After other speeches on that day and the next, the Prime Minister rose (June 25). He began by remarking that the predictions of financial disaster owing to increased expenditure and so-called confiscatory taxation had been made when the Corn Laws were repealed, when succession duties were begun in 1853, on Sir William Harcourt's Budget in 1894, and on the Budget of 1909. But since 1894 there had been the largest investment of capital recorded in British history; the capital which had gone abroad had found itself subjected to far larger exactions than in Great Britain; and the experts had been refuted by experience. Between 1905-6 and 1914-15 national expenditure had risen by 57,000,000_l._ Of this, the Navy had taken 18,000,000_l._, the Civil Service, including social reform, 30,500,000_l._, of which 20,000,000_l._ were due to old-age pensions and insurance, and 2,500,000_l._ to Imperial expenditure on education. The revenue derived from taxation had increased in the same time by 41,000,000_l._; the non-tax revenue, mainly from the Post Office, by 11,000,000_l._, or nearly 50 per cent. In 1905-6 direct taxation produced 50.3 per cent. of the tax revenue, indirect 49.7 per cent.; the proportion now was 59.5 per cent. to 40.5 per cent., and of the latter only a little more than 7 per cent. was derived from the non-sumptuary taxes. This Mr. Asquith treated as an argument against using the 1_d._ taken off the income tax to reduce the sugar duty. Meantime Great Britain, almost alone among nations, had been reducing her national debt. In principle he had always been a rigid economist, but expenditure on the Navy certainly could not be reduced, and that on social reform was likely to increase. Treasury control was in fact being vigorously exercised; the mainspring of additional expenditure was in the Commons, which had largely expanded the scheme of old-age pensions and other social reforms. The increase in indirect taxation had been wholly in sumptuary taxes. As to direct taxation, income-tax law had become to the ordinary man a Chinese puzzle, and he repeated that there ought to be a thorough revision of the system of collection. As to the present problem, the injustice of the existing system of local rating was unquestionable, and a local income-tax, which he would have preferred, being impracticable, the fairest way to reach personalty was through the income tax and supertax payers. That was the first principle of the Chancellor's proposals, the second was that the grants must be accompanied by security for efficiency, which would involve no interference with local autonomy; the third was that the increased subvention to local authorities should be accompanied by a new system of valuation. Every one admitted that the existing system was unfair and ineffective. They desired to assist the local authorities with expert advice. The need for expenditure on these objects was much more urgent than the relief of the sugar duty.