T HE mind of the Chancellor of the Exchequer moves irregularly.
In some directions—in that of protec- tion to native industry, for example—its progress is lightning-like. He is a Free-trader one day, and a Pro- tectionist the next. But when the point at issue is only the removal of a tax against which an overwhelming case has been made out, Mr. Austen Chamberlain cannot stir a step without the support of a Departmental Committee. On Monday he was asked to remit the duty now levied on alcohol which has been " denatured," and so, made useless as a beverage. The question may seem of small importance, since for the common run of men alcohol ceases to be interest- ing when it ceases to be potable. But it has a very real bearing upon English manufactures. Mr. Haldane, who has given great attention to the development of our chemical industries, is convinced that we are sustaining serious injury by reason of this very duty. In England the price of alcohol is too high to admit of its being used for manufactures. Our chemists are equal to any in the world, but when it comes to the appli- cation of their knowledge to industrial processes they are hampered by fiscal restrictions. Alcohol, accord- ing to Colonel Sadler, plays a great part in over a hundred manufactured products. But in this country the duty stands in the way of its being used. It is cheaper to import the goods into which it enters than to make them. Probably when the Tariff Commission comes to deal with this part of the industrial field it will recommend the levying of a heavy Custom-duty to compensate for the disadvantage we have thus imposed upon ourselves. Dimethyl aniline is a case in point. Colonel Sadler tells us that it was once largely made in this country. But when the foreigner took to making it he was able to sell it at 3: d. a pound because he had his alcohol free, whereas the English manufacturer who had to pay duty on the alcohol used could not sell it under 2s. 4d. a pound. The remedy here is not the imposition of a duty on the manufactured article, but the remission of the duty levied on the alcohol used in manu- facturing it. This is only one of the industries affected by the duty. Every kind of celluloid manufactured is either prohibited or hampered by the increased cost of production. The young and vigorous motor industry might make immense progress if alcohol could be used in the place of petrol. As a motive-power in locomotion, lighting, and heating it is still in its infancy, but in this country it must remain in its infancy unless the duty is removed. Otherwise every attempt at growth will be effectually prevented. Nor is it only the produc- tion of things into which alcohol enters that is hindered by the duty. Its operation is equally injurious in refer- ence to the production of alcohol itself. Alcohol can be obtained from potatoes as well as from corn, and both the potatoes and the corn may be damaged. In Germany, Colonel Sadler tells us, fifty-three million tons of potatoes are grown for this purpose, and in the Eastern provinces almost every farm has its distillery. Probably other products will be found available for the same purpose, and a very real encouragement would thus be given to agri- culture,—that agriculture which is commonly supposed to be beyond even the help of the Tariff Reformer.
Two years ago, it seems, a clause was agreed to in Committee which allowed the use of alcohol in manufac- tures. But when the report stage was reached Sir Michael Hicks Beach persuaded the House to insert so many amendments that the concession lost all its value. On Monday, therefore, Mr. Hobbouse made a fresh attempt. He proposed that where the Inland Revenue authorities are satisfied that alcohol " which has been suitably denatured and rendered unpotable is required for motive-power, lighting, heating, and manufacturing purposes, it shall be lawful to sell such spirit without payment of any duty or tax thereon." The Chancellor of the Exchequer did not deny the importance of the amendment. He was content to fall back upon the complications with which the question was surrounded. He realises that the possible use of alcohol in manufactures has greatly increased already, and may increase still more. He is anxious " carefully to con- sider the position in the light of new facts and discoveries, and to remove obstacles to enterprise in this country." But there is the Revenue to be protected ; and with this object before him, he can only consent to the appointment of a Departmental Committee to go into the question and to present a Report which shall command universal consent. But however universal this consent may be, it will not of itself remove the duty. That will remain for at least another year, probably for two years, since the Committee will have to take evidence and prepare its Report, and its members will be busy men, a great part of whose time will be wanted for their ordinary work. But what, it may be said, is two years where the future of so many great in- dustries is concerned ? We are inclined to reply : Every- thing. Two years may give foreign rivals a start in the race which we shall never be able to make up. In countries where there is uo duty on alcohol used for manufactures those industries have already taken root, and two years may be just what they need to perfect their machinery and to secure the command of the market. The protection of the Revenue is, no doubt, a matter of moment ; but where so much hangs on the abandonment of this single, and not very large, source of income, the Chancellor of the Exchequer might have been a little more ready to run a very small risk. It is just these over-cautious delays that have hampered English trade in the past. We should have had much less reason to bemoan the decay of some of our industries in presence of foreign competition if we had always been on the watch for fresh openings for those new industries which are constantly being called into being by the advance of science. When the Chancellor of the Exchequer is told by Mr. Haldane that this country is fast being left behind in the chemical race, and that this result is due in a large measure to the restrictions on the use of alcohol, he might surely have devised a remedy which should take rather less time to come into operation than a Committee which is to " obtain the assistance of other advisers," and eventually " enable a solution to be arrived at that will satisfy all parties." The case is so clear that we de not doubt that this Committee, when appointed, will in the end recommend the abolition of the duty on de- natured alcohol. What we regret is the delay that must intervene before the preparation and presentation of its Report. We do not deny, of course, that the Chancellor of the Exchequer ought not to surrender a duty until he is satisfied that the consequent loss to the Revenue is more than made up, as regards the national prosperity, by the stimulus which its removal will give to trade and industry. We should have thought, however, that in this instance no great risk would have been involved in forming his con- clusion on the evidence already before him, without calling for the help of a Departmental Committee. Still, though our manufacturers must wait another year at least before entering themselves for the chemical race, it is something to know that at the end of that interval they may hope to start with their energies quickened by the knowledge that their rivals are already twelve months ahead of them. If they are tempted to complain that they are thus heavily handicapped, they must cheer themselves with the thought that the Chancellor of the Exchequer could not spare the money sooner. The Revenue must be protected, though industry starves.
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