levying a Customs duty, and to report what in their opinion was the most convenient form of duty. A copy of the minute of appointment and of the report of the the Committee are appended (Appendix II). The Committee was not asked to express any opinion on the merits of a Customs duty; they were merely asked to report which of the various schemes placed before them was the most convenient method of levying it. Some of the members of the Committee were opposed to the principle of a duty.

6. The scheme selected by the Committee presents considerable administrative difficulties. These difficulties arise from the fact that the duty has to apply to an article which cannot be distinguished on entry, but has to be taxed by reference to its subsequent use for only one out of several different uses to which it may be put. Imported barley may be used for feeding or grinding or for making malt, and that malt may be used either for brewing or distilling or for malt extracts, malted foods or for the manufacture of vinegar. It is only in respect of the barley malted for use in breweries and distilleries that the duty is to be charged. In order to secure this it is necessary to take precautions to secure that all malt used by brewers or distillers has been made either from British barley or from imported barley upon which duty has been paid. This involves a requirement that imported barley intended for malting, and having paid duty at the port, should be accompanied by certificates at every stage of its progress from the port to the malthouse, brewery or distillery. As each consignment was split up into separate parcels a fresh certificate would have to be made out for each parcel; a certificate would have to accompany each parcel as it passed through the hands of successive purchasers. Records, open to revenue inspection, would have to be kept by importers, corn merchants, maltsters, brewers and distillers. All receipts and sales of parcels of imported duty-paid barley would have to be shown, and on every transaction in which imported duty-paid barley changed hands a fresh official form would have to be filled in and signed.

7. Records would have to be kept and certificates would have to be provided by every person handling British barley, except the original grower, in order to prevent the malting of foreign barley which had been imported duty free ostensibly for feeding to livestock and to prove to the Revenue authorities that barley reaching the maltster, brewer or distiller, unless imported and duty paid, had in fact been grown in this country, and was not, therefore, liable to duty. A stack of barley after leaving the farmer may be split up and pass through many hands before it reaches its ultimate destination. Each part of the stack when sold to a new purchaser would have to be accompanied by a certificate showing that it has been grown in this country, lest it might ultimately be sold to brewers or distillers, who would have to produce evidence to show that it was homegrown barley.

8. Arrangements would have to be made to pay back the duty on imported duty-paid barley which was subsequently used for malt extracts, vinegar, or for feeding purposes.

9. The scheme would, therefore, impose burdensome restrictions and increased expense on a wide range of trades, none of which would obtain any benefit from the duty. It would arouse the opposition of the interests affected, and the Customs and Excise Department would have to administer a highly complex and irritating scheme of control, containing considerable opportunities of evasion, without the willing co-operation of the trades concerned, and for a revenue return which would be negligible compared to the trouble and expense involved to all concerned.

10. Moreover, a duty on imported malting barley would have to be accompanied by duties on foreign malt and malt extract, by an increase in the Customs duties on imported beer and spirits, and by an increase in the drawbacks on beer and spirits exported. It would also probably produce a demand that corresponding duties should be imposed on malt substitutes, which would involve an additional duty on sugar, and new duties on maize and rice, if used in the process of brewing or distilling.

11. Yet it is very doubtful whether even this elaborate scheme would be of much assistance to barley growers. Brewers in purchasing malt are guided more by considerations of quality than of price. They must have malt of a certain quality for their beers, and this necessitates the use of a proportion of malt made from imported bailey whatever may be the price. This proportion of imported barley has to be increased after a bad barley season in this country so as to correct the deficiencies in the British barley. A Customs duty would not, therefore, result in any marked increase in the demand for British malting barley. On the other hand, there is great danger that the imposition of the duty would be followed by an actual fall in British barley prices if the duty stimulated home production and there was little increased demand from brewers.

12. The annexed statement (Appendix I), giving the home production and imports of barley, the number of barrels of beer brewed and the amount of spirits distilled, shows that the decline in demand for British malting barley is due not to foreign competition but to a decline in the production of beer and spirits.

13. A Customs duty on imported malting barley, therefore, would be difficult to administer, would be open to the possibility of evasion, would impose irritating restrictions on all traders in barley and malt, and would be of doubtful advantage to the farmer. For these reasons the Government cannot see their way to accept the proposal.

MINISTRY OF AGRICULTURE AND FISHERIES.

14th December, 1927.

APPENDIX I.

UNITED KINGDOM.*

HOME PRODUCTION AND IMPORTS OF BARLEY, NUMBER OF BARRELS OF BEER BREWED, AND AMOUNT OF SPIRITS DISTILLED,

* Great Britain and Northern Ireland only from 1st April, 1923, but it may be noted that the trade of the Irish Free State in Barley has been negligible.

For the 12 months ended September, 1926, 808,000 tons of barley were used for malting, 684,000 tons by brewers, and 124,000 tons by distillers.

APPENDIX II.

TREASURY MINUTE DATED 15TH OCTOBER, 1923.

The Chancellor of the Exchequer states to the Board that he proposes to appoint a Committee to consider the various methods of levying a Customs duty upon imported malting barley, and to report what in their opinion is the most convenient form of duty.

The Chancellor of the Exchequer proposes that the Committee shall be constituted as follows:

Captain M. Falcon, M.P. (Chairman).

Mr. George Bull, C.B.E., representing the National Association of Corn and Agricultural Merchants.

Mr. H. D. Cherry-Downes, representing the Maltsters' Association of Great Britain.

Mr. H. Fountain, C.B., representing the Board of Trade.

Mr. Harry German

Mr. Cleveland Fyfe

representing the National Farmers' Union.

Mr. J. Holman, representing the National Federation of Corn Trade

Associations.

Mr. W. H. Pascoe, representing the Customs and Excise Department.
Mr. Hugh F. Paul.

Mr. W. H. Ross, representing the Whisky Association.
Major E. A. Ruggles-Brise, M.P.

culture and Fisheries.

Mr. S. R. Wells, M.P., representing the Brewers' Society.

Sir David Wilson, Bart.

With Mr. E. S. Bertenshaw, of the Customs and Excise Department, and Mr. R. Ross, of the Ministry of Agriculture and Fisheries, as Joint Secretaries to the Committee.

My Lords concur.

COMMITTEE ON IMPORTED MALTING BARLEY DUTY.

REPORT.

To the Lords Commissioners of His Majesty's Treasury.

1. We were appointed by Your Lordships' Minute of 15th October, 1923, to be a Committee to consider the various methods of levying a Customs duty upon imported malting barley, and to report what in our opinion is the most convenient form of duty. In the course of our discussions a question arose as to the scope which the duty contemplated was in fact intended to have; our Chairman sought instructions on the point, and received from the Chancellor of the Exchequer a letter stating that the duty which the Government had in view was a duty upon imported malting barley for use in brewing and distilling, and that it was not proposed that the duty should fall on imported barley used for feeding purposes, on malt extracts used for food or medicinal purposes, or on malt used for vinegar or any other food purposes.

2. We have not thought it necessary to hear witnesses. The hearing of evidence would necessarily have prolonged our proceedings, and as the Committee itself included representatives of the agricultural and business interests concerned it is reasonable to suppose that our discussions have yielded the same result as though witnesses had appeared.

3. We were not asked to concern ourselves with the policy of a Customs duty of the kind contemplated in our terms of reference, and we accordingly express no opinion on that aspect of the matter, on which we were not in agreement. For the same reason we do not deal with any consequential questions arising out of the imposition of a duty upon imported malting barley, as for example the necessity of imposing a duty upon imported malt; it is, however, essential that due account should be taken of these in framing legislation. We conceived that we should most usefully discharge the functions laid upon us by recommending to Your Lordships, as promptly, as possible, a method likely to prove reasonably workable in practice, if ultimately approved by Parliament. We do not here detail the different schemes which we have considered, but confine ourselves to an account of the manner in which we have arrived at our conclusions, with a statement of the method which we recommend. We append, however, a copy of a memorandum* (which was prepared for our information) summarising various suggested methods of levying a duty.

4. The normal, and the simplest, method of levying a Customs duty upon any imported article is so to define the article in the taxing legislation as to provide a definite criterion of liability or non-liability to duty which can be applied at the port (and at the time) of importation by reference to some ascertainable characteristic of the article. If this can be done the question of liability is settled once and for all before the article passes the Customs. For example, barley is easily distinguishable from other grains; and the levying of a duty upon all barley would be a simple matter.

5. Our task, however, was to find a method of levying a duty upon barley intended to be used for particular purposes only, and we have been forced to *Not printed here.

the conclusion that it is not practicable to adopt the method described in paragraph 4. Although a broad distinction can be drawn between imported barleys of malting sorts and of feeding sorts, there is no practical or technical distinction to meet the present case, and it is not possible to frame a legal definition by reference to characteristics ascertainable at the time of importation.

6. We were thus thrown back upon the alternative course of obtaining from importers of barley, at the time of importation, a declaration whether it is intended to be used for malting, brewing or distilling, or not for malting, brewing, or distilling. This means that duty would be charged at the time of importation upon barley declared as intended for malting, brewing or distilling, while barley declared as not intended for those purposes would pass the Customs "duty free." The use of " duty-free" barley for malting, brewing or distilling should be prohibited under penalties. We are informed that importers are able to declare at the time of importation whether barley is intended for malting, brewing or distilling, or not, in nearly every case.

7. We think that duty must be charged on the importation of all barley intended for malting, irrespective of the fact that some malt made from imported barley will be used by manufacturers of the products on which the letter from the Chancellor of the Exchequer indicates that the duty is not intended to fall, and that the exemption from the incidence of the duty of any particular products in the manufacture of which malt is used must be effected by means of a subsequent repayment of duty.

8. We are agreed that if the course referred to in paragraph 6 is adopted provision should be made for the repayment of duty paid in cases where barley declared on importation for malting, brewing or distilling, and therefore dutypaid, is subsequently sold for feeding. (This is distinct from the questionnoticed in paragraph 7-of exempting certain manufactured products into which malt enters.) Such a provision will leave it open to any importer who wishes to retain the right to sell a parcel of barley for malting, brewing, or distilling to declare it accordingly and to pay the duty, with the knowledge that the duty can be recovered from the Customs if the barley is eventually proved to have been used for feeding. We think this should be the regular method of dealing with the very small proportion (see paragraph 6) of importations the ultimate use of which may be uncertain, and we do not consider it necessary to provide that barley delivered duty-free may be diverted to malting.

9. We are agreed, however, that repayment of duty should not be allowable in respect of broken and undersized corns, &c., screened from importe d malting barley.

10. It is an obvious corollary of a method which contemplates

(a) the delivery of barley without payment of duty, but under a pro-
hibition against use for malting, brewing or distilling; and
(b) a repayment where barley on which duty has been paid is shown
to be used for feeding or for the purposes excepted from the
incidence of the duty in the letter from the Chancellor of the
Exchequer,

that the Customs must be in a position not only to detect any use of “ dutyfree" barley for malting, brewing or distilling, but also to satisfy themselves when a repayment is claimed that duty has in fact been paid and that the barley has been used for a purpose carrying a title to repayment. To this end machinery is necessary by which the Customs can track" British barley back to the farm where it was grown, and imported duty-paid barley back to the ship which imported it.

11. In the matter of "tracking" special consideration has to be given to the passage of barley through malting premises, inasmuch as the grain