I move—

Income Tax.

1. That, subject to such definitions, conditions, exemptions and abatements as may be provided in an Act to be passed during the present session of Parliament, from and after the 1st day of July, 1925, there shall be charged, levied and collected annually throughout the Union for the benefit of the Consolidated Revenue Fund—

1. (a) A tax upon incomes, to be known as the normal tax whereof the rates in respect of the year of assessment ended the 30th day of June, 1925, shall be—
   1. (i) In the case of companies, the sole or principal business of which is mining for gold or diamonds, for each pound of taxable amount, as defined in the said Act, three shillings
   2. (ii) in the case of companies, the sole or principal business of which is life assurance (including the issue of annuities), for each pound of taxable amount, one shilling and sixpence;
   3. (iii) in the case of all other companies, for each pound of such taxable amount, two shillings and sixpence;
   4. (iv) in the case of persons other than companies, for each pound of such taxable amount, one shilling and as many two-thousandths of a penny as there are pounds in that amount, subject to a maximum rate of two shillings in every such pound;
2. (b) an additional tax upon the incomes of persons other than companies, to be known as the super tax, which shall be chargeable in respect of such incomes of persons other than companies as are in the aforesaid Act made subject to super tax. The rates of super tax in respect of the year of assessment ended the 30th day of June, 1925, shall be, for each pound of the amount subject to super tax, as defined in the said Act, one shilling and as many five-hundredths of one penny as there are pounds in that amount, subject to a maximum rate of five shillings in every such pound.

Death Duties.

2. That from and after the commencement of an Act to be passed during the present session of Parliament, and subject to such amendments of Act No. 29 of 1922 as may be effected thereby, there shall be charged, levied and collected under the said Act No. 29 of 1922 as so amended in respect of the estates of persons dying on or after the 1st day of July, 1925, an estate duty upon the dutiable amount of each such estate at the following rates:

Upon the first £2.000 of dutiable amount, ½ per cent.

Upon so much of the dutiable amount—

Subject to an abatement of £7,500, which shall be reduced by £1 for every completed £1 whereby the dutiable amount exceeds £7,500.

Licence Duties.

3. That, subject to such definitions, conditions and exemptions as may be provided in an Act to be passed during the present session of Parliament, from and after the 1st day of January, 1926, there shall be charged, levied and collected throughout the Union in respect of the carrying on of the several trades, professions and occupations specified in the Schedules hereto subjoined (*) the several licence duties specified therein.

[* Pages 767-768 of the Votes and Proceedings. See Reports of Debates hereafter when House in Committee of Ways and Means.]

Native Tax.

4. That, subject to the provisions of an Act to be passed during the present session of Parliament and to such definitions, conditions and exemptions as may be provided therein, there shall be charged, levied and collected annually throughout the Union, as from the 1st day of January, 1926—

1. (a) A tax, to be called the general tax, of one pound, to be paid by every adult male native who is domiciled in the Union or who has resided therein for a continuous period of twelve months immediately preceding the date on which the tax becomes due;
2. (b) a further tax, to be called the local tax, of ten shillings, to be paid in respect of every hut or dwelling in a native location within the Union by the native occupier thereof but not by any such occupier who is the owner of any allotment of land held under quitrent title in the location in which such hut or dwelling occupied by him is situate.

Customs Duties.

5. That there shall be charged, levied and collected for the benefit of the Consolidated Revenue Fund, subject to any rebates and conditions which may be provided, or any arrangement made, under the authority of an Act to be passed during the present session of Parliament or of any law relating to the management of the customs, customs duties in respect of goods imported into the Union according to the tariff set out hereunder (*), which shall be in substitution for the tariff of customs duties at present in force in respect of goods so imported.

In moving this resolution I would like shortly to discuss certain general aspects of the five taxation proposals which the House is being asked to consider, and also to discuss certain of the more important details thereof. The first resolution deals with the question of income tax. Under the existing income tax legislation the old rates imposed were on companies other than private companies, viz., gold and diamond companies, a normal tax of 1s. 6d. in the £ and a dividend tax of 1s. 6d. in the £, a total approximately of 3s. in the £, allowance being made for the fact that a proportion of the profits might not have been distributed, but, generally speaking, we may take it that the total tax payable by these mining companies in respect of normal tax and dividend tax amounted to 3s. in the £ Then we have other companies. In the case of other companies the normal tax was 1s. 6d. in the £ and the dividend tax 1s. in the £, that is the total approximately of 2s. 6d. in the £. Then we come to other classes, namely, persons other than public companies. Under this class was included individuals, private companies, societies and associations not incorporated, trusts, etc. In the case of this class the normal tax was 1s. in the £ plus one two-thousandths part of a penny for each £ of the taxable amount with a maximum of 2s. Then we got in that class super tax. The super tax as hon. members know was limited to individuals only. It was 1s. plus one five-hundredth part of a penny for each £ of the taxable amount with a maximum of 5s. Now I come to the new rates which are proposed in this resolution. The new rate on companies, namely, gold and diamond mining, will be a normal tax of 3s. in the £, that is, as hon. members will see, a consolidation approximately of the two existing taxes. Then there is a special class, namely, life insurance companies. The normal tax is at 1s. 6d. in the £. Then we get the third class of other companies with a normal tax of 2s. 6d. in the £. These are the new proposals in regard to companies. On persons other than companies there is the normal tax as previously mentioned and then the super tax as already mentioned, but the previous limitation to individuals is removed and it is extended to all persons other than companies.

Not private companies?

No. The private company will now come under the tax imposed upon companies. It is removed from the privileged position which it enjoys under existing legislation. The principal features of these new rates are, first, the abolition of the dividend tax and the consolidation of the normal and dividend tax rates into an increased normal tax rate. Then we get another feature, the abolition of the distinctive rate for private companies. Further, there is the introduction of the special rate for life insurance companies and the extension of the super-tax for individuals to all persons other than companies. Hon. members will notice that the present proposal with regard to life insurance companies is a modification of the original proposal as originally given notice of when the Budget speech was delivered and as previously appeared on the Order Paper. I just want to say a few words in regard to the proposal relating to the abolition of the dividend tax. The abolition of this tax will effect a great simplification of the existing scheme of taxation. By reason of its nature the tax required complex provision to guard against evasion, and these complexities resulted in much litigation and many difficulties in administration. The administrative difficulties with which the department was being faced were so great and the opportunities in regard to avoidance of the tax were such that the department found it practically impossible to continue to administer this tax, and therefore the present proposals have been made. As far as public companies are concerned the change will not make a great difference in the incidence of the taxation as the new rate is really a consolidation of the two existing rates. Companies which have adopted in the past a conservative policy in regard to the distribution of dividends will pay more. We have cases of some companies that have practically distributed all their profits in dividends, and as far as these companies are concerned the proposals will not make much difference, but in the case of companies which put a large proportion of their profits to reserve the new proposals will make a considerable difference. Small companies and companies making small profits will also pay more, as the abatement of £2,500 under the dividend tax relieved such companies from that portion of the levy. I may say that in those cases we propose to reintroduce the former abatement of £300 in the case of small companies, which will give a certain measure of relief. I may say that there was never any very sound reason for the differentiation between large and small companies. If the intention was to lighten the burden of the man of small means the method overlooked the fact that there may be a wealthy man the holder of shares in a small company and a man of small means may be the holder of shares in a large company. The existing legislation, therefore, did not attain this object of lightening the burden for the man of small means, so that the attempt to assist the small companies, where the shareholders are men of modest means, may have the opposite effect—of assisting men of wealth. Any attempt to resolve companies into their constituent shareholders will inevitably produce anomalies in taxation. The only possible way of dealing with a company is to regard it as a separate entity. Under the new rates all companies are treated alike, all pay the consolidated rate made up of a combination of the previous normal and dividend taxes. No differentiation is made between private and public companies. The question of liability is settled solely by the fact of its incorporation. I may say that the attempt that was made to deal with companies in this way, to treat your private company in a different manner, has resulted in many of these companies being formed with the distinct object of evading or avoiding taxation. The various methods which have been employed are too well known to require recapitulation. In any case, I may inform the House that the department has found that if we are to attain this object of getting everybody to pay their fair share of taxation as far as companies are concerned, the only possible way is, as we are proposing now, to abolish the dividend tax and to introduce this consolidated taxation on companies. In the case of life insurance companies the exception is made which I have already indicated. Such companies were specially exempted from dividend tax on distributions to their members. The tax has been maintained at its old level by fixing a special rate continuing such exemption. We take special measures not to bring them under this increased taxation; but under the new proposals they will continue to pay practically the same taxation as they formerly paid. Then I come to the question of the extension of the super-tax to persons other than companies. The original scheme introduced by Act No. 41 of 1917 provided for companies normal tax and dividend tax, and for individuals normal tax and super-tax. In 1919 the term “individual,” as used for normal tax purposes, was altered to—

the reason being that doubt had arisen as to whether under this term, for instance, trusts were also included. This levied the super-tax on individuals only. Now that the normal tax and dividend taxes have been consolidated in the case of companies, the balance of the scheme of taxation requires that super-tax as well as normal tax shall in future be paid by all remaining taxpayers. We therefore get this: That where formerly your super-tax was limited to individuals only, in future, after we have dealt with these various sorts of companies, all the remaining persons will be liable to super-tax, and in this will be included trusts, as already indicated. Then I come to the abatements that are proposed. These, of course, do not appear in the resolution itself; but the Act, which will be introduced as a result of the passing of these proposals, will contain the usual abatements, with this alteration: We propose to increase the abatement in the case of children from £50 to £60, and also to provide for this abatement of £300 in the case of the smaller companies. The other abatements will remain the same under the existing legislation. There will also be reintroduced the farmers’ option, under which the farmer will be able to elect as to whether he will pay on the existing basis or on the cash basis only. Then I come to the second resolution—death duties. The new rates affect estate duty only, no alteration being proposed in regard to succession duties. The rates have been steepened so as to permit of the increased abatement from £1.000 to £7,500, and, of course, this £7,500 will also run off £ for £. This alteration will, according to our calculations, make no difference with regard to the yield of the tax. Through these adjustments we hope to obtain the same amount from this source as the tax previously yielded. The high abatement makes the tax on estates up to £15,000 less than at present, but owing to the steeper grading the £15,000—£26.000 will pay the same rate as at present. Below £15,000 the actual receipts will be less. Beyond £26.000 there is a progressive increase from one-tenth per cent. at £27,000 to 3½ per cent. at £100,000. On an estate of £100,000, the actual rate of duty will be 11 per cent., as compared with 7.5 per cent. under the old schedule. It has to be borne in mind, however, that the rates appearing in the schedule refer only to the block specified for each rate, and the rate for an estate has to be calculated on the various blocks of which it is made up. I notice that in some cases the press has endeavoured to tell the public that this is an enormous increase. They have not taken account of the block rates, so if you want to get at the exact rate payable in respect of each estate you have to take that fact into consideration. Then we come to the abatement. The existing abatement is £1.000, sliding off £ for £ for each £ in excess of the £1,000. Under the new proposals the abatement is £7,500, sliding off in the same way, so that in the case of an estate of £15,000, the abatement disappears. It is proposed, in the Act itself, to introduce certain amendments with regard to administrative matters which we hope will simplify the administration, and we will try to deal with the vexed question of the taxation of limited interests which have given rise to considerable trouble. We hope the amendments we intend introducing will go a long way to simplify that vexed question. The third resolution deals with the consolidation of the existing legislation in regard to licences. Hon. members will here see that revised schedules are now placed before them in which certain alterations have been proposed on the existing schedule, which I gave notice of when the Budget debate was introduced. I may say these proposals were put forward tentatively, as a basis of discussion, and these revised proposals are the result of the discussions I have had with the various interests concerned. Licences are shown in two schedules. Schedule 1 contains the licences reserved to the Union Government. These licences—unless other provision is made—authorize the conduct of the business which is licensed throughout the Union. In the case of a Union licence, a person in possession of that will be able to carry on his business in all the provinces. Schedule 2 contains the licences which are to be collected by the Union Government for the benefit of the provinces concerned. The province in which the liability for the licence arises will benefit by the collection in respect of that liability. Schedule 2 is divided into three parts: Part 1 deals with trades, part 2 with professions, and part 3 with occupations other than trades or professions. The licences contained in schedule 2 are, generally speaking, current only in the province in which they are issued, save that professional licences under part 2 are only required to be taken out in the province where the licencee has an office or place of business (headquarters). Thus in the case of a professional man, if he carries on his profession in another province, unless has a place of business there, he will not need to take out a licence in the second province. This will meet the case of a medical man on the border of a province who has patients in the adjoining province. On the other hand, occupational licences must be taken out in respect of each province in which the occupation is actually exercised or carried on. The professional licences can be held by individuals only, and in the case of firms, each member of a firm will require to be licensed. I will deal shortly with some of the licences we propose to levy to show where we have made certain changes as a result of discussions we have had with interested parties. First in schedule 1—Union licences—the licence for the agent of a foreign firm. This has always been a Union licence, but it only enables the licensee to carry on a trade in the province in which the licence was issued. Now, the licence will be for the whole of the Union. The licence for the agent of a foreign firm has been increased from £50 to £75 per annum, while the quarterly licence has been raised from £25 to £50. The increased quarterly licence is necessary because individuals come out and transact all their business within three months, and then leave again. The licence for a wholesale commercial traveller will be £15, while the licence for retail commercial travellers has been increased from £3 to £7 10s., as they compete with the local holders of general dealers’ licences. The details in regard to general dealers’ licences are shown on the Order Paper (page 767). We have tried to adhere to the principle that this shall not be really a source of taxation, but be more in the nature of a registration of a business, and we have therefore again introduced the principle of limitation, the maximum licence payment being £100. This enables the provinces to retain the revenue from this source. Under this scheme the provinces will, more or less, obtain revenue they are now getting from these licences. Then there is the case of the millers. To meet the case of the small country miller, whose gross receipts during the preceding 12 months have not exceeded £250, the licence will be £1. Coming to part 2,—professional licences—it will be seen that the highest licence has been fixed at £10. In some of the provinces these licences ran up to £20, but in other provinces they are less. The licences for doctors, dentists and medical practitioners have been reduced from £15 to £10. We have tried to deal with the case of the professional man in the Transkei Territories, or district of Glen Grey, and in their case the licence has been reduced to £5. This has been done on the representation of the Cape provincial administration, and we are continuing the special treatment accorded to these professions in the existing Cape legislation. The principle of commutation has been extended to all licences under this schedule. Any second licence will be charged for at half rates provided the full rate is paid for the licence for which the highest duty is specified. Where an attorney happens to be a notary public and conveyancer, if he takes out an attorney’s licence the other licences can be obtained by him at half the ordinary fees. Coming to part 3—occupational licences—numerous changes have been made mainly for the purpose of avoiding accumulated liability in those cases where a considerable variety of occupation is necessary to produce a livelihood. For instance, the licence for the administration of estates has been dropped, and a new licence has been substituted called broker’s or agent’s licence. The stock or share broker’s licence of £10 is retained. The appraiser’s licence will be limited to sworn appraisers, and will contain an exemption in regard to law agents in respect of appraisements made in their own districts. I have dropped the proposed money lender’s licence of £50.

Why?

Because we found it practically impossible to frame the exemptions which would obviously have to be allowed. I am afraid we shall have to deal with the moneylender in another way.

Are these occupational licences to be paid to the Union or to the provinces?

They are provincial licences. The auctioneer’s licence for a province will be £20, and for a particular magisterial district £10. If a man is an attorney, as well as an auctioneer, he will have to pay both an attorney’s and an auctioneer’s licence. The licence for a board of executors or trust company has been reduced from £75 to £50 for a head office, and from £50 to £25 in respect of each branch. We have thus tried to meet the case of the smaller trust companies. Many of these concerns can well afford to pay the increased licence, but there are smaller ones which might have found it difficult to pay the licence as originally fixed. I now come to the resolution dealing with native taxation. Prior to Union each of the colonies in South Africa had a different system of levying taxation on the natives under its control. Not only did the amount of the tax vary in each province, but also their extent, and even the principle was different in the various colonies. The position is to-day as it existed before Union, and it will be well to give a short review of the position. In the Cape Province proper the main tax is a hut tax. This is fixed at 10s. payable by the occupier of each hut situate on Crown land, in reserves known as native locations. This tax has been varied, so that in certain locations where individual tenure had been substituted for communal, quitrent has replaced the hut tax. The quitrent varies in respect of the extent of land held, but it may be taken that the quitrent payer pays, on the average, 15s. per annum to the State. Further, a tax of 2s. goes to the divisional Council as a road rate. The proceeds of that tax are collected by the Government and paid to the divisional council for local purposes. There is also, in certain areas, a rate of 5s. levied for the construction and maintenance of cattle dipping tanks in the native territories. It will be noticed that in the Cape Province the tax is only levied on residents in locations, whether of communal or individual tenure, and it is estimated out of a total of 200,000 adult native males, in the Cape Province, about 125,000 entirely escape direct taxation. In the Transkeian territories the basic tax is the hut tax 10s., or a quitrent of 15s., but in the territories natives on private farms, who are not bona fide native servants, are liable to the hut tax. In addition the Transkeian general council levies 10s. on native male adults in the district in its jurisdiction for the purpose of promoting native education and agriculture, and for general local development of the natives in the territories. Then we come to the case of Natal. There is a direct tax of 14s. a year payable on every occupied native hut, whether on native locations, Crown lands or private property, that is apart from the squatters’ rent. In Natal there is a tax of 6s. per hut in respect of the dipping levy. In the Transvaal the basic tax is the poll tax of £2 payable by every adult male native. Farm labourers and municipal residents pay only £1. Squatters on Crown lands pay, in addition, rent and grazing fees. In the Free State the tax is a poll tax of £1 payable by every male coloured person between the ages of 18 and 60 years.

Are you going to do away with the age limit?

No, there will be exemption when the Act is brought forward. It is being considered. It will at once be appreciated that the existence of these four or five different systems of taxation under one Government is an anomaly. The legal principles applicable to each are different, and the administrative machinery necessary to collect them varies from province to province. It is sometimes difficult to decide under which system a native, who has changed his residence from one province to another, is liable to this taxation. From the point of view of the native to whom even one set of legal provisions can only with effort be intelligible, is impossible to appreciate the distinctions. It is grossly inequitable that the native in the Cape Province should pay much less than the native in the Transvaal, who is subject to a tax of £2. Also in the Cape many of the natives escape direct taxation altogether. The present proposal is an attempt to rectify these anomalies, which have arisen as a result of the different forms of taxation applicable in the various colonies before Union, and many of which exist to-day. It must be remembered that under the Financial Relations Extension Act, 1922, the right of direct taxation of natives was taken from the provincial councils. To the provincial council is entrusted the responsibility of making provision for the primary education of the natives, and the Act laid down that all the expenditure on the education of the natives should be met by the Government. In anticipation of that the Treasury has advanced an amount of no less than £160,000, which had to be spent in this special way, and which it was the intention to recoup from the natives by means of direct taxation to be imposed on them. It is proposed, when this measure becomes law, that this law will come out of the special native development fund and will be repaid to the treasury. I may add that the separate taxation of natives has been generally accepted in principle by the colonies forming the Union, and by the different Governments of the South African continent. The native still contributes less to the exchequer than the white man does, yet he enjoys equal privileges of protection, and the other benefits which civilization can permit him. Although he contributes to the expenses of the Government, it is not possible to reach him in the same manner as we can reach the whites, and, therefore, he should contribute in a special way. The question then arises on what principle should the native be taxed. It is a fundamental theory of taxation that the taxpayer should contribute to the State in proportion to his ability to pay. In the case of the native, it would be well high impracticable and impossible to adhere to that principle. The native people are ignorant of any system of scientific taxation. Their tribute to the chiefs approximates to what is called a poll tax. There is then the important question of the ease of collection in the case of natives liable to the tax. We differentiate between the natives enjoying the privilege of the occupation of lands provided for their use by the State, and those not so privileged. Two taxes are proposed, one is a general tax of £1 per annum payable by every adult male native, and a local tax, in addition to the general tax of 10s., to be paid by the native occupier in respect of every hut or dwelling in a location in the Union. An alteration has been made, therefore, in the form of the local tax as previously proposed. The local tax as formerly proposed would also have been a poll tax. Since then the matter has been reconsidered by the Native Affairs Commission, and they came to the conclusion that it would be better to have it on the hut instead of on the head, as in the general tax. Then I come to the revenue expected to be collected under this taxation. Careful calculation has been made, and the estimated revenue for the general tax will be £1,125,000, and from the local tax £290.500. It has been found that four-fifths of the revenue from the general tax, namely, £900.000, will amount to a little more than we get at present from native taxation. It has, therefore, been arranged between the Native Affairs Department and the treasury that the treasury will receive £900.000 out of the proceeds of this general tax, and the remaining one-fifth, together with the local tax, will be returned to the native development fund, which we propose to set up to be used for native development purposes. The local tax will go back to the particular locality where that tax has been collected, and one-fifth of the poll tax will be put into the native development fund.

Does that refer to the provincial area or the native area?

No, the remaining one-fifth of the general tax and the local tax derived from areas in which a council does not exist will go to the native development fund. Where a local council does exist the local tax will go to that particular area. This fund will be administered by the Minister of Native Affairs. The provinces will out of that fund get the amount which they have to receive for native education and the balance will be used for such other purposes as the Minister of Native Affairs in consultation with the Native Affairs Commission may decide. Hon. members will see that certain classes of native taxation have been discarded, that, for instance, in regard to the taxation of polygamy, and the general principle has been adopted of making persons pay per head and also not to differentiate between persons employed in certain industries which has been the case up to the present. Hon. members will see that the taxation proposed will approximate very closely to the taxation at present payable in the British territories of the South African continent. This averages 25s. per head per annum in the other territories.

What is the total additional taxation upon the natives as a result of this?

I have told the hon. gentleman that at present we receive about £900,000 from the natives and under this scheme we will get from the general tax £1,125,000, and from the local tax about £290,000. As I have already pointed out, your Transvaal native under this scheme will pay very much less and, of course, there is your Cape native who will have to pay more, but then you have this important fact that under existing legislation a very large number of Cape natives have escaped direct taxation altogether up to the present and they have benefited very considerably, as far as education is concerned, very much more than the natives in other provinces. Then I come to the last resolution, namely, the customs tariff. Hon. members will see the changes which have been made in regard to the form in which this tariff is now proposed. For example, changes have been made on the basis of classifying goods according to the rate of duty payable. This is rather important and I want to detail the changes made in regard to classification. Class 1 deals with goods liable to duty according to the weight, or gauge, and not according to the value, class 2 embraces goods liable to a specific rate of so much per lb. thus an ad valorem rate, class 3 deals with goods liable to a duty of 25 per cent. ad valorem, class 4 a duty of 3 per cent. ad valorem, the whole of which was rebated to Great Britain, and reciprocating British dominions. The fifth class deals with goods enumerated which came in entirely free of duty. The sixth class includes all goods not already enumerated and on which a general ad valorem rate is levied. The tariff I now propose, however, makes an important alteration in this classification. Hon. members will see that it groups commodities as far as possible on the basis of natural affinity, thereby enabling anyone interested in any particular industry to see at a glance under which class the goods imported by that industry would fall. In other words, industrialists, for instance, on a glance at the tariff will at once have a comprehensive view of the whole position. Take the case of the farmer. On referring to class 1 of the tariff before the House, he will see what duties are imposed on articles that he products, and referring to class 5 he will see what rate of duty he has to pay, if any, on agricultural machinery, implements and appliances which he uses in his industry. Then there is a class of particular interest to industrialists, namely, class 15, under which provision is made for the entry free of duty of the raw materials imported by the industry requiring them. This list of raw materials entering free is a most extensive one, as hon. members will see by referring to items 336-371, both inclusive. These are the particular items under which raw materials are admitted free of duty for use in particular industries. Hon. members will also see that the tariff is further divided into minimum rates special and maximum rates general. The maximum will be the tariff rate in general application. The purposes of the minimum rates are to enable the Government to grant preferential rates to Great Britain and reciprocal dominions. The extent of the difference between the two rates on certain articles and a list of these articles will be found set out in the report of the board of trade and industries plus, of course, any other articles the Government may decide to include. Then the other purpose for which the maximum and minimum tariff is framed is, of course, to allow the Government to enter into negotiations with other countries for commercial agreements in return for special privileges granted by those countries on Union products. Then the third reason is to protect the consumer against the undue raising of the prices of any protected commodities or against combines or monopolies that may take advantage of their protected position and refuse to sell the article they produce or control to any person or firm wishing to buy it in the usual or ordinary course of trade. I believe there are industries where the necessity for this has already been made apparent. An innovation in the tariff is the introduction of suspended duties. Examples of this hon. members will find in item 23, gelatine in bulk, item 32 milk, item 59 jute bags, item 81 seaming and binding twine. The manufacture of these articles may be said to be in a nascent state and through the introduction of this step the Government will be enabled as soon as these industries warrant it to give them protection. This will be a stimulus to the particular industries, which will know that as soon as they deserve it they will get this protection. The tariff, as hon. members will thus see, is framed so as to give, in the first place, adequate protection to Union industries. That is one of the main principles that have been kept in mind, to provide by the system of suspended duties in the interests of Union industries, also to provide for the levying of duty on protected commodities, and then to admit articles for our industries either free or at the lowest rate compatible with revenue requirements. Then, and this is the most important provision of all, to provide the necessary revenue which the Government requires for carrying out the functions of the Government. Perhaps it may be necessary for me to go into detail in regard to some of the duties which are being altered under the existing tariff, just to indicate what are the most important alterations. First we come to the class for the protection of Union industries. Members will see there is an item 2, baking-powder, increased from 20 per cent. ad valorem, to 4d. per lb., or 30 per cent. ad valorem, whichever is the greater; butter substitutes, from 3¼d. to 4d. per lb., then cheese, cocoa, confectionery, slab-chocolate, plain or fancy confectionery, jams, bacon and ham, coconut-matting, salt, blankets and rugs, wire-mats, clothing, shirts, pyjamas, second-hand clothing, overcoats and coats, hats and caps, milk cans and buckets, wire-netting, saddlery and harness, brushes and brooms, furniture, cardboard boxes, ink and ink powders, newspapers or parts thereof, for completion in the Union, printed, ruled, lithographed and embossed matter, and stationery. These are the principal matters in regard to which changes are made, mainly for the protection of existing industries. Then we come to industries for which a suspended rate of protective duty is provided for, and which it is proposed to proclaim by proclamation as soon as the Government see fit. Gelatine, animal or vegetable in bulk, glue, in bulk, jute bags, ready-made clothing, piece-goods, twine, wire, which includes fencing-wire, bottles or jars of common glass, disinfectants in bulk, substances for the destruction of agricultural pests, including sheep and cattle scab. Item 269, furniture; item 271 (b) hubs, rims and spokes; then you come to the other class, raw, semi-manufactured and manufactured articles, which enter into the manufacture of articles made in the Union (see items 336 to 372). We then have articles which come in free when required for a particular industry, and then those which come in free or at a much reduced rate. The most notable instances are piece goods of cotton or wool, duty reduced from 15.12 per cent. to 5 per cent.; chassis for motors manufactured in the Union, reduced from 20.17 per cent. to 5 per cent.; item 139, refrigerating plant, reduced from 20.17 per cent. to free of duty; item 140, sewing and knitting machines, another item showing a reduction from 20.17 per cent., to 15 per cent.; item 140, mechanics’ tools, 20.17 per cent. to 3 per cent; there is also a large number of articles which pay 3 per cent. if of foreign origin and which will now be admitted free irrespective of the country from which they come. For instance, we have agricultural machinery, apparatus, appliances or implements. This formerly paid 3 per cent. apart from Great Britain, and will now come in free. Dairy utensils and machinery, other than milk cans and buckets, and plant and machinery for factory installation are other items. I come to the last class, the class on which the duties are raised to provide additional revenue. In this you get patent and proprietary foods, dates in cartons; item 31 meat pastes, potted or tinned, duty increased from 1¼d. and 1d. per lb. to 3d. per lb.; item 129, motor-cars, apart from the withdrawal of the preferential rebate, the duty is increased from 20 to 22 per cent. on cars of a value not exceeding £400. and from 20 to 25 per cent. on cars not exceeding £600. Item 302, gold and silverplate and plateware; item 304, jewellery, and item 308, tobacconists’ wares, in all these cases the duty is raised to 30 per cent. These are the principal changes embodied in the proposals at present before the House, and which the House will naturally be better able to discuss in detail when the House is in committee. I now move the resolution standing in my name.

seconded.

I hope the House, now that it has listened to the very careful explanation by the Minister, of what this motion means, will realize what amount of work still lies before it before this session can come to an end. It seems to me that if the work which has been foreshadowed by the Minister in connection with this resolution, and in connection with the legislation, which will be required to give effect to this resolution, is to be carried through before the end of this session, taking the somewhat optimistic forecast of the Prime Minister the other day, we shall have no time to give to anything else. I do not intend to go into these various taxes in any detail, but to confine myself, as far as possible, to certain matters of principle arising in connection with them, and I shall follow, as far as possible, the order followed by the Minister in moving these resolutions. He first of all dealt with the income tax. He showed us what changes are going to be made in regard to the incidence of that tax, namely, in regard to companies: but I would like the House to consider whether this is a wise principle which we embody in our income tax Acts, of taxing companies at a higher rate than ordinary individuals. Surely in this country we are always told that we want to encourage industry; we want to get capital into this country to develop our resources. The one way to get capital to come in is through the medium of industrial and commercial companies, and why a man should be more heavily taxed if he puts his money into that kind of investment, than into Government funds. I cannot understand. We talk in these taxation Acts as if we were taxing companies, as if the company was some sort of creature, but we can only tax persons directly or indirectly. The people who put their money into these companies pay the taxes, and when we tax the companies we tax the shareholders. This system penalizes the man who puts his money in a concern for developing the resources of this country, as against the man who nuts his money into Government funds, and I think the Government should consider whether that is a sound principle and whether there is anything to justify it. The Minister touched on death duties. I would only suggest that an exemption limit of £7.500 seems to me a very high one. I admit that the present exemption of £1.000 is too low. I think the estate duty should not begin at £1.000, but at the same time, I do say that we are going rather far when we put the limit of exemption as high as estates of £7.500: and the Minister cannot afford to do that at a sacrifice of revenue, and, therefore, in order to get this very high limit of exemption he has to screw a little more out of the estates above £26.000. You may say an estate of £26.000 can afford to be highly taxed. So it can, but so can an estate of £7,500, and I do think we should be careful about forcing up the rates of estate duty beyond the figure at which they now stand, which is fairly high. And we are doing this at a time when our revenues are in a flourishing condition; not when we require more revenue, but when we are able to give away something. Then we come to these licences. There is nothing, perhaps, that the Minister is doing, that is going to bring home to the people in this country the sting of taxation so much as this schedule. The system of taxation by licences seems to me to be an undesirable one. You single out certain occupations and professions, and stick on to them what is, in some of these cases, a very considerable amount, by way of licence duty. It is an additional income tax, but levied on a most unscientific basis. It is not felt so much by the particular people who happen to be making large incomes out of their professions, but by the struggling man who has just begun, and who is on the margin, so to speak, and it has the effect, naturally, of discouraging new entrants into that profession or occupation, because they are met, at the outset, before they can establish themselves, by this comparatively high licence duty. I think some of these licence duties are calculated to keep back the development of this country, rather than help it on. Why, for instance, in the name of common-sense, should we tax the agent of a foreign firm at £50 a quarter or £75 a year? Why do we want to penalise foreign firms who want to send their agents here? Surely the more we get here the better for the development of trade. Why put a barrier at the ports, and say to the agents of these firms “You have to pay this £75?” Then we are going to tax banks—for every branch established £20. Surely it is to the advantage of this country to have branches of the various banks scattered about the country as much as possible. It is one of the arteries of modern commerce and business, the banking system, and why we should discourage these institutions to establish branches wherever they can, I cannot quite understand. Then we come to trading licences, and here is an item which I should have thought the farmers would have had something to say about. A wholesale butcher has to pay £75 licence, and a dealer in livestock £20. I should have thought it was our business rather to encourage people of that kind who come along and buy the farmers’ livestock, but we are sticking a licence duty which will come as a severe discouragement for people who want to go into the business. Then there is the ostrich feather buyer. In these times, we are going to tax him to the extent of £10! I should have thought that we should rather have given a bonus to these buyers to go round and buy ostrich feathers. And the Minister mentioned, also, the commercial traveller. He said they put a licence on the retail commercial traveller up to £7 10s., because he goes round the country and competes, perhaps unfairly, with the ordinary dealer and trader. I see some reason for that; but I cannot see why a commercial traveller, who goes round as the agent of a wholesale firm, should be taxed at £15. should have thought the wholesale commercial traveller, who does not trade directly with the public, was the man you wanted to encourage and not to tax. These are matters which can be discussed more properly in committee. It seems to me that this form of taxation has many undesirable points about it. I am fully in accord with the principle of having some sort of uniformity in regard to native taxation. The various forms at present existing have grown up haphazard, and it is very desirable that there should be uniformity, and also that a larger amount should be devoted to native education. It is an odd combination of politics, however, that the Government is now putting forward. They are increasing the taxation on the natives to a considerable amount, but at the same time they are restricting his field of employment. That appears to be somewhat illogical. What is driving the native into the field of industry is economic pressure, and a very powerful lever in that pressure is taxation. I remember when native taxation was urged as a means of making them work. Now, however, we are increasing their taxation and restricting their field of employment as part of one and the same policy. That is one reason, at any rate, why the Government should hesitate about putting its industrial restrictions into force, until they can give us some kind of segregation policy of which that is a part. Coming to the customs this is, perhaps, by far the most important matter dealt with by the Minister. We have had put before us what is called a new and scientific tariff. As far as the classification is concerned, I think we shall all agree that a good piece of work has been done, and that the present classification is the beginning of a more scientific system and a much more useful classification than we have had before. I want to give credit where it is due to the Board of Trade and Industries for what they have done in that respect. It is the beginning of a sounder and better classification tariff than we have now, but I do think the thing has been done in rather too much of a hurry, and I do not think even the Board of Trade could reasonably hope that they could put before this country a brand new tariff in the very short time at their disposal. You see the effect of that already, for pages of alterations have had to see made between the date of laying the tariff on the table and the present time, and no doubt more alterations will have to be made before the tariff comes into operation. The preparation of a new tariff based on altogether new principles demanded more time than Government has allowed, and we might have waited for that with advantage for another year. The Minister has told us that one of the principles of the new tariff is the two rate classification—a maximum and minimum—and that is to enable favourable rates to be given to countries which give us certain advantages in return. The Minister told us when we were last discussing the matter that Great Britain would receive the most favoured nation treatment. For that concession we are duly grateful, but this does not constitute what we understand by preference. I don’t want to raise that all over again because we have debated it at very great length, but I wish to point out that preference in the sense in which it was understood, in the resolution moved from this side, involved not a two-rate but a three-rate classification. Canada already has a three-rate classification. There should be a third rate—a rate below that given to other countries which should be applied to imports from Great Britain with due regard, of course, to the needs of our own country. We are not urging preference to the disadvantage of South Africa, but we believe it can be applied with mutual benefit to both countries. Another point I wish to touch upon is that which was referred to by the hon. member for Cape Town (Gardens) (Mr. Coulter), who has been seriously misunderstood by hon. members on the other side of the House. The hon. member for Gardens brought before the attention of the House the fact that in its tariff-making activities South Africa is bound by prior obligations. We are bound to accord to certain countries the most favoured nation treatment, and also to accord to Great Britain that most favoured nation treatment. Apart from that, which was a traditional rather than a definite obligation, we are under certain obligations to give to other countries most favoured nation treatment. But what he said was not that we were not absolutely free to do what was best for ourselves, but in the exercise of that undoubted right of doing what we think is best in our own interests, we have to have regard to the fact that we are under certain definite obligations which cannot be set aside except by mutual agreement. That is what the hon. member meant.

That is not what he said.

That was as I understood it. We have what is called the scientific tariff. We have tried to find out what policy is involved in this proposed new tariff what is the policy behind this new tariff—because on that depends, to a very large extent, whether we have a sound or a bad tariff. The Board of Trade have given us a report in which they lay down various principles they think ought to be applied. On page 2, report No. 51, they tell you what was in their minds in recommending a tariff. One was revenue, then the protection of industries which have already been established and which are found to be capable of further extension with tariff assistance, and the encouragement of new industries likely to be successfully established with a moderate measure of tariff assistance. Then there was the interests of the consumer and the creation of a wider field of employment for civilized labour. On the question of the protection of industries, I do not think there is anything in this statement of the board’s policy to which we on this side of the House can take exception. The policy we pursued when we were in office was a policy of moderate and discriminate protection. We gave encouragement through the tariff to certain industries where we thought encouragement would be repaid and where we thought it was worth while, in the interests of the country, to do so and would encourage production without increasing the cost to the consumer. Is that the policy the present Government is following? We have heard one or two declarations of policy from members of the Government. We had one from the Minister of Justice when he was being entertained and feted by the Chamber of Industries. He then gave an outline of the Government policy on that occasion which led me to suppose that we were going in for a general policy of high protection all round. He told the people at Robertson, or somewhere in that district, that the aim of the Government was to make South Africa economically independent. It is a fine phrase. If that is really the policy behind this tariff, a policy of general high protection and of making South Africa economically independent, then I say it is going to be a very doubtful blessing to this country. I think economic independence is beyond our reach even if it were desirable. I only know one country where that ideal has been almost reached, and that is the island of Tristan de Cunha. If we pursue the policy of high protection in this country we shall reach that stage before long. In these times economic life is a question of exchange. We produce things we cannot use and intend to sell them to other people who will buy them. Particularly is that the case in South Africa. We produce a large amount of gold which we want to export and get other things into the country for it. We produce a good many products of agriculture which we want to export because we have not a market to consume them here. If we want to export we have to find markets, and if we increase the cost of production the chance of finding markets is very restricted. If you unduly tax imports into the country you restrict the measure of your own exports. That must be borne in mind in connection with any tariff applied to South Africa.. We have no great home market. We are not like America with a vast market inside its own borders. Any industry which is going to produce on a scale that will be economical production, must look to a market beyond our shores. Our first duty in South Africa is to increase our home market by getting more people into the country, by developing land, because vast tracts of our land are lying undeveloped, and we are making very little progress at increasing the amount of developed land. We are piling up our expenditure, our loans, our debt and our taxation and the number of European people coming into the country—and they are the people we have to look to for development—is practically nil. You must look at a tariff with different eyes if you have a wide home market or if people are pouring into the country, but from that point of view the country is almost stationary. More than in any other country you have to look to your primary industries and the building up of a home market which such industries must have. It seems to me, when we hear this talk about making South Africa economically independent and putting on a protective tariff to encourage industry all round, we are talking of running before we can walk, and we may be penalizing the very thing that would promote our progress and which would give us the necessary conditions for that progress, namely, a sound and stable home market. The Government must exercise particular care that when this scientific tariff is going to be applied it is applied in the sense the board suggests, moderate and discriminate protection and the applying of protection where and only where, the circumstances justify it. I don’t know whether I am suggesting something humanly impossible in this world as we find it. The hon. member for Cape Town (Central) (Mr. Jagger) thinks it is a task no human being can discharge. I think it may be done within a certain limit but care must be taken not to exceed the limit and do not make protection, instead of an assistance, a tax on development. It must not be applied if it is merely going to send up the cost of production. Even if it is merely going to increase the cost of an article to the limit of the duty it will be a burden instead of an assistance. If it is going to be applied to keep the price of an article inside the country just below the imported article plus the duty, then it is going to be a burden to us. It should be made an absolute condition of the protective tariff being applied, it should be regarded as its only justification, if the costs of the article produced under the tariff are brought down to something near the competitive cost outside the tariff barrier, making due allowance for different circumstances. Unless an industry that gets protection can do that and grow and become efficient and reduce its costs to something approximating the cost of the competitive production outside then the protective tariff which is given to it is a mere burden on the people in favour of small particular section. This again is a thing we are particularly liable to in South Africa. Where you have a vast home market internal competition will bring down your prices. Where you have a limited market such as we have, the application of the tariff must be made with particular care to see that it is not used simply as a means of giving to a few producers a benefit at the expense of the general consumers. Then again it must not be applied so as to strangle our primary industries or restrict their development. One sees what is happening in other parts of the world. One sees, for example, in Canada, what the farmers think of the effect of their protective tariff. It will be a bad day for us in South Africa if the industrial section of the people get such a hold on the sympathy of the Government that they are able to get a tariff that will be a similar burden on the primary producer to what the tariff has proved in Canada. Another danger that attends us here, and that attends every protective country to a greater or lesser degree, and especially this country, is that it is so easy to come along and ask the Government for increased protection. The tariff becomes not a protection for industry, but a mere shelter for inefficiency. When an industry finds its market is falling off, that the demand is not what it was before, it is so easy, instead of increasing the efficiency of that industry, to come to the Government for more protection. Take the printing industry. That is one of the most highly organized industries we have, both as regards its industrial conditions and the relations between the employers and the employees. But I think everybody would agree, anyhow most people would agree, that the costs of producing their product in South Africa are such as to restrict very severely the demand for these articles. What happens? Instead of their meeting the situation and reducing their costs, they come along and ask for more protection. And they are getting it. That is the unfortunate part.

It is the same with all of them.

Here you have an industry which is very highly organized and particularly organized as regards the relations of employers and the men employed. I would suggest that in an industry like that the men’s organizations should take a wider view of their functions than they have done in the past. We know the trade unions, owing to the circumstances in which they have had to fight their way to recognition, in the past have been very largely on the defensive, so to speak. I think they have not yet gone far enough and that they should look for a wider outlet for their activities. Where they have got an organization which enables them to exercise a considerable voice in fixing wages and labour conditions, they should go a step further and devote their energies to seeing that the industry as a whole is made more and more efficient, and enabled to produce its products at a lower cost. That is the greatest service they could possibly do, not merely to the industry, but to their own primary interests, because the stabilization of wages and the increase of wages is far better safeguarded by extending the efficiency of the industry, by improving its production, by reducing its costs, than by merely adopting a sort of trench system to fight any attempted encroachment by the employer.

I think that is being done by the printing industry.

I am glad to hear that it is being done. If it is being done, it does not seem to be having the desired effect. I do not know the industry from the inside, but it seems to me that the way progress to which we have to look where, in an industry where a certain measure of organization has been achieved, is by the common consultation of the men’s associations and the employers to improve their conditions of efficiency and reduce their costs. We hear a great deal to-day about the extension of civilized labour. What is the greatest handicap to civilized labour as compared with uncivilized labour? It is the high cost at which the civilized man has to live. Nothing will handicap the civilized man so much in his competition it, the labour market as increased costs. It seems to me that one of the things we have specially to watch in regard to these taxation proposals is that they shall not be employed so as to shelter mere inefficiency and be applied where in the opinion of impartial men, who know something about business and commerce, the efficiency of the industry is not what it should be. It is to the advantage of everybody, to the advantage of the industry, to the advantage of the men who work in it, and to the advantage of the consumer, that progress should be achieved by improved efficiency rather than by increased tariff protection.

Then you ought to approve of the principle of suspended duties.

I do not know how the principle of suspended duties is going to be applied, but I am talking now of the printing and stationery industry, and that is not suspended duty as far as I can make out. One thing occurs to me in connection with that industry. I see that the protection on ink is going to be raised. That is, I think, an industry where efficiency should be looked into a little bit. When I was in a Government office I was compelled to use local ink, because the Government bought the local ink in preference to the imported, and the result was that I had to go out and buy some for myself It was stuff to which the name of “ink” could hardly be applied, and it seems to me that many of our Government records which are preserved in that fluid will disappear before many years have passed. Here is a product so much below the level of ordinary commercial quality that nobody will buy it if they can possibly help it, and now we are going to give it a further tariff protection. I am not saying and I do not intend to be understood as saying that industries can never be properly assisted through the tariff. I think there are cases where the tariff system is justifiable, where protection through tariff is justifiable and economic, and where such protection will repay itself. [Time expired.]

I was pleased to hear the first portion of the speech of the hon. member for Yeoville (Mr. Duncan). I appreciate the sentiments he then expressed, but I am sorry that later on he altered his arguments to practically suit the arguments of the hon. member for Cape Town (Central) (Mr. Jagger). I appreciate what has been said by the Minister of Finance, not only in regard to the tariff, but in regard to the other matters he dealt with. I agree with his remission of taxation to £7,500 on the death duties for the reason that, if that amount was invested it would only mean an income of £500 a year. Insurance companies would only pay £500 a year if you invested that amount with them, and surely £500 is not too high for a widow to be left with at the age of 50 years, especially with a family I think, when we look at it from a broad aspect that up to £7,500 should be exempted I would have liked the Minister to have gone further and to have tried to bring in legislation to prevent those, who leave very large estates, from creating a fraud by escaping payment of any death duties. I believe it is possible for persons, especially millionaires, to so arrange their estates by some method or power which only lawyers know about, to make conditions whereby, when they die, their estates pay very little death duties. Whether they give it away before they die, or whether it is done in some other way the fact remains that they keep control of the estate. I hold that legislation should be created to prevent fraud of that description the hon. member for Yeoville (Mr. Duncan) dealt a great deal with the question of economic independence.

May I call your attention, Mr. Speaker, to the fact that there is no quorum.

Play the game. It shows you do not play the game.

What game?

The parliamentary game.

House counted, and Mr. Speaker declared that a quorum was present.

The hon. member may proceed.

I appreciate the solicitude of the hon. member for Paarl (Dr. de Jager) on behalf of this honourable House. I was dealing with the question of economic independence. I have faith in South Africa. I look forward to the time when there will be one large industrial area almost the length of Natal, especially in those industries directly or indirectly connected with coal or iron. It is not right that we should wait until these industries are developed before having a proper tariff scheme. It is the first time that a Government has tried to set down the principle upon which future Governments can build. It is impossible to follow the logic* of the argument of the hon. member for Yeoville when he stated that it is utterly impossible for any country to have economic independence. If we analyse this matter we must come to the conclusion that it is possible, and will have to be possible in the future, or the highest civilization will have to fall as they fell in the past. We have found that where the highest civilization did not safeguard its economic standard, it has been destroyed owing to the different civilizations exploiting lower civilizations. We have had instances of the Babylonian empire, the Egyptian, the Grecian, the Phoenician and the Roman; and let me tell you that we shall have the decay of the British Empire also, unless something is done to create economic independence: and we shall also be destroyed as part of that empire unless we strive to create that economic independence. I would like to draw the attention of the House to one or two facts. Prior to the great war the exports from England to Germany practically were of the same value as from Germany to England, but with this difference, that, whereas 81.7 per cent. of the total value of the exports from Germany to Britain were manufactured, or partly manufactured commodities, there was only 39.4 per cent. of the value of the exports from England to Germany, which were manufactured, or partly manufactured. England exporting, therefore 60.6 of total value in raw commodities, purchased in foreign countries and should only have credit for brokerage, not full value. All economic experts lay down that 50 per cent. of the value of any commodity is created by wages and profit. Therefore, if a country exports manufactured goods of a greater value other country, it reaps the benefit, to 50 per cent. of that value. I hold that we should manufacture our own commodities, and not do as we are doing at the present time, following out the policy of hon. members opposite, of exporting our raw products. I have always been opposed to the exportation, for instance, of mealies to such a large extent as we do. Mealies should go out either on four feet or through the cold storage. We have no right to send our raw commodities out of the country, and get, in return, the manufactured products of other countries. The Cost of Produce Committee, which sat in 1923, proved that the farmers the producers of the raw commodity, only get 23 per cent. of the value of that produce paid by consumer or factory. On the other hand, we have, on a manufactured article, 50 per cent. distributed in wages and profits; therefore, if we tried, as far as possible, to create economic independence, not only would it be a great achievement, but it would create a large and prosperous nation. I believe that it is only on the foundation laid down by the Minister of Finance that that structure can be built up, and I thank the Minister for taking the stand he has, and in bringing in a tariff of this description. In the past, especially in the United States, Great Britain and Germany, we have had them manufacturing commodities for the requirements of their respective countries and then doubling output, and why? Because under the present system, they realize that by increasing their output, they do not increase their overhead charges, therefore, the surplus has been dumped in countries like South Africa, which have been satisfied with a small population exploited by a few with a large number of uncivilized people among its population. We must prevent not only dumping into this country or the surplus of other countries, but, by our tariff, protect our industries and grow more necessities like wheat in this country. If we do not do this, the time may come when, owing to a free trade policy in this country, the farmers will refuse to produce certain commodities, we shall then be at the mercy of other countries in the case of a world shortage. We may have to pay very heavily for our negligence in looking after the interests of South Africa, the brightest land in the world. The farming community have agreed to sacrifice their own interests for the sake of a protectionist policy, to create industries in this country, whereas in Australia and Canada the farmers are fighting against protection. Allow me to thank the farmers for their unselfishness.

The farmers here have not had experience yet.

The farmers have agreed to go hand in hand with the other sections of the community for the sake of creating a bigger, brighter and more prosperous country.

I wish to draw the Minister’s attention to one or two points, as I am afraid if I do not do so now there will be no opportunity later to make any substantial alteration in the proposals. I think the majority of the House agree with the Government’s policy of protection. There are a few who still believe in the principle of free trade; but the number in this House must be very small. I think the majority agree that this policy will enable existing industries to become more prosperous and fresh industries to be started. Protection should be so devised as to assist an industry in building itself up in the country, and when it has reached the stage that it can compete with industries overseas, then the protection they can demand should not be so great as when they were being built up. Alterations in the tariff will, I take it, depend largely on the recommendations of the Board of Trade from time to time. The Government has laid down that protection is going to be the policy of the Union, and I think those who want to invest their money in this country will feel that they have every chance of securing protection for their investment. But with regard to the methods in which the Government has dealt with various matters, in this tremendously long and complex miscellaneous list that we are going into committee on. I want to say something on a few items. I want to refer to this question of companies, which the hon. member for Yeoville (Mr. Duncan) dealt with, I would like to endorse what he said. I cannot understand why it should be considered right for an individual to pay a certain rate and why, if, for the sake of convenience, three or four persons should go into a business as a limited liability company, the rate of tax should be so much higher. The Minister rather indicated in his remarks, that what had happened in the past was that they had not divided the profits as dividends and that you could not get at the companies; but if the Minister does not get his dividend tax he might make them pay on their appropriation account. I think the Minister would get a far higher amount by taxing them on that than he gets under existing laws. I cannot understand why there should be a tax of 2s. 6d. on income derived by way of debenture interest. There seems to me to be a great deal of justice in the criticisms of the Minister’s proposals on this point. With regard to the various professional licences, I was very glad to see the Minister’s original proposal to impose a licence of £50 on moneylenders, for I would like to see them taxed out of existence. Under the law a man cannot carry on a moneylender’s business in the Cape Province, but he can do so in some other parts of the Union. Why has this licence been struck out? I hope it will be reinstated, and that a thumping tax will be put on the moneylenders. I am glad to see that the licences on dentists and doctors are to be reduced as compared with the original proposals. The omission of a licence for the administration of an estate, as originally proposed, is also a step in the right direction. The Natal Society of Accountants wish to know why accountants have to pay the same licences as members of the legal profession, and more than three times as much as conveyancers pay. The aerated water manufacturers in the small towns and dorps, who have previously paid £2 a year, will now have to pay £10, which is as much as the biggest aerated water manufacturer in the country will pay. Surely the licence should bear some relation to the amount of output. I am glad to see that far the first time a little measure of protection is to be given to the wire netting industry, but the Minister should consider placing jackal-proof fencing on the suspended list, for the time is rapidly arriving when all vermin-proof fencing will be made in South Africa. As to the alteration in the incidence of the duty on cinematograph films, ordinarily it is a fair method to make people pay on the value of their importations, but not in this instance. The Minister should try to help the small importer as against the big one in some other way. It is very difficult to fix anything like the real value on films. Some of the films come direct from the manufacturers, who simply state the original cost of production plus its showing value. In other cases films are purchased without rights, in which case duty would be paid on the cost of print only. I am told that as the result of the Minister’s proposals the importation of second-hand films will very largely increase, with the result that the public will not be able to see such high-class pictures as they have been witnessing up to the present. Would it not be better to calculate the duty on footage or to stick to the original proposals and place the tax at 8s. 4d. per 100 feet, or 25 per cent. ad valorem, for the result would be that people would import the best type of film? To give a specially low rate to second-hand films is a reversal of the ordinary customs policy; It may be said the people affected are the powerful concerns. Over 90 per cent. are imported by the African Films, Limited, and I understand the people who have made representations to the Government are the small importers. I would be the last in the world to give concessions to the powerful firms. If the Minister adopts the suggestions I have made he can exempt the small importer of films, and that would prevent the big concerns from squeezing these small men out. It is unsound economically to tax the films according to value rather than according to footage. I am told the tariff of 30 per cent., which it is proposed to levy, is believed to be the highest in the world. We must not forget the public will have to pay the tax in the form of larger admission fees. I hope the Minister will deal with this in committee. I would also like him to explain in committee, under this vote, why the billiard table keeper pays £12 per table, and the bagatelle table keeper pays £4 per table. Apart from these suggestions and the criticism of individual items, I say of the general policy of the Government that I am entirely in accord with it.

As the time I have for speaking is limited I shall devote myself entirely to the tariff, and before doing so I want to make a couple of personal explanations. Anything I say in regard to this tariff must be taken as representing my own views and not the views of the South African party. I am usually taken to be speaking as an importer. For the information of the House, I may say I have here a directory of industrial establishments, and in this I have nine different establishments. I mention that to show, as I am sometimes said to be prejudiced against local industries, that it is untrue. What I do object to is the taxation of people for the benefit of any manufacturer. As far as I can see the object of this tariff, in some degree, is to restore war conditions to the local industries, the conditions of scarcity, the difficulties of importing, and the consequent high prices we had during the war, to substitute the custom house for the enemy submarine. According to the Minister the tariff is avowedly protectionist. The Minister said it candidly in his Budget speech, and he candidly admitted that it must in some degree increase the cost of living and consequently place a burden on the people of South Africa. You cannot take £400,000 extra through the customs without somebody having to pay it, and it is paid by the people of South Africa. It is also said to be an object that we want to make an industrial country of South Africa. I have been here for 40 years in business, and I say, not for generations to come, possibly never, will you make this country an industrial country on a big scale. In the first place the markets are entirely too small, the local markets. You have a European population of 1,600,000, not more than sufficient to make one big city in America or Europe. If you take even that population it is very much scattered over a wide area, which increases the cost of distribution to the manufacturer. You have a large population of natives, but they are not large consumers of manufactured goods. If you say the natives are worth about half-a-million Europeans to the manufacturers so far as consumption is concerned, you have about hit it. In industry, in a protected home market which is small, you cannot produce cheaply, consequently with such a small home market you cannot do an export trade, and compete with other countries as you must do if you want to be an industrial country. I have never seen an industry in this country where the product conies from the land that went ahead without cultivating an export trade. Take maize as an example. You cannot do an export trade in manufactured goods in South Africa. In order to do it you would have to specialize in staple lines in a big home market and you have not got it in South Africa. Compare it with Great Britain, America or Germany. In Great Britain the home market is 45 millions; Germany 50 to 60 millions, and America, 110 millions of people, the largest free trade and the largest and wealthiest body of consumers in the world.

Did you say free trade?

Yes, there are 48 states in the United States of America and there are no tariffs between any of them.

There is no tariff between Natal and the Free State.

But there are only 150,000 people in Natal. These other countries are able to specialize in manufacturing and this can keep down the cost of production, and consequently can do an export trade. We in South Africa, can only go in for small factories, intended for the supply of the local market. If hon. members will look at page XIII, of the statistics of production, they will see that 32 per cent. of the total factories we have here only employ four hands or less, 65 per cent. only 10 or less and 5 per cent. have got 50 to 100. The directory of industrial establishments shows the same. This includes such trades as builders, bread-makers, blacksmiths and the like, industries to which this protection will do no good at all, in fact just the reverse. There are any number of these small industries spread all over the country, just adapted for the supply of local requirements. These industries are already in some degree protected by the distance from the large markets overseas, by the freights, cost of landing, etc., and they have also this advantage, a very great advantage, that the purchaser is on the spot. There are hundreds of men who will buy a suit from a tailor on the spot rather than wait until they can get it from overseas. The small manufacturers have all these local advantages. These factories are numerous and widespread throughout the whole of South Africa to-day, and in my opinion the best way the Government could assist them would be to reduce their working expenses by reducing the cost of living, and reducing the cost of material which they have to buy for their trades—not this system, which is going to increase the cost of living.

And reduce their wages.

If you reduce their working expenses you will undoubtedly increase their trade. As regards wages, the important thing is not what they amount to in pounds, shillings and pence, but what those wages will buy… There is one point that is frequently overlooked in discussions on this question. If you simply protect one industry in a country and do not protect the others, that industry, of course, would benefit. Take, for example, the boot manufacturing industry. If that were protected and every other industry were left without protection, undoubtedly that industry would benefit, and must benefit, because every industry would pay tribute to the boot industry and it would get its stuff free, but when you scatter your protection, as you propose to do now, pretty well all round, and protect every industry you possibly can protect, then it is another story for the boot manufacturer. He finds that he has got to pay tribute to the wheat and flour industry in the shape of a duty on bread—increased cost of bread—he has got to pay to the sugar industry in the shape of a duty on sugar, and so it goes on with bacon and ham, and with every other industry right through, until, in the end, he finds that, owing to the increased wages that he has to pay to meet the increased cost of labour and materials, he is no better off than he was at the start with a free tariff or, we will say, even a revenue tariff. His costs of production are so increased that he has to go to the Government whining again for further protection. That is exactly what is taking place in Canada. Canada has had a protectionist policy, such as is now proposed here, since 1878. What do we find today? Canada is still calling out for increased protection. We shall have the same in South Africa. Then there is another point. So small is this market of ours in South Africa—

Then make it large.

You cannot make it large by this system. As I was saying, so small is this market of ours that in many cases you are taxing the community for the benefit of one factory. One factory can meet all the demands in South Africa. Take milk cans and buckets, which I see the board of trade and industries are very keen on giving help to. The board, in their report, state that their original intention was to propose a suspended duty, but, having visited the factory at East London and—

They decided to recommend an increase of the duty—

Here is a case in point. They are giving this protection on cans and buckets, which must affect every man in the dairying business, simply to one factory.

There are the employees in the factory.

It would pay the Government to pension off all the employees of the factory and let the cans and buckets come in free. Take lamps, take condensed milk, there again you have one factory producing condensed milk. Take matches, one factory, which has been in existence for years. I do not think it would be a bad idea at all for the Government to pension the employees in all these factories, and I believe the people themselves who have to buy the stuff would come out better in the end. Then furthermore, another point is that this would, of course, just make the right opportunity for combines. When several factories are started in one line they find that the market is too small and they begin to compete, and then some go to the wall. Take the case of match factories. Several were started immediately Sir Gordon Sprigg put on a heavy duty in 1884, but to-day there is only one and they pay a very good dividend. In every country where you have protection by the tariff you have these combines. It is well-known that the United States and Germany are full of them, and to some extent Canada also. You have only Great Britain alone where they don’t flourish because if they put up the price above a certain point, in comes outside competition. But wherever you have a high tariff to protect industries you are bound to have these combines. The smaller the market the more easy it is for these combines to be brought about. There are only two or three manufacturers to get together and bleed the public, for their own special benefit. It is sometimes seriously contended that these protective duties will not mean a rise in prices. I do not say that is argued by my hon. friend, but by some of his supporters. Let me say this, that it is not the experience of other countries.. I have here the experience of Canada, where they have tried it for a long time. They say—

I mentioned the case of matches. I have here a letter dated the 17th June from a firm of wholesale merchants—

My friends think the board of trade are going to control prices. Here is an example. The sugar people are calling now for a dumping duty. I have looked into this matter and there is no dumping taking place. The output of sugar has enormously increased. This year it is 2¾ million long tons more than it was last year. The original estimates have almost everywhere been extended. What has taken place is this. With this enormous output the price began to fall ever since the middle of April. What our friends in Natal really want is that we should step in and prevent the people of South Africa getting the benefit of the fall in prices. The importers have bought on a falling market and no doubt they have bought cheaply and it is not fair that we should prevent the people of South Africa from getting the benefit of the fall in sugar. The board proposes to control prices. On what basis are they going to control prices? On the basis of the best managed factory, or on the basis of the worst managed factory? You will find companies which will make a profit on the 10 per cent. tariff and others which will lose on the 30 per cent. tariff. Take blanket factories. You have one here which has done well for years, and they have done it under the existing tariff. You have another at Harrismith which has made a bad mess of things, but they have both worked on the same tariff. Take boots. You have a factory at Brak River where they have an ample supply of labour, probably at cheap rates, but—I do not think it is any secret—they have got into financial trouble. You have factories here and at Port Elizabeth which are flourishing, and all under the same tariff. Take another thing, the printing trade. There is one large concern which, at a recent annual meeting, declared a dividend of 20 per cent. Does that require any tariff assistance?

What firm is that?

Never mind. It is in Cape Town. They could have paid more, and yet, notwithstanding that, the Government have actually increased the duty on printed matter from 25 to 35 and 40 per cent. I would like to ask whether the board is going to control prices on the basis of this concern or on the basis of the “Nationale Pers,” for instance, which has not yet declared a dividend. What I want to know is, are you going to fix the basis on the most efficient or on the inefficient people? If you do the latter, you will be taxing people for the benefit of the inefficient concern; and if you base it on the most efficient concern, you crush out inefficient people—which in my opinion ought to be done. It is ridiculous that the board can control prices. It just shows the absolute want of experience in business matters. It cannot be done.

It has been done.

Well, we will see. In addition to the heavy financial burdens, we pay 22 million pounds for the government of this country—Union government and provincial government—in the shape of taxation. The people of South Africa are now called upon to contribute large sums, amounting also to millions, to maintain industries and increase the profits of certain concerns. [Time had expired.]

At the suggestion of Mr. Blackwell the hon. member was allowed to continue.

May I mention again the printing trade? I have got here the annual balance-sheet of a certain printing establishment in this city. They have a capital of £175,000 and they made a net profit of £73,000. Of that they made £23,000 revenue from certain investments. Their business is especially in the printing and newspaper business. Furthermore, it is not by any means an infant industry. The Board of Trade say here—

I agree with that—

That is not a printing business only.

It does not make any difference. I will give you more information. Here is a letter I have from a man in the paper business—

That is the position, and yet my hon. friend has given these people increased protection, without the slightest justification. Surely it was good enough for this concern to start their extension before the Government came into this, and when they had no idea of increased protection. The result is that you simply increase the profits of that concern, and no doubt of others as well. Perhaps the Minister will get his customs people to take out the figures of how many millions we pay to increase the profits of the printing trade and of the boot industry, the protection of which is increased from 27 to 30 per cent. I am in that trade myself. I bought that business as far back as 1888, and I have run that concern successfully when the duty was 8 per cent., under the Cape Government, and I have never yet, in any shape or form, asked the Government for any protection. It was not necessary to increase the duty. The Government must be taking some millions out of the pockets of the people to keep those engaged in the highly-protected industries. Has the far-reaching result of some of these proposals ever struck the Minister? He has admitted himself that it will increase the cost of living.

Terrible.

My hon. friend does not seem to understand that mere £ s. d. is not everything to the wage earner, but it is the cost of living that tells in the long run. The Government are the biggest employers, and if anybody suffers they will. For instance, the railwaymen may want more wages. Increased custom duties will also mean higher costs of material. The other day the Railway Department called for tenders for rubber. The only rubber factory in South Africa tendered to supply the articles at £644 against a British tender of £369. In pursuance of the Government’s policy the tender was given to the South African factory. This is only a small matter. If this policy is steadily pursued, it will mean that the cost of running the railways will be increased. That means, in the long run, higher railway rates, which will fall on the producers, manufacturers and people generally. These increased railway rates may mean handicapping the producer, and then there will be less traffic, and consequently less employment on the railway. You cannot protect all the industries in South Africa. The biggest industries cannot be protected. How can you protect bricklayers and painters, or the people in the building trade? Not a sixpence. Take men in the transportation industry—the Railway Department, Harbour Department, motor-car drivers and the like; take professional men and the civil service; in fact the vast bulk of the people of South Africa will get no benefit from this protectionist policy. In fact, just the reverse. The cost of living will go up, and they will have less money with which to buy the natural products of the country. These are the people who will have to carry the burden of these protected industries. Where do the primary industries come in under this tariff? They get absolutely no benefit at all, but they have to sell their produce in the world’s market and have to take the world’s price. What benefit will men engaged in the wool, mohair, hides and skins, feathers, cotton, gold and diamond industries get out of the tariff? Not a sixpence, but just the reverse. But they will have to pay more for many things—stationery, furniture, blankets, boots and shoes. It has been stated that if we start factories in South Africa they can consume all our raw material, but they cannot consume anything like what we produce. Further, the South African manufacturer will not, for instance, pay more for South African hides and skins than the world’s price. He will not pay 1d. or 2d. a pound more for hides and skins, because they are South African produce. To be content with our small market is absolutely impossible. The position of the farmer is a hard one—is there ever a period when some part of the Union is not suffering from drought? And yet, in times of drought, when the farmer is getting no income, will have to pay for the increased protection given to the manufacturers. The only reason our farmers are not fighting these proposals is that they have not yet realized their full significance. In Canada, farmers are feeling the effects of a high protectionist policy to such an extent that the western farming provinces of Canada is talking of seceding from the confederation. I have not the least doubt that if this policy is pursued our farmers will tell a different story to what they are doing to-day. Instead of an increased demand for some of their products they will find that, under protection, there will be a decreased demand. The vast bulk of the people in South Africa have fixed incomes, and if the cost of certain articles is increased, then they will have to buy less of them, or go without, For instance, the people may not be able to afford to buy fruit or butter or poultry. If the tariff is raised, you are not going simultaneously, by any manner of means, to increase the incomes of all the people. Consequently, the consumption of certain articles will fall off. We are putting settlers on the land. And yet they are to be handicapped by the fact that they will have to pay higher prices for the things they will have to buy and get world prices for their produce.

But you provide a local market.

Just, perhaps, for a few vegetables and garden stuff, and against that you decrease the agriculturists’ market in other directions. In fact, I doubt whether you would increase your local market for garden truck and the like, because the people would have less to spend on these articles. You handicap the man on a small allotment if you increase his cost of working expenses. To a certain extent the result of this will probably be to drive people off the land, and that will be the result, I honestly believe, if this policy of protection is continued. Even where a man sticks to it and works, it will decrease the number of men he can afford to employ. That has occurred in Australia, and what you gain in employment on the industrial side you lose by heavy unemployment on the agricultural side. The object of this policy, as it has been stated several times by the Prime Minister particularly, is that you want to find increased employment for the European population. If that could be done, it would please every member of this House, but what is the position of the industries to-day? 35.63 per cent. of the total employees in industry to-day, or one-third are Europeans. 64.37 per cent. are non-Europeans, and the average wage of Europeans in the Cape is £228 and of non-Europeans £73 per annum.

And efficiency?

It is much lower than in Australia and Canada, judging by the output of the people. Members must see that there is every possible induce meat for employers to take the cheapest labour, and I have already pointed out in my speech on the budget, that the European is handicapped in this country by the high cost of living. In my opinion, if there is one place in the world that should have cheap living, it is South Africa. If you increase the cost of living, it falls heaviest on the European, because his standard of living is higher than the coloured man and the native and, therefore he must get a higher rate of wages than the coloured or the native. The tendency will then be for employers to employ coloured employees instead of Europeans in our industries, and that will be even more so in the non-protected industries. Take the farmers who have to complete in the overseas markets. When they see the cost of production go up they will naturally do the best they can to get the cheapest labour, and as there is a tremendous disparity between the cost of white and coloured labour, they will employ coloured labour every time. But that means you are going to make it more difficult for the European to compete with coloured labour. If you reflect, I think you will find it comes to this that we are taxing ourselves, not for the benefit of the white man, but for the benefit of the native and coloured man. If you make in certain trades the employment of white labour compulsory you will enormously increase the cost of production, and to increase further the cost of living will make life almost intolerable in this country. The policy of protection is going to be mixed up with the question of civilized labour. Paragraph 12 of the report of the Board of Trade shows they are going to favour labour concerns which are employing civilized labour—

You will see by the report, also, that they have their eye on the boot industry, and if they don’t employ more white labour, they will not get the assistance of the duty they require. The biggest part of the employees in the boot industry is coloured people. They also have their eye on the sugar industry, as to the labour they employ. It is evident from this memorandum we are not going to have what all manufacturers pray for, that is a stable tariff. If the manufacturer does not employ sufficient European labour and pay sufficient wages, he may have the tariff reduced. It has been done in one instance already. Take the case of the oil people in Durban. Because they did not employ satisfactory labour, because they had too many natives, that protection has been taken off.

Quite right, too.

Let me tell my hon. friend that this has been tried in Australia. They set out to control prices; they were only going to give protection where fair wages obtained. It was tried in Australia fifteen years ago and it was then called the “new protection.” I have got an article written by an Australian in January, 1924. He says—

It has gone out of date in Australia altogether. You will have exactly the same here. All these promises on the part of the Government and also on the part of the Labour party, as far as that is concerned, that this is not going to put up prices, are not worth a rap. No, it will be impossible to control prices here in South Africa under this tariff. Then there is another feature of the tariff that I want to call the Minister’s attention to and that is the suspended duties which are suggested on 14 different items. To my mind this is an iniquitous proposal. You simply put this through and the man in business will never know exactly where he is. The suspended duties, which are very high, are going to be put on at the will of the Minister. Some small manufacturer starts a factory and then he comes along and asks the Minister to give effect to the suspended duties. It is not fair. Any duties of this kind should rest entirely in the hands of Parliament. If they want to put on increased duties, let them do so, but to leave the matter in the hands of any Minister or any official, in my opinion, is neither fair nor just. There is another point to which I desire to call the Minister’s attention and that is the differential duties. As he explains, it is proposed to allow stuff to be imported free to the manufacturer, while the man who imports it to re-sell has to pay a duty. That is going to lead to any amount of fraud, in fact I have been informed that fraud has already started. Take the small manufacturer who imports a quantity of goods for his own trade. He finds he has got too much and he is pressed for payment, that man undoubtedly will make an effort to get rid of that stuff in one way or another. It is a most dangerous thing to discriminate in one identical material between the man who is allowed to import it free because he is to use it in his trade, and the man who has to pay a duty of 15 per cent. on it. You are bound to have fraud: I do not see how you can prevent it. I now want to come to a conclusion. I wish to say this quite deliberately to the House. I believe the result of this policy will be extremely disturbing to trade, with suspended duties, differential duties and the like, though I admit that is not quite so important in itself, but what is far more important is this, that you are going to increase the cost of living. You are going to tax the many for the benefit of the few.

You are going to give work to the people.

You are going to impede the expansion of the primary industries of this country for the simple reason that you are going to increase the costs of production. Furthermore, you are undoubtedly going to encourage the migration of people from the land to the towns.

What are they doing now?

I will admit they are migrating to some extent now, but you are going to increase that. You are certainly not going to increase emigration to this country. People will not come to a dear country to live. That has been the experience of Canada. At every census the people in that country have been disappointed at the result. Again—and here I would like to ask the attention of the Prime Minister —you are not going to increase the happiness of the people as he seems to think, but what you are going to increase is undoubtedly the unrest which will exist in big centres as the result of this policy. That has been the experience of Australia and I believe it will be the same here —dissatisfaction and unrest throughout the country.

The hon. member who has just spoken (Mr. Jagger) is certainly a whole hogger so far as free trade is concerned. I want to go on to the question of provincial taxation. I am sorry this Government, like every other Government, has been afraid to point out to the various provincial councils that the best method of taxation is the taxation of the land. My friends say “Oh,” but numbers of farmers have spoken to me about it and said—

That is the experience all over the world.

How does the hon. member bring that under this motion?

As an alternative to the taxation which is proposed to be made.

The hon. member cannot move an alternative now. He can move it in Committee of the Whole House, after notice, in terms of Standing Order No. 114 (4).

I am not moving it, Mr. Speaker; I must discuss the policy of the Government. The policy of the Government is to lay down certain taxes here. Surely I am right in showing an alternative tax?

The hon. member is not entitled to do that under this motion. He can do it in the manner indicated above.

Well, I bow to your ruling, Mr. Speaker; you have rather taken the wind out of my sans. I think the Board of Trade is to be congratulated. I want to go further. I am speaking entirely for myself, because I know the parties are split this afternoon on the question of free trade and protection. Do not let us go too far with protection. I want to warn the people from the Free State, which is an absolutely agricultural area, that we must keep our eyes on the Government and on the Board of Trade, and see that they do not go too far with protection. The man who puts up the wall always wants to make it higher. I find the people who go in for the secondary manufacturing industries are like Oliver Twist: they are always asking for more. And who is going to pay for it in the end? The farmers and the working classes are going to pay for it, because, even with the mild protection put on to-day, there is £400,000 being charged to the people; but that is not all. There must be added to that the ordinary profit, and before we have finished with it, it will be £1,000,000. and that is coming out of the stomach of the workers. If our friends think they are going to protect the people of South Africa and attract immigrants which means the cost of living going up, they are making the greatest mistake in their lives. Canada is losing 300,000 people a year, and their farmers have found this out To-day in Canada, on account of the high protection, there is a secessionist movement, much greater than in this country—not from the British Empire, but from Canada. To-day the farmers and workers in western Canada—the only place where they have had a workingmen’s Government outside of South Africa—they are to-day saying—

because they have been tied down and crushed under a high-tariff wall. The same thing is going on in Australia. All the people have gone to the towns. It is lust as well to utter a word of warning. We must keep our eves on the Board of Trade and see that they do not put on higher and higher tariffs. All tariffs should be put on by this House. We will find that the consumer will have to pay more and more and there will be less consumers employed, and the farmer will have to pay more; because he sells in the market of the world. It does not help him to get 10s. more in the market of the world if he has to pay 4s. more for his hat and 10s. more for his boots. The 10s., instead of being 10s., will come down to 6s. When we send our mealies overseas they are not paid for in gold but in kind—in hats and boots, for instance. We cannot be a country of great primary productions, like America.

Why?

Because he United States have a home market. Even Australia cannot get a home market, and Australia is putting its tariff wall up higher and higher, and is becoming a country of two towns only. I speak absolutely for myself on this question. The Labour party’s policy is protection, with protection of the worker and the consumer. But I cannot see how under this system the consumer is going to be protected. He will naturally pay more in the future than he has in the past—he will pay at least £1,000,000 more. I cannot see how the farmer or the working miner is going to be protected. I, for one, will fight against any increases in the tariff, if we are going to go on the lines of Australia or Canada, for South Africa is a country of primary production, and our markets for raw materials are overseas. I also have money in industries, and I am speaking against my personal interests. I am—for a small man heavily interested in the printing industry, which is the best organized trade in South Africa. But who pays for it? The consumer all the time. The printing industry is becoming a huge trust. I am speaking for myself, for it would pay me to have this huge tariff wall. But I can see all other industries becoming trusts, and that is not good for the working man.

It is most refreshing to hear some words of wisdom from my hon. friend opposite, and I hope his friends will take note of what he said.

No.

I thought not. Their policy is protection in the things in which they are interested, but no protection for anyone else. If the hon. member had not anticipated me, I was going to express my sympathy over the injury which the farmer is going to suffer. It seems to me that the farmer is a most long suffering individual. The general policy of the Government, which underlies these tariff proposals, and other legislation which has been before this House for the past few weeks, is inevitably going to lead to an increase in the cost of living and production. As has been pointed out more than once, there are two main industries in this country—agriculture and mining. It is self-evident that any increase in the cost of living and production is going to militate against these two industries. Take mining first. We produce a large amount of gold; we cannot consume it here, so we have to send it overseas. Of course, anything which puts up a tariff wall here makes it more difficult to get back into this country the goods in return for the gold which we send abroad. It seems to me that in its present stage the mining industry has no need of such commiseration as the farmers. The mining industry has established its position and has aroused in the public an appreciation of the extent to which the public depend upon it. There was a severe lesson as to that given in 1922 and in spite of everything said about that industry by hon. members opposite whilst in opposition, the present Minister of Labour, for example, as to what they were going to do with the labour supply none of these extreme measures were adopted because they recognized if they attempted anything like it, it would recoil on their own heads. It is not, therefore, necessary to commiserate with the mining industry, but in the case of the farmer it is different. It is not disputed that the effect of these proposals is going to put up the cost of living, the farmer is going to pay more for his clothes and boots and everything and the farmer depends upon cheap production to get rid of his products. In these estimates we have a vote of between £700,000 and £800,000 for the Department of Agriculture, and the object is to get the farmers to produce more cheaply. The yield per acre for most of the crops is very low in this country and we have large numbers of experts paid by the State to teach the farmers how to increase their yield, how to produce economically, how to organize their products, and how to find a market overseas. It is surely contradictory to spend that money on teaching the farmer how to produce cheaply and then go in for a policy that is going to add the farmers’ cost of production. It is extremely likely, too, the farmer will have to pay more in respect of railway rates and fares. Hon. members opposite are going in for a policy of civilized labour, and we have £170,000 expenditure on the estimates this year for that. In the report of the railway board, it is stated that the adoption of this policy and the consequent taking on of something like 4.000 extra European employees has added greatly to the cost of running the railways and to the cost of railway construction. That is going to hit the farmer. There is also the policy that says to anybody employing machinery you will have to employ this labour in that occupation and that labour in this occupation. We have it on the authority of the Prime Minister that that policy is going to apply to the farmer, even in the Free State. In another Bill of the Minister of Labour power is to be taken by the Government to step in and, having fixed the kind of labour these people shall employ, to fix the wages that particular labour will receive. Is it not commons sense to say that it is going to lead to more wages being paid to a more expensive type of labour. We have also got in these proposals a scheme of death duties. Death duties are an unsatisfactory form of taxation.—

When the interval took place I was endeavouring to show that, in my opinion, the farmers of this country in consenting, as apparently they do, to the proposals contained in the budget this year, are really a most long-suffering people, because, as my hon. friend, the member for Bloemfontein (North) (Mr. Barlow), has pointed out, there can be no possible doubt that the result of these proposals, assuming they are adopted, will be that the cost of living and the cost of production will be increased, and that is an evil which is likely to fall upon the farmers. Among the instances which I have given as to the manner in which the farmer would be affected by these proposals occurs the imposition of increased death duties. In my opinion, death duties are a most undesirable form of taxation. To begin with, death duties are emphatically a tax on capital and it seems to me that if they are imposed, then the proceeds of that tax should be devoted to the redemption of debt, and should not be used to supplement the ordinary revenue of the country.

Do you say that capital should be immune from taxation?

I do not suggest that capital should be immune from taxation; it certainly is not. But if you are going to have a direct tax on capital, that tax should be devoted to the redemption of the capital liabilities of the country and should not go into the ordinary revenue of the year. Apart from the fact that it is a tax on capital and to that extent diminishes the power of capital to promote development in the country, it is a most haphazard source of revenue. In one year it may be that there is a large return; in another year, because few rich people die, the return may be very small. It is also, it seems to me, extremely unfair that if a man happens to come into his property somewhat late in life, the same property should bear this tax twice over within a very short period. Burdens of this kind fall much more directly and with greater effect upon the owners of land than they do upon other forms of capital which are represented by stocks and shares. If an estate is held liable to pay a certain amount, a capital sum, then if it consists of stocks and shares, those stocks and shares sufficient to par the amount can be sold, but if it is a case of getting the amount from land then either part of the estate has to be sold perhaps at a very inopportune time or money has to be borrowed, and in any case the power of that landowner to develop his land and help the agricultural development of the country is very largely prejudiced. It may be said that these duties obtain in England and have obtained, I think, since 1894. I believe that it was in 1894 that Sir William Harcourt introduced the system. It is safe to say that at that time nobody foresaw the enormous amount of money which was to be raised by these duties and the far-reaching effect which it would have on the landed interests in England. Sir William Harcourt when he introduced his budget expected to get some four millions a year from this tax. The amount now derived is something like fifty millions a year. When one sees the effect on the landed interests in England it would be wise for the landowners of this country to look ahead, and see where this tax is going to lead them. There was one little matter which interested me. The Government of that day had a very small majority and the matter was fought very bitterly, but all through that contest the Government never once relied upon the closure but allowed full and free discussion. I would like to commend this example to hon. members opposite Of course it may be said, if one disapproves of high duties for tariff purposes, if one disapproves of death duties, where is the revenue to be raised? The Minister said this afternoon that one of the objects was to raise revenue. I admit at once that we must have revenue. That could be obtained by imposing moderate duties. Industries have been established and it is the duty of the Government to see that these industries are fairly treated and not exposed to undue competition from outside. It is only fair also that there should be some discrimination as to which industries should receive what I may call artificial support It does seem to me, however, that these proposals this year, the tariff proposals in particular, have been introduced without adequate consideration The Government decided in their wisdom that the moment they came in they were going in for a policy of protection. They proceeded to appoint a board of men of no great experience to support them in this policy, and so to-day we have got these proposals. I think it would have been much better to have waited another year, in order to see what the position of world trade was likely to be, and how things were going to shape themselves. It would have been better to have appointed a thoroughly representative commission to see what the effect of such proposals would be upon industry, and what their effect would be upon the general public and the farmers. Put the Government did otherwise. They act first and investigate afterwards. It was only the other day that the Minister of Labour told us he was going to appoint a commission to go into the question of wages. The question was naturally asked as to why he did not get the report of that commission before bringing in a Wage Bill. I feel sure that if such a commission had been appointed, we should have had a good deal of valuable information as to the extent to which the country could stand these duties, and we might also have had a valuable expression of opinion as to how the ordinary expenditure of the country could be curtailed; because there is no doubt we are expending an enormous amount of money. The expenditure is too great. I am not saying the salaries are too great, but the number of people employed is too great; they are far more than is necessary for this comparatively small population. If we had had this commission, I believe the whole question of the budget would have been put on a much better footing. I recognize the Minister in his tariff proposals has met the sentiments of some people on a number of points, but at the same time the way in which he has met us is not adequate. I think hon. members opposite who represent farming interests would do well to take into their hearts the advice that the hon. member for Bloemfontein (North) (Mr. Barlow) and other hon. members have given, because if we go on like this the result will be that we shall put up the cost of production; then there will be a demand for further protection, then a demand for further wages, followed by another demand for further protection, and so we shall go on. The upshot will be that we shall be manufacturing a certain number of things for which we have a very limited market, and then when we come to turn things out on a bigger scale it will be absolutely impossible to compete with the goods of other countries where people have had more experience, and where they work harder perhaps. It is no use thinking we are self-contained in this country. We are not now and, in the nature of things, we cannot be for many years to come. We have to realize that the price of things in the world is governed by factors over which we have little control. It is a great pity that these proposals have been put before us without sufficient investigation.

If the hon. member for Cape Town (Central) (Mr. Jagger) was not regarded in the country as a faddist, as far as free trade is concerned, his doctrine of despair this afternoon might do a good deal of harm in discouraging the establishment of industries. The hon. member is not even consistent, because after telling us that we should never be able to establish industries in this country, he then went on to tell us the number he, himself, had established; and, knowing what a successful business man he is, we know he would not have gone on with them if they had not been successful. I entirely disagree with the hon. member and contend that industries here are not only possible, but highly practical and absolutely essential for the well-being of the country. We know very well that the prosperity of the great industrial countries has been based on their coal and iron resources, and there is no country with finer coal deposits than we have, and no country with greater prospects for its iron industry. If we work these, as they should be worked, there is no reason why we should not also be a prosperous industrial country. The only reason why we are not in the van is that we started late but it has been found that the country which starts last is very often best adapted to an industry. The great argument we have had to-day against protection is that our markets are too small. The hon. member for Yeoville (Mr. Duncan) stated that the last Government was in favour of a moderate and discriminating protection. But apparently that has been a great failure to judge by results. He went on to tell us that what we wanted was to get more people into this country But we have too many people in this country already for the work offering, and until we provide work for the people, it is heartless to ask men to come to this country and walk about unemployed. The sensible procedure is to establish industries and after finding work for our own people, then invite others to come here to assist us. The only flourishing industry, as we have heard, is the printing industry, and that industry has been built up on protection. It has had so much protection that hon. members are beginning to throw stones at it. The hon. member for Cape Town (Central) (Mr. Jagger) read about the huge profits made by a printing company. I asked the name, but he did not give it to me; but I have a shrewd idea that that particular firm is making money out of lucrative Government contracts which ought to be done by the Government printer. But I think this case is somewhat of an exception, and I can point out quite a number of printing establishments which are hard put to it to make ends meet, and pay ordinary rates of interest on the capital invested. I approve of the two-line tariff of the Government; because it gives the Government an opportunity to select the industry which has got to be protected, and also for the Government to say under what conditions of labour that industry is to be carried on. We know very well that since the tariff has been introduced, enquiries have been made by manufacturers in other countries as to the prospects of coming here. I know my friends on the other side respect big finance, and I will tell them that the only way to bring industry into this country is to put such a tariff wall around the country that large manufacturers will have to come into South Africa to protect themselves. The United States is, to my mind, a properly protected country, and firms like Lever Brothers and Messrs. Coats Limited, really big people, have been compelled to go into the United States and erect factories, in order to retain their trade. The same thing happened in Australia, particularly in the motor industry. Motor manufacturers have been compelled to start factories there to protect their own business. That is what we want to do here. In Australia, the motor industry has developed in such a way that it has become a big industry. One of the faults I previously found with our tariff is that it does not go far enough, and for one thing, gives a mere 10 per cent. advantage in favour of motor-body building in South Africa. In Australia, they have gone the whole hog, and put a tariff of 40 per cent. on motor bodies. The result is that in a very short time they have established the motor body building industry. I have an Australian paper here in which there is a full page advertisement of a car which is very popular in South Africa. In every instance it quotes the models and the price of the Australian body and the imported body. In some of these instances I find there is an advantage of £20 in favour of the complete car with locally-made body, and in one case an advantage of no less than £50 in favour of the car with the local body. This refutes the argument that under protection the manufacturers take fullest advantage of their position, and shows that competition regulates prices. I might give numerous cases of the effect of protection elsewhere, but will merely quote one outstanding case which came to my notice recently. At the outbreak of the war, practically the whole trade of the world, in dyes, was done by Germany. At that time, dye manufacturing in the United States was so small that it did not figure in the trade statistics, but the war proved an effective tariff. In 1916 Congress put on a tariff to encourage the industry, and the rate was so high that it compelled the manufacture of dyes within the United States. The result was that in 1923, seven years after the tariff was put on, the dye manufactures in the United States were valued at £18,000,000 sterling, and outside competition had ceased altogether. But what did South Africa, with its moderate discriminating tariff do in similar circumstances? It did nothing. The war proved a real protective barrier for South Africa and many industries progressed; but we did not take advantage of it, and we have fallen back to our old position. Now this Government has to come along and repair what the other Government should have done, and South Africa has to start afresh. There are many cases I could quote where industries are languishing for want of protection against cheap European labour. We have heard so much about discriminating protection that one would think that we, on this side, want indiscriminate protection. That is by no means the case. What we say is that the industries we want to foster should be natural to the country. In other words, that the raw material should be here. We regard it as a negation of our policy that diamonds mined in Kimberley should be sent overseas to be cut; that wattle bark grown in this country, and hides produced here, should be sent to England and elsewhere, and come back here in the form of leather and boots; or that wool should be grown in this country, sent overseas, and come back in the shape of clothing and other woollens. In place of this we should turn into finished products our own raw materials, and employ our people instead of people overseas. We have had the amazing spectacle to-day of the hon. member for Cane Town (Central) (Mr. Jagger), who is admittedly an importer, and the hon. member for South Peninsula (Sir Drummond Chaplin), who has been referred to as representing the Chamber of Mines, advising the farmers on the Government side what attitude they should adopt with reference to protection. If it were necessary I should say—

because what these gentlemen suggest is not in the interests of South Africa or the interests of those these benches represent. Free trade is a selfish policy, and that is why these gentlemen advocate it. They see in it an advantage to themselves, and those they represent—the importers and the mining companies—and naturally they are all out for it. In order to introduce protection, it must be understood that as in the case of any new policy, somebody must make a sacrifice at first. Among the first things I should like to see made in this country would be farming implements. A few months ago I was in one of the dorps in the Transvaal and I found that, in every instance, the agricultural implements on sale there were either made in Germany or the United States. Bearing that in mind, I would like to ask hon. members on both sides of the House what becomes of the saying—

If these gentlemen are as anxious for South Africa first, as they say they are, they should be ashamed to use agricultural implements made overseas, provided they can obtain similar articles made in South Africa.

You cannot get them.

That is only a matter of time. There is no reason at all why agricultural implements should not be made here, and then our farmers instead of supporting people in other countries, could support their own kith and kin. The same thing happened in Australia; where great objection was raised to protecting agricultural implements. It was said that they could not be made in that country, but the McKay Harvester Company was established, and in a very few years it not only manufactured enough for Australia’s requirements, but was able to compete in the world’s market against all comers. History would repeat itself here if the scheme were given a trial, and I trust farmers will not listen to the blandishments of the other side and betray future generations, for a small immediate benefit. The programme we uphold on these benches is protection for national industries by tariff or bounty, and at the same time we believe in protection for the workers in those industries by way of proper conditions of work, limited hours of labour, and sufficient wages. We also believe in the protection of the public by the avoidance of excessive prices, and I will say here that the curtailment of profits is going to be one of the biggest difficulties in introducing a protective policy. We have been told here to-day that under protection the cost of living would increase, and such important items as the prices of matches have been quoted. But the principal items of the ordinary person’s expenditure are housing and food-stuffs. The late Government had a very practical way of dealing with the housing problem, and I am only sorry that the present Government does not extend that policy. I refer to housing loans. The municipalities obtained money from the Government at a low rate of interest, and by that means hundreds of people who, in the ordinary way, would never have had homes of their own have acquired them on very favourable conditions and at a low rate of interest. If the present Government continued that policy it would be a big public boon, for housing is still a difficult problem for men of small means. I trust the Government will deal with the matter in the way indicated, and if it does it will be a big step towards reducing the cost of living. As regards foodstuffs, I have recently stated in the House my views as to the necessity of regulating the prices of necessaries, and we have the promise that the Board of Trade will look into the prices of bread and meat. I am satisfied from the investigations I have made that the report must be in favour of a very big reduction in the cost of these articles. We are told that under protection salaries would purchase less. That is apparently the case, but let us take a comparative view of the United States and England. The cost of living is 50 per cent. higher in the United States than it is in England, but on the other hand wages are 125 per cent. higher in the United States than in England. Further the American artizan works shorter hours and lives a very much happier and more comfortable life than his English competitor. He has no financial worries, and a very large proportion of the inventions which emanate from America are the work of mechanics and artizans who have time and energy to devote to investigation and experiment. What a contrast the British worker provides. During the war practically 50 per cent. of the men brought up in free trade England, who had worked in factories from daylight to dark for a mere pittance, were found to be unfit for active service. The United States, under protection, on the other hand, are a healthy, happy and prosperous community, which not only retains its own people, but absorbs every year more than the entire white population of South Africa. No wonder the United States have to put a limit on the number of people who wish to rush into that country. The same thing applies to Australia, to a lesser extent. Quite a number of people born in South Africa, who have been compelled to leave here for Australia, have found work immediately on their arrival there. This shows that under a protective policy there is work for all. The same thing would apply here. With protection we would have work for all willing to work, we could get a large influx of white workers and would soon create the home markets required. There would be no trouble about shipping freights, and the farmers would share in the general prosperity of the country. The hon. member for Cape Town (Central) (Mr. Jagger) says that under protection people would leave the land, but he seems to have forgotten that in the past few years 70,000 people have come off the land under present conditions, and the trouble is they never go back to the land. We must, therefore, find work in our towns, not only for the present, but future generations. Our farmers cannot continue to cut up their land, and there must come a time when they will want to know what to do with their children. These openings will only occur under a policy of protection, and I hope they will realize that the interests of South Africa as a whole are their interests, and therefore anything which affects South Africa must affect them. Let us assume as correct the statement that under protection we are going to have higher living costs, but with plenty of work people will be able to afford to pay. We were told by the hon. member for Bloemfontein (North) (Mr. Barlow), that if he wanted to buy a hat or a pair of boots he would have to pay more for them under protection than under free trade, but he forgets that the unemployed are not able to afford to buy anything, no matter how low the price may be. What is the solution of all this’ What solution do the hon. members opposite give? The hon. member for Cape Town (Central) (Mr. Jagger) tells us protection is going to be a curse to the country.

He wants to reduce wages.

The hon. member might tell us that having exhausted all other means of employment he wants us to take in each others’ washing, but the high licence fee on laundries prohibits this. Does the hon. member propose that we should continue as we are going at the present time? To-day we are spending half a million a year in relief works, which are of no permanent good and must be a failure. We are spending extra money in poor relief and charity, and altogether, in order to continue the present rotten system, it must be costing us a million pounds yearly. The only way we are going to obviate this is to have a big fiscal change. From statistics we know that every year 9,000 boys are leaving school without hope of employment. We must find work for them, and in order to reduce taxation per head it is imperative we should get more white population. Overhead charges for interest on loans, and payment of officials to run the ship of State cannot be reduced. I hope the Government will continue in its policy of protection and will go the whole hog and give us real protection. By this policy I believe the Government can introduce a number of industrialists into the country, not croakers, like my hon. friend, if he will excuse me for saying so, but people who will come and give the country a fair trial. If we have industry and it is made known to the world that men can get lucrative employment under our sunny skies, I think they will leave the fogs and come out here. I would like to speak about another portion of the tariff, professional fees. I think the Minister made a mistake in increasing the professional fees at the present time, because there does not appear to be any necessity for it. There is no mandate for it, and no reason why these people should be picked out for special taxation. It is class legislation which should not be considered. If I might be permitted, I would like to speak personally now on the question of auctioneers’ and appraisers’ licences, because these have been raised very high. In the Transvaal I was paying £5 a year, but under the new tariff I have to pay £25, or only 400 per cent. more, for the auctioneers’ and appraisers’ tax.

Was that done by the previous Government?

I dont know, but whoever is responsible for this last impost has something to answer for. Men who do business on the Witwatersrand must have provincial licences, which are going to cost £25 a year against £5 to-day.

The shoe is pinching.

If there was a boom on I could understand it, but there is no boom. I will undertake to bet, if it were parliamentary, that if the Minister looks up his records, there are not six of the many auctioneers on the Witwatersrand who, during the last few years, have paid any income tax.

They are a clever lot then, very clever at book-keeping.

You will find they have been living on capital. Now on the question of occupational licences, which in the past were left to the local bodies. Take, as an example, billiard table fees. The municipalities had control, and I think it was a far better arrangement. It does not seem fair to say that the earning capacity of billiard tables in Cape Town is only the same as in the remote dorps, yet they have to pay the same under the proposed rates. It should be left to the local authorities, who would deal more equitably with it than under the present proposal.

We have listened to a very interesting speech from the hon. member but the sting was in the end of the speech. He ought to see that when you have to pay £25 licence for appraisers and auctioneers every man won’t be able to get it, so there you have protection in its very essence.

I want protection for the other man.

The hon. member offered to make a bet with the Minister. It seems to be a habit of my labour friends to start betting. It is a new disease, and I hope it will not continue. If the Minister put a big tax on the men making bets, there might be fewer bets. Some of the bets are not a credit to those who make them. My hon. friend’s bet to the Minister was not a credit to Parliament.

Is Parliament the only place they make bets?

There might be other places, I do not know’. I am interested to know, however, that the Labour programme seeks protection for all industries. I am glad. I remember when there were only a few hon. members in this House who supported protection. I am glad to see this now, because some of us stood up for protection for South African industries ever since we entered this House. I am glad to see you are now going to help us to carry this through. There are more friends in this House of South African industries than of free trade. The hon. member for Cape Town (Central) (Mr. Jagger) gave us a homily on free trade, and that represents about the whole of his following on this side of the House. Take the boot trade. The boot trade of to-day is in the position it is through what the late Government did for it. There is no doubt about that. Let us be just. The late Government did not do as much as I would have liked them to do, but they certainly made a start. I want to deal now with my hon. friend, the member for Cape Town (Central) (Mr. Jagger). He gave us a speech lasting nearly an hour and a half, and I do not think there was anything from a to z in connection with free trade, so far as it applies to this country, that he did not deal with. I think I am safe in saying that we all recognize that the hon. member is very honest and sincere. I believe he would admit, if I put it to him, that not only would he have free trade in trade, but he would also have free trade in wages. He would like A and B to make their own contracts as regards wages. That, I believe, it is impossible to deal with in that way. We know what free trade in wages means as far as the workmen are concerned. Which is the greatest free trade country in the world to-day? Great Britain. I ask the hon. member to follow the statistics, as no doubt he does, in regard to employment in the world to-day, and he will find that free trade Britain has more unemployed than any other country in the world to-day. In fact, the gold dole system has become almost an industry in itself, in consequence of the state of trade. I think the hon. member must admit that if, after fully half a century, the Cobden school of free trade has put the Old Country—the Mother Country, to many of us—into that position, the principles upon which it is based cannot be sound, when it leaves such a large section of its population out of employment So much is that the case that the very school to which my hon. friend belongs were, at the last general election, left almost nil at the polls. What is the position to-day? The present Prime Minister is introducing tariffs, and the present chancellor of the exchequer is introducing tariffs so as to stabilize trade and give employment to people in Great Britain. Take America. The hon. member (Mr. Jagger) talked about the 48 states of America. As a matter of fact, there are 53 states in America to-day. Every writer whom I have been able to read on the subject has laid down the fact that America has built up her position because of the protection of her own trades. We all know Abraham Lincoln’s celebrated dictum—

What is the position here? My hon. friend attacked the printing trade. Let me say this: This is the first time, I think, the hon. member has been unjust in any speech he has made. He took the balance sheet and said—

That does not mean very much possibly. He has got to find out what the turnover of that firm was for that year. Suppose they had a turnover of £600,000 and the capital is £150,000, what does it work out at? It does not work out at above 5 per cent. on their turnover. In spite of what the hon. member for Cape Town (Central) (Mr. Jagger) may say, I think that 5 per cent. is not an extravagant profit on a turnover of £600,000, if you have a capital of £150,000. I know a concern where the capital is £5,000, and that concern pays 20 per cent. every year. Would it surprise my hon. friend to know that the nature of business is such, that no concern turns over its capital six times a year. What is the profit? Very much less than the average man would care to take, or could afford to take. Let us suppose that the capital, instead of being £150,000, had been £600,000. what would have been the result? They would only have had 5 per cent. on their capital. In dealing with this question, you have not merely to take the dividend that is paid, but you have to take the turnover as well. Another thing my hon. friend forgot to say was that printing was not the sole business of this firm. It is possible that the profit on the printing business might not have been able to pay that dividend.

I said that.

Yes, I admit that. How can my hon. friend tell whether that dividend is made on the printing side or not? Is it not possible that it might have been made on the other side of the business? Then, if it was made on the other side of the business, the whole argument of my hon. friend falls to the ground. He says that it is going to affect the consumer. Before the present delimitation I had 4,800 electors in my constituency, and I began to think what proportion would use printing. I make bold to say that there is not 5 per cent. that would use printing. After all is said and done, how can the cost of printing affect the great multitude? I do not think my hon. friend could have taken a worse illustration than printing. The amount spent on printing by the general public is extremely small. Where is the trade in which both masters and workmen are in a better position than they are in the printing trade to-day? I don’t know it. What has been the secret? The secret has been that there has been a strong trade union to defend the men, the masters have met them, everything has been arranged amicably, and the result is that, to-day, the printing industry is one of the best trades in the country. Take the matter of exercise books, for instance. If the hon. member will just look at this and see how much the printer gets and the workman gets for producing them, and then how much the middleman gets, he will find that the middleman gets a much larger share of the profit than the man who produces them. My hon. friend made an attack on the boot trade. I think when he comes to die he will be stared in the face by a pair of boots. Ever since I can remember he has had this boot bogey before him. He also attacked the sugar trade. What price would we have had to pay for sugar if it had not been for the sugar factories of Natal during the war? As to boots, the difference between a pair of boots produced here and those imported is so small, that it cannot affect the general wearer very much. Then he attacked coloured labour in the factories. The hon. member must remember that there are districts and districts, but why should not coloured labour be employed if they get just wages? As I understand it, those who receive protection for their industries should only receive it on the grounds that they pay a just and fair rate of wages to those whom they employ. The very thing the Board of Trade exists for is to investigate such trades as should be protected. I recently received letters about certain items that were being protected wrongly. I submitted these to the Board of Trade and I am sure they will be considered favourably. The hon. member for South Peninsula (Sir Drummond Chaplin) said the board consisted of young men, but I have yet to learn that if a man has the experience and the education that his youth should make any difference to his capacity. If they can investigate properly I do not see that it makes the slightest difference who they are. I hope the Minister will not depart from his course because of the speech of the hon. member for Cape Town (Central) (Mr. Jagger), who has been giving us this cry for seventeen or eighteen years, but in spite of it we have gone on with the development of industry. It is the duty of every country to utilize its own products as far as possible, by every means it can for the purpose of developing the country. I appreciate very much what the Government are doing in this direction. We must approach this in the spirit that this is a national programme. I rose because I wanted them to feel that everybody was not with the hon. member for Cape Town (Central). I recognize that this Government are going even further than the last Government in the way of protection. We must eliminate the party spirit. We must look at the trade of the country. We must have regard to the hope of the boys in this country, and the development is bound to come. It is not always the article that costs least that brings the best results. I congratulate the Government on their step forward, although, in my opinion, they are not marching fast enough, but, as far as they have gone, I am sure we appreciate it, and I am sure many members will support me, with the exception of a possible few, whose idea of trade is determined by how cheaply you can buy a thing and how cheaply you can sell it.

One was delighted to listen to the speech of the hon. member who has just sat down, and one was particularly struck by the earnest appeal, which I re-echo, that this matter should, as far as possible, be divorced from party politics. What the hon. gentleman meant, I take it, was that no party capital should be made out of either arguments for or against. What he desired to impress upon the House was his deep-rooted conviction, and it is mine too, that this should be approached from a national point of view, with the sole object that we should, by united effort, secure the advancement of the country. I must say a word in regard to that, in view of his remarks. He said it was due to the South African party that a tariff was imposed on boots, which resulted in the building up of the present boot industry. One would have thought, from the way the hon. member put it, that it was a spontaneous effort on the part of the South African party; that they had conceived it, and that they were anxious to build up this boot industry by means of the imposition of a tariff. That is far from the truth. Those who were in the House at the time know that there was almost a rebellion on that side.

Forty of them.

Was not the boot thrown down. They said if you don’t give us not a tariff but—prohibition of the importation of certain kinds of boots, we will fight against the Government and out you go. So much for the high-souled intention of the then Government as a whole to build up the boot industry by means of a tariff. The result of that rebellion was that though the then stubborn Minister of Finance refused to go the whole hog, we made some concession to them. That is the history of the tariff on boots. So the hon. member must not lay the flattering unction to his soul, that the late Government did this. It was pure self interest on the part of a certain section—the iron heel on the wooden boot. I refrain from saying leather; because there are some wondrous compounds in boots and it behoves the hon. member for Cape Town (Central) (Mr. Jagger) to give us a second edition of his speech and tell us what goes into the manufacture of hoots. Well, we are all agreed that it is not only wise but imperative that we should build up the industries of the country. But it is also well for us to consider well how we should do it. I want to second the appeal of the hon. member for Bloemfontein (North) (Mr. Barlow). Beware how you rush into a tariff wall; beware how you rush into protection of your industries and the building up of your industries by so crude and unscientific a method as the imposition of tariffs. Don’t let the House misunderstand me; I want to lay it down, as a fundamental principle, that I thoroughly and soundly believe that we have got to encourage our industries, and encourage them in view of the big world relationships, by means of protection. It is unfortunate but it is true. Under the system in which we live where you have a suicidal world war, commercially, running on, you have the singular circumstance lacing you all the time, of one country trying to set up, and actually succeeding in doing so, setting up a tariff wall against another country—each country trying to intrude its manufactures and products into the other country and shut out the other country’s products. We are taking our part; gradually drifting into it. That is the state of affairs, and I want to say that whatever means we may devise, or hope to devise, the fact remains that it cannot last long. It can only be a temporary expedient, and that is all rendered absolutely necessary by the policy of the whole world in carrying out of cut-throat profit making, and, try how you will, you will never devise any means to accomplish the end of making this or any other country in the world great or sane when you have a state of affairs where everybody in trying to make profits out of the needs of the people, and all we can do is to palliate the position and gain some temporary advantage for our country, later on to lose it to some temporary advantage to the other country. I want to remind the Minister of Finance, in his consideration of this question, and the Government generally and the House, that tariffs have a boomerang effect; because there is no country, in the present state of the world’s development, which can do without the products of some other country. Under a sane and wise state of society, we would have this state of affairs, that where things can be best produced in one country, there they will be produced for the rest of the world, and if we could do that with an article, it would be our task to make it and disseminate it throughout the world. But in view of the fact that everybody is rushing for profits, and fighting for profits, and having no other goal in view, then we find ourselves in this false, artificial position, where we have to be building up walls against each other, and these walls tend to react. The bricks tend to drop out and fall on your toes. If we start a tariff wall, and say to a country that desires to send to us articles which they can produce cheaper, and perhaps for the moment, better than we can, that we are going to put up a tariff wall against them, and as that is their only hope of expansion, they, in turn, are going to place an embargo on the goods we produce and desire to export to them.

You are a free trader.

No, but I am a free-trader in diamonds. Whilst we are anxious to protect existing industries where they require it and also to establish new industries, I do ask the House to be careful how it does it. The tariff method is unscientific. The hon. member for Cape Town (Central) (Mr. Jagger) is perfectly correct on one point. His point was emphasized very ably by the hon. member for Bloemfontein (North) (Mr. Barlow). The point was this—that the amount of protection given to industry by means of the tariff does not represent the full amount the country pays. Further, if you are gaining revenue by the imposition of protective duties you are not protecting. The Minister of Finance expects to gain added revenue to the extent of £400,000 by these new duties. But you cannot have the money and also protect. If goods continue to come into the country under the increased tariff and produce £400,000 in customs duties we are not keeping them out, and thus you are not protecting the manufacturer of similar goods in South Africa. Logically the position is this—if it is necessary to prevent importations in order that you should manufacture the article here, you must do so but if you do that you will get no revenue from these importations. May I say, by the way, that it is very unsatisfactory to allow the Minister to look upon these protective duties as revenue, for immediately he adds that sum to his ordinary revenue, it will very difficult to persuade him to let go of it? I am in happy agreement with the hon. member for Cape Town (Central) (Mr. Jagger) on this point—to get this additional £400,000 in customs duty you are going to charge the country nearly £1,000,000.

Who pays the million?

The people here. The £400,000 are paid upon the value of the goods and the whole of that has to be paid out Naturally every person in business hopes to make a profit. I am informed that the average profit is reckoned at 25 per cent., but I have an idea that 33 and one-third per cent. is looked upon as legitimate profit. Assuming that there are only two intermediaries—the wholesaler and the retailer—the importer is not content to make his profit only on the original cost, and quite rightly; as he has to pay higher import duties, he gets a percentage on the top of that in addition to the freight and other charges. Thus, in order that the revenue may benefit to the extent of £400,000, the consumer in South Africa will pay not £400,000, but £781,250. Assuming that the customs are responsible for the collection of something like £8,000,000 in revenue, the consumer has to pay over £15,000.000. May I appeal to the Minister—although I am afraid it is too late this year—to consult with those who wish to see South Africa go ahead, in order to ascertain whether some better system of fostering industries cannot be devised. My hon. friend had a gibe at the hon. member for Boksburg (Mr. McMenamin) he said: within the last five years we had turned our attention to protection. My hon. friend is not fair there. We have had it on our programme since we were a South African Labour party. But as a result of our cogitations, rightly or wrongly, we came to the conclusion, as I have come to the conclusion, and I maintain now, that the best system of protecting your industries in the country is by means of bounties. You have many advantages by the system of bounties. In the first place, the amount required to protect the industry is a definite amount paid definitely without being passed on to the consumer.

Your figures are wrong.

I would say to the hon. member for Beaconsfield (Col. Sir David Harris) the figures are here. In between the original agreement of customs duty and the time it reaches the consumer there are increased amounts. The original amount is very much enlarged by the time it reaches the consumer. I know it is becoming more customary for the wholesaler to import direct and pass it on to the consumer, but the consumer pays more than is passed on to the State in customs duties. If it is paid in bounties it is paid direct and does not become any more on reaching the consumer. If it does, the State steps in and says: “You get no bounty if you charge the customer more.” Under that system, every year the House will get all the information necessary on the working of the businesses and can see at any time whether it is advisable or not to go on paying the bounty. We could lay down conditions under which the industry could be run. It is a most scientific method of protecting an industry. It never gets more money unless we decide in Parliament that it shall get more, because it comes up every year for review. Thirdly, we are going to know the conditions of an industry, the hours and the wages, and whether the labour is civilized or uncivilized. By a tariff system you lose touch once you put the tariff on, and the Minister only knows that he expects to derive a certain amount of money from it. The fact remains that we are not protecting an industry adequately if we derive revenue in the process. Apart from the principle, I would like to refer to some of the details which prove what I have contended in a matter of principle. You don’t know all the ramifications when you have imposed a tariff. You do not know what things it affects and you are only surmising up to a certain extent. I put it that the Board of Industries themselves do not know how far a tariff ramifies through a country. It is difficult to find out. I had a case put before me and it has also been put before the Minister. It is decided to increase the tariff on plain sheet glass in the hope, I suppose, of starting a glass industry. It is either that, or he expects to get revenue from it. There is no large glass industry in the country, and very small prospects of there being any, but I am willing to join with the Minister in trying to institute fresh industries. Now what has he done? We Rave rapidly built up in this country joinery works, so much so that there is one firm that I know which has been hitherto a big importing firm of joinery products, but which has founded a factory and is making their own requirements on the spot, and would you believe it, though it must sound rank heresy to the hon. member for Cape Town (Central) (Mr. Jagger), but it is all done in the Transvaal by highly-paid civilized labour. All the household joinery requirements of a large importing building firm are being manufactured near Johannesburg, including lights, the frames with the glass in. The Minister has imposed a heavy tariff on the importation of glass, but he omits to do it on the lights. What happens? It is a direct incentive not to produce work in this country, but to import it. The firm should have been producing it, but have come to the conclusion it pays better to import the manufactured lights from Scandinavia than to make them here under the new tariff arrangement. Heaven knows how many more there are. It is most difficult for any body of men to lay down definitely how this tariff ramifies through industry and acts on the industries of the country. Is it not better to introduce a method involving only absolute amounts, circumscribed in their effects, rather than an unscientific, unsound, unknown quantity like the imposition of a tariff undoubtedly involves. There are other things one would like to deal with, concrete examples. My main object in rising was to endeavour to press upon the House and the Minister that it is common cause with us all, possibly with one or two exceptions, that the time has arrived when industry has to be fostered in South Africa, when we should look upon our home market as our important market, and not, like the hon. member for Cape Town (Central) (Mr. Jagger), as too small. It is only as small as you make it, and it can be as large as you make it. Your home market is your wage earner and your wage spender. What is our foreign market is somebody else’s home market. We are all endeavouring to intrude upon each other. Therefore, it is wise for us to look at our home market and manufacture for that home market wherever it is required. Let us not be foolish, let us not rush in because others happen to have done it, but let us realize that there must be some scientific way of attacking this, as there is of attacking all questions and all problems of national importance. That other way. I submit to the Minister and to the House, is the institution of bounties, not the rather elusive method, the rather happy-go-lucky method of imposing a tariff and hoping to God that it is going to have some effect.

It was very disappointing to me on examining the tariff to discover—and I think that all wine farmers feel the same about it—that the excise on strong drink has remained unchanged. What I can congratulate the hon. Minister of Finance upon is his sympathetic attitude towards the industries of our country, and especially towards the protecting measures of our cattle and grain farmers, I regret to say that he has not been equally sympathetic towards the wine farmers and has neglected to also introduce protective measures to enable the wine farmers to stand up against the competition from abroad. We are a wine producing country, and it happens too often that the wine farmers are not able to get a proper market for their wine in their own country. Then, in addition, we have over production, and are only too often obliged to pull out the taps and so causing thousands of leaguers of wine to become lost. Nevertheless, we permit the foreign article to be imported, and to an extent which is equal to one-third of the whole quantity of liquor which is consumed in this country. It is a very unsound position. The importation of drink is directly encouraged by the excise duty, which is 37s. 6d. a gallon of whisky here, while abroad it is 72s. 6d., and the import duty on Cape brandy amounts to 73s. 6d. That terrible condition of things enables the foreign competition to import liquor here, and they can dispose of it to better advantage here than at home. Our attention is continually drawn to-day to the action of the Government in protecting our industries even in some cases against our own interests in as much as indispensable articles are taxed to the detriment of the population. We are willing to swallow the bitter pill, because we think that the policy is a good policy in the interest of the development of our industries, and the giving of work in our country, but the wine industry is made an exception by the Government with open eyes and without sympathy. Notwithstanding that we are a wine producing country, our tariffs are even lower than in Canada, and our liquor trade falls to a great extent into the hands of foreign producers.

pointed out that there was not a quorum.

House counted, and Mr. Speaker declared that a quorum was present.

It is true, indeed, that the Act of 1924 brought relief to the wine farmer. The dealers are now obliged to buy their drink at the price that the Cooperative Wine Farmers’ Association has fixed, but nothing can prevent him if he thinks the price too high from importing the article from abroad, and that, to such an extent, that he can sell more imported liquor than he himself produces. The only manner to prevent this is to make the tariffs so high that they are at least equal to the excise in the country of export. When we sat in Opposition on that side of the House, we always insisted on high import duties on whisky and, from platform to platform, we preached in the wine districts that our policy would be to see to it that the excise of strong drink was increased. Therefore we are disappointed. I know that the hon. Minister has had his hands full, and we acknowledge that he has already done much in the interest of the country, but we hope that, in the coming recess, he will see his way open to take steps to give our wine farmers the necessary.

I should like to comment on three remarks made by the Minister. The first remark he made this afternoon, or one of the first, was that, in his opinion, the taxpayer should contribute to the State in proportion to his ability to pay. I should like to know in what way the Minister of Finance applies this suggestion of his. He takes a man with £500 a year, invested in a company, and he makes that man pay income tax at a higher rate per £ than the man with £50,000 a year invested in other forms of security. Upon a man with £500 a year derived from a limited liability company, he imposes a tax of £62 10s. a year, while, if he gets the same income from other sources, he is taxed £25 10s. 5d. a year. That is, he more than doubles his income tax, because he commits the crime of investing in a limited liability company. Let us go into the range of larger incomes which are subject to super-tax. Take a man with £3,000 a year—because it is best to give definite examples, so that one can appreciate the very great injustice of this form of taxation—who derives his income from limited companies, including interest on debentures. He is taxed £433 6s. 8d. a year while the same man, having the same income—£3,000—from other sources, would only have to pay £270 1s. 8d., that is, because he committed the iniquity of investing in limited liability companies, he would have to pay £206 more on an income of £3,000. I do not understand, and the Minister has not put forward any reason, for his harshness, if I may so put it, on the holders of shares in limited liability companies. The only reason that I can see, is the ordinary highwayman’s reason, that he wants the money, and is going to take it. But I suggest that he could minimise the injustice very much if he made his basic rate a shilling in the £ on all dividends and interest on debentures and surcharge the individual—the rate to which that individual is liable under the normal tax. That is to say, that if an individual has a large income, he would be surcharged a shilling in the £. making 2s. in the £ the maximum for those liable under the normal tax and I further suggest that there would be no administrative difficulty in doing it any more than there would be in levying The income tax department would take the total of a man’s dividends, charge him the full normal rate on it, and deduct the amount which he had paid through the company and then you would get some limited form of justice. An-other thing that the Minister said, and I am certain that he did not appreciate what he was saying when he said, in his budget speech that he was going to revert to the single flat rate of tax on profits, such rate to be the sum of the existing two rates for normal and dividend tax respectively. And then he made the cryptic remark—

If he refers to the last report of the income that department—up to June, 1923—he will find that the total taxable income of companies amounted to £19,942,000, while the dividend tax for the same period was only assessed on £13,867,000. That is a difference of over £6,000,000.

They did not distribute.

I want to point out to the Minister that he is going to charge an extra 1s. in the £ on over £6,000,000 which amounts, roughly, to £300.000 a year. I suggest to the Minister that it is rather poor consolation to owners of shares in companies when the Minister says that hon. members will see that it is not intended to increase the tax. If you take another £300,000 out of the public surely you are increasing the taxes.

They have been very lucky to escape it all the time.

The Minister must be a wizard to get £300,000 more when it is not to come from anybody. I am perfectly prepared to tell the income-tax people if they come for another 25 per cent. on the tax that they have made a mistake for the Minister told me that the tax is not going to be increased. The public are going to pay in this form £300,000 more than they did under the previous arrangement. This is going to fall more harshly on people with medium and small incomes than on people with high incomes, for in the latter case they probably pay 1s. 9d. or 1s. 10d. in the £ in normal tax, whilst the Minister will deduct 2s. 6d. in the £ from money due to people who are not subject to income-tax at all. That is my real complaint against the form of taxation the Minister is levying on companies. What the Minister should have stated was that he is charging the same on so much of the profits as are being distributed in dividends, and that he is levying an additional 1s. in the £ on the balance undistributed. The other statement I wish to call attention to is this. The Minister mentioned that he was doing away with the privileged position of private companies in this matter. What “privilege” is he doing away with? The only “privilege he is doing away with is the “privilege” to be unfairly taxed. He is committing an act of injustice.

Why should a private company be treated differently to any other company?

The real point is why should a shareholder be treated differently from any other individual. Simply because the Minister treats the shareholders in a public company with injustice that is no reason why he should extend the injustice to a shareholder in a private company. For instance, the position to-day under the Minister’s suggestion is that if there are ten men in an ordinary partnership they will now be charged much more if they turn their business into a limited liability company.

Why do they form a company?

For various reasons. First of all I would suggest it is not a crime to form a limited liability company.

It is a privilege.

In the case of a private partnership there is always a difficulty in liquidating assets in the event of one of the partner dying, but that difficulty is overcome if the concern is a limited liability company. Another reason for forming a business into a limited liability company is that ownership rights can be very much more clearly defined.

It may be more negotiable.

I agree. Instead of penalizing limited companies the Government ought to help them in every way. If you look round the country you will find limited liability companies have done more to develop the country than any other form of the investing public. In all the forward movements you will find it has been done through the medium of limited liability companies, and surely we don’t want to penalize enterprize of any kind in the country, and therefore the Minister’s particular antipathy to public companies passes my comprehension. There is another point, and that is a limited liability company is one of few methods the poor man, and the man of medium means has, of investing his money and small savings so as to get the same return as the man of large means. If he is careful and wise he can become a partner with people of big interests, and earn the same return as the man who has the command of large capital. I get back to the elementary justice of the thing. There cannot be any justice in penalizing one form of investment against another form of investment. Of course, the Minister, I agree inherits the principle from his predecessor. I appreciate that. But we are expecting better things from the other side, and when the tax was originally put on it was put on at 1s. all round, as the Minister will remember. The principle was wrong but the injustice was slight. Then it went up to 1s. 6d. in the £, and the injustice became much greater. Now it has gone up to 2s. 6d. in the £, and I frankly say the injustice is indefensible. That is the conclusion any ordinary man would come to. I know it is simplifying the administration by doing away with the dividend tax. It is a pity he did not go the whole way and simplify it entirely by putting the tax on the individual, as it is done in most other countries, at any rate there is no tax on companies in England, it is entirely on the individual, and it is justly balanced, and the individual pays according to his ability to pay, which is the end, I understand, the Minister is aiming at. I asked the Minister whether he cannot agree to levy an all-round tax on companies of 1s. in the £, and make the individual shareholders liable for the difference, at the rate that his income should be rated for normal tax. If his normal tax rate is 1s. 6d. in the £ he would have to pay another 6d. in the £, in the same way as he pays super tax. Without administrative difficulty the Minister would get his money all right, and so do away with a grave injustice. He will get the difference between the 1s. and what the man ought to pay. He will not get money that he is not entitled to, but he will get the money he is entitled to as Minister of Finance. I was disappointed the Minister made no statement as regards the tax on interest received by debenture holders. I was hoping that he was going to say that in the Bill which he is bringing in, he was going to amend Clause 21 (2) (a) of the 1917 Act. That is a right and clear way of doing it. The clause, as he will remember, instead of allowing debenture interest to be treated as an expense, treats it as a profit. That is where the injustice really arises; and I had hope, at any rate, that he was going to see that the people, especially the poorer classes who receive interest on these debentures and have to pay 2s. 6d. in the £ tax on every £ they receive, would be relieved of this very grave burden. I was very glad to hear the hon. member for Yeoville (Mr. Duncan) take up the question of estate duty. I think most of us realize that the estate duty is a fair and reasonable tax, but I must say that I entirely agree with him that the abatement should be reduced a good deal below the £7,500 mark. It seems to me that the duty could easily start at £5,000. Perhaps if the Minister were to consider that, it would help to make up the loss of money that he is getting from the poor shareholder in the limited liability companies to which he is not entitled. It might be something on the credit side for him after he has appeased his conscience by righting a wrong. I would like to say one word regarding licences. I notice the hon. member for Cape Town (Han over Street) (Mr. Alexander) referred again to the importers’ licences and the maximum. Any licence of any considerable amount must be bad in its incidence, and my view always has been that the utmost tax ought to be about £15. I cannot quite see how the Hon. member for Hanover Street does not appreciate the fact that if you take a licence, either of the nature of the importer’s licence, or any of a similar nature, but the importer’s licence particularly, if you don’t put a maximum on that, it becomes purely an ad valorem customs duty, which may be increased to such a point that it quite upsets the incidence of the customs tariff which you put on through the Board of Trade and Industries, and I quite agree that when you get an importer’s licence, or any other licence, including a general dealer’s licence, up to even £100, there is a certain hardship placed on the smaller man, but you are not going to improve it by making that licence larger all round. If it were not for the hon. member’s profession I would say, in fact, I will say, as long as the hon. member will not misunderstand me, that it is just as reasonable for the hon. member to take up the position that the licence should be increased as the size of your business increases as it would be for him to say that the licence of an attorney, an accountant, or an advocate should also increase as his business increases. There is no doubt, looked at from a purely equitable point of view, it is rather rough on the briefless barrister to have to pay £10 per annum licence, while the K.C. who makes £10,000 a year only has to pay the same amount. Yet I do not think he would advocate that it should be done on an ad valorem basis according to the value of a man’s briefs. We should be quite clear that the licence should only be an authority to trade and not a taxing measure, and I say that both the importer’s licence of £300 and the general dealer’s licence of £100 are excessive. Personally, I think the general dealer’s licence would be much fairer if it were £15 for each branch, just in the same way as you charge your banks per branch. There seems to be no reason why the general dealer should pay £100 licence for the branch, while a bank, doing perhaps infinitely more business and making infinitely more profit, pays £20. The real fault is trying to get revenue out of your licences. There is one point I would suggest to the Minister. I think in regard to the proviso for the professional licences that the second licence can be obtained for 50 per cent. of the scheduled amount, that he might consider whether he should not apply that to the other categories as well, because both in part 1 and in part 3 you get the same troubles as you do in part 2. I suggest he should apply that all round. It seems a very fair thing. I would like to make one or two remarks on the tariff. I am rather diffident about doing so after all the experts who have given us their views. As regards the suspended duties. I do ask the Minister to reconsider these duties altogether. I cannot see that the suspended duties are necessary at all. The House sits for six months in the year, and during those six months surely the Minister can come to the House and ask for any special duty to be put on. It does not seem to me that there is so much urgency about it that it cannot stand over for the six months when the House is not in session. I would suggest to him also that if he keeps this form of duty on he must have some arrangement by which the importer is going to be given some notice. The importer cannot have the Sword of Damocles hanging over his head every time he indents for any goods that perhaps before they arrive here the duty may have gone up 10 per cent. or 15 per cent. and put him out of the market. The tiling is impossible, so I do urge the Minister to do away with it. It seems quite unnecessary to have these duties; it is going to lead to terrible trouble, and it is very unfair. As regards the differential duties mentioned by the hon. member for Cape Town (Central) (Mr. Jagger), well, I feel that for the money you hope to get out of them it is not worth while tempting the weak. There is going to be a horrible lot of humbug about it. It is very difficult to apply because the man with the least conscience comes off best. And so I do feel that if you think it necessary to put an article on the free list because it is used for some manufacturing purpose, I suggest it should be put on the free list altogether. That is, there should be only one duty for one article, and everybody will know what it is, and there will be no temptation to wrong doing on the part of the public. I can assure the Minister that there will be a good deal of swindling going on with these differential duties. I am not a follower of the hon. member for Cape Town (Central) (Mr. Jagger) on tariffs. I know that the facts he puts before us in the House are beyond impeachment; but we cannot all agree with the deductions he makes from those facts. As a general rule, it seems to me it is not worth while discussing free trade and protection in South Africa. We are bound to have a tariff for revenue purposes, and it has to be a pretty stiff one, and the only question, to my mind, is whether we should levy that tax so as to benefit industries or not, and therefore the balance of evidence seems to be in favour of utilizing our necessity of raising revenue in order to help industries, and I must say I disagree with the hon. member. I do think the development of industries increases the population. If you increase the population, the advantage, so far as the country is concerned, is that von distribute the burden of taxation. The great trouble in this country is that, for such a small population, we have such a heavy burden of taxation. If we could only increase our profit-earning population, then our burden of taxation would not be so heavy as it is, and, indirectly it would help other industries because the cost of production would decrease. I feel that in this country we are very likely to go too far on the road of protection. If I may say so, the danger to-day is not that we shall make the mistake of going too far towards free trade, but that we shall overstep the bounds of reasonable protection, and although I have always been a protectionist, I feel that, in some cases to-day, our forms of protection are subject to the very greatest criticism. I do not think we test each industry sufficiently and the first test I would apply to an industry is how much increased labour will it employ? That is the main reason, I take it to give employment to people. We do not pay more for an article for the fun of the thing, but to employ people at reasonable wages Another important test is, what proportion of the total demand for a certain article is likely to be supplied by the local manufacturers, because there is a tendency,—to a certain extent there is bound to be in the earlier stages—that the country not only pays the tax that is levied at the ports on the imports; but also pays some proportion more on the goods that are locally manufactured, and it is very necessary if you are going to have protection, that you should see to it that the largest bulk possible of the demand can be manufactured locally. Another very important factor in deciding on any protection is whether efficient competition will be assured amongst the members of the industry in the Union. If you have an industry which can combine easily you are going to have the price put up against the consumer, but if you have an industry which is large enough to support a number of factories you are very much more likely to secure efficient competition, and thus keep prices within reasonable bounds. That is the difficulty the Board of Trade will be in with its suggestions, for there will not be sufficient competition in South Africa to keep the prices down to their right level. It will be found that the prices of the South African manufacturer will always be just below the price at which the article can be imported. In that event the public will pay more than it should, but if there is enough competition then the price will be kept well under the imported price, and the public will get the benefit.

How long does competition last now?

If we have only enough firms in an industry you will have plenty of competition, but the difficulty arises when there are only a few firms, for then it is very easy for them to form a combine. The hon. member for Cape Town (Central) (Mr. Jagger) quoted certain figures as to results obtained in certain industries, but it does not seem to me to be of any use to quote the figures of the most efficient manufacturer. If you are going to base your figures on that you will not put on enough duty to do any good, but you must base the figures on the average efficiency. I quite agree that the efficient man will always do well—the objection of our hon. friends opposite is that the efficient man always makes money. That is the reason why the hon. member for Cape Town (Central) (Mr. Jagger) can make a profit in the boot industry with an 8 per cent. duty and some of his competitors cannot. The criticism this afternoon was that these people ought not to object to lower duties because they make money.

Hear, hear.

I should have thought the hon. gentleman was the last person in this country to adopt the cry that it is a crime to be efficient.

I do not.

We are too prone, when a man has shown his efficiency, and has been successful, to criticize instead of complimenting him, and the hon. member for Cape Town (Central) took up exactly the same position. I would suggest another thing to the hon. member—that is, when he judges the results of any concern he should do so on the total capital employed, and not on the share capital only. He mentioned the case of a company the capital of which was so much, and the reserve fund was more than the share capital, and then he said they earned a big dividend on their share capital.
I would say if a man makes £20,000 and has got £100,000 share capital and £100,000 reserve capital, he makes 10 per cent. on his capital, and not 20 per cent., because he has £200.000 with which he is working. I think the deductions made by my hon. friend were exaggerated.

There are certain impressions created by this discussion which I cannot leave unanswered. In connection with the view of what the meaning may be of this customs tariff for the young country in which we live, views have been expressed which are intended to decrease the value thereof, and to completely destroy them if that were possible. No account is kept of the fact that we are here practically for the first time obtaining a proper customs tariff. Nor has account been taken of the fact that in the past we had an unscientific system, and that an attempt is made here to give us an independent and scientific system. This all is lost from view, and the system is criticized in the way that is petty to say the least of it. We do not appreciate sufficiently the work that has been done to give us a proper system, and to enable our industries to develop, and to put us in the position to build up an independent people. The conditions which prevailed in the past, and which still prevail today, call any Government to do something for the development of the country and of its industries, and then arguments are used here to frighten the population at the proposals of the Government. The position is that so many of our industries could not exist during the depression after the war, and where now an attempt is being made to help them on again, the hon. member for Cape Town (Central) (Mr. Jagger) regards it as an attempt to reinstate war conditions in the country. The great argument on which I wish to say a few words is that this tariff will lead to an increase in the cost of living. It astonishes me to see that the hon. member for Benoni (Mr. Madeley) commences to juggle with figures here to prove to us how the figures are added one to another, with the result that the cost of living is increased. I tried to follow the figures in order to see what the effect thereof on the cost of living would be. My first conclusion is that the increases in connection with eatables did not take place on essential foodstuffs. There is an increase on cheese, but large quantities of that are already made in this country. Then there is an increase on certain sweets and such like dainties which are not necessary. Fish extracts also falls under this category. Then there are other delicacies such as tapioca, fruit syrup, etc., which we can regard as luxuries. They are used by those who have a taste for them, but they are not essential foodstuffs. The costs of living are, therefore, not increased, but a large class of articles are imported duty free and, according to the Minister of Finance, this will reduce the cost of living. The hon. member for Cape Town (Central), however, points to £400,000 more, which has to be paid and says that the costs of living are increased by that amount, because it is a further sum which has to be paid. I have also gone into this, and I mention some of the articles on which the customs tariff has been raised in order to see whether it will increase the cost of Jiving. We have beads, watches, silverware, musical instruments, sporting goods, tobacco goods, writing materials, pyrotechnics, printing and motors. The increases, therefore, fall on those things which are able to pay. They also come on luxuries, and it is a wrong argument to state that it will increase the cost of living. But even where there is an increase in the cost here and there we must, as a young country, remember that we must develop, and where employment is given to the inhabitants, there money will be circulated, and we shall contribute to the general welfare of the fatherland. Then I come to another great argument of the hon. member for Cape Town (Central). He said that the effect of the new customs tariff would be to drive the white people from the country side to the town. This is inexplicable to me. If we remember that in former years, in times of prosperity, there was a flow to the town, then it seems as it this entirely condemns the argument of the hon. member. Between 1911 and 1921 more than 100,000 white people were impoverished. I use those figures intentionally. At the same time about 70,000 people streamed to the town from the countryside. The census report of 1921 shows us that. The country population has only increased by 50,000 while the urban population has increased by 200,000. The normal increase would have been 130,000. It was not the rich people but people who were forced to the towns by necessity and hunger and we must remember that in those times we had a period of unprecedented prosperity during the war. If there is one argument which condemns the past then it is these figures. They show that the system of the past was ineffective. If we examine the same report we find how many necessaries of life we still import which could be prepared and supplied in our country itself if there was proper protection. There is an astonishing amount of food-stuffs imported. House furniture is imported. Wooden chairs to the value of £34,000 were imported and with protection we ought to make all these things here. The same applies to boots, etc., which are imported and which certainly should not be the case. I want to mention another matter which has already been referred to by the hon. member for Ladysmith (Mr. J. J. van Zyl). The wine farmers feel that they have not been protected. Spirituous drinks are imported under a particularly low customs tariff. £700,000 worth was imported in 1920, £609,000 in 1921, £433,000 in 1922, £453,000 in 1923, and in 1924 £435,000. Our average production per annum is worth £400.000 and £500,000. It is therefore more or less identical with the amount imported, but we must remember in addition that we have over-production and that we have to destroy one-third of our production. That is being done and yet we import so much drink. If there is one portion of the community which does not enjoy adequate protection then it is the wine farmers of the Western Province. I admit that the matter must be enquired into before the Minister can act. We think, however, that it is one of the things, or an evil, from which we have suffered much and that it is one of the things to which the Minister should have given his attention the first. I hope he will give his immediate attention thereto. It is not right to treat the wine industry in which hundreds of thousands of coloured people and white people makes an honourable living, in this way. The industry is groaning under the fluctuations of the market influenced by the imports from abroad. We want to make an urgent appeal to the Government to give the necessary protection to the industry. The argument is, course, the interests of the treasury. We alleged that the treasury will not suffer if the industry is well protected and is placed on a firm basis. The custom tariff which has been drawn up is an honest attempt to contribute to the prosperity of the country. We do not wish to say that it is perfect, but we support it as a proper and honest piece of work in the interests of the country.

I quite agree with the hon. member for Newlands (Mr. Stuttaford) in opposing the tax on companies. I think it is quite a mistake to charge 12½ per cent. on dividends. Anyone who has tried to raise small industrial companies in this country knows the extreme difficulty of obtaining capital. You may get the first £5,000 or £6,000, but, after that, you are stuck. You are going to make it more difficult. You are going to kill enterprise altogether; because most enterprises started here are started in a small way, and you have to fight for many years, and if you cannot get 10 per cent. on an industrial enterprise, it is not worth starting, because you can get 6 per cent. or 7 per cent. by merely sitting on the doorstep from mortgages. The Minister proposes to reform the income tax of the farmers, and not to schedule their increase in stock. I think he is making a mistake there. If there is one disservice the last Government did the farmer it was to allow him to re-invest. That re-investing clause ruined a good many farmers, and the farmer, once having paid on his increase, is not called on again to pay on it, for if you take the average for a period of five or ten years you find the farmers’ stock is very much the same at the end of each year. Then in regard to licences, it is proposed to tax the cattle dealer. What does the Minister understand by cattle dealer? Is a farmer who buys half-a-dozen head, to feed them and sell them again, a cattle dealer? If there is one thing the country round the Western Province—the grain growing areas—is crying out for it is that the farmers should buy stock and feed them, and use the manure. What is very much needed in the farms round here is manure to provide humus in the soil. If you go to the Malmesbury or Caledon districts you find that the farms there are being blown away by the wind, for there is nothing in them. If you are going to turn South Africa into a desert it is no use talking about tariffs, for there will be no one left to enjoy the tariffs. This has been called a scientific tariff, but I don’t see where the science comes in to increase the protection of an industry, such as the printing industry, from 17½ per cent. to 35 per cent. The printing industry last year used £1.000.000 worth of raw materials, of which 90 per cent. or over was imported. Compare that with the treatment of the sugar industry, the protection of which is to be reduced. South Africa is the lowest protected sugar producing country in the world. Last year we produced 165,000 tons of sugar and the year before over 200,000 tons. Last year’s consumption was about 165,000 tons. Less than ½ per cent. of the material required by the sugar industry was imported. If an industry, producing £4,000.000 to £5,000,000 a year is not worth encouraging, what industry is. It is a pure South African industry and I think the hon. member for Cape Town (Central) (Mr. Jagger) forgot that, when he was Minister of Railways, a good part of his revenue came from the sugar industry.

I quite agree to that, but we carried sugar at low rates all the same.

Not only does the sugar industry employ a large number of men but it also contributes very largely to the welfare of other forms of agriculture. Sugar planters buy all the maize, meat and beans they require for the natives, who, by the way, are largely displacing the Indians, so that sugar growing may be looked upon as an entirely South African industry. Yet the Government propose to tax this very heavily, not only directly but also indirectly. We have to pay a very heavy tax on the articles required by the natives and that means that native wages will have to be increased, so that the farmers will have to pay more and receive less. I don’t think farmers on the Government side of the House realize that no matter who is taxed, it all falls back on to the land. That is one reason why I agree with the hon. member for Bloemfontein (North) (Mr. Barlow) that a land tax will be a simpler tax for the farmer will then realize what he is really paying. The farmer is paying for the lot as the whole wealth of the country comes from the soil.

What about diamonds?

You get more out of the top three inches than from the five or six thousand feet level. I don’t think the farmer quite realizes that. I try to impress upon him he is the man who must bear the burden and unless he imposes real economy on the Government it is going to be a parlous state of affairs.

My hon. friend the member for Cape Town (Central) (Mr. Jagger) has approached this subject as an ardent free trader and I am approaching it as an ardent protectionist. He believes in restricting our activities to primary products; I believe in supporting to the fullest extent industries likely to be of value to the country. It seems to me it all depends upon the angle at which we look at these things, whether one is a free trader or protectionist in a country like South Africa. From an economical point of view the hon. member is logical; if all men in all countries had the same standard of living it would be different, but men are not equal; neither are countries nor climates equal. People do not live under the same standards, they do not work under the same conditions, and it is necessary for each country to protect its own standard and its own industries. What is the argument of the hon. member for Cape Town (Central)? He says what many countries used to say in the past, that—

That is true from that point of view, but we have two considerations to look at. The first thing we want to bring to this country is a white population, but the conditions are such that we cannot support a white population on our primary products. We are not an agricultural country. If we compare South Africa with other Dominions, we find as an agricultural producing country we are in a bad way. We are not a country like New Zealand where they have a good rainfall, so that they can depend on their primary products, or like Australia with a wool cheque of £60,000,000 a year, which is obtained with the minimum of human effort, where they can build up a larger population than we can here. In a country like Canada, with a most fertile soil, they can build up a large population on their primary products. Here in South Africa our agricultural wealth exists largely along the fringe of the coast, and the interior is dry and arid. As an agricultural country we can never hope to build up a large population. I cannot see our continuing to exist upon this continent against the rising tide of colour without a large population, and the only way to protect ourselves is by the creation of manufactures. How are we going to create industries unless we go in for protection? When America started upon its career of protection Mr. Gladstone stomped England, using the same arguments as the hon. member for Cape Town (Central) (Mr. Jagger), and telling America that it was mad to dream of establishing industries. Its function was to produce primary products. I move—

Agreed to; debate to be resumed to-morrow.