR. HALDANE said that as his conduct had been called into question he thought he ought to reply. This was merely a book-keeping transaction which did not make one farthing difference. The money which the Volunteer corps paid for this purpose came out of the capitation grant, and £28,000 was given to the Commissioners to pay off principal and interest. In the ordinary course the Sinking Fund would have provided for the capital expenditure, but under this proposal the debt would be reduced to exactly the same extent by the annuity of £28,000 a year which they had to pay instead of putting down the capital sum in a lump. Financially they redeemed the annuity and the annuity was in substance the same as the debt. There was no difference at all. MR. AUSTEN CHAMBERLAIN inquired whether the £28,000 а year which had hitherto been paid to the Public Works Loans Commissioners was in fact the money of the Volunteers. It was part of the capitation grant given to the Volunteers, but intercepted as regarded the £28,000 to pay off the debt. Did the right hon. Gentleman mean to pay the Volunteers less in future by the amount of £28,000 ? MR. HALDANE replied in the negative. The Volunteers never got that £28,000. It was intercepted for the purpose of paying their debt to the Public Works Loans Commissioners. MR. AUSTEN CHAMBERLAIN wished to know what would happen when a corps had cleared its debt off. It would previously have entered into the possession of its full capitation grant, but what would happen now? MR. HALDANE said exactly the same state of things which prevailed now would go in. When the debt was cleared off the Volunteer corps would would be under this arrangement mortcome into its full capitation grant. It gaged to him, and he would be the under this scheme lose not a sixpence of mortgagee in possession. They would public money. The £28,000 was in his hands paying off debt precisely as it had done before, and that was why he had called it merely a book-keeping transaction. LORD WILLOUGHBY DE ERESBY (Lincolnshire, Horncastle) said it appeared that in the past this money had been handed over to the Chancellor of the Exchequer who had used it for the extinction of Debt, but the Secretary for War now proposed to keep the money in his own hands and was going to speculate | the ordinary course by putting it on the with it. He had a great respect for the Estimates. He would be the last man right hon. Gentleman as a man who to suggest that the War Secretary understood military matters and as a had done this in order that he might man engaged in another profession, but he make the Estimates of next year had never heard of him as a financial lower. It would be impossible for him speculator in mortages. Was it a to do anything of that kind. He would business-like position to put up the War not suggest that the right hon. GentleMinister to make investments? Surely man wished to take in the Committee the Chancellor of the Exchequer was the in any sense of the word. What he did proper person to have control of this believe was that the War Secretary £500,000, and it was a most dangerous in his new-born enthusiasm to do the plan to place it in the hands of the best he could had hardly thought out Minister for War. It was not for the what he was doing. Now that it had Admiralty or the War Office to go off been clearly pointed out that it was speculating upon their own hook; the an infringement of the old Sinking matter should be dealt with by the Chan- Fund Act, he hoped the right hon. cellor of the Exchequer. Gentleman would reconsider his decision. a proper con *MR. GEORGE FABER (York) said MR. VICTOR CAVENDISH (Derbythat, although he would not have shire, W.) thought the debate could the audacity to suggest that the Secre- not be brought to tary for War was going in for specula- clusion until the Committee had had a tion, he contended that he was doing full explanation from the person actually by these transactions what he had no responsible for this operation, namely, right to do. It was a culpable evasion, the Financial Secretary. No one in the if it was not an actual breach, of the last Parliament had devoted so much old Sinking Fund Act which provided energy to placing the financial position that all surpluses at the end of the of the country before the House, and he financial year should be handed over to hoped the hon. Gentleman would give a the Commissioners for the reduction of full and complete explanation of this the National Debt. The Secretary for transaction. The right hon. Gentleman War was deliberately depriving the the Secretary of State for War had taken Sinking Fund of a sum of nearly as a precedent for this operation a case £500,000. The Chancellor of the Ex- where a Supplementary Estimate was chequer, the custodian of the nation's taken for the Volunteer Capitation Grant. funds, was not present to look But in his opinion there was no analogy after his own. He (Mr. Faber) asked between the two cases. whether it was fair that the Secretary for War should filch away such a sum in this manner. The country had heard over and over again almost ad nauseam from hon. Members who were now in power that the national finances were in a deplorable condition, and MR. VICTOR CAVENDISH said the that the National Debt had become operation only resulted in the Volunso swollen that the national credit was im-teers getting in two sums what they paired. That was from some aspects true. otherwise would have received later in It was therefore the duty of the Liberal one. Party when they came into power to put the national finances on a proper basis; and their first step ought to have been to reduce the National Debt. So far as the sum required was concerned he had no word to say about it, but he did say that if the War Office wanted the sum of £459,000, let them come to the House next year and ask for it in Lord Willoughby De Eresby. MR. HALDANE said in that case the money was taken out of a surplus and out of the Estimates in the next year. In that case it was necessary to enable the Volunteers to get the money at a time more convenient to them. The question of urgency had been raised. It was perfectly possible that it was part of the right hon. Gentleman's new scheme, but if it was, no suggestion of it had been put before the House by the right hon. Gentleman when he put forward his scheme a few days previously. The right hon. Gentle- for the purpose of having a purely inman had to show something more dependent body which was not liable to than a justification for his policy; anything like Parliamentary pressure. he had to show that there was urgency in He asked whether it was not possible the matter. His right hon. friend had to take a favourable view of the position said that the Secretary of State could of Volunteers in the difficulties they had make this right in three weeks by bringing to encounter, by decreasing the interest in another Estimate. He would go if they were not able to remit the debt. further and say the right hon. Gentleman It seemed to him that no precise benefit could put it right to-morrow by with- was to be obtained by Volunteer corps drawing the present Estimate and issuing from the proposal, and he did not think a revised one. Therefore there was no the right hon. Gentleman had made weight whatever in the plea of urgency. clear what its real objects were. It was a new service, and it was not They were now within three or four contemplated in the Estimates of last weeks of the end of the financial year, with new Estimates and the introduction of a new service, and in those circumstances he thought the right hon. Gentleman would be well advised-it would make no difference in the details of his policy-if he presented a revised estimate to the House of Commons, showing what his policy really was. year. And as the expenditure would not come on until 1907-8 he would have thought it quite possible to substitute a revised Estimate. This transaction would not, he understood, be concluded by the simple financial operation. This operation applied only to those mortgages which related to loans which were fully advanced, and not apparently to those which were not fully advanced. Was the House to understand that any benefit that might accrue to those corps which would come in under this operation would not be extended to other corps whose loans had not been fully paid up, or was a principle being established that the loans made by the Public Works Loans Commissioners were to be taken over by the right hon. Gentleman. MR. HALDANE said there were only two or three-a very small amountwhich had not been fully paid up, and they would be dealt with afterwards. MR. VICTOR CAVENDISH said he would like to press the right hon. Gentle man still further on the principle and ask whether in the future the Volunteers were to go to the Public Works Loans Commissioners or to the right hon. Gentleman? MR. HALDANE said they would go to the Public Works Loans Commissioners as before. THE FINANCIAL SECRETARY TO THE WAR OFFICE (Mr. BUCHANAN, Perthshire, E.) was understood to say that while he wished to reply briefly to the right hon. Gentleman, he did not think he could add anything to what his right hon. friend had said. As a matter of fact by the operation proposed the public liabilities of the State would be diminished. He did not think that there was any doubt in the minds of hon. Members as to what was meant by the proposal, and the right hon. Gentleman the other night had made no secret of the fact that it MR. AUSTEN CHAMBERLAIN asked whether, apart from the scheme, there was any advantage either to the War Office or to the Volunteers of the country. MR. VICTOR CAVENDISH said in those circumstances he did not see the object of this alteration. He reminded the MR. BUCHANAN said he did not Committee that the Public Works Loans say that there would be any advantage Commissioners were established largely to the War Office if the scheme did not go through, but, as the right hon. Gen- grant at all from which this annual tleman was aware there was in view of payment was to come. At the present the scheme, if it did go through, con- moment they knew that £28,000 came siderable advantage to the War Office, from the capitation grant. If the scheme and still more to the Volunteers, and went through the capitation grant would he ventured to think that the come to an end, and, therefore, this Volunteer corps as a rule would not investment of it would have no interest be inclined to demur to the proposal of and no sinking fund. Consequen ly, the his right hon. friend. No doubt there benefit to the right hon. Gentleman when was very great ultimate benefit in store he brought in his scheme a fortnight or for them if the House adopted the three weeks hence-assuming that he Supplementary Estimate and the pro- abolished the capitation grant and other posal of the right hon. Gentleman. If matters-was that he would be enabled the House in its wisdom should see fit not to accept the proposal of the right hon. Gentleman then they were as they had been before; no possible alteration was made in the future, and Volunteer corps would find as heretofore, that if they wanted money for building drill halls or laying out ranges, they would get it on similar terms to those they were now receiving from the Public Works Loans Commissioners. The right hon. Gentleman the night before last and on other occasions had explained very fully what he proposed to do in the event of his scheme passing. He proposed to remit the debts due to the Public Works Loans Commissioners in order to start the Territorial Army of the future in a much better and more independent position than the Volunteer corps now occupied. Therefore he thought the Volunteer corps of the country would be very slow indeed to refuse the proposals now being made by his right hon. friend. MR. RAWLINSON (Cambridge Universiy) said that, assuming the projected scheme did not go through, the War Office were investing a sum of money, nearly £500,000, which should naturally go to the liquidation of the National Debt. They were investing that sum of money in a terminable annuity, and for a number of years the War Office would get £28,000 annually which was not passed by any Vote of the House of Commons. He had the greatest sympathy with the proposal, but it was wrong from the financial point of view; as had been pointed out, it was being dealt with contrary to the ordinary rules of the Consti ution. Assuming that the scheme did go through, then, as he understood, there would be no further capitation Mr. Buchanan. to say that he had carried the scheme MR. ABEL SMITH (Hertfordshire, Hertford) thought this financial operation had been pretty well exposed. Nothing that the Secretary for War or the Financial Secretary had said could possibly conceal the fact that a sum of £500,000 was being diverted from its proper purpose, namely, the reduction of the National Debt, to other purposes-a proceeding which it had always been contended, especially by the right hon. and hon. Gentlemen who now occupied the Treasury Bench, was an |