This division, of course, meant little; and it was clear that the Government and the majority of the Commons would not accept the Lords' transformation of the Amending Bill. But the division on the guillotining of the Finance Act had left the Government weaker, and they had been compelled to strain their supporters' patience by announcing a new session "in the early winter" after a Prorogation in August, to enable the essential provisions of the Revenue Bill to be carried in time for the insertion of the grants to the local authorities in the next Estimates. Before the Prorogation they would take the Amending Bill, the Indian Budget, and the resolutions on the Reform of the House of Lords.
For the moment, they proceeded with the Committee stage of the Finance Bill (July 13, 14, 15, 16), but only a brief notice of a few features of it is possible here. An amendment moved by Mr. Worthington Evans (U., Colchester) to allow a payer of supertax to deduct the duties on mineral rights and undeveloped land from his sources of income, on the ground that he would otherwise be paying part of his tax twice over, was defeated by 257 to 115, the Chancellor of the Exchequer rejecting his arguments; and he was also unsuccessful in his opposition to the provisions regarding income tax in respect of property abroad, which he contended would be ineffective as well as unfair. He outlined, indeed, an ingenious method of evasion, and contended that it was unjust to tax income which never reached Great Britain, but was reinvested abroad, as also income already taxed in the country of its origin. From both sides of the House the unfairness of the provisions was insisted on; and an amendment moved by the Chancellor of the Exchequer, intended to afford some relief to insurance companies and others who had habitually invested abroad the proceeds of their foreign investments, was carried by 280 to 190. Next day (July 14) on the clause altering the estate duties (p. [95]) the usual complaints were made of the incidence of the death duties on large estates, especially agricultural estates; and Sir A. Henderson (U., St. George's, Hanover Square) declared that the necessity of selling stock to meet them was one cause of the fall in Stock Exchange securities, which he estimated as aggregating over 1,000,000,000l. since 1909. The critics were reinforced by Mr. Balfour (U.) who contended that the tax came out of capital, and might thus decrease employment suddenly where the estate was that of a great landlord or manufacturer; besides, it was diminishing the national emergency reserve. The Chancellor of the Exchequer replied that the money had to be found, and savings were diminished whether it was raised by death duties or by income tax; if expenditure on defence, education, or public health were inadequate, securities would then depreciate also. The fall in them had been heavier abroad, and also at home before 1905. Some of the burden must come out of capital; Germany got it thus, but from the living. The clause was passed by 301 to 207. On the clause abolishing settlement duty and relief in respect of settled property (p. [95]), an attempt was made by Mr. Cassel (U., St. Pancras) to prevent its retrospective application where estate duty had been paid before the passing of the Bill. The Chancellor of the Exchequer, invoking the example of Pitt, contended that each generation had a right to adjust its own taxation. Members on both sides strongly condemned the clause, Mr. Bonar Law citing as a parallel Mr. Larkin's "To hell with contracts" (A.R., 1913, p. 208). The Solicitor-General said that the Government proposed, first, that the full settlement estate duty that had been paid should be repaid; next, that during the whole of the period over which that duty failed to frank the estate interest should be allowed on the amount. He contended that it was a fair equivalent. The amendment was rejected by 297 to 208, and the clause passed by 295 to 204.
The following day (July 15) attempts were vainly made to extend the relief in cases of quick succession to property where it consisted of land or a business, first, by removing this limitation so as to take in personalty, next, by extending the five years' interval allowed between payments of the entire estate duty to fifteen. The former the Chancellor of the Exchequer found too costly; the latter was rejected on a division by 297 to 175. An attempt by Sir F. Banbury (U.) to prevent the reduction of the annual charge for diminution of the National Debt from 24,500,000l. to 23,500,000l. (p. [95]) was rejected, after a long discussion, by 281 to 176. The Chancellor of the Exchequer said that, while the greatest previous reduction of the Debt—Mr. Goschen's—had been 39,000,000l. in six years the Liberal Government had effected a reduction of 103,000,000l. The retort was made, of course, that it had also increased expenditure permanently by 40,000,000l. annually, and some of the money, it was contended, was wasted—on the land valuation and payment of members, for instance. Next, the relief to be given to married persons in respect of income tax was challenged as inadequate by Mr. Cassel (U.) and other members. A new clause in the Bill provided that income tax and supertax should be assessed, charged, and recovered on the incomes of husband and wife separately, as if they were not married. This met two grievances—that the husband was called on to pay tax on his wife's income, but could not recover it from her (A.R., 1913, p. 224), and that the wife could not make a return or claim abatement; but it did not meet a third and far more general grievance—that their two incomes were still added together and treated as one, so that they paid more than two persons with equal incomes living together unmarried. The Chancellor of the Exchequer argued against any concession on this head, but agreed that there should be special exemption for married people, and the clause was adopted. Next day, however, attempts were made so to amend it as to modify or relieve this grievance. An amendment providing that the separate incomes of husband and wife should be treated as one for purposes of exemption or abatement only when they together exceeded 500l. was rejected by 267 to 139, partly as involving too great a sacrifice of revenue; another, preventing a husband's goods from being liable for distraint for his wife's income, was also rejected by 271 to 166. A new clause providing that private firms, like companies, should not be taxed on profits made abroad, was criticised as enabling such firms to escape taxation by transferring their business abroad. The Chancellor of the Exchequer admitted this was done already, but not often enough to make it worth while to stop it, and the clause was adopted by 225 to 95. Another amendment, providing for deductions in respect of inherently wasting assets, was rejected by 208 to 113, and, after the rejection of other amendments, the Committee stage was completed under the guillotine.
Next day the usual "Massacre of the Innocents" took place, but subsequent events so increased the numbers that the list need hardly be given here. In the evening the Chancellor of the Exchequer dealt with the situation at the annual Lord Mayor's dinner to bankers and merchants at the Mansion House. A quieter period of trade, he said, was opening; but in twenty years the international commerce of the country had doubled, the clearances of the London banks had trebled; in 1914, 160,000,000l. of new capital had been issued in London, as against 125,000,000l. in 1913. Trade depressions were now shorter, and there were healthy signs. He referred to the great progress set up by British capital, comparing its effect to irrigation in the Sudan; and he mentioned that in fifty years 3,700,000,000l. of British capital had been advanced for development, though in war and war preparations the world's expenditure during the past ten years had been 4,500,000,000l. He looked to finance to arrest this "creeping catastrophe." But peace was needed at home also; there was the industrial crisis, as to which he was hopeful, and the Irish crisis, and the two together would set up the gravest situation Great Britain had had to face for centuries. It was, the duty, therefore, of responsible men of all parties to work for peace.
But the Irish crisis was approaching a climax. The Amending Bill, as transformed by the Lords, was to be taken in the Commons on Monday, July 20; it was certain that it would be accepted neither by the Nationalists nor by Ministers; but a minority in the Cabinet, said to number four out of nineteen, were alleged to favour concessions to Ulster beyond those originally embodied in the Bill. Conferences between the different leaders were held informally, and on July 17 the Cabinet met twice, A great naval display had been arranged at Spithead on the occasion of the test mobilisation; the King was to leave London to review the Fleet at 9.30 A.M. on Saturday, July 18; but he was detained till the afternoon, and various communications passed in the morning between him and the Prime Minister. The two, however, travelled together to Portsmouth, where the most powerful Fleet ever assembled, numbering some 200 vessels in all, was drawn up in eight lines, extending over some twenty-two miles altogether, and manned by some 70,000 officers and men. The forces afloat were supplemented by five squadrons of four seaplanes each, with a squadron of eight aeroplanes, and four airships. The King was able to witness the illumination of the Fleet on Saturday evening; on Sunday he visited some of the ships informally; on Monday the ships moved to sea past the Royal yacht, as did a procession of aircraft, and, after witnessing tactical exercises, the King returned to London late on Monday evening. The display and assemblage proved to have an unforeseen value.
The curtailment of the King's visit was explained by the momentous revelation made by The Times on Monday morning, July 20, that His Majesty had issued invitations for the following day to a Conference on the Ulster question at Buckingham Palace, consisting of two members each from the Government, the Opposition, the Nationalists and the Ulster Covenanters. This step was believed to have been initiated by the King, but taken with the knowledge and consent of the Ministry, though without previous consultation with the leaders of the Nationalists or of either the British or Ulster section of the Opposition. The Prime Minister and the Chancellor of the Exchequer would represent the Ministry; the Marquess of Lansdowne and Mr. Bonar Law the Unionists of Great Britain; Mr. John Redmond and Mr. Dillon the Nationalists; Sir Edward Carson and Captain Craig the Ulstermen. It was rumoured that the Government, though not prepared to accept the transformed Amending Bill, had virtually abandoned the time-limit, and were ready to exclude from the operation of the Home Rule Act not only Armagh, Down, Derry, and Monaghan, but parts of Fermanagh and Tyrone. The dispute now centred, therefore, on the question whether parts of these latter counties should be excluded or the whole.
The Amending Bill was postponed pending the Conferences; and the Prime Minister in announcing the postponement (July 20) repeated the statement of The Times, adding that the Speaker would preside. Mr. Bonar Law announced that the Opposition leaders had "loyally accepted" the King's command; Mr. Redmond, while disclaiming responsibility for the calling of the Conference, said that he had "of course accepted" likewise. Mr. Ginnell (I.N., Westmeath, N.) asked, as an independent Irish Nationalist, what authority the Prime Minister had to advise the King to place himself at the head of a conspiracy to defeat the decision of the House; but Mr. Asquith and the Speaker ignored the question. In the House of Lords, Lord Courtney of Penwith asked for assurances that the Government took the responsibility for the Conference, and that the final decision would rest with Parliament; and the Marquess of Crewe made a satisfactory reply.
The action of The Times was severely criticised, as tending to jeopardise the success of the Conference; but its information, as the Prime Minister assured the House, was not derived from official quarters, and seemed to have been obtained by inference from the movements of Ministers and of the King. The Conference itself was received with misgiving by the Nationalists, the Labour party, and a section of the Liberals, the first named feeling that they could not go much further in concession, the two others suspecting that the King had initiated it, and in so doing had exceeded the limits set by constitutional usage to the powers of the Crown. It had been rumoured that the King had intimated that he would not sign the Home Rule Bill except in conjunction with an Amending Bill; so that the Unionists need only make the Amending Bill impossible to ensure a crisis, ending probably in the dismissal of Ministers and a general election. The Daily News called the Conference "a Royal coup d'état"; the Labour party's views were expressed by Mr. J. H. Thomas (Derby) in his constituency on July 21. He objected to it as a deliberate attempt to defeat the Parliament Act, and also because two rebels had been invited to take part; Labour leaders who had used such language would have been arraigned at the Old Bailey. Liberal feeling was manifested at a meeting of members on that day, summoned in order to express anxiety for the supremacy of Parliament; but a more moderate resolution was passed, declaring that the party was determined to stand by the Nationalists, and that the Government should not appeal to the constituencies before completing the whole of its programme under the Parliament Act.
The misgivings of the Liberals were heightened by the speech with which the King opened the Conference at Buckingham Palace at 11.30 A.M. on Tuesday, July 21. It was as follows:—