Mr. RAUBENHEIMER, introduced by Dr. Bremer and Mr. le Roux, made and subscribed the oath and took his seat.

Mr. SPEAKER announced that the Committee on Standing Rules and Orders has appointed the following members to serve on the select committees mentioned, viz.—

Leave was granted to the Minister of Justice to introduce the South Africa Act Amendment Bill.

Bill brought up and read a first time.

Leave was granted to Col. Stallard to introduce the Rand Water Board Statutes 1903-’32 Amendment (Private) Bill.

Bill brought up and read a first time and referred to a select committee, the members to be appointed under Standing Order No. 50 (Private Bills).

In my budget statement last year the revenue and expenditure for the past financial year was estimated at £29,380,000 and £27,480,000, respectively, that is a surplus of revenue of £1,900.000 was anticipated, and thus it was hoped to reduce the estimated deficit of £2,100,000 as at 31st March, 1932, to £200,000 by the 31st March, 1933.

The transactions for the year 1931-’32 were rather better than anticipated, the actual deficit being £1,018,000 instead of £1,200,000, so that the accumulated deficit to 31st March, 1932, was reduced to £1.915,000.

The receipts for last year now figure at £27,253,000 a net decrease of £2,127,000 as compared with the original estimates. This decrease is accounted for as follows:—

After providing for an additional appropriation of £341,000 the expenditure for the past year is placed at £27,300,000. This represents a saving of £500,000 on the main and additional appropriations.

The deficit for the year 1932-’33 is therefore £47,000, which, added to the accumulated deficit of £1,915,000 at 31st March, 1932, makes an aggregate deficit of approximately £1,962,000 as at the close of the past year.

It is interesting to note that on a gold basis, the results would have been rather better. For example, on the gold basis customs would have been £328,000 less, but against this the customs surtax which ceased on the 21st January, 1933, would have produced £419,000. Furthermore, the 5 per cent. primage which was also discontinued from 21st January, 1933, necessitated additional expenditure supply of £250,000; the public debt expenditure was also increased by £135,000.

On the other hand, the departure from the gold standard resulted in the receipt of £65,000 from the gold premium under income tax.

The net result would have been as follows:—

Therefore on the assumption that the receipts from all other sources of revenue would not have shown any material variation during the period January to March whether the Union was on or off the gold standard, the past year on a gold basis would have closed with a surplus of some £364,000 instead of a deficit of £47,000.

I will lay on the table this afternoon a statement showing how the net decrease in the estimated revenue of £2,127,000 is arrived at—the increase or decrease as between the original estimate and the actual receipts under each head of revenue is set out.

Before leaving the past year’s figures I should like to make a few comments on the shortfall in the estimated revenue.

The aggregate shortage over the financial year was £1,879,000 under this head.

In order to account for this decrease, it is essential to give separate particulars for the first nine months while the Union was on the gold standard and also for the last three months of the financial year after the departure from the gold standard.

The value of imports for the period April to December, 1932, was £23,500,000 compared with £37,487.000 during the same period of 1931.

This decrease is attributable not only to a decrease in the volume of trade which contracted from 1,902,000 tons landed at Union ports in 1931 to 1,459,000 tons in 1932, but also to a fall in the prices of commodities which between the two periods fell from £18 to £14.5 per ton.

The fall in volume accounts for 23.5 per cent. and the fall in prices for 15 per cent. of the decrease in the value of imports during the period April-December, 1932, compared with the same months of 1931.

In framing the estimates for 1932’33, revenue was based on a total import value of £36,000,000 compared with £48,000,000 in the previous year; allowance being made for a decrease in trade, and for the reduced value on a gold basis of goods imported from countries off gold, the discount being estimated at 25 per cent.

From July to December the discount was over 25 per cent. and from the end of October it exceeded 30 per cent. This further accentuated the decreased value of imports.

An increase in the wholesale price of commodities from countries off gold was generally expected but this anticipated rise did not take place, and as stated above there was actually an average fall of 15 per cent.

According to the estimates the revenue collected to the end of December, 1932, should have been in round figures £7,662,000, whereas actually only £6,362,000 was received.

During the period January to March, 1933, the value of imports was £10,270,000, but if for comparative purposes this amount is converted to a gold basis, we obtain a figure of £7,190,000, which is considerably less than the value of imports during the first quarter of 1932, namely £8,266,000.

The principal decrease in revenue during this period was due to the withdrawal of the surtax on the 21st January, 1933, resulting in a loss on the estimates of £520,000.

Owing to the increase in the value of imports on an off-gold basis, the shortage on the original estimate for this quarter was only £59,000.

With the exception of sugar, which is up £11,000, all items under this head show decreases, due to the continuance of the depression and to the consequent contraction of the spending power of the people.

All three heads show decreases, viz.:

The surplus receipts over expenditure for this year amount to about £1,300,000 and, after allowing for all charges in the department’s commercial account, an amount of £480,000 may be regarded as the department’s contribution to the exchequer.

Under the head of telephones, there has been a shortfall, compared with the revenue of a normal year.

Notwithstanding the bad times, the post office savings bank has not lost its popularity. The balance to the credit of depositors at 31st December last was £71,000 more than at the same date of the previous year and deposits are continuing to increase; 28,000 additional accounts were opened during the year.

This head of revenue shows a small increase of £27,000 on the original estimate.

The shortfalls under the various heads of revenue all represent the effect of the continued depression throughout the financial year, with the resulting restriction in trade and fall in values.

The principal increase over the original estimates is in respect of gold mines, in part due to the better results achieved by certain leased mines on the Far East Rand and in part the result of higher prices received for gold in respect of the output for the short period of the calendar year ended 31st December last which was affected by the Union’s departure from the gold standard.

The total increase in receipts from gold mines amounts to £554,000, of which £297,000 goes to revenue account and £257,000 to loan account.

Of the £297,000, £65,000 represents the additional benefit to the State owing to the rise in price of gold. Of the £257,000 in loan account about £67,000 is due to this cause.

Diamond Revenue.—The estimate of revenue from diamond mining was restricted to export duty, for which an original estimate of £200,000 was given. Nothing was estimated to be received under the head Government ownership or income tax.

Even this low estimate of export duty has, however, proved too high, owing to the complete stagnation of the diamond market, and the revised estimate shows a shortfall of £76,000 on the original estimate.

State Mining.—The original estimate was on a conservative basis and represented little more than a recovery of the expenditure of the year.

Better local sales than were anticipated have resulted in increased receipts of £51,000 over the estimate and a contribution to loan account of £305,000.

Income Tax.—Income tax taken as a whole, that is, including the amounts collected from gold mines and the amounts transferred to income tax account in respect of leased gold mines, shows an increase on the original estimate of £152,000, the shortfall under the heads of general and super tax having been more than made up by the increased yield from the gold mines.

Surtax on Interest.—The surtax on interest, which was estimated to produce £350,000 in the financial year, has actually yielded exactly that sum.

Stamp Duties and Fees.—Stamp duties have again shown a fall, the receipts being £54,000 below the original estimate. These duties are a sure index of business activity and the fall reflects business conditions, the fall of values in properties and the stagnation of the property market and bond business.

The stock exchange activity during the last quarter of the year has not been sufficient to affect materially the position as a whole.

Few, if any, of the shares bought for speculation are registered, and the duty upon brokers’ notes is small. It requires a great many brokerage transactions to produce any substantial amount of revenue.

Native Taxes.—The estimate of native taxes, which was put at £60,000 above the collections for the preceding financial year, has not been reached by £112,000, the receipts being £848,000.

Even this collection represents a remarkable recovery from the position in the early part of the financial year, when at one period the collections were below those for the corresponding period of the previous year.

The value of the Union’s mineral production in 1932 (excluding quarry products) was £52,541.000, compared with a production in 1931 of £54,818,000. A decrease of £2,277,000.

Gold.—Shows an increase of 680,540 ounces and £2,891,000 in value over 1931 and thus more than maintained the high rate of output of the past few years.

The Witwatersrand gold mines gave employment to 775 more Europeans and 7,188 natives in 1932 than in 1931. The total number of Europeans is 23,051.

Dividends.—The dividends paid in 1932 by gold mining companies showed an increase of £453,000 on the 1931 payment (from £8,590,000 to £9,043.000).

Diamonds.—The estimated value of diamonds produced in 1932 fell by £2,500,000 (from £4,183,000 to £1,680,000).

State Diamond Diggings.—The expenditure on the State diggings in 1932-’33 was £106,000. The production during that year was 70,700 carats and sales of stones amounted to £466,000. This amount has been distributed as follows—

The total credits to loan account from this source amount to £4,625,000.

The average number of whites employed on the diggings during the year was 236.

As in former years statistical tables will be included in “Hansard.” I desire only to deal with a few of the more important exports.

Exports in 1932 (including re-exports, specie, bunker coal and ships’ stores) was £69,043,000 against £71,840,000, a decrease of £2,797,000.

Imports in 1932 (including Government stores) were £32,813,000 against £53,015,000 in 1931— a decrease of £20,202,000—of which £6,000.000 may be attributed to the reduced value of goods imported from off-gold countries when converted to a gold basis.

It should be borne in mind that, for the first nine months of 1931, the countries to which we sell most of our exports—and from which we buy about two-thirds of our imports—were still on the gold standard. The depreciation in the currencies of these countries throughout 1932 is reflected in the lower values after conversion into Union currency.

Gold.—The gold exported in 1932 in the form of bar and specie, amounted to £48,500,000 and represented 70 per cent. of the value of the total exports.

For 1931 the proportion was 64 per cent.

Diamonds.—The value of diamonds exported in 1932 was £2,000,000 against £2,500,000 in 1931.

The increase in the value of agricultural, pastoral products and foodstuffs, exported during 1932 was £600,000 (from £12.9 millions in 1931 to £13.5 millions in 1932). In 1930 the value was £12.9 millions and in 1929 £26.4 millions.

Wool.—The export of wool shows an increase both in quantity and value, viz., of 136 million lbs., of a value of £860,000 (from 236.6 million lbs., value £5.70 million in 1931 to 372.6 million lbs., value £6.56 millions in 1932).

Fruit.—There has been a slight increase both in the value and quantity of citrus fruit exported, viz., 60,000 boxes and £90.000 in value. The export figures for 1932 are the highest on record, and we are steadily nearing the 2,000.000 box mark and a value of £1,000,000.

Fish.—For some years past the annual imports have been steady at approximately 11 million lbs., but a decrease to 9 million lbs., value £209,000, occurred during 1932.

Coffee.—The imports fell from 16,000 tons, value £425,000 in 1931 to ±2,500 tons, value £415.000 in 1932, but the decrease was due mainly to the abnormally heavy imports in 1931.

Tea.—Tn this case also there has been a large decrease in the imports, viz., from 14 million lbs. Weight, value £686,000 in 1931, to 10½ million lbs., value £280,000 in 1932, but here again the imports during 1931 were unusually large.

Rice.—The same position obtains in regard to rice, of which the imports in 1932 were normal, although 2,000 tons less than in 1931.

Wheat.—The imports of wheat have declined from 96,000 short tons, value £435,000 in 1931 to 32,000 short tons, value £176,000 in 1932, owing to the curtailment of permits to import wheat for blending purposes.

The issue of these permits was suspended, except for wheat for seed, biscuit-making, etc., during the latter half of 1992. I do not want to weary the House by giving details of a number of articles imported. I will just mention:—

The number and value of motor chassis and parts imported decreased from 4,580 of a value of £781,000 in 1931 to 2,793 of a value of £483,000 in 1932.

Motor Spirit.—The level of imports as far as quantity is concerned has not appreciably declined, the figures being:—

Footwear.—The large decrease in the importation of footwear by 4 million pairs is due to the imposition of specific duties which affected the importation of low grade leather footwear and particularly canvas shoes from the east.

The beneficial effect of this reduced importation on the local industry has been most marked.

Manufacturing industries which suffered a severe setback during 1931 and the first half of 1932 owing to the reduced spending power of the community and the curtailment of credit have now regained much confidence.

During the last two or three months of the calendar year industries have shown an appreciable increase in activity.

According to the latest available statistics, there were 2,168 insolvencies in the four provinces during the ten months ended 31st October, 1932, as compared with 2,184 in the same period in the previous year.

Commerce, which accounted for 1,019 of the insolvencies in 1931, shows an increase of 159 for the first ten months of last year, while insolvencies amongst manufacturing concerns have risen from 39 to 58.

The increase in the number of insolvencies amongst manufacturers is, however, not as serious as would at first appear, for it is confined mainly to small, under-capitalized concerns.

Reports now indicate some improvement in most of the more important industries.

The boot and shoe industry, which was suffering severely from competition from abroad, and had lost its markets in the Rhodesias, was in a critical position during the first half of 1932 but the further protection by the imposition of specific duties granted towards the middle of the year had a most salutary effect.

During the last quarter most factories were working full time, and many of them on overtime.

The long period of recession experienced by the clothing industry during 1930 and 1931 was broken during the course of 1932 and since then there has been an upward trend.

This industry, as well as a number of others, reports a satisfactory increase and expectations of a continuance of good business.

The textile industry was active during the past year, and has been working on full time for some months now.

The consistent downward trend in employment which marked the latter half of 1931 continued steadily during the first half of 1932 but showed an upward tendency during the third and fourth quarters.

Te total number of industrial employees of all races in certain selected establishments in the five largest industrial centres of the Union dropped from 65,948 in December, 1931, to 57,073 in July, 1932, but increased slowly during the following months to 58,018 in November last.

The decrease in European employment which marked the second half of 1931 continued steadily until July, 1932, when the figure was 22,637; since then, however, there has been a slow but steady increase, and in November European employment had risen to 23,517.

Coloured labour fell from 11,127 in December, 1931, to 9,026 in August, 1932, but in the next three months rose again to 9,676.

Native labour decreased steadily throughout the year until in November the figure was 22,539 as compared with 27,015 in December, 1931, while Asiatics, after a sharp fall in the first five months from 2,469 to 1,962 increased to 2,286 in November.

The expenditure from loan funds for the year was approximately £8,730,000 and was met from the following sources:

which was sufficient to meet the capital expenditure, costs of raising loans and finance the deficit on the revenue account for the past year and leave a balance of approximately £900,000 in the exchequer.

The total amount appropriated for loan expenditure in 1932-’33 was £10,208,000; the issues required for expenditure fell short of that sum by £1,478,000 and that portion of the appropriation lapsed at the close of the year.

The receipts to credit of the loan account amounted to £3,088,000, being £506,000 in excess of the estimated receipts. The principal increases being under the heads gold mines (leases), £257,000, and State mining, £215,000.

At the commencement of last year the Public Debt

The external debt, which is all payable in London and is composed of stock and debentures, amounted to £165,648,000 at 31st March, 1933, an increase of £5,962,000.

This increase is accounted for by the issue in London in October last of a 3½ per cent. loan redeemable 1953 ’73. The issue price was 96½ and the sum raised was £8,000,000 sterling. From this amount, however, there falls to be deducted £2,038,000, representing stock transferred from the London to the South African register.

Hon. members will doubtless wish to have some details concerning the issue of the £8,000,000 London loan, which I will now proceed to give.

The lists were opened on the 25th October and by 12.30 p.m. on the 27th the loan was fully subscribed—a satisfactory reflection of the Union’s credit on the London money market.

The net proceeds of the loan in sterling after allowing for the discount, commissions for underwriting, issuing and brokerage, amounted to £7,577,800 sterling.

Of this sum approximately £3,887,000 sterling was received prior to South Africa leaving the gold standard and amounted to £2,699,000 in South African currency.

Of the remainder, £94,000 was received in the period 1st to 18th January which, less the costs of exchange then operating, amounted to £90,800, and the balance of £3,596,800 has been accounted for at par.

The total proceeds, therefore, amounted to £6,287,000 in South African currency against an eventual liability of £8,000,000 now that the currencies of the Union and Great Britain are at par.

The internal debt amounted to £106,528,000 at the close of last year, a net increase of £2,267,000.

The increase comprises:

As regards Union Loan Certificates, the Government has found it necessary to reduce the interest which these certificates earn to a figure more in keeping with rates which rule to-day.

The purchase price will remain the same, namely, 16s., but the certificate will accumulate to 20s. in 6 years instead of 5 years as is the case at present, while at the end of 10 years it will amount to 24s. instead of 26s.

The rate all over is approximately 4 per cent. and the new series was made available on the 1st April.

Similarly it has been necessary to discontinue the issue of 5 per cent. Savings Stock, 1940, into which holders of matured Union Loan Certificates could convert at par, and to replace it by a 4 per cent. Savings Stock redeemable 1943-’53.

At the close of the year the total public debt was £272,176,000, comprising external debt £165,648,000 and internal debt £106,528,000. At the 31st March, 1932, it was £263,947,000, the increase being £8,229,000.

At the 31st March, 1933, there was held in the sinking funds for external loans about £24,022,000 of stock of Union external loans. The net external debt may therefore be put at £141,626,000.

Against the internal debt there was held in the sinking funds about £1,906,000 of Union securities, making the net internal debt £104,622,000.

During the year ended 31st March, 1933, the rates of discount which the Treasury offered for the purchase of treasury bills underwent several changes.

In April, 1932, the rates were 4 per cent., 4½per cent. and 5 per cent. for 90 days, 6 months and 12 months, respectively.

These rates were in force up to October last since when there has been a progressive reduction. The rates on the 28th January, 1933, for 6 and 12 months bills being 2 per cent. and 3 per cent., respectively.

The scaling down of these rates followed a similar process which was going on all over the world but was accelerated in the case of South Africa in January by the return of capital from oversea.

On the 13th of February it was decided for the time being to discontinue the issue of treasury bills of any currency.

I may say I disliked having to adopt this measure as the treasury bill is the key to what little money market there is in South Africa.

I was forced to do so, however, as the Treasury expected to, and did, receive more than sufficient revenues from that date until about the end of March to meet expenditure— to have accepted any further sums for Treasury bills would merely have meant accumulating surplus balances which could not be put to profitable use.

The plentiful supply of money and the reduction in rates of interest puts the Government in the position of being able to convert two of its higher rated loans. This action, of course, can only be taken if a loan is maturing or if the Government has the right to give notice of redemption in terms of the prospectus of issue.

The loans in question are the 5 per cent. local loan 1929-’39 and the 5 per cent. London loan 1933-’43.

In regard to the former the Government gave notice on the 31st of March that it intended to redeem this loan on the 1st October and with the notice of redemption stockholders were informed that an opportunity would be given to them to convert their holdings into a new local loan.

I am now able to inform the House that it has been decided to offer holders of 5 per cent. local stock the option of conversion into a like nominal amount of 3¾ per cent. local stock 1948-’58, the principal of which will be repayable at par on the 15th September, 1958, the Government retaining the right to redeem in whole or in part on or after the 15th September, 1948, on giving three months’ notice. The 5 per cent. local loan 1929-’39 outstanding today is £25 millions and the saving to the Exchequer by the conversion will be the substantial sum of £315,000. The prospectus of the new loan will be issued on the 1st June.

As regards the 5 per cent. London loan this amounts to £13 millions and the first maturity date falls on the 1st of June. At present there is an embargo upon issues in London for the purpose of converting trustee stocks, but I am in close contact with the High Commissioner in London who has been asked to seize the first opportunity that the market may offer for converting this loan. The interest on a new loan should be at least I per cent. per annum less than the present rate which should secure a further saving of approximately £130,000 to the Exchequer.

In the existing economic conditions some of the smaller municipalities are finding difficulty in meeting their debt obligations and in order to give them some much-needed relief the rate of interest on loans granted to local authorities from the Local Loans Fund under Act No. 19 of 1926 has been reduced from 6 per cent. per annum to 5 per cent. per annum with effect from 1st April, 1933.

This reduction will also apply to new loans and to outstanding balances on loans already granted.

Further relief has been granted by extending the redemption period of outstanding loans in the case of those public bodies who have found it difficult to meet their liabilities, and where the circumstances justified such extensions being granted.

It has also been decided, in order to enable smaller municipalities to assist in relieving the serious unemployment position in the country to grant loans from the Local Loans Fund to them at less than 5 per cent. to enable them to undertake necessary works provided civilized labour is employed thereon.

Provision for these two classes of loans has been made in the estimates of expenditure from loan funds.

The banking position has undergone a great change since I made my last budget statement.

Now that the inducement to transfer money overseas has fallen away and has been replaced by a desire to transfer money back to the Union, the commercial banks have seen their deposits increase by leaps and bounds.

As a result, the banks’ liabilities to the public have risen from £55 millions at the end of December, 1932, to £63 millions at the close of February; the latter figure coincides with that at the end of December, 1928, the end of the boom period; at the close of last month these liabilities had risen to £70 million.

Advances and discounts, on the other hand, have been on the down-grade and at the close of April last had reached a figure of £34 millions, as compared with the figure of £51 millions at the end of the year 1929.

In these circumstances it is interesting to notice that the commercial banks have seen their balances with the Reserve Bank grow to abnormally high figures and at the same time their advances to the public dwindle to the lowest level for the past ten years.

The banks are thus in a position to grant credit readily if applied for on sound business lines.

The banks have so much money at their disposal that they have had to reduce their rates for fixed deposits drastically.

Since the Reserve Bank reduced its discount rate from 6 to 5 per cent. on the 7th October and again from 5 to 4 per cent. on the 20th February and from 4 to 3½ per cent. on the 15th May, the commercial banks have also reduced their rates for advances and discounts.

The banks, in order to maintain a balanced position, sell to the Reserve Bank any excess purchases of sterling exchange which results in very high credit balances being maintained with the central institution.

The Reserve Bank continues to buy the gold from the mines and the credit thus created is for the time being not fully used to pay for imports and other commitments overseas.

These two causes have doubled the Reserve Bank’s liabilities and this sudden change might have caused some difficulty but for the Currency and Exchanges Act, 1933, which allows the bank to reduce its ratio to 30 per cent.

The Act further protects the Reserve Bank from exchange losses while it is carrying out its functions of preventing undue fluctuation in the exchange value of the South African pound in relation to the pound sterling.

It is gratifying to know that the Reserve Bank has succeeded in this task, so far at no cost to the Treasury and that the bank has no fear regarding its ability to continue to maintain the South African pound at par with sterling.

The increase in the note circulation after the Union left the gold standard is not to be interpreted as an indication of inflation since it is calculated that the total amount of gold coin withdrawn from circulation, practically speaking, tallies with the increase in the note issue.

As hon. members will see from the estimates of expenditure from loan funds during the current year, provision has been made for services of £12,616,000.

The votes include provision of—

• £1,000,000 for railway and harbour works.
• £515,000 for public works.
• £532,000 for irrigation works.
• £200,000 for the local loans fund.
• £4,000,000 for Land Bank capital and additional assistance to farmers.
• £350.000 for advances to farmers under agriculture vote.
• £80,000 for advances to farmers under Special Relief Act.
• £412,000 for afforestation.
• £750,000 for relief of unemployment.
• £1,658,000 for the iron and steel industry.

These amounts total £9½ millions—the remainder of the provision is for general loan account services and for the withdrawal of the surplus silver in circulation.

The expenditure will be found from—

Leaving a sum of approximately £6½ millions to be found during the year.

To raise this money it is proposed to offer for subscription an issue of local stock in a few months’ time.

Having regard to the existing easy monetary conditions, I am satisfied I shall be able to obtain the required sum at a very favourable price.

The Government proposes, at an early date, to appoint a commission to investigate the position of the provincial councils, especially in regard to financial relations, but it will, of course, not be able to do anything during this session.

For that reason it is necessary again to make provision to finance the deficit in the Orange Free State accounts of approximately £575,000 for the past year and for the current year.

The Cape and Natal provinces continue to show shortfalls in their accounts but these deficits, however, do not call for action by the central Government. It is expected that the Transvaal will be able to balance its account as at the end of last year.

With regard to South-West Africa, the Government has granted sufficient funds to meet the deficit up to the end of last year and has also provided £300,000 for the deficit for the current year and £70,000 for capital expenditure and relief of distress in the territory.

The report of the commission appointed to enquire into financial and other matters in the territory will, it is expected, be received very shortly.

The estimates of revenue for the current year based on existing taxation have been framed on a conservative basis, as well as a close regard to the atcual collections for the past year.

Owing, however, to the departure of the Union from the gold standard several heads of revenue show considerable increases as a result of the depreciation of the Union’s currency. The heads of revenue that show this improvement are customs duties and income tax from gold mines and gold mines (leases).

Thus, notwithstanding that the customs surtax which contributed £1,662,000 to the revenue of last year was discontinued as from 21st January last, the estimated revenue for the current year is placed at £28,292,000, an excess over the collections of last year of £1,039,000, or excluding last year’s customs surtax collections an increase of £2,701,000, almost entirely due to the rise in customs duties and income tax from gold mines.

Hon. members will be able to see for themselves how this increase occurs from the estimates of revenue I will lay on the table this afternoon, but nevertheless it seems desirable that I should give a few particulars of the more important items.

The estimated collections have been put at £8 millions, an increase of £1,334,000 over the receipts for last year, which represents approximately the value of the duties to be collected on a sterling basis as compared with the gold basis of last year. This estimate is based on an importation of goods of a value of £46 millions sterling and includes an allowance of £4 millions for an anticipated improvement in trade. I may say that so far there have been no signs of improvement.

This main head of revenue shows a minor increase of £15,000 over the receipts of last year. The anticipated receipts might have been placed somewhat higher, but owing to the reduction of the rates on farmers’ lines and to the curtailment of the use of the telephone by subscribers, it is not deemed to be wise to increase the estimate at the moment.

The estimated receipts for this year have been placed at £14.426,000 compared with the receipts for 1932-’33 of £13,077,000—an increase of £1,349,000.

This satisfactory position is due largely to the enhanced price of gold and consequent improved yield in the normal taxation upon the gold mines.

After making allowance for the lower grade of orc which it is anticipated the mines will be able to crush under present conditions and the increase of expenditure which is likely to result from the change in the Union’s currency basis, the yield of ordinary income tax from gold mining is expected to rise from the figure of £1,797,000 realized in the present financial year to £3,100,000, an increase of £1,303,000 over the actual results for that year. The yield from the leased mines is expected to rise from £540,000 to £900,000, an increase of £360,000.

In making these estimates an average price of 120s. per ounce of gold has been assumed, but as that price depends to-day upon the franc exchange, it has to be accepted that the estimate depends upon a factor which is itself undependable. All that can be said is that up to the present that average price has been slightly exceeded since the Union left the gold standard, though at times it has fallen below it. But slight variations are likely to be more than compensated by variants in the provision made in the estimate for the reduction in the yield of gold and increases of costs.

In the estimate of £3,100,000 from income tax from gold mines about £1,360,000 represents the additional amount to be received as a result of the increased price. Under the gold mines leases estimate of £900,000 about £367,000 is due to the same cause.

On the loan account a further £1,900,000 is expected so that the benefit to the State of the “gold premium” on present basis of tax is in the neighbourhood of £3,627,000.

No revenue from Government ownership or income tax is anticipated from this source. If there is any improvement in the diamond market some of the amounts outstanding and due by the smaller companies may be paid, but any such receipt will be fortuitous. The estimate for export duty has been reduced to £100,000 and even that small sum may not be realized if the present stagnation in the diamond market continues. It is perhaps worthy of comment that the duty collected in the two years 1927-’28 and 1928-’29 was approximately £1,200,000 each year.

The estimate under this head has been placed at £150,000 or £11,000 less than the collections for last year and represents the estimated value of diamonds to be sold during the year.

The diamond market continues to be in a condition of extreme depression and all the diamond mines in the Union have ceased working. The Government is at present engaged in negotiations with the Union producers, the South-West Africa Administrator and the Diamond Corporation, with a view to arriving at an agreement which will as far as possible regulate the sales of diamonds from the various sources of supply and establish confidence in the maintenance of values. If such an agreement can be arrived at the Government hope and believe that when it comes into operation with restored confidence in the future, the condition of the diamond market may be improved and that our producing mines will be enabled to take early advantage of any such improvement.

The estimates of expenditure for the current year will be laid on the table and the variations between the grants for 1932-’33 and the estimates for 1933-’34 have been fully explained in the memorandum prefacing the volume. At this stage, I would only point out that the amount to be appropriated is £34 millions, being approximately £6½ millions in excess of the original estimate for the past year; the following services account for practically the whole of this sum, viz.:

The remainder of the increase is explained in the memorandum.

In my statement on the Additional Estimates of Expenditure for last year, I explained the position fairly fully regarding this account.

For 1933-’34, I am providing a sum of £2,500.000 for the payment of subsidies, being £858,000 to complete the payments due on exports to be made in the second year of subsidy and £1,642,000, being the estimated amount payable for the first portion of the third year’s subsidy on exports. It is probable that a further £428,000 will be required in 1934-’35 to complete the third year of subsidies.

It will be necessary to extend the existing legislation to permit of the payment of subsidies for a third year and this will be done in the annual Financial Adjustments Bill.

Owing to the abandonment of the gold standard it was decided to alter the basis of payment of subsidy. From the 14th February, 1933, the regulations governing the payments were amended so that from that date the subsidy has been paid on a weight and measurement basis, the value basis operating previously being discontinued. Under this arrangement the Government was not called upon to find additional funds for this service, as was bound to have been the case had the original value basis of payment been continued and this would not have been possible.

Hon. members may like to know the total expenditure on this service from its inception to the close of last year, together with the anticipated expenditure for the current year. The figures are as under:

which, together with £428,000 to be provided for in 1934 ’35 makes a total of £6,232,000 for the three years’ programme.

To meet this expenditure primage receipts contributed £1,864,000 during the years 1931-’32 and 1932-’33, the remainder is a charge on the Consolidated Revenue Fund.

The prolonged depression has brought about a severe trial on the farming community throughout the whole world.

The position has become so acute in our country that the Government has decided that effective measures must be taken to save a large percentage of the farmers from ruin.

It is maintained in some quarters that there are many farmers who have themselves to blame for the position in which they find themselves, but when the worst blame has been cast on them there still remains a good deal for which they cannot be held responsible and which no action on their part, however carefully and rationally conceived, could have avoided.

It is true that quite a number of farmers over-mortgaged their farms, that a large number did not in prosperous times make provision for the lean years, that a large number acquired more land in prosperous times at excessive prices without a reasonable prospect of earning sufficient thereon to pay for it.

After allowing for all this there still remains during this depression a burden which weighs heavily upon the farmer—on the prudent as well as on the careless.

This is the unparalleled fall in prices of agricultural products for which the farmer has not been compensated by a, similar reduction in his interest liabilities or in other factors entering into his cost of production.

How devastating this fall was for the economic independence of the farmers will be seen from the following figures.

Since 1929 agricultural products in the internal market have, with few exceptions, fallen at least a third in value. Some, such as mealies, hides and skins, have fallen by one-half. The value of exports of agricultural products has fallen since 1928 by nearly two-thirds. The average price of agricultural products is now 15 per cent. to 20 per cent. lower than it was before the war. On the other hand, the price of the goods bought by the farmer is still on a higher level than it was before the war.

Another important item of expenditure of the farmer, namely, interest on bonds, has not been reduced but has in many instances been increased.

To-day up to 8 per cent. interest must be paid on first-class mortgage bonds on farms while in 1914 bonds as a rule carried interest at a rate from 6 per cent. to 7 per cent. Many farmers therefore found themselves in a position where the gap between expenditure and income could not be bridged.

Many of the bondholders who advanced money with a reasonable prospect of repayment are faced with the position that the value of their bonds has depreciated or even disappeared completely.

The Government cannot remain indifferent to this state of affairs, and allow the matter to settle itself by the usual course of foreclosure of mortgage bonds, insolvencies and abandonment of farms.

The result would be, firstly, that many farmers would lose their livelihood, as a result of which they would be forced to the towns, where in the face of an already over-supplied labour market and through lack of education and training in a profitable urban occupation, many of them would be relegated to poor-whiteism.

Such a development would inflict serious damage on the investing classes, they might get possession of farms but farms without sufficient cultivation do not produce wealth.

For many widows and orphans it would entail a serious loss of income, for the State it would mean aggravation of a social problem of employment which is already very difficult, reduction in the number of independent and productive citizens, and an increase in the number of those who, in spite of themselves, have become a burden to the community.

Every reason, therefore, exists why the State, creditors and debtors, should co-operate in an endeavour to find the best and least disadvantageous way out of the difficult position.

There are two important principles which must be observed in the solution of this problem.

A moratorium has frequently been recommended as a remedy. This would go too far and yet not far enough. It is too far-reaching in that it places the bad debtor on the same footing as the good one. In this way it destroys the credit of the good debtor. It does not go far enough because it is only a moratorium, that is to say, a postponement and not a constructive remedy.

A moratorium ties up everything. It not only immobilises the business which is subject to the moratorium, but also a great deal besides. It is really a confession of failure of the economic system to function. It protects the people who are in difficulties, without helping them out of their difficulties, and it places new difficulties in the way of those who are perfectly able to carry on, and even to initiate profitable enterprise. It gives a shock to confidence from which it generally takes years for the community to recover.

A moratorium on farming debts would hear most heavily on the large class of farmers who are still carrying on, in the interest of those whose survival as farmers is less certain. It is in effect a blow at the vital force of the community and should therefore be avoided at all costs.

A second principle is that no harm should be done to the normal economic system. In the ordinary course of events citizens arrange their affairs with each other on the basis of a free contract. The State should avoid altering contractual relations in dealing with emergency relief measures.

There has latterly been support in different quarters for a policy whereby the State would take over all mortgage bonds on farm properties, this scheme to be financed by the issue of Government stock on a truly colossal scale.

The protagonists of this scheme have laid great stress on the benefits which it would confer on farmers. They have, however, omitted to consider its implications for the community in general.

The Government, on the other hand, if it is to deserve the confidence reposed in it must consider the matter not from the point of view of a particular class, but of the community as a whole.

The first result of such a measure would be to increase the national debt by approximately 40 per cent. Such a large and sudden increase would undoubtedly inflict grave injury to the credit of the country.

Protagonists of this policy talk of reducing interest to 3½ per cent. I can assure them that the Union cannot to-day hope to raise a loan of £100,000,000 at 3½ per cent. interest.

To sidestep this difficulty some of them suggest that the Government should simply make an issue of stock, and pay the bondholders with these. In other words, they recommend that for this purpose Government stock should have compulsory legal tender.

Such unsound measures have not hitherto found a place in the financial system of the Union and it is to be hoped that we shall never descend to that level.

The credit of a country should be used in the interest of the community as a whole. If the national debt grows to such proportions that our power of borrowing suffers as a result, it will necessarily mean that it will be difficult to obtain capital for other measures which we wish to undertake in the future.

The State dare not over-mortgage itself in such a way as to impair its ability to obtain capital for essential future needs.

The sound position in which we are to-day in respect of our national debt is largely due to the careful borrowing policy which has been followed in the past, and will only continue as long as investing interests retain their confidence in our loan policy.

In support of the scheme which seeks to make the State the universal mortgagee for farmers, the advantages of systematic amortization have been strongly advocated.

Amortization of mortgage debts is to be strongly recommended. But when it is argued, as it is argued in favour of a particular scheme, that it will rid the farmers of all mortgage debts in a given period, there are certain very pertinent questions which must be answered.

Is it intended that once such a scheme is inaugurated the State should forbid farmers to incur any further debts?

Is it intended that farmers should be deprived of the right of free contract in respect of incurring indebtedness?

If the answer is in the affirmative, how are new farmers to be financed? If the answer is in the negative, how is the object of ultimately wiping out all mortgage indebtedness to be encompassed? And what is there to prevent the growth of an equally great new crop of indebtedness even as the State, at great expense, is trying to cut away the existing one?

It must be clear that any scheme under which the general taxpayer is called upon to bear a considerable share of the cost of liquidation of the debts of a particular class in order to save that class in the public interest should at least provide adequate guarantees that it shall not be called upon to repeat the process. What possible guarantee could be established in this connection?

Neither can we lose sight of the political consequences of such a policy. A State remains stable as long as its citizens have an interest in its existence.

When, however, the State becomes creditor on a large scale to its citizens, there arises a large class who have a direct pecuniary interest in repudiation of the national debt. This becomes a fruitful soil for the germ of disintegration.

The world has sufficient experience of the economic confusion which results from political instability to serve as a warning against a policy which encourages this.

The Government has therefore decided that assistance to the farming community in their present difficulties must take a form other than that of wholesale taking over of mortgage bonds.

What the Government proposes should be viewed in the light of a measure of special cooperation of the State, the creditors and the farmers, with the object of bringing to an end an untenable situation.

The Government proposes to make available a considerable amount as a subsidy against interest on existing mortgage bonds—sufficient to pay 1½ per cent. on all bonds of bona fide farmers.

In return for this measure, which will result in securities again attaining a reasonable value and in the removal of the danger of the collapse of farm property values, it is expected of creditors that they will be prepared to accept interest at the rate of 5 per cent. on farm mortgages for so long as this measure is necessary.

The Government depends on their co-operation for the successful issue of this scheme and I am glad to be able to give the House the assurance that a large group of representatives of the bondholders with whom I discussed the matter in conference have given me their promise that they would be willing to support the scheme.

It is expected of the farmers that they will leave no stone unturned to pay their share of the reduced interest and thus give practical support to the help offered by the Government and the creditors. Without their co-operation in this matter the Government can hardly request creditors to make the sacrifice which is necessary on their part for the solution of the problem.

There may be a small minority of the creditors who will not be prepared to co-operate. In their case provision has been made, as the Government will exercise its right of taxation to appropriate all interest they demand in excess of 5 per cent. from the farmers.

As the Government intends to return such amounts by way of subsidies to those farmers who have paid them the effect of the scheme will be that for such time as it is considered necessary to continue such support the creditor will get 5 per cent. on his capital, of which the farmer will contribute 3½ per cent. and the Government 1½ per cent.

I wish to add something on the question of arrear interest on farm bonds. During the last few years many farmers found it difficult to pay interest on bonds. Complete figures of the amount in arrear are not available but it is estimated at between 1½ to 2 million pounds. Although the interest subsidy will be paid on existing bonds only, the Government is also prepared to pay it on the interest on arrear interest if this be added to capital.

The bill to be introduced will allow for this addition to be registered free of charge by the Deeds Office and give the same preference thereto as that which is enjoyed under the existing bond.

In order to give the scheme a good start an earnest appeal is made to all bondholders to allow any arrear interest which the mortgagor is unable to pay at present to be capitalized in this manner.

An appropriation of £1,500,000 has been made in the estimates for this service.

The Government recognizes that there will be cases in which the calling up of the bond is inevitable. Estates have to be liquidated. Mortgagees may require their money for their own businesses. There may even be cases where mortgagees refuse to co-operate in the general scheme and call up their bonds in consequence.

The Government has made provision for this by providing in the loan estimates an amount of £4 million to be placed at the disposal of the Land Bank. This amount is not intended to be used to take over mortgages where the existing bondholders are satisfied to leave things as they are.

It is intended to be used to take over bonds which are called up, and in respect of which the Land Bank has satisfied itself that the debtor has a reasonable prospect of carrying on his farming operations successfully.

In addition to the scheme which I have just explained, there are certain other measures which the Government has adopted in regard to farming. Some information has already been published about the schemes to be set on foot to counteract soil erosion.

Provision is further made on the estimates for the financing of small irrigation works. This will help farmers in the immediate financial stringency, and will also be of permanent benefit to the country in its effects on conservation of water, and better farming practice.

To assist farmers in drought-stricken areas the Government has made arrangements the details of which are already known, to facilitate the transfer by rail of stock seeking for pasture. The marketing of livestock will be assisted by the new subsidy in respect of tariffs for railing stock from longer distances to the chief markets of the Union.

Provision has also been made on the estimates for loans to re-stock farms where owing to conditions of drought and depression farmers, otherwise able to carry on, have not enough stock for economic utilization of their farms.

The present export subsidies and the various protective measures in the interest of the farmers will be continued.

In order to assist farmers who, while able to pay the interest on their Land Bank bonds, find difficulty at the present juncture in meeting their instalments towards redemption of capital, a bill will be introduced to give the board of the bank power to suspend amortization payments at their discretion.

The Government has also considered the position which has arisen as a result of the joint and several liability provision of the Agricultural Credits Act of 1926. Owing to the failure of weaker members of credit societies, many of the stronger members would be ruined if the provisions of the Act in respect of joint liability were enforced. We have come to the conclusion that joint liability, which is in effect only another form of the pernicious practice of standing surety, has been a failure, and credit societies will therefore be relieved of the joint liability of members for the debts of the society.

Details of all these schemes will be given in a white paper which will be laid on the table this afternoon.

As I have said before, the steps which we are now proposing must be looked on in the light of emergency relief measures.

Permanent improvement of the conditions of farmers can only result from a substantial rise in the level of prices. This would once more restore the farming community to a position of independence.

All other countries are at one with us in desiring this and the question of raising the level of prices will play an important part in the deliberations of the conference which will assemble in London in the course of next month.

Realizing the importance of this matter your delegates to the conference will keep it in the forefront of their attention. The plight of our farmers is largely due to the breakdown in the normal working of the world’s economic mechanism.

Such being the case, the community is in duty bound to tide them over the difficult times while the mechanism is being repaired.

The present measures must in the nature of things be emergency measures. No Government can permanently maintain an important class of the community at the cost of other classes, and permanent improvement can only be expected from a general economic revival.

While the brunt of the depression has fallen on the farming community, attention must also be given to other classes who have their share of hardship to bear.

Those sections of the salaried and wage-earning classes who have continued in employment during the depression have been relatively better off than they were before.

While prices have fallen, wages have generally speaking not fallen to the same extent. Their real wages have therefore increased.

On the other hand unemployment is still bad, and the Government has therefore made provision on the estimates for a considerable expenditure on public works, and for other measures which will increase employment.

The measures of which I shall tell the House presently for the development of low-grade ore and general expansion of the gold-mining industry will provide considerable employment for both natives and Europeans.

The Labour Department will be given £750,000 on loan account and £145,000 on revenue account for measures to relieve unemployment.

In addition the railways, as my colleague will explain to you to-morrow, will spend over £1,000,000; labour settlements in the Forestry Department will have over £200,000.

While expenditure on irrigation, public works, telegraph and telephone construction and numerous other services in other votes will assist in giving employment.

The anticipated deficit for the current year on the existing basis of taxation, after providing for all these special measures, is therefore, £5,724,000, which, taken in conjunction with the deficits carried forward, gives a total deficit for the four years of £7,686,000—a truly formidable figure.

My proposals for meeting this deficit are as follows:

Tn the first place it is estimated that, owing to the increased price of gold, an additional amount of £1,900,000 will accrue to the loan account in accordance with the provisions of the General Loans Consolidation and Amendment Act, 1917. Now, having regard to the circumstances under which this accrual occurs and the present difficult emergency conditions, I think I may rightly claim that this sum should, for the present anyway, be diverted to the revenue account so that it can be utilized in a more direct and general way for the benefit of the community as a whole.

The diversion of this amount will still leave the usual contribution to loan account intact and thus the principle of utilizing a portion of the receipts derived from a vanishing State asset for capital expenditure is maintained. I am satisfied this proposal is in the public interest.

In the second place, we wish to deal with inland revenue from the gold mines.

South Africa’s departure from the gold standard and the subsequent depreciation of our currency have had the effect of increasing the value in depreciated currency of the production of the gold mines by many millions.

This is an increment due solely to State action. It is maintained by State action under the Currency and Exchanges Act, and is in no wise an appreciation of the assets of the shareholders which could be reckoned on as one of the factors inducing them to sink their money in the mines.

In considering its attitude to the premium, the State need therefore not be concerned with any claim that this money belongs by right to the shareholders.

There are, however, other important considerations:

1. 1. The first is the imperative need of using this opportunity for developing the production of low-grade ore. It is proposed to make every reasonable allowance to the mines for this purpose.
   It is accepted that the prolongation of the life of the existing mines and the extension of the gold-mining industry as a whole are of vital importance not only in the interest of the mining industry but of the country as a whole; it extends the life of the gold mines and affords more employment for white and native workers.
   The present currency position, involving as it does a large increase in the nominal sale price of gold, offers a unique opportunity for achieving those ends.
   The mining of ore below the previously accepted limits of payability should be encouraged and every opportunity be given for development which will add to the future possibilities of the mines.
   In the term “development” I include the sinking of shafts and the acquisition of necessary underground equipment and also development in excess of current requirements.
2. 2. The second consideration is the fact that the change in the currency policy of the State should benefit all producers; the gold producers have the right to share in this in the same way as other producers.
3. 3. Gold-mining is by nature a risky enterprise i and it is felt that mining shareholders are entitled to derive some benefit from the favourable circumstance which has appreciated the value of their product, even though this favourable circumstance is not inherent in the nature of the industry in which they risked their money. It is a windfall, but a share of the windfall may reasonably go to mining shareholders.
4. 4. There is also a probability that mining costs will rise and any such rises which eventuate will be paid out of the premium.

These are the prior claims which it is thought can fairly be advanced on behalf of the industry.

It is, however, very important to maintain a fair balance between mining shareholders and the rest of the country.

The money for the premium must be found by the rest of the community, and if an undue share of the premium is given to mining share-holders it will involve impoverishment of other classes and the emergence of new economic dislocations and new economic problems for the j Government.

The taxation necessary for re-distributing the premium between the mines and the rest of the community will not be based upon the premium as such, but upon the excess of the actual profits made over a statutory standard.

This standard profit will be determined by recalculating the profit earned during the period assessed on the basis of the standard value of gold (84s. 9d. per ounce of fine gold) and adding to the sum so ascertained an amount equal to ten per cent. of it.

This ten per cent. is designed to compensate for the lower grade of ore which may have been worked during the period assessed as compared with that worked in 1932.

As the percentage represents, over the industry as a whole, an allowance of six-tenths of a pennyweight, it will be seen that, for the current year at least, it probably errs on the side of generosity.

Moreover, in order to prevent anomalies which would arise in certain cases as the result of the recalculation of profits, a minimum standard profit will bo allowed equivalent to one shilling and six pence per ton milled.

The following further allowances will be made: —

1. (1) Expenditure on underground equipment or shaft sinking actually incurred in the year of assessment out of current revenue, which has not been taken into account in determining profits, will be allowed provided that such extraordinary expenditure has been undertaken in accordance with plans approved by the Minister of Finance on the recommendation of the Government Mining Engineer.
2. (2) A further amount equivalent to one shilling for every ton milled by the mine will be deducted.
3. (3) Where the profit for any year assessed does not exceed £2,000 the tax will not be levied,
4. (4) Provision will be made for the additional share of profits to be paid to the Government under any lease, for additional income tax resulting from the enhanced profits, and for any balance of the redemption allowance under the Income Tax Act which cannot be met from standard profits.

The tax will be levied on a graduated scale on the balance left over after all these allowances and deductions have been made.

The details of the manner in which this graduated scale will be applied are necessarily somewhat technical and involved, and I do not propose to weary hon. members by giving them at this stage. They are set out in a white paper which will be laid on the table this afternoon.

Hon. members will, however, be interested in the general result.

The scheme gives every encouragement to a sound policy of development by freeing from taxation any share in the premium used for this purpose, and at the same time penalises by higher taxation failure on the part of a mine to take advantage of these opportunities.

It is estimated that the yield of the tax in respect of the calendar year 1933 will produce in the financial year 1933-’34 about £6,000,000, representing roughly one-third of the premium which would have been available had there been no change in the policy of mining.

With the additional income tax which will be payable on the increased profits and the additional share of profits which will accrue to the State in respect of the leased mines, about one-half of the premium will, it is anticipated, be diverted to the State coffers, but this proportion will, of course, be increased if the mines fail to take the opportunities which are held out to them.

I may add that in further fulfilment of its desire to encourage the wise extension of the mining industry, the Government hopes to introduce at an early date legislation to provide for much needed changes in the existing gold law.

Another proposal connected with the surtax on interest will affect the revenue figures.

I propose to make concessions which will constitute a substantial remission of taxation in regard to the surtax on fixed interest, which was imposed as an emergency measure last year.

in the first place the rate will be reduced to a flat rate of five per cent.

Secondly, interest derived from any security where the rate fixed by that security does not exceed five per cent. will be exempt from the tax.

Thirdly, life insurance companies, which were specially brought under the provisions of last year’s taxing measure, will now be relieved from payment of the tax.

These changes will exclude the great bulk of interest-bearing securities, including all Union Government stocks from the tax.

It is the definite policy of the Government to do all in its power to reduce the rate of interest in this country. These remissions of taxation should help in that direction.

The surrender of revenue through these remissions is £200,000.

During the last financial year the consumption of factory-made cigarettes fell by over 80 million. This resulted in a loss of revenue amounting to £20,000.

A large proportion of this decrease is attributed to a more extensive use of cigarettemaking machines by individual smokers.

In order to protect the revenue I propose to impose a surtax of 1½d. per 2 ounces on cigarette tobacco to be collected by means of stamps affixed to the containers of such tobacco.

This surtax of 1s. per lb. should on the 1932 figures bring in additional revenue of £10,000.

It is anticipated, however, that half the sales of cigarette tobacco will swing back to factory-made cigarettes so that revenue will benefit by £10,000 plus £5,000 through the surtax, a total of £15,000 per annum.

Hon. members will remember that last year certain additional or special duties were imposed on whisky, rice, tea and fish, the rates being approximately equal to the exchange benefit derived by the importer after allowing for the primage and surtax charges.

As the exchange benefit has now disappeared, I propose to discontinue the additional duty of 2s. 6d. per proof gallon on whisky.

Notwithstanding the additional duties imposed on rice and tea, the price of these commodities to the consumer has not risen and in the circumstances I propose to discontinue the additional duty but at the same time to increase the ordinary duty by the amount of the special duty now abolished.

I can see no good reason for remitting this taxation, there is little, if any, likelihood of it being passed on to the consumer.

The special duty on fish of ¾d. per lb. I also propose to convert into an addition to the ordinary duty.

It has been represented to me by the Board of Trade that in the interests of the local fishing industry the duty should not be withdrawn.

Its imposition in 1932 did not result in any appreciable increase in the local price, and competition, particularly from Japanese salmon, is severe.

I have already referred to the withdrawal of the primage duty and the customs surtax duty.

All these proposals represent an amount of £7,686,000 which will become available to meet the deficit.

The hopes of the world for finding a way out of the depression, which is within measurable distance of completing its fourth year, are fixed on the conference of 66 nations, which will assemble in London in the middle of June.

South Africa has not only the same general interest of all nations in the success of the conference, but also a particular interest as the world’s chief gold producer.

The Government has considered it necessary to send a strong delegation to represent our interests at the conference.

Our interest will, in common with other nations, lie in a sufficient rise in prices to enable the economic machine to work smoothly and efficiently once again.

For this purpose to be accomplished it is essential to take the necessary steps for the revival of international trade, and for the removal of some at least of the barriers which now prevent its free flow.

The Union has always striven to keep its tariffs within reasonable limits and our trade is, as a result, not hampered by the almost prohibitive restrictions which have worked so much harm in different countries during the depression. At the same time sacrifices in tariff rates may, however, also be required from us to assist in a freer flow of commodities. We shall have to be as much prepared to make them as we expect others to make them.

This depression has made it abundantly clear that there are limits beyond which tariff protection cannot go without defeating its own purpose in a general slowing down of the velocity of trade.

The Union delegation will naturally do its utmost to counter any measures which may tend to diminish the importance of gold for currency purposes. There is no question of the stabilizing influence on world trade of a gold standard if that standard is allowed to function freely.

After nearly two years of fluctuating currencies, the world is now crying out for a stable basis for international trade.

All authorities are apparently in agreement that the gold standard is the only basis on which international trade can be carried on with confidence.

The Union delegation will do its utmost to obtain the restoration of the gold standard under guarantees for its maintenance in the future and under conditions which will safeguard the interests of the Union as a whole.

I shall now recapitulate the more important figures I have dealt with.

The accumulated deficit carried forward from 31st March, 1933, is £1,962,000.

For the current year revenue on the existing basis of taxation is £28,292,000, and expenditure is £34,016,000, giving a shortfall of £5,724,000. The deficit to be dealt with is therefore £7,686,000.

My proposals will result in additional revenue of £7,915,000, which, after allowing for remissions of revenue to the extent of £229,000, is sufficient to meet the deficit.

I think hon. members will agree that having regard to the present world economic situation the position of our public finances as reflected in the budget which I have just laid before them gives cause for great satisfaction and thankfulness.

It is undoubtedly a great achievement for any country to be able, in these days, after having made reasonable provision for the public requirements of its people to be able to balance its budget.

Proposals of a very far-reaching nature are included in its provisions. They are the joint proposals of a national Government pledged to deal with the country’s problems, in this time of crisis, in a national manner.

Let me assure the country that only as the result of the elimination of sharp party divisions has it been possible to bring forward these proposals.

I bespeak for them the sympathy and the support of the people of the Union.

I now give notice that I shall move to-morrow that the House go into Committee of Ways and Means to consider resolutions on customs and excise duties, income tax and other forms of taxation.

I lay upon the table—

1. (1) Estimates of the expenditure to be defrayed from revenue funds during the year ending 31st March, 1934 (excluding Railways and Harbours Administration).
2. (2) Estimates of the expenditure to be defrayed from loan funds during the year ending 31st March, 1934,

and to announce that His Excellency the Governor-General, having been informed of the provision made in these estimates of expenditure, recommends the appropriation contemplated therein to the consideration of the House.

I also lay on the table estimates of the revenue to be received during the year ending 31st March, 1934.

I also lay upon the table certain papers relating to the budget and statistics of trade and production for inclusion in “Hansard”.

1. (a) Customs surtax ceased on 21.1.1933.
2. (b) Includes £58,000 due to increased price of gold.
3. (c) Includes £7,000 due to increased price of gold.

1. a Includes £1,360,000 being additional receipts due to increased price of gold.
2. b Includes £367,000 being additional receipts due to increased price of gold.

a Includes £67,000 additional receipts due to increased price of gold.

The MINISTER OF RAILWAYS AND HARBOURS seconded the motion.

On the motion of the Minister of Railways and Harbours, the debate was adjourned; to be resumed to-morrow.

Message received from the Senate—

The Senate requests that the hon. the House of Assembly will be pleased to appoint an equal number of members to serve with the members of the Senate.

Message referred to Committee on Standing Rules and Orders for consideration and report.

First Order read: Second reading, Agricultural Pests Amendment Bill.

Second Order read: Second reading, Fransch-hoek Water (Private) Bill.