III
THE BUDGET[ToC]
THE BUDGET RESOLUTIONS[ToC]
House of Commons, May 4, 1903
The Leader of the Opposition this afternoon told us that we were at the beginning of what would be a very complex and a very protracted discussion. If that discussion continues as it has begun, the Government will have no reason to complain of it. We have made extensive and even daring proposals. Those proposals have been accepted and, on the whole, even acclaimed by the public at large, and they have not been substantially challenged in this House. The Leader of the Opposition, it is true, devoted his reasoned and temperate speech to making a careful inquiry into the foundations and the character of certain of the taxes by which my right hon. friend proposes to raise the revenue for the year; and I gathered he accepted, with such reservations as are proper to all engaged in a large discussion, and as are particularly appropriate to a Party leader, the general principle of differentiation of taxation in regard to the amount of property, but that he demurred to and condemned differentiation in regard to the character of property. The right hon. gentleman singled out for special censure and animadversion the two sets of taxes in relation to land and to the licensed trade. He used an expression about some of the forms of taxation proposed by the Chancellor of the Exchequer which was a striking one. He said that they diverged from the principles which have hitherto dominated civilised society.
Even at the risk of that accusation we on this side of the House have always taken and will always assert an entirely different position in regard to the taxation of land and of liquor licences from that of the taxation of other classes of property. The immemorial custom of nearly every modern State, the mature conclusions of many of the greatest thinkers, have placed the tenure, transfer, and obligations of land in a wholly different category from other classes of property. The mere obvious physical distinction between land, which is a vital necessity of every human being and which at the same time is strictly limited in extent, and other property is in itself sufficient to justify a clear differentiation in its treatment, and in the view taken by the State of the conditions which should govern the tenure of land from that which should regulate traffic in other forms of property. When the right hon. gentleman seeks by comparisons to show that the same reasoning which has been applied to land ought also in logic and by every argument of symmetry to be applied to the unearned increment derived from other processes which are at work in our modern civilisation, he only shows by each example he takes how different are the conditions which attach to the possession of land and speculation in the value of land from those which attach to other forms of business speculation.
"If," he inquires, "you tax the unearned increment on land, why don't you tax the unearned increment from a large block of stocks? I buy a piece of land; the value rises; I buy stocks; their value rises." But the operations are entirely dissimilar. In the first speculation the unearned increment derived from land arises from a wholly sterile process, from the mere withholding of a commodity which is needed by the community. In the second case, the investor in a block of shares does not withhold from the community what the community needs. The one operation is in restraint of trade and in conflict with the general interest, and the other is part of a natural and healthy process, by which the economic plant of the world is nourished and from year to year successfully and notably increased.
Then the right hon. gentleman instanced the case of a new railway and a country district enriched by that railway. The railway, he explained, is built to open up a new district; and the farmers and landowners in that district are endowed with unearned increment in consequence of the building of the railway. But if after a while their business aptitude and industry creates a large carrying trade, then the railway, he contends, gets its unearned increment in its turn. But the right hon. gentleman cannot call the increment unearned which the railway acquires through the regular service of carrying goods, rendering a service on each occasion in proportion to the tonnage of goods it carries, making a profit by an active extension of the scale of its useful business—he cannot surely compare that process with the process of getting rich merely by sitting still. It is clear that the analogy is not true.
We are further told that the Budget proposals proceed on the assumption that there is a corner in land, and that communities are denied the opportunity of getting the land required, whereas, it is asserted, there is in fact nothing approaching a corner in land. I do not think the Leader of the Opposition could have chosen a more unfortunate example than Glasgow. He said that the demand of that great community for land was for not more than forty acres a year. Is that the only demand of the people of Glasgow for land? Does that really represent the complete economic and natural demand for the amount of land a population of that size requires to live on? I will admit that at present prices it may be all that they can afford to purchase in the course of a year. But there are one hundred and twenty thousand persons in Glasgow who are living in one-room tenements; and we are told that the utmost land those people can absorb economically and naturally is forty acres a year. What is the explanation? Because the population is congested in the city the price of land is high upon the suburbs, and because the price of land is high upon the suburbs the population must remain congested within the city. That is the position which we are complacently assured is in accordance with the principles which have hitherto dominated civilised society.
But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement. Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener—the market-gardener liable to be disturbed on the outskirts of great cities, if the population of those cities expands, if the area which they require for their health and daily life should become larger than it is at present.
I should like to point out to the Committee that the right hon. gentleman, in using this argument about the market-gardener, recognises very clearly—and I think beyond the possibility of a withdrawal—the possibility of these cities expanding and taking up a larger area of ground in consequence of the kind of taxation which my right hon. friend in his land taxes seeks to impose. But let that pass. What is the position disclosed by the argument? On the one hand we have one hundred and twenty thousand persons in Glasgow occupying one-room tenements; on the other, the land of Scotland. Between the two stands the market-gardener, and we are solemnly invited, for the sake of the market-gardener, to keep that great population congested within limits that are unnatural and restricted to an annual supply of land which can bear no relation whatever to their physical, social, and economic needs—and all for the sake of the market-gardener, who can perfectly well move farther out as the city spreads, and who would not really be in the least injured.
We take the view that land cannot be regarded as an ordinary commodity, nor are we prepared to place publicans' licences in the same position as ordinary property. A licence is a gift from the State, and the licensed trade is subject to special restrictions and special taxation; this has been recognised by all parties and by all Governments. The position in regard to licences, as we know perfectly well, has been sensibly and, indeed, entirely altered in the course of the last few years. We have seen the assertion on the part of the licensed trade of their right to convert their annual tenancy of a licence from what it has been understood to be, to a freehold, and in that position they must face the logical consequences of the arguments they have used and of their action. If there are any hardships to them in the taxation proposed, let the hardships be exposed to Parliament and they will be considered in no spirit of prejudice or malice. Do not, however, let us have attempts to represent that the tax which involves an increase in the cost of production extinguishes the profits of the industry. It does not necessarily affect the profits of the industry; it is not a deduction from resultant profits; it is an incident in the turnover. If there are hard cases and special instances, we are prepared to meet them with the closest attention and with a desire to avoid severity or anything like the appearance of harsh treatment of individuals. But we decline to regard licences or land on the same footing as ordinary property. Licences are not to be regarded as ordinary private property, but as public property which ought never to have been alienated from the State.
No one will deny that we are making very considerable proposals to Parliament for the finance of the year; but the Conservative Party have gravely compromised their power of resistance. Those who desire to see armaments restricted to the minimum consistent with national security, those who labour to combat the scares of war, and to show how many alarms have no foundation,—those are not ill-situated, if they choose to make criticisms on the scale and scope of the finance required for the year's expenditure. But an Opposition that day after day exposes the First Lord of the Admiralty and the Prime Minister to a rain of questions and cross-questions, the only object of which, or an important object of which, is to promote a feeling of insecurity, involving demands for new expenditure of an almost indefinite character, those who, like the right hon. Member for Dover,[16] hurry to and fro in the land saying—or was it singing?—"We want eight, and we won't wait"—they, at least, are not in the best position to tell the taxpayer to call on some one else. Surely a reputation for patriotism would be cheaply gained by clamouring for ships that are not needed, to be paid for with money that is to come from other people.
There is another set of arguments to which I should like to refer. We have been long told that this Budget would reveal the bankruptcy of free-trade finance, and the Leader of the Opposition, seeking from time to time for a sound economic foothold in the fiscal quicksands in which he is being engulfed, has endeavoured to rest the sole of his foot on tariff for revenue. The adoption of a policy of tariff reform, we have been told, had become absolutely necessary if the revenue of the country was to be obtained and if a natural expansion were to be imparted to it. But now, if we may judge from the newspapers, one of the complaints made against the free-trade system and the free-trade Budget of my right hon. friend is not that the revenue will expand too little, but that there is the possibility that it will expand too much. It is not that we have reached the limits of practicable free-trade taxation, but that the taxation we now ask Parliament to assent to, will yield in the second year a much more abundant return than in the first year, and that in subsequent years the yield will increase still further. In the words of The Times newspaper: "The Chancellor of the Exchequer has laid broad and deep the basis of further revenue for future years."
Those who lately taunted us with being arrested by a dead wall of Cobdenite principles are now bewailing that we have opened up broad avenues of financial advance. They came to bewail the deficit of this year: they remained to censure the surplus of next. We may, no doubt, in the future hear arguments of how protection will revive industry and increase employment, as we have heard them in the past; but there is one argument which I should think it unlikely would be effectively used against us in the future, and that is that a free-trade system cannot produce revenue, because one of the criticisms which is emphatically directed against this Budget is on account of that very expansiveness of revenue which it was lately declared a free-trade system never could produce.
But that is not the only vindication of free-trade finance which is at hand. How have foreign countries stood the late depression in trade? The shortfall of the revenue from the estimates in this country was last year less than two millions, in Germany it was eight millions, and in the United States over nineteen millions. Let the House see what fair-weather friends these protectionist duties are. In times of depression they shrink. In times of war they may fail utterly. When they are wanted, they dwindle, when they are wanted most urgently, they fade and die away altogether.
And what is true of the taxation of manufactured articles as a foundation for any fiscal policy is true still more of the taxation of food, and of no country is it so true as of this island. For if you were ever engaged in a war which rendered the highways of the ocean insecure the rise in prices would be such that all food taxes would have to be swept away at once by any Government which desired to use the whole vigour of its people in prosecuting the war. This year, with its trade depression and its excellent maintenance of the revenue, has seen the vindication of free trade as a revenue-producing instrument; next year will see its triumph.
I have no apprehensions about the Budget which is now before the Committee. As Mr. Gladstone said, in introducing the Reform Bill of 1884, what is wanted to carry this measure is concentration and concentration only, and what will lose this measure is division and division only. And I venture to think that it will not only be a demonstration of the soundness of the economic fiscal policy we have long followed, but it will also be a demonstration of the fiscal and financial strength of Great Britain which will not be without its use and value upon the diplomatic and perhaps even upon the naval situation in Europe.
The right honourable Member for East Worcestershire[17] said this Budget was the work of several sessions, if not indeed of several Parliaments. The statement is exaggerated. The proposals outlined do not in any degree transcend the limits of the practical. A social policy may be very large, but at the same time it may be very simple. All these projects of economic development, of labour exchanges, of insurance for invalidity, and unemployment, which depend on money grants, may require very careful and elaborate administrative adjustment; but so far as Parliament is concerned they do not impose difficulties or make demands upon the time of the House in any way comparable to those which are excited by the passage of an Education or a Licensing Bill, and I see no reason whatever why we should not anticipate that in the course of this session and next session we should be able to establish a wide and general system of national insurance, which, more than any other device within the reach of this generation of the workers of our country, will help to hold off from them some of the most fatal and most cruel perils which smash their households and ruin the lives of families and of workmen.
On many grounds we may commend this Budget to the House. It makes provision for the present. It makes greater provision for the future. Indirect taxation reaches the minimum. Food taxation reaches the minimum since the South African war. Certainly the working classes have no reason to complain. Nothing in the Budget touches the physical efficiency and energy of labour. Nothing in it touches the economy of the cottage home. Middle-class people with between £300 and £2,000 a year are not affected in any considerable degree, except by the estate duties, and in that not to a large extent, while in some cases they are distinctly benefited in the general way of taxation. The very rich are not singled out for peculiar, special, or invidious forms of imposition.
The chief burden of the increase of taxation is placed upon the main body of the wealthy classes in this country, a class which in number and in wealth is much greater than in any other equal community, if not, indeed, in any other modern State in the whole world; and that is a class which, in opportunities of pleasure, in all the amenities of life, and in freedom from penalties, obligations, and dangers, is more fortunate than any other equally numerous class of citizens in any age or in any country. That class has more to gain than any other class of his Majesty's subjects from dwelling amid a healthy and contented people, and in a safely guarded land.
I do not agree with the Leader of the Opposition, that they will meet the charges which are placed upon them for the needs of this year by evasion and fraud, and by cutting down the charities which their good feelings have prompted them to dispense. The man who proposes to meet taxation by cutting down his charities, is not the sort of man who is likely to find any very extensive source of economy in the charities which he has hitherto given. As for evasion, I hope the right hon. gentleman and his supporters underrate the public spirit which animates a proportion at any rate of the class which would be most notably affected by the present taxation. And there is for their consolation one great assurance which is worth much more to them than a few millions, more or less, of taxation. It is this—that we are this year taking all that we are likely to need for the policy which is now placed before the country, and which will absorb the energies of this Parliament. And, so far as this Parliament is concerned, it is extremely unlikely, in the absence of a national calamity, that any further demand will be made upon them, or that the shifting and vague shadows of another impending Budget will darken the prospects of improving trade.
When all that may be said on these grounds has been said, we do not attempt to deny that the Budget raises some of the fundamental issues which divide the historic Parties in British politics. We do not want to embitter those issues, but neither do we wish to conceal them. We know that hon. gentlemen opposite believe that the revenue of the country could be better raised by a protective tariff. We are confident that a free-trade system alone would stand the strain of modern needs and yield the expansive power which is necessary at the present time in the revenue. And our proof shall be the swift accomplishment of the fact. The right hon. gentleman opposite and his friends seek to arrest the tendency to decrease the proportion of indirect to direct taxation which has marked, in unbroken continuity, the course of the last sixty years. We, on the other hand, regard that tendency as of deep-seated social significance, and we are resolved that it shall not be arrested. So far as we are concerned, we are resolved that it shall continue until in the end the entire charge shall be defrayed from the profits of accumulated wealth and by the taxation of those popular indulgences which cannot be said in any way to affect the physical efficiency of labour. The policy of the Conservative Party is to multiply and extend the volume and variety of taxes upon food and necessaries. They will repose themselves, not only, as we are still forced to do, on tea and sugar, but upon bread and meat—not merely upon luxuries and comforts, but also on articles of prime necessity. Our policy is not to increase, but whenever possible to decrease, and ultimately to abolish altogether, taxes on articles of food and the necessaries of life.
If there is divergence between us in regard to the methods by which we are to raise our revenue, there is also divergence in regard to the objects on which we are to spend them. We are, on both sides, inclined to agree that we are approaching, if we have not actually entered on, one of the climacterics of our national life. We see new forces at work in the world, and they are not all friendly forces. We see new conditions abroad and around us, and they are not all favourable conditions; and I think there is a great deal to be said for those who on both sides of politics are urging that we should strive for a more earnest, more strenuous, more consciously national life. But there we part, because the Conservative Party are inclined too much to repose their faith for the future security and pre-eminence of this country upon naval and military preparations, and would sometimes have us believe that you can make this country secure and respected by the mere multiplication of ironclad ships. We shall not exclude that provision, and now indeed ask the Committee to enable us to take the steps to secure us that expansion of revenue which will place our financial resources beyond the capacity of any Power that we need to take into consideration. But we take a broader view. We are not going to measure the strength of great countries only by their material resources. We think that the supremacy and predominance of our country depend upon the maintenance of the vigour and health of its population, just as its true glory must always be found in the happiness of its cottage homes. We believe that if Great Britain is to remain great and famous in the world, we cannot allow the present social and industrial disorders, with their profound physical and moral reactions, to continue unchecked. We propose to you a financial scheme, but we also advance a policy of social organisation. It will demand sacrifices from all classes; it will give security to all classes. By its means we shall be able definitely to control some of the most wasteful processes in our social life, and without it our country will remain exposed to vital dangers, against which fleets and armies are of no avail.
FOOTNOTES:
[16] Mr. Wyndham.
[17] Mr. Austen Chamberlain.
THE BUDGET AND NATIONAL INSURANCE[ToC]
The Free Trade Hall, Manchester, May 23, 1909
(From The Manchester Guardian, by permission.)
Considering that you have all been ruined by the Budget, I think it very kind of you to receive me so well. When I remember all the injuries you have suffered—how South Africa has been lost; how the gold mines have been thrown away; how all the splendid army which Mr. Brodrick got together has been reduced to a sham; and how, of course, we have got no navy of any kind whatever, not even a fishing smack, for the thirty-five millions a year we give the Admiralty; and when I remember that in spite of all these evils the taxes are so oppressive and so cruel that any self-respecting Conservative will tell you he cannot afford either to live or die, I think it remarkable that you should be willing to give me such a hearty welcome back to Manchester. Yes, sir, when I think of the colonies we have lost, of the Empire we have alienated, of the food we have left untaxed, and the foreigners we have left unmolested, and the ladies we have left outside, I confess I am astonished to find you so glad to see me here again.
It is commonly said that our people are becoming hysterical, and that Britain is losing her old deep-seated sagacity for judging men and events. That is not my view. I have been taught that the dock always grows near the nettle. I am inclined to think that in a free community every evil carries with it its own corrective, and so I believe that sensationalism of all kinds is playing itself out, and, overdoing, is itself undone. And the more our scaremongers cry havoc, and panic, and airships, and sea-serpents, and all the other things they see floating around, the greater is the composure and the greater is the contempt with which the mass of the nation receives these revelations, and the more ready they are to devote their mind to the large and serious problems of national and social organisation which press for solution and for action at the present time, and upon which his Majesty's Government have notable proposals to make.
I come to you this afternoon to speak about the political situation and the Budget, or rather I come to speak to you about the Budget, because the Budget is the political situation; and I ask you, as if it were at an election, whether you will support the policy of the Budget or not. Let us look into it.
What is the position in which we find ourselves? After reducing the taxes on coal, on tea, on sugar, and on the smaller class of incomes by nearly £7,000,000 a year, and after paying back £40,000,000 of debt in three years, we find that new circumstances and new needs make it necessary that we should obtain fresh revenue for the service of the State.
What are the reasons for this demand? There are three reasons—and only three. Old-age pensions, the navy, and the decrease in the revenue derived from alcoholic liquor. From those three causes we require sixteen millions more money this year than we did last year. Now who has a right—this is my first question—to reproach us for that? Certainly the Conservative Party have no right.
Take first the case of old-age pensions. I do not think their record is a very good one on that. They promised old-age pensions to win the general election of 1895. They were in power for ten years and they made no effort to redeem their pledge. Again, Mr. Chamberlain, in 1903, promised old-age pensions as a part of his Tariff Reform proposal, but the Conservative Party refused to agree to the inclusion of old-age pensions in that programme and forced that great man in the height of his power and his career to throw out old-age pensions from the Tariff Reform programme and to write a letter to the newspapers to say that he had done so.
We, the Liberal Party, did not promise old-age pensions at the election of 1906. The subject was scarcely mentioned by any of the candidates who are now your Members. Certainly it did not occupy at all a prominent position. We did not promise old-age pensions; we gave old-age pensions. When the Old-Age Pensions Bill was before the House of Commons, what was the attitude of the Conservative Party? Did they do anything to try to reduce or control the expenditure of that great departure? On the contrary. As my right honourable friend the Chancellor of the Exchequer has told the House of Commons, amendments to the Old-Age Pensions Bill were moved or received the official support of the Whips of the Conservative Party which would have raised the cost of that scheme to fourteen millions a year. And the Liberal Government, which was making this great effort, which was doing the work, which was keeping the Tory promise, was reproached and was derided for not accepting the proposals which these irresponsible philanthropists, these social reformers on the cheap, these limited-liability politicians, were so ready to move. And Lord Halsbury, the late Lord Chancellor, one of the leaders of the Conservative Party, a man with a powerful influence in their councils, said in a public speech that the old-age pensions as proposed by the Government were so paltry as to be almost a mockery.
I do not think any fair-minded or impartial man, or any average British jury, surveying the record of the Conservative Party upon old-age pensions, could come to any other conclusion than that they had used this question for popularity alone; that they never meant to give old-age pensions; that they only meant to get votes by promising to give them; that they would have stopped them being given if they could; that while the Bill was on its way they tried to embarrass the Government, and to push things to unpractical extremes; and now, even when the pensions have been given, they would not pay for them if they could help it. Let me say that I think the conclusion, which I believe any jury would come to, would perhaps be rather harsh upon the Conservative Party. I believe they meant better than their record; I am willing to admit that. But their record is before us, and it is a bad one, and upon the facts I have no hesitation in saying that it is not open to them to protest—they have not even an inch of foothold to protest—against any expenditure which we may now have to incur in order to defray the consequences of the policy of old-age pensions. So much for the first cause of the increased expenditure.
I pass to the navy. The Naval Estimates have risen by three millions this year. I regret it; but I am prepared to justify it. There will be a further increase next year. I regret it; but within proper limits necessary to secure national safety I shall be prepared to justify it; but I hope you will not expect me to advocate a braggart and sensational policy of expenditure upon armaments. I have always been against that, as my father was before me.
In my judgment, a Liberal is a man who ought to stand as a restraining force against an extravagant policy. He is a man who ought to keep cool in the presence of Jingo clamour. He is a man who believes that confidence between nations begets confidence, and that the spirit of peace and goodwill makes the safety it seeks. And, above all, I think a Liberal is a man who should keep a sour look for scaremongers of every kind and of every size, however distinguished, however ridiculous—and sometimes the most distinguished are the most ridiculous—a cold, chilling, sour look for all of them, whether their panic comes from the sea or from the air or from the earth or from the waters under the earth.
His Majesty's Government are resolved that the defensive measures of this country shall be prescribed by the policy of Ministers responsible to Parliament, and by the calculations, subject to that policy, of the experts on whom those Ministers rely, and not by the folly and the clamour of Party politicians or sensational journalists. In that determination we as a Government are united, and we shall remain united. Yet it is clear that the increase in the Naval Estimates of this year must be followed by another increase in those of next year. That is deplorable. It will impose upon our finances a strain which some other nations would not find it very easy to bear, but which, if the necessity be proved, this country will not be unwilling, and will certainly not be unable to support.
Well, but what have the Conservative Party got to say about it? Have they any right to complain of the taxes which are necessary for the maintenance of our naval power? Do we not see that they are ever exerting themselves to urge still greater expenditure upon the nation? He is a poor sort of fellow, a penny-plain-twopence-coloured kind of patriot who goes about shouting for ships, and then grudges the money necessary to build them. And when Mr. Balfour tells us that "gigantic sacrifices" are required, and that those gigantic sacrifices "must begin now," and then at the same time objects to the taxes by which the Government proposes to raise the money, he puts himself in a very queer position.
I have dealt with two of the causes which have led to our demand for further revenue—old-age pensions and the navy. Upon neither of them have the Conservative Party any ground for attacking us. What is the third? Ah, gentlemen, I agree that there is one cause of the prospective deficit for which we are budgeting for which the Conservative Party is in no way responsible. I mean the decline in the consumption of alcoholic liquors. Nothing that they have said and nothing that they have done has, in intention or in fact, contributed to the drying up of that source of revenue. On the contrary, by their legislation, by the views they have taken of the rights of the licensed trade, by their resistance to every measure of temperance reform, by their refusal even to discuss in the House of Lords the great Licensing Bill of last year, by their association with the brewers and with the liquor traffic generally, they have done all they could—I do them the justice to admit it—to maintain the Customs and Excise from alcoholic liquors at the highest level. If the habits of the people, under the influences of a wider culture, of variety, of comfort, of brighter lives, and of new conceptions, have steadily undergone a beneficent elevation and amelioration, it has been in spite of every obstacle that wealth and rank and vested interest could interpose.
The money has to be found. There is no Party in the State who can censure us because of that. Our proposals for enlarging the public revenue are just and fair to all classes. They will not, in spite of all these outcries you hear nowadays, sensibly alter the comfort or status, or even the elegance of any class in our great and varied community. No man, rich or poor, will eat a worse dinner for our taxes.
Of course, from a narrow, electioneering point of view, there are a great many people—I believe they are wrong—who think we should have done much better if we had put another penny on the income tax instead of increasing the tax upon tobacco. Well, I have come here this afternoon to tell you that we think it right that the working classes should be asked to pay a share towards the conduct of a democratic State. And we think that taxes on luxuries, however widely consumed, are a proper channel for such payment to be made. We believe that the working classes are able to pay by that channel, and we believe, further, that they are ready to pay. We do not think that in this old, wise country they would have respected any Government which at a time like this had feared to go to them for their share.
I have a good confidence that this Budget is going to go through. If there are hardships and anomalies in particular cases or particular quarters, we are ready to consider them. They will emerge in the discussions of the House of Commons, and we have every desire to consider them and to mitigate them. But we believe in the situation in which we find ourselves in this country, and in the general situation of the world at the present time—that the taxes on incomes over £3,000 a year, upon estates at death, on motor-cars before they cause death, upon tobacco, upon spirits, upon liquor licences, which really belong to the State, and ought never to have been filched away; and, above all, taxes upon the unearned increment in land are necessary, legitimate, and fair; and that without any evil consequences to the refinement or the richness of our national life, still less any injury to the sources of its economic productivity, they will yield revenue sufficient in this year and in the years to come to meet the growing needs of Imperial defence and of social reform.
This Budget will go through. It will vindicate the power of the House of Commons. It will show, what some people were inclined to forget, that in our Constitution a Government, supported by a House of Commons and the elected representatives of the people, has in fact a full control of national affairs, and has the means of giving effect to its intentions, to its policy, and to its pledges in every sphere of public affairs.
That is one thing which the passage of this Budget will show. Let not that be overlooked. But that is not the only thing; the Budget will do more than that. It will reveal the financial strength of Britain. At a time when every European country is borrowing merely for the needs of ordinary annual expenditure, when all these disturbing naval programmes, which are injuring the peace of the world and the security and progress of civilisation, are being supported by borrowed money; and when the credit of Germany has fallen below that of Italy, this country, which has necessarily to make the biggest expenditure for naval defence of any country, will be found, under a Free Trade system and by our proposals, able not only to pay its way, but to pay off the debts of the past—to pay off the debts of our predecessors—even in the worst of times at the rate of something like £7,000,000 a year.
I have spoken to you of the causes which in the past have led up to this Budget. I have spoken to you of its present justification. What of the future? If I had to sum up the immediate future of democratic politics in a single word I should say "Insurance." That is the future—Insurance against dangers from abroad. Insurance against dangers scarcely less grave and much more near and constant which threaten us here at home in our own island. I had the honour and opportunity a few days ago of explaining to the House of Commons our proposals for unemployment insurance. That is a considerable matter. It stands by itself. It is a much simpler question than invalidity insurance; but it is a great matter by itself. Indeed, I thought while I was explaining it to the House of Commons that I had not made such an important speech since I had the honour of explaining the details of the Transvaal Constitution.
Well, what is the proposal? The proposal is that you should make a beginning. We have stood still too long. We should begin forthwith, taking some of the greatest trades of the country in which unemployment is most serious, in which fluctuations are most severe, in which there are no short-time arrangements to mitigate the severity to the individual; and that a system of compulsory contributory insurance, with a large subvention from the State, should be introduced into those great industries.
But our proposals go farther than that. The State assistance to unemployment insurance will not be limited to those trades in which it is compulsory. Side by side with the compulsory system we shall offer facilities to voluntary insurance schemes in other trades, managed by trade unions or by societies or groups of workmen. Moreover, we contemplate that the State insurance office should undertake, if desired, the insurance against unemployment of any individual workman in any trade outside of those for which compulsory powers are required, and should afford to these individuals an equivalent support to that which is given in the trades which are subject to the compulsory system.
Of course you will understand that the terms, that can be offered under a voluntary or partial system, are not so good as those which can be obtained in the compulsory system of a great trade. Where all stand together, it is much better for each. But still it is certain that individuals who take advantage of the insurance policy which will be introduced, and I trust carried through Parliament next year, will be able to secure terms which will be much more favourable than any which are open to them by their unaided contributions at the present time, because their contributions will be reinforced by the contributions of the State. Further, if our beginning proves a success the attempt and the system will not stop there. It will be extended, and in proportion as experience and experiment justify its extension, in proportion as the people of this country desire its extension, it must eventually cover, in course of years, the whole of our great industrial community.
Well now, it is said that in adopting the policy of contributory insurance the Government have admitted that they were wrong in establishing old-age pensions upon the non-contributory basis. Now I do not think that is true. There is no inconsistency or contradiction between a non-contributory system of old-age pensions and a contributory system of insurance against unemployment, sickness, invalidity, and widowhood. The circumstances and conditions are entirely different. The prospect of attaining extreme old age, of living beyond threescore years and ten, which is the allotted span of human life, seems so doubtful and remote to the ordinary man, when in the full strength of manhood, that it has been found in practice almost impossible to secure from any very great number of people the regular sacrifices which are necessary to guard against old age.
But unemployment, accident, sickness, and the death of the bread-winner are catastrophes which may reach any household at any moment. Those vultures are always hovering around us, and I do not believe there is any sensible, honest man who would not wish to guard himself against them, if it were in his power to make the necessary contribution, and if he were sure—this is a very important point—that he would not by any accident or fraud or muddle be done out of the security he had paid for. And if we choose to adopt one system of State-aid for dealing with one class of need, and quite a different system for dealing with quite a different class of need, it does not lie with any one, least of all does it lie with those who have impartially neglected every problem and every solution, to reproach us with inconsistency.
But I go farther. The Old-Age Pensions Act, so far from being in conflict with a scheme of contributory insurance, is really its most helpful and potent ally. The fact that at seventy the State pension is assured to all those who need it, makes a tremendous difference to every form of insurance confined to the years before seventy, whether for old age or for invalidity. I asked an eminent actuary the other day to make me some calculations. They are rough, general calculations, and no doubt they might be more exact. But roughly, I believe it to be no exaggeration to say that the rates to cover a man till seventy are in many cases scarcely half what they would be, if they had to cover him till death. Do you see what that means? It is a prodigious fact. It is the sort of fact by the discovery of which people make gigantic fortunes; and I suggest to you that we should make this gigantic fortune for John Bull. It means that the whole field of insurance has become much more fruitful than it ever was before, that there is a new class of insurance business possible which never was possible before. It means that the whole field of insurance is far more open to the poorest class of people than it was before, and that with a proper system the benefits of the Old-Age Pensions Act would not be confined to the actual pensioners who are drawing their money, but would extend forwards in anticipation to all other classes and to all other people, and that so far as five shillings a week is concerned—that is not much unless you have not got it—the actuarial position of every man and woman in this country has been enormously improved by the Old-Age Pensions Act.
It is of that improvement that we mean to take advantage next year. Next year, when Free Trade will have yielded the necessary funds to the revenue, we mean to move forward into this great new field. But let me say one thing which is of the utmost importance. We must remember that the field of insurance is already largely covered by a great mass of benevolent and friendly societies, just as the field of unemployment insurance is already occupied to some extent by trade unions, and the Government would not approve of any development or extension of the policy of insurance which did not do full justice to existing institutions, or which did not safeguard those institutions, to whom we owe so inestimable and incommensurable a debt, or caused any sudden disturbance or any curtailment of their general methods of business. On the contrary, we believe that when our proposals are put in their full detail before the country, they will be found to benefit and encourage and not to injure those agencies which have so long been voluntarily and prosperously at work.
The decisive question is this—will the British working classes embrace the opportunities which will shortly be offered to them? They are a new departure; they involve an element of compulsion and of regulation which is unusual in our happy-go-lucky English life. The opportunity may never return. For my own part, I confess to you, my friends in Manchester, that I would work for such a policy and would try to carry it through even if it were a little unpopular at first, and would be willing to pay the forfeit of a period of exclusion from power, in order to have carried such a policy through; because I know that there is no other way within the reach of this generation of men and women by which the stream of preventable misery can be cut off.
If I had my way I would write the word "Insure" over the door of every cottage, and upon the blotting-book of every public man, because I am convinced that by sacrifices which are inconceivably small, which are all within the power of the very poorest man in regular work, families can be secured against catastrophes which otherwise would smash them up for ever. I think it is our duty to use the strength and the resources of the State to arrest the ghastly waste not merely of human happiness but of national health and strength which follows when a working man's home which has taken him years to get together is broken up and scattered through a long spell of unemployment, or when, through the death, the sickness, or the invalidity of the bread-winner, the frail boat in which the fortunes of the family are embarked founders, and the women and children are left to struggle helplessly on the dark waters of a friendless world. I believe it is well within our power now, before this Parliament is over, to establish vast and broad throughout the land a mighty system of national insurance which will nourish in its bosom all worthy existing agencies and will embrace in its scope all sorts and conditions of men.
I think it is not untrue to say that in these years we are passing through a decisive period in the history of our country. The wonderful century which followed the Battle of Waterloo and the downfall of the Napoleonic domination, which secured to this small island so long and so resplendent a reign, has come to an end. We have arrived at a new time. Let us realise it. And with that new time strange methods, huge forces, larger combinations—a Titanic world—have sprung up around us. The foundations of our power are changing. To stand still would be to fall; to fall would be to perish. We must go forward. We will go forward. We will go forward into a way of life more earnestly viewed, more scientifically organised, more consciously national than any we have known. Thus alone shall we be able to sustain and to renew through the generations which are to come, the fame and the power of the British race.
LAND AND INCOME TAXES IN THE BUDGET[ToC]
Edinburgh, July 17, 1909
(From The Times, by permission.)
We are often assured by sagacious persons that the civilisation of modern States is largely based upon respect for the rights of private property. If that be true, it is also true that such respect cannot be secured, and ought not, indeed, to be expected, unless property is associated in the minds of the great mass of the people with ideas of justice and of reason.
It is, therefore, of the first importance to the country—to any country—that there should be vigilant and persistent efforts to prevent abuses, to distribute the public burdens fairly among all classes, and to establish good laws governing the methods by which wealth may be acquired. The best way to make private property secure and respected is to bring the processes by which it is gained into harmony with the general interests of the public. When and where property is associated with the idea of reward for services rendered, with the idea of recompense for high gifts and special aptitudes displayed or for faithful labour done, then property will be honoured. When it is associated with processes which are beneficial, or which at the worst are not actually injurious to the commonwealth, then property will be unmolested; but when it is associated with ideas of wrong and of unfairness, with processes of restriction and monopoly, and other forms of injury to the community, then I think that you will find that property will be assailed and will be endangered.
A year ago I was fighting an election in Dundee. In the course of that election I attempted to draw a fundamental distinction between the principles of Liberalism and of Socialism, and I said "Socialism attacks capital; Liberalism attacks monopoly." And it is from that fundamental distinction that I come directly to the land proposals of the present Budget.
It is quite true that the land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly. It is quite true that unearned increments in land are not the only form of unearned or undeserved profit which individuals are able to secure; but it is the principal form of unearned increment, derived from processes, which are not merely not beneficial, but which are positively detrimental to the general public. Land, which is a necessity of human existence, which is the original source of all wealth, which is strictly limited in extent, which is fixed in geographical position—land, I say, differs from all other forms of property in these primary and fundamental conditions.
Nothing is more amusing than to watch the efforts of our monopolist opponents to prove that other forms of property and increment are exactly the same and are similar in all respects to the unearned increment in land. They talk to us of the increased profits of a doctor or a lawyer from the growth of population in the towns in which they live. They talk to us of the profits of a railway through a greater degree of wealth and activity in the districts through which it runs. They tell us of the profits which are derived from a rise in stocks and shares, and even of those which are sometimes derived from the sale of pictures and works of art, and they ask us—as if it were their only complaint—"Ought not all these other forms to be taxed too?"
But see how misleading and false all these analogies are. The windfalls which people with artistic gifts are able from time to time to derive from the sale of a picture—from a Vandyke or a Holbein—may here and there be very considerable. But pictures do not get in anybody's way. They do not lay a toll on anybody's labour; they do not touch enterprise and production at any point; they do not affect any of those creative processes upon which the material well-being of millions depends. And if a rise in stocks and shares confers profits on the fortunate holders far beyond what they expected, or, indeed, deserved, nevertheless, that profit has not been reaped by withholding from the community the land which it needs, but, on the contrary, apart from mere gambling, it has been reaped by supplying industry with the capital without which it could not be carried on.
If the railway makes greater profits, it is usually because it carries more goods and more passengers. If a doctor or a lawyer enjoys a better practice, it is because the doctor attends more patients and more exacting patients, and because the lawyer pleads more suits in the courts and more important suits. At every stage the doctor or the lawyer is giving service in return for his fees; and if the service is too poor or the fees are too high, other doctors and other lawyers can come freely into competition. There is constant service, there is constant competition; there is no monopoly, there is no injury to the public interest, there is no impediment to the general progress.
Fancy comparing these healthy processes with the enrichment which comes to the landlord who happens to own a plot of land on the outskirts or at the centre of one of our great cities, who watches the busy population around him making the city larger, richer, more convenient, more famous every day, and all the while sits still and does nothing! Roads are made, streets are made, railway services are improved, electric light turns night into day, electric trams glide swiftly to and fro, water is brought from reservoirs a hundred miles off in the mountains—and all the while the landlord sits still. Every one of those improvements is effected by the labour and at the cost of other people. Many of the most important are effected at the cost of the municipality and of the ratepayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is sensibly enhanced.
He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing even to the process from which his own enrichment is derived. If the land were occupied by shops or by dwellings, the municipality at least would secure the rates upon them in aid of the general fund; but the land may be unoccupied, undeveloped, it may be what is called "ripening"—ripening at the expense of the whole city, of the whole country—for the unearned increment of its owner. Roads perhaps have to be diverted to avoid this forbidden area. The merchant going to his office, the artisan going to his work, have to make a detour or pay a tram fare to avoid it. The citizens are losing their chance of developing the land, the city is losing its rates, the State is losing its taxes which would have accrued, if the natural development had taken place—and that share has to be replaced at the expense of the other ratepayers and taxpayers; and the nation as a whole is losing in the competition of the world—the hard and growing competition in the world—both in time and money. And all the while the land monopolist has only to sit still and watch complacently his property multiplying in value, sometimes manifold, without either effort or contribution on his part. And that is justice!
But let us follow the process a little farther. The population of the city grows and grows still larger year by year, the congestion in the poorer quarters becomes acute, rents and rates rise hand in hand, and thousands of families are crowded into one-roomed tenements. There are 120,000 persons living in one-roomed tenements in Glasgow alone at the present time. At last the land becomes ripe for sale—that means that the price is too tempting to be resisted any longer—and then, and not till then, it is sold by the yard or by the inch at ten times, or twenty times, or even fifty times, its agricultural value, on which alone hitherto it has been rated for the public service.
The greater the population around the land, the greater the injury which they have sustained by its protracted denial, the more inconvenience which has been caused to everybody, the more serious the loss in economic strength and activity, the larger will be the profit of the landlord when the sale is finally accomplished. In fact you may say that the unearned increment on the land is on all-fours with the profit gathered by one of those American speculators who engineer a corner in corn, or meat, or cotton, or some other vital commodity, and that the unearned increment in land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.
It is monopoly which is the keynote; and where monopoly prevails, the greater the injury to society, the greater the reward of the monopolist will be. See how this evil process strikes at every form of industrial activity. The municipality, wishing for broader streets, better houses, more healthy, decent, scientifically planned towns, is made to pay, and is made to pay in exact proportion, or to a very great extent in proportion, as it has exerted itself in the past to make improvements. The more it has improved the town, the more it has increased the land value, and the more it will have to pay for any land it may wish to acquire. The manufacturer purposing to start a new industry, proposing to erect a great factory offering employment to thousands of hands, is made to pay such a price for his land that the purchase-price hangs round the neck of his whole business, hampering his competitive power in every market, clogging him far more than any foreign tariff in his export competition; and the land values strike down through the profits of the manufacturer on to the wages of the workman. The railway company wishing to build a new line finds that the price of land which yesterday was only rated at its agricultural value has risen to a prohibitive figure the moment it was known that the new line was projected; and either the railway is not built, or, if it is, is built, only on terms which largely transfer to the landowner the profits which are due to the shareholders and the advantages which should have accrued to the travelling public.
It does not matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself, and everywhere to-day the man, or the public body, who wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an inferior use, and in some cases to no use at all. All comes back to the land value, and its owner for the time being is able to levy his toll upon all other forms of wealth and upon every form of industry. A portion, in some cases the whole, of every benefit which is laboriously acquired by the community is represented in the land value, and finds its way automatically into the landlord's pocket. If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more. If the opening of a new railway or a new tramway, or the institution of an improved service of workmen's trains, or a lowering of fares, or a new invention, or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are able to charge them more for the privilege of living there.
Some years ago in London there was a toll-bar on a bridge across the Thames, and all the working people who lived on the south side of the river, had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings appealed to the public conscience: an agitation was set on foot, municipal authorities were roused, and at the cost of the ratepayers the bridge was freed and the toll removed. All those people who used the bridge were saved 6d. a week. Within a very short period from that time the rents on the south side of the river were found to have advanced by about 6d. a week, or the amount of the toll which had been remitted. And a friend of mine was telling me the other day that in the parish of Southwark about £350 a year, roughly speaking, was given away in doles of bread by charitable people in connection with one of the churches, and as a consequence of this the competition for small houses, but more particularly for single-roomed tenements is, we are told, so great that rents are considerably higher than in the neighbouring district.
All goes back to the land, and the landowner, who in many cases, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched, is enabled with resistless strength to absorb to himself a share of almost every public and every private benefit, however important or however pitiful those benefits may be.
I hope you will understand that when I speak of the land monopolist, I am dealing more with the process than with the individual landowner. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land, is morally a worse man than any one else, who gathers his profit where he finds it, in this hard world under the law and according to common usage. It is not the individual I attack; it is the system. It is not the man who is bad; it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy, were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law. Look at our actual proposal.
We do not go back on the past. We accept as our basis the value as it stands to-day. The tax on the increment of land begins by recognising and franking all past increment. We look only to the future; and for the future we say only this: that the community shall be the partner in any further increment above the present value after all the owner's improvements have been deducted. We say that the State and the municipality should jointly levy a toll upon the future unearned increment of the land. A toll of what? Of the whole? No. Of a half? No. Of a quarter? No. Of a fifth—that is the proposal of the Budget. And that is robbery, that is plunder, that is communism and spoliation, that is the social revolution at last, that is the overturn of civilised society, that is the end of the world foretold in the Apocalypse! Such is the increment tax about which so much chatter and outcry are raised at the present time, and upon which I will say that no more fair, considerate, or salutary proposal for taxation has ever been made in the House of Commons.
But there is another proposal concerning land values which is not less important. I mean the tax on the capital value of undeveloped urban or suburban land. The income derived from land and its rateable value under the present law depend upon the use to which the land is put. In consequence, income and rateable value are not always true or complete measures of the value of the land. Take the case to which I have already referred, of the man who keeps a large plot in or near a growing town idle for years, while it is "ripening"—that is to say, while it is rising in price through the exertions of the surrounding community and the need of that community for more room to live. Take that case. I daresay you have formed your own opinion upon it. Mr. Balfour, Lord Lansdowne, and the Conservative Party generally, think that that is an admirable arrangement. They speak of the profits of the land monopolist, as if they were the fruits of thrift and industry and a pleasing example for the poorer classes to imitate. We do not take that view of the process. We think it is a dog-in-the-manger game. We see the evil, we see the imposture upon the public, and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development, and in congested centres of population, and we say here and now to the land monopolist who is holding up his land—and the pity is, it was not said before—you shall judge for yourselves whether it is a fair offer or not—we say to the land monopolist: "This property of yours might be put to immediate use with general advantage. It is at this minute saleable in the market at ten times the value at which it is rated. If you choose to keep it idle in the expectation of still further unearned increment, then at least you shall be taxed at the true selling value in the meanwhile." And the Budget proposes a tax of a halfpenny in the pound on the capital value of all such land; that is to say, a tax which is a little less in equivalent, than the income-tax would be upon the property, if the property were fully developed.
That is the second main proposal of the Budget with regard to the land; and its effects will be, first, to raise an expanding revenue for the needs of the State; secondly that, half the proceeds of this tax, as well as of the other land taxes, will go to the municipalities and local authorities generally to relieve rates; thirdly, the effect will be, as we believe, to bring land into the market, and thus somewhat cheapen the price at which land is obtainable for every object, public and private. By so doing we shall liberate new springs of enterprise and industry, we shall stimulate building, relieve overcrowding, and promote employment.
These two taxes, both in themselves financially, economically, and socially sound, carry with them a further notable advantage. We shall obtain a complete valuation of the whole of the land in the United Kingdom. We shall procure an up-to-date Doomsday-book showing the capital value, apart from buildings and improvements, of every piece of land. Now, there is nothing new in the principle of valuation for taxation purposes. It was established fifteen years ago in Lord Rosebery's Government by the Finance Act of 1894, and it has been applied ever since without friction or inconvenience by Conservative administrations.
And if there is nothing new in the principle of valuation, still less is there anything new or unexpected in the general principles underlying the land proposals of the Budget. Why, Lord Rosebery declared himself in favour of taxation of land values fifteen years ago. Lord Balfour has said a great many shrewd and sensible things on this subject which he is, no doubt, very anxious to have overlooked at the present time. The House of Commons has repeatedly affirmed the principle, not only under Liberal Governments, but—which is much more remarkable—under a Conservative Government. Four times during the last Parliament Mr. Trevelyan's Bill for the taxation of land values was brought before the House of Commons and fully discussed, and twice it was read a second time during the last Parliament, with its great Conservative majority, the second time by a majority of no less than ninety votes. The House of Lords, in adopting Lord Camperdown's amendment to the Scottish Valuation Bill, has absolutely conceded the principle of rating undeveloped land upon its selling value, although it took very good care not to apply the principle; and all the greatest municipal corporations in England and Scotland—many of them overwhelmingly Conservative in complexion—have declared themselves in favour of the taxation of land values; and now, after at least a generation of study, examination, and debate, the time has come when we should take the first step to put these principles into practical effect. You have heard the saying "The hour and the man." The hour has come, and with it the Chancellor of the Exchequer.
I have come to Scotland to exhort you to engage in this battle and devote your whole energy and influence to securing a memorable victory. Every nation in the world has its own way of doing things, its own successes and its own failures. All over Europe we see systems of land tenure which economically, socially, and politically are far superior to ours; but the benefits that those countries derive from their improved land systems are largely swept away, or at any rate neutralised, by grinding tariffs on the necessaries of life and the materials of manufacture. In this country we have long enjoyed the blessings of Free Trade and of untaxed bread and meat, but against these inestimable benefits we have the evils of an unreformed and vicious land system. In no great country in the new world or the old have the working people yet secured the double advantage of free trade and free land together, by which I mean a commercial system and a land system from which, so far as possible, all forms of monopoly have been rigorously excluded. Sixty years ago our system of national taxation was effectively reformed, and immense and undisputed advantages accrued therefrom to all classes, the richest as well as the poorest. The system of local taxation to-day is just as vicious and wasteful, just as great an impediment to enterprise and progress, just as harsh a burden upon the poor, as the thousand taxes and Corn Law sliding scales of the "hungry 'forties." We are met in an hour of tremendous opportunity. "You who shall liberate the land," said Mr. Cobden, "will do more for your country than we have done in the liberation of its commerce."
You can follow the same general principle of distinguishing between earned and unearned increment through the Government's treatment of the income-tax. There is all the difference in the world between the income which a man makes from month to month or from year to year by his continued exertion, which may stop at any moment, and will certainly stop, if he is incapacitated, and the income which is derived from the profits of accumulated capital, which is a continuing income irrespective of the exertion of its owner. Nobody wants to penalise or to stigmatise income derived from dividends, rent, or interest; for accumulated capital, apart from monopoly, represents the exercise of thrift and prudence, qualities which are only less valuable to the community than actual service and labour. But the great difference between the two classes of income remains. We are all sensible of it, and we think that that great difference should be recognised when the necessary burdens of the State have to be divided and shared between all classes.
The application of this principle of differentiation of income-tax has enabled the present Government sensibly to lighten the burden of the great majority of income-tax payers. Under the late Conservative Government about 1,100,000 income-tax payers paid income-tax at the statutory rate of a shilling in the pound. Mr. Asquith, the Prime Minister, when Chancellor of the Exchequer, reduced the income-tax in respect of earned incomes under £2,000 a year from a shilling to ninepence, and it is calculated that 750,000 income-tax payers—that is to say, nearly three-quarters of the whole number of income-tax payers—who formerly paid at the shilling rate have obtained an actual relief from taxation to the extent of nearly £1,200,000 a year in the aggregate. The present Chancellor of the Exchequer in the present Budget has added to this abatement a further relief—a very sensible relief, I venture to think you will consider it—on account of each child of parents who possess under £500 a year, and that concession involved a further abatement and relief equal to £600,000 a year. That statement is founded on high authority, for it figured in one of the Budget proposals of Mr. Pitt, and it is to-day recognised by the law of Prussia.
Taking together the income-tax reforms of Mr. Asquith and Mr. Lloyd-George, taking the two together—because they are all part of the same policy, and they are all part of our treatment as a Government of this great subject—it is true to say that very nearly three out of every four persons who pay income-tax will be taxed after this Budget, this penal Budget, this wicked, monstrous, despoliatory Budget—three out of every four persons will be taxed for income-tax at a lower rate than they were by the late Conservative Government.
You will perhaps say to me that may be all very well, but are you sure that the rich and the very rich are not being burdened too heavily? Are you sure that you are not laying on the backs of people who are struggling to support existence with incomes of upwards of £3,000 a year, burdens which are too heavy to be borne? Will they not sink, crushed by the load of material cares, into early graves, followed there even by the unrelenting hand of the death duties collector? Will they not take refuge in wholesale fraud and evasion, as some of their leaders ingenuously suggest, or will there be a general flight of all rich people from their native shores to the protection of the hospitable foreigner? Let me reassure you on these points.
The taxes which we now seek to impose to meet the need of the State will not appreciably affect, have not appreciably affected, the comfort, the status, or even the style of living of any class in the United Kingdom. There has been no invidious singling out of a few rich men for special taxation. The increased burden which is placed upon wealth is evenly and broadly distributed over the whole of that wealthy class who are more numerous in Great Britain than in any other country in the world, and who, when this Budget is passed, will still find Great Britain the best country to live in. When I reflect upon the power and influence that class possesses, upon the general goodwill with which they are still regarded by their poorer neighbours, upon the infinite opportunities for pleasure and for culture which are open to them in this free, prosperous, and orderly commonwealth, I cannot doubt that they ought to contribute, and I believe that great numbers of them are willing to contribute, in a greater degree than heretofore, towards the needs of the navy, for which they are always clamouring, and for those social reforms upon which the health and contentment of the whole population depend.
And after all, gentlemen, when we are upon the sorrows of the rich and the heavy blows that have been struck by this wicked Budget, let us not forget that this Budget, which is denounced by all the vested interests in the country and in all the abodes of wealth and power, after all, draws nearly as much from the taxation of tobacco and spirits, which are the luxuries of the working classes, who pay their share with silence and dignity, as it does from those wealthy classes upon whose behalf such heartrending outcry is made.
I do not think the issue before the country was ever more simple than it is now. The money must be found; there is no dispute about that. Both parties are responsible for the expenditure and the obligations which render new revenue necessary; and, as we know, we have difficulty in resisting demands which are made upon us by the Conservative Party for expenditure upon armaments far beyond the limits which are necessary to maintain adequately the defences of the country, and which would only be the accompaniment of a sensational and aggressive policy in foreign and in Colonial affairs. We declare that the proposals we have put forward are conceived with a desire to be fair to all and harsh to none. We assert they are conceived with a desire to secure good laws regulating the conditions by which wealth may be obtained and a just distribution of the burdens of the State. We know that the proposals which we have made will yield all the money that we need for national defence, and that they will yield an expanding revenue in future years for those great schemes of social organisation, of national insurance, of agricultural development, and of the treatment of the problems of poverty and unemployment, which are absolutely necessary if Great Britain is to hold her own in the front rank of the nations. The issue which you have to decide is whether these funds shall be raised by the taxation of a protective tariff upon articles of common use and upon the necessaries of life, including bread and meat, or whether it shall be raised, as we propose, by the taxation of luxuries, of superfluities, and monopolies.
I have only one word more to say, and it is rendered necessary by the observations which fell from Lord Lansdowne last night, when, according to the Scottish papers, he informed a gathering at which he was the principal speaker that the House of Lords was not obliged to swallow the Budget whole or without mincing.[18] I ask you to mark that word. It is a characteristic expression. The House of Lords means to assert its right to mince. Now let us for our part be quite frank and plain. We want this Budget Bill to be fairly and fully discussed; we do not grudge the weeks that have been spent already; we are prepared to make every sacrifice—I speak for my honourable friends who are sitting on this platform—of personal convenience in order to secure a thorough, patient, searching examination of proposals the importance of which we do not seek to conceal. The Government has shown itself ready and willing to meet reasonable argument, not merely by reasonable answer, but when a case is shown, by concessions, and generally in a spirit of goodwill. We have dealt with this subject throughout with a desire to mitigate hardships in special cases, and to gain as large a measure of agreement as possible for the proposals we are placing before the country. We want the Budget not merely to be the work of the Cabinet and of the Chancellor of the Exchequer; we want it to be the shaped and moulded plan deliberately considered by the House of Commons. That will be a long and painful process to those who are forced from day to day to take part in it. We shall not shrink from it. But when that process is over, when the Finance Bill leaves the House of Commons, I think you will agree with me that it ought to leave the House of Commons in its final form. No amendments, no excision, no modifying or mutilating will be agreed to by us. We will stand no mincing, and unless Lord Lansdowne and his landlordly friends choose to eat their own mince, Parliament will be dissolved, and we shall come to you in a moment of high consequence for every cause for which Liberalism has ever fought. See that you do not fail us in that hour.
FOOTNOTES:
[18] Lord Lansdowne has since been at pains to explain that he did not use the word "mincing." That word ought to have been "wincing" or "hesitation"—it is not clear which.
THE BUDGET AND THE LORDS[ToC]
Norwich, July 26, 1909
(From The Manchester Guardian, by permission.)
The Budget is the great political issue of the day. It involves all other questions; it has brought all other issues to a decisive test. The Daily Mail has stated that the Budget is hung up. So it is. It is hung up in triumph over the High Peak; it is hung up as a banner of victory over Dumfries, over Cleveland, and over Mid-Derby. The miniature general election just concluded has shown that the policy embodied in the Budget, and which inspires the Budget, has vivified and invigorated the Liberal Party, has brought union where there was falling away, has revived enthusiasm where apathy was creeping in.
You cannot but have been impressed with the increasing sense of reality which political affairs have acquired during the last few months. What is it they are doing at Westminster? Across and beyond the complicated details of finance, the thousand amendments and more which cover the order paper, the absurd obstruction, the dry discussions in Committee, the interminable repetition of divisions, the angry scenes which flash up from time to time, the white-faced members sitting the whole night through and walking home worn out in the full light of morning—across and beyond all this, can you not discern a people's cause in conflict? Can you not see a great effort to make a big step forward towards that brighter and more equal world for which, be sure, those who come after us will hold our names in honour? That is the issue which is being decided from week to week in Westminster now, and it is in support of that cause that we are asking from you earnest and unswerving allegiance.
I do not think that there is any great country in the world where there are so many strong forces of virtue and vitality as there are in our own country. But there is scarcely any country in the world where there is so little organisation. Look at our neighbour and friendly rival Germany. I see that great State organised for peace and organised for war to a degree to which we cannot pretend. We are not organised as a nation, so far as I can see, for anything except party politics, and even for purposes of party politics we are not organised so well as they are in the United States. A more scientific, a more elaborate, a more comprehensive social organisation is indispensable to our country if we are to surmount the trials and stresses which the future years will bring. It is this organisation that the policy of the Budget will create. It is this organisation that the loss of the Budget will destroy.
But, we are told, "it presses too heavily upon the land-owning classes." I have heard it said that in the French Revolution, if the French nobility, instead of going to the scaffold with such dignity and fortitude, had struggled and cried and begged for mercy, even the hard hearts of the Paris crowd would have been melted, and the Reign of Terror would have come to an end. There is happily no chance of our aristocracy having to meet such a fate in this loyal-hearted, law-abiding, sober-minded country. They are, however, asked to discharge a certain obligation. They are asked to contribute their share to the expenses of the State. That is all they are asked to do. Yet what an outcry, what tribulation, what tears, what wrath, what weeping and wailing and gnashing of teeth, and all because they are asked to pay their share.
One would suppose, to listen to them, that the whole of the taxation was being raised from, or was about to be raised from the owners of agricultural estates. What are the facts? Nearly half the taxation of the present Budget is raised by the taxation of the luxuries of the working classes. Are they indignant? Are they crying out? Not in the least. They are perfectly ready to pay their share, and to pay it in a manly way, and two hundred thousand of them took the trouble to go to Hyde Park the other day in order to say so.
What are the facts about agricultural land? It is absolutely exempt from the operations of the new land taxation so long as agricultural land is worth no more for other purposes than it is for agricultural purposes: that is to say, so long as agricultural land is agricultural land and not urban or suburban land, it pays none of the new land taxation. It is only when its value for building purposes makes its continued agricultural use wasteful and uneconomic, it is only when it becomes building land and not agricultural land, and when because of that change it rises enormously in price and value—it is only then that it contributes under the new land taxation its share to the public of the increment value which the public has given to it.
Then take the death duties. One would suppose from what one hears in London and from the outcry that is raised, that the whole of the death duties were collected from the peers and from the county families. Again I say, look at the facts. The Inland Revenue report for last year shows that £313,000,000 of property passing on death became subject to death duties, and of that sum £228,000,000 was personalty and not real estate, leaving only £85,000,000 real estate, and of that £85,000,000 only £22,000,000 was agricultural land. These death duties are represented as being levied entirely upon a small class of landed gentry and nobility, but, as a matter of fact, there is collected from that class in respect of agricultural land only seven per cent. of the whole amount of money which the Exchequer derives from death duties.[19]
I decline, however, to judge the question of the House of Lords simply and solely by any action they may resolve to take upon the Budget. We must look back upon the past. We remember the ill-usage and the humiliation which the great majority that was returned by the nation to support Sir Henry Campbell-Bannerman in 1906 has sustained in the last three years at the hands of the House of Lords. That Assembly must be judged by their conduct as a whole. Lord Lansdowne has explained, to the amusement of the nation, that he claimed no right on behalf of the House of Lords to "mince" the Budget. All, he tells us, he has asked for, so far as he is concerned, is the right to "wince" when swallowing it. Well, that is a much more modest claim. It is for the Conservative Party to judge whether it is a very heroic claim for one of their leaders to make. If they are satisfied with the wincing Marquis, we have no reason to protest. We should greatly regret to cause Lord Lansdowne and his friends any pain. We have no wish whatever to grudge them any relief which they may obtain by wincing or even by squirming. We accord them the fullest liberty in that respect.
After all, the House of Lords has made others wince in its time. Even in the present Parliament they have performed some notable exploits. When the House of Lords rejected the Bill to prevent one man casting his vote two or three times over in the same election, every one in this country who desired to see a full and true representation of the people in Parliament might well have winced. When the House of Lords rejected or mutilated beyond repair the Land Valuation Bills for England and for Scotland, every land reformer in the country might have winced. When the House of Lords destroyed Mr. Birrell's Education Bill of 1906, every man who cared for religious equality and educational peace might have winced. When they contemptuously flung out, without even discussing it or examining it, the Licensing Bill, upon which so many hopes were centred and upon which so many months of labour had been spent, they sent a message of despair to every temperance reformer, to every social and philanthropic worker, to every church, to every chapel, to every little Sunday school throughout the land. If it should now prove to be their turn, if the measure they have meted out to others should be meted out to them again, however much we might regret their sorrows, we could not but observe the workings of poetic justice.
But I hope the House of Lords and those who back them will not be under any illusions about the Budget and the position of the Government. The Government is in earnest about the Budget. The Budget carries with it their fortunes and the fortunes of the Liberal Party. Careful argument, reasonable amendment, amicable concession, not affecting the principles at stake—all these we offer while the Bill is in the House of Commons. But when all that is said and done, as the Bill leaves the House of Commons so it must stand. It would be a great pity if Lord Curzon, the Indian pro-Consul, or the London Spectator—it would be a great pity if those potentates were to make the great mistake of supposing that the Government would acquiesce in the excision of the land clauses of the Budget by the House of Lords. Such a course is unthinkable. Any Liberal Government which adopted it would be swiftly ruined. The land proposals of the Government have not been made without long deliberation and full responsibility. We shall not fail to carry them effectively through the House of Commons; still less shall we accept any amendment at the hands of the House of Lords.
Is it not an extraordinary thing that upon the Budget we should even be discussing at all the action of the House of Lords? The House of Lords is an institution absolutely foreign to the spirit of the age and to the whole movement of society. It is not perhaps surprising in a country so fond of tradition, so proud of continuity, as ourselves that a feudal assembly of titled persons, with so long a history and so many famous names, should have survived to exert an influence upon public affairs at the present time. We see how often in England the old forms are reverently preserved after the forces by which they are sustained and the uses to which they were put and the dangers against which they were designed have passed away. A state of gradual decline was what the average Englishman had come to associate with the House of Lords. Little by little, we might have expected, it would have ceased to take a controversial part in practical politics. Year by year it would have faded more completely into the past to which it belongs until, like Jack-in-the-Green or Punch-and-Judy, only a picturesque and fitfully lingering memory would have remained.
And during the last ten years of Conservative government this was actually the case. But now we see the House of Lords flushed with the wealth of the modern age, armed with a party caucus, fortified, revived, resuscitated, asserting its claims in the harshest and in the crudest manner, claiming to veto or destroy even without discussion any legislation, however important, sent to them by any majority, however large, from any House of Commons, however newly elected. We see these unconscionable claims exercised with a frank and undisguised regard to party interest, to class interest, and to personal interest. We see the House of Lords using the power which they should not hold at all, which if they hold at all, they should hold in trust for all, to play a shrewd, fierce, aggressive party game of electioneering and casting their votes according to the interest of the particular political party to which, body and soul, they belong.
It is now suggested—publicly in some quarters, privately in many quarters—that the House of Lords will not only use without scruple their veto in legislation but they propose to extend their prerogatives; they are going to lay their hands upon finance, and if they choose they will reject or amend the Budget. I have always thought it a great pity that Mr. Gladstone made a compromise with the House of Lords over the Franchise Bill of 1884. I regret, and I think many of my hon. friends in the House of Commons will regret, looking back upon the past, that the present Government did not advise a dissolution of Parliament upon the rejection of the Education Bill in 1906. A dissolution in those circumstances would not merely have involved the measure under discussion, but if the Government of that day had received the support of the electors at the poll their victory must have carried with it that settlement and reform of the relations between the two Houses of Parliament which is necessary to secure the effective authority of the House of Commons. That is the question which, behind and beyond all others, even the Budget, even Free Trade, even the land—that is the question which, as the Prime Minister has said, is the dominant issue of our time.
Opportunity is fickle, opportunity seldom returns; but I think you will agree with me that if the House of Lords, not content with its recent exploits with the legislative veto, were to seize on the new power which its backers claim for it over finance—if, not content with the extreme assertions of its own privileges, it were to invade the most ancient privileges of the House of Commons—if, as an act of class warfare, for it would be nothing less, the House of Lords were to destroy the Budget, and thus not only create a Constitutional deadlock of novel and unmeasured gravity, but also plunge the whole finance of the country into unparalleled confusion, then, in my judgment, opportunity, clear, brilliant, and decisive, would return, and we should have the best chance we have ever had of dealing with them once for all.
These circumstances may never occur. I don't believe they will occur. If we only all stand firm together I believe the Budget will be carried. I believe the Budget will vindicate the strength of the Government supported by the House of Commons. I believe it will vindicate the financial strength of this great country. I don't believe, if we pursue our course without wavering or weakening, there is any force in this country which can stand against us. The Conservative Whip in the House of Lords, a friend of mine, Lord Churchill, said the other day that the House of Lords when they received the Budget would do their duty. I hope they will. But in any case be sure of this—that the Government and the House of Commons will do their duty. Then if there is anything more to be done, see that you are ready to do your duty too.
FOOTNOTES:
[19] Since the date of this speech the new concessions, doubling the allowance exempted from income tax for the expenses of agricultural estates, have been made public.
THE SPIRIT OF THE BUDGET[ToC]
Leicester, September 5, 1909
(From The Times, by permission.)
I have done my best to study the political history of the last forty or fifty years, and I cannot find any Government which, at the end of its fourth year, enjoyed the same measure of support, prestige, and good fortune that we do. The only Administration which could compare in the importance and the volume of its legislation with the present Government is Mr. Gladstone's great Government of 1868. That was a Government of measures and of men; but no measure of that Government could equal in importance the Old-Age Pensions Act which we have placed on the Statute-book. The settlement of the Irish Church question by Disestablishment was not a more baffling and intricate business, than the settlement of the Irish University question which Mr. Birrell has achieved. The labour legislation of the Government of 1868, although very important, shows nothing which equals in importance the Trades Disputes Act, which we have carried through, and Mr. Cardwell's reforms in army organisation were not more successful, and were certainly much less generally accepted, than those which have been effected by Mr. Haldane. In the fourth year of its administration the Government of 1868 was genuinely unpopular. It had quarrelled with the Nonconformists without gaining the support of the Church; it had offended the liquor interest without satisfying the Temperance forces in the country; it had disturbed and offended many vested interests without arousing popular enthusiasm.
Indeed, if you look back, you will find that the fourth year in the history of a Government is always a very critical and has often been a very unfortunate year. It is quite true that Mr. Disraeli's Government, which assumed office in 1874, did enjoy in its fourth year a fleeting flush of success, which, however, proved illusory. With that single exception, every other modern Government that has lasted so long, has occupied an unsatisfactory position in its fourth year. The Government of 1880 in the year 1884 was brought very low, and was deeply involved in disastrous enterprises beyond the sea which ultimately resulted in sorrow and misfortune. The Conservative Government which took office in 1886 was by the year 1890, owing to its strange proceedings against Mr. Parnell, brought to the depths of humiliation. The Government of 1895 was in the year 1899 thoroughly unpopular, and if they had not plunged into the tumult of war in South Africa, they would very shortly have been dismissed from power. As for the Government of 1900, in the fourth year of Mr. Balfour's late Administration, I am sure I could not easily do justice to the melancholy position which they occupied.
Where do we stand to-day at the end of our fourth year of office? I put it plainly to you to consider, whether one is not justified in saying that we occupy a position of unexampled strength at the present time. The Government is strong in its administrative record, which reveals no single serious or striking mistake in all the complicated conduct of affairs. There have been no regrettable incidents by land or sea and none of those personal conflicts between the high officials that used to occur so frequently under a late dispensation. We have had no waste of public treasure and no bloodshed. We are strong in the consciousness of a persistent effort to sweep away anomalies and inequalities, to redress injustice, to open more widely to the masses of the people the good chances in life, and to safeguard them against its evil chances. We also claim that we are strong in the support and enthusiasm of a majority of our fellow-countrymen. We are strong in the triumph of our policy in South Africa; most of all we are strong in the hopes and plans which we have formed for the future.
It is about this future that I will speak to you this afternoon. And let me tell you that when I think about it, I do not feel at all inclined to plead exhaustion in consequence of the exertions we have made, or to dwell upon the successes which we have had in the past, or to survey with complacency the record of the Government or to ask you to praise us for the work which we have done. No; when I think of the work which lies before us, upon which we have already entered, of the long avenues of social reconstruction and reorganisation which open out in so many directions and ever more broadly before us, of the hideous squalor and misery which darken and poison the life of Britain, of the need of earnest action, of the prospects of effective and immediate action—when I dwell upon this, it is not of feelings of lassitude or exhaustion that I am conscious, but only of a vehement impulse to press onwards.
The social conditions of the British people in the early years of the twentieth century cannot be contemplated without deep anxiety. The anxiety is keen because it arises out of uncertainty. It is the gnawing anxiety of suspense. What is the destiny of our country to be? Nothing is settled either for or against us. We have no reason to despair; still less have we any reason to be self-satisfied. All is still in our hands for good or for ill. We have the power to-day to choose our fortune, and I believe there is no nation in the world, perhaps there never has been in history, any nation which at one and the same moment was confronted with such opposite possibilities, was threatened on the one hand by more melancholy disaster, and cheered on the other by more bright, yet not unreasonable hopes. The two roads are open. We are at the cross-ways. If we stand on in the old happy-go-lucky way, the richer classes ever growing in wealth and in number, and ever declining in responsibility, the very poor remaining plunged or plunging even deeper into helpless, hopeless misery, then I think there is nothing before us but savage strife between class and class, with an increasing disorganisation, with an increasing destruction of human strength and human virtue—nothing, in fact, but that dual degeneration which comes from the simultaneous waste of extreme wealth and of extreme want.
Now we have had over here lately colonial editors from all the Colonies of the British Empire, and what is the opinion which they expressed as to the worst thing they saw in the old country? The representatives of every Colony have expressed the opinion that the worst they saw here, was the extreme of poverty side by side with the extreme of luxury. Do not you think it is very impressive to find an opinion like that, expressed in all friendship and sincerity, by men of our own race who have come from lands which are so widely scattered over the surface of the earth, and are the product of such varied conditions? Is it not impressive to find that they are all agreed, coming as they do from Australia, or Canada, or South Africa, or New Zealand, that the greatest danger to the British Empire and to the British people is not to be found among the enormous fleets and armies of the European Continent, nor in the solemn problems of Hindustan; it is not the Yellow peril nor the Black peril nor any danger in the wide circuit of colonial and foreign affairs. No, it is here in our midst, close at home, close at hand in the vast growing cities of England and Scotland, and in the dwindling and cramped villages of our denuded countryside. It is there you will find the seeds of Imperial ruin and national decay—the unnatural gap between rich and poor, the divorce of the people from the land, the want of proper discipline and training in our youth, the exploitation of boy labour, the physical degeneration which seems to follow so swiftly on civilised poverty, the awful jumbles of an obsolete Poor Law, the horrid havoc of the liquor traffic, the constant insecurity in the means of subsistence and employment which breaks the heart of many a sober, hard-working man, the absence of any established minimum standard of life and comfort among the workers, and, at the other end, the swift increase of vulgar, joyless luxury—here are the enemies of Britain. Beware lest they shatter the foundations of her power.
Then look at the other side, look at the forces for good, the moral forces, the spiritual forces, the civic, the scientific, the patriotic forces which make for order and harmony and health and life. Are they not tremendous too? Do we not see them everywhere, in every town, in every class, in every creed, strong forces worthy of Old England, coming to her rescue, fighting for her soul? That is the situation in our country as I see it this afternoon—two great armies evenly matched, locked in fierce conflict with each other all along the line, swaying backwards and forwards in strife—and for my part I am confident that the right will win, that the generous influences will triumph over the selfish influences, that the organising forces will devour the forces of degeneration, and that the British people will emerge triumphant from their struggles to clear the road and lead the march amongst the foremost nations of the world.
Well, now, I want to ask you a question. I daresay there are some of you who do not like this or that particular point in the Budget, who do not like some particular argument or phrase which some of us may have used in advocating or defending it. But it is not of these details that I speak; the question I want each of you to ask himself is this: On which side of this great battle which I have described to you, does the Budget count? Can any of you, looking at it broadly and as a whole, looking on the policy which surrounds it, and which depends upon it, looking at the arguments by which it is defended, as well as the arguments by which it is opposed—can any one doubt that the Budget in its essential character and meaning, in its spirit and in its practical effect, would be a tremendous reinforcement, almost like a new army coming up at the end of the day, upon the side of all those forces and influences which are fighting for the life and health and progress of our race?
In the speeches which I have made about the country since the Budget was introduced I have explained and defended in detail the special financial proposals upon which we rely to provide the revenue for the year. You are, no doubt, generally acquainted with them. There is the increase in the income-tax of twopence, the further discrimination between earned and unearned income, and the super-tax of sixpence on incomes of over £5,000 a year. There are the increases in estate duties and in the legacy duties, and there are the new duties on stamps; there is the tax on motor-cars and petrol, the proceeds of which are to go to the improvement of the roads and the abatement of the dust nuisance; there are the taxes on working class indulgences—namely, the increase in the tax on tobacco and on whisky, which enable the working man to pay his share, as indeed he has shown himself very ready to do; there are the taxes on liquor licences, which are designed to secure for the State a certain special proportion of the monopoly value created wholly by the State and with which it should never have parted; and, lastly, there are the three taxes upon the unearned increment in land, upon undeveloped land, upon the unearned increment in the reversion of leases, and then there is the tax upon mining royalties.
Now these are the actual proposals of the Budget, and I do not think that, if I had the time, I should find any great difficulty in showing you that there are many good arguments, a great volume of sound reason, which can be adduced in support of every one of these proposals. Certainly there is no difficulty in showing that since the Budget has been introduced there has been no shock to credit, there has been no dislocation of business, there has been no setback in the beginning of that trade revival about the approach of which I spoke to you, when I was in Leicester at the beginning of the year and which there are now good reasons for believing is actually in progress. The taxes which have been proposed have not laid any burden upon the necessaries of life like bread or meat, nor have they laid any increased burden upon comforts like tea and sugar. There is nothing in these taxes which makes it harder for a labouring man to keep up his strength or for the small man of the middle class to maintain his style of living. There is nothing in these taxes which makes it more difficult for any hard-working person, whether he works with his hands or his head, to keep a home together in decent comfort. No impediment has been placed by these taxes upon enterprise; no hampering restrictions interrupt the flow of commerce. On the contrary, if the tax upon spirits should result in a diminution in the consumption of strong drink, depend upon it, the State will gain, and all classes will gain. The health of millions of people, the happiness of hundreds of thousands of homes, will be sensibly improved, and money that would have been spent upon whisky will flow into other channels, much less likely to produce evil and much more likely to produce employment. And if the tax on undeveloped land, on land, that is to say, which is kept out of the market, which is held up idly in order that its owner may reap unearned profit by the exertions and through the needs of the surrounding community, if that tax should have the effect of breaking this monopoly and of making land cheaper, a tremendous check on every form of productive activity will have been removed. All sorts of enterprises will become economically possible which are now impossible owing to the artificially high price of land, and new forces will be liberated to stimulate the wealth of the nation.
But it is not on these points that I wish to dwell this afternoon. I want to tell you about the meaning and the spirit of the Budget. Upon the Budget and upon the policy of the Budget depends a far-reaching plan of social organisation designed to give a greater measure of security to all classes, but particularly to the labouring classes. In the centre of that plan stands the policy of national insurance. The Chancellor of the Exchequer has been for more than a year at work upon this scheme, and it is proposed—I hope next year, if there is a next year—it is proposed, working through the great friendly societies, which have done so much invaluable work on these lines, to make sure that, by the aid of a substantial subvention from the State, even the poorest steady worker or the poorest family shall be enabled to make provision against sickness, against invalidity, and for the widows and orphans who may be left behind.
Side by side with this is the scheme of insurance against unemployment which I hope to have the honour of passing through Parliament next year. The details of that scheme are practically complete, and it will enable upwards of two and a quarter millions of workers in the most uncertain trades of this country—trades like ship-building, engineering, and building—to secure unemployment benefits, which in a great majority of cases will be sufficient to tide them over the season of unemployment. This scheme in its compulsory form is limited to certain great trades like those I have specified, but it will be open to other trades, to trade unions, to workers' associations of various kinds, or even to individuals to insure with the State Unemployment Insurance Office against unemployment on a voluntary basis, and to secure, through the State subvention, much better terms than it would be possible for them to obtain at the present time.
It would be impossible to work a scheme of unemployment insurance except in conjunction with some effective method of finding work and of testing willingness to work, and that can only be afforded by a national system of labour exchanges. That Bill has already passed through Parliament, and in the early months of next year we shall hope to bring it into operation by opening, all over the country, a network of labour exchanges connected with each other and with the centre by telephone. We believe this organisation may secure for labour—and, after all, labour is the only thing the great majority of people have to sell—it will secure for labour, for the first time, that free and fair market which almost all other commodities of infinitely less consequence already enjoy, and will replace the present wasteful, heartbreaking wanderings aimlessly to and fro in search of work by a scientific system; and we believe that the influence of this system in the end must tend to standardising the conditions of wages and employment throughout the country.
Lastly, in connection with unemployment I must direct your attention to the Development Bill, which is now before Parliament, the object of which is to provide a fund for the economic development of our country, for the encouragement of agriculture, for afforestation, for the colonisation of England, and for the making of roads, harbours, and other public works. And I should like to draw your attention to a very important clause in that Bill, which says that the prosecution of these works shall be regulated, as far as possible, by the conditions of the labour market, so that in a very bad year of unemployment they can be expanded, so as to increase the demand for labour at times of exceptional slackness, and thus correct and counterbalance the cruel fluctuations of the labour market. The large sums of money which will be needed for these purposes are being provided by the Budget of Mr. Lloyd-George, and will be provided in an expanding volume in the years to come through the natural growth of the taxes we are imposing.
I have hitherto been speaking of the industrial organisation of insurance schemes, labour exchanges, and economic development. Now I come to that great group of questions which are concerned with the prevention and relief of distress. We have before us the reports of the majority and minority of the Royal Commission on the Poor Law, and we see there a great and urgent body of reforms which require the attention of Parliament. The first and most costly step in the relief of distress has already been taken by the Old-Age Pensions Act, supplemented, as it will be if the Budget passes, by the removal of the pauper disqualification. By that Act we have rescued the aged from the Poor Law. We have yet to rescue the children; we have yet to distinguish effectively between the bonâ fide unemployed workman and the mere loafer and vagrant; we have yet to transfer the sick, the inebriate, the feeble-minded and the totally demoralised to authorities specially concerned in their management and care.
But what I want to show you, if I have made my argument clear, is that all these schemes—which I can do little more than mention this afternoon, each one of which is important—are connected one with the other, fit into one another at many points, that they are part of a concerted and interdependent system for giving a better, fairer social organisation to the masses of our fellow-countrymen. Unemployment insurance, which will help to tide a workman over a bad period, is intimately and necessarily associated with the labour exchanges which will help to find him work and which will test his willingness to work. This, again, will be affected by the workings of the Development Bill, which, as I told you, we trust may act as a counterpoise to the rocking of the industrial boat and give a greater measure of stability to the labour market.
The fact that everybody in the country, man and woman alike, will be entitled, with scarcely any exception, to an old-age pension from the State at the age of seventy—that fact makes it ever so much cheaper to insure against invalidity or infirmity up to the age of seventy. And, with the various insurance schemes which are in preparation, we ought to be able to set up a complete ladder, an unbroken bridge or causeway, as it were, along which the whole body of the people may move with a certain assured measure of security and safety against hazards and misfortunes. Then, if provision can be arranged for widows and orphans who are left behind, that will be a powerful remedy against the sweating evil; for, as you know, these helpless people, who in every country find employment in particular trades, are unable to make any fair bargain for themselves, and their labour, and this consequently leads to the great evils which have very often been brought to the notice of Parliament. That, again, will fit in with the Anti-Sweating Bill we are passing through Parliament this year.
Now, I want you to see what a large, coherent plan we are trying to work out, and I want you to believe that the object of the plan and the results of it will be to make us a stronger as well as a happier nation. I was reading the other day some of the speeches made by Bismarck—a man who, perhaps more than any other, built up in his own lifetime the strength of a great nation—speeches which he made during the time when he was introducing into Germany those vast insurance schemes, now deemed by all classes and parties in Germany to be of the utmost consequence and value. "I should like to see the State" (said Prince Bismarck in 1881), "which for the most part consists of Christians, penetrated to some extent by the principles of the religion which it professes, especially as concerns the help one gives to his neighbour, and sympathy with the lot of old and suffering people." Then, again, in the year 1884 he said: "The whole matter centres in the question, 'Is it the duty of the State or is it not to provide for its helpless citizens?' I maintain that it is its duty, that it is the duty, not only of the 'Christian' State, as I ventured once to call it when speaking of 'Practical Christianity,' but of every State."
There are a great many people who will tell you that such a policy, as I have been endeavouring to outline to you this afternoon, will not make our country stronger, because it will sap the self-reliance of the working classes. It is very easy for rich people to preach the virtues of self-reliance to the poor. It is also very foolish, because, as a matter of fact, the wealthy, so far from being self-reliant, are dependent on the constant attention of scores, and sometimes even hundreds, of persons who are employed in waiting upon them and ministering to their wants. I think you will agree with me, on the other hand—knowing what you do of the life of this city and of the working classes generally—that there are often trials and misfortunes which come upon working-class families quite beyond any provision which their utmost unaided industry and courage could secure for them. Left to themselves, left absolutely to themselves, they must be smashed to pieces, if any exceptional disaster or accident, like recurring sickness, like the death or incapacity of the breadwinner, or prolonged or protracted unemployment, fall upon them.
There is no chance of making people self-reliant by confronting them with problems and with trials beyond their capacity to surmount. You do not make a man self-reliant by crushing him under a steam roller. Nothing in our plans will relieve people from the need of making every exertion to help themselves, but, on the contrary, we consider that we shall greatly stimulate their efforts by giving them for the first time a practical assurance that those efforts will be crowned with success.
I have now tried to show you that the Budget, and the policy of the Budget, is the first conscious attempt on the part of the State to build up a better and a more scientific organisation of society for the workers of this country, and it will be for you to say—at no very distant date—whether all this effort for a coherent scheme of social reconstruction is to be swept away into the region of lost endeavour.
That is the main aspect of the Budget to which I wish to draw your attention. But there is another significance of the highest importance which attaches to the Budget. I mean the new attitude of the State towards wealth. Formerly the only question of the tax-gatherer was, "How much have you got?" We ask that question still, and there is a general feeling, recognised as just by all parties, that the rate of taxation should be greater for large incomes than for small. As to how much greater, parties are no doubt in dispute. But now a new question has arisen. We do not only ask to-day, "How much have you got?" we also ask, "How did you get it? Did you earn it by yourself, or has it just been left you by others? Was it gained by processes which are in themselves beneficial to the community in general, or was it gained by processes which have done no good to any one, but only harm? Was it gained by the enterprise and capacity necessary to found a business, or merely by squeezing and bleeding the owner and founder of the business? Was it gained by supplying the capital which industry needs, or by denying, except at an extortionate price, the land which industry requires? Was it derived from active reproductive processes, or merely by squatting on some piece of necessary land till enterprise and labour, and national interests and municipal interests, had to buy you out at fifty times the agricultural value? Was it gained from opening new minerals to the service of man, or by drawing a mining royalty from the toil and adventure of others? Was it gained by the curious process of using political influence to convert an annual licence into a practical freehold and thereby pocketing a monopoly value which properly belongs to the State—how did you get it?" That is the new question which has been postulated and which is vibrating in penetrating repetition through the land.[20]
It is a tremendous question, never previously in this country asked so plainly, a new idea, pregnant, formidable, full of life, that taxation should not only have regard to the volume of wealth, but, so far as possible, to the character of the processes of its origin. I do not wonder it has raised a great stir. I do not wonder that there are heart-searchings and angry words because that simple question, that modest proposal, which we see embodied in the new income-tax provisions, in the land taxes, in the licence duties, and in the tax on mining royalties—that modest proposal means, and can only mean, the refusal of the modern State to bow down unquestioningly before the authority of wealth. This refusal to treat all forms of wealth with equal deference, no matter what may have been the process by which it was acquired, is a strenuous assertion in a practical form, that there ought to be a constant relation between acquired wealth and useful service previously rendered, and that where no service, but rather disservice, is proved, then, whenever possible, the State should make a sensible difference in the taxes it is bound to impose.
It is well that you should keep these issues clearly before you during the weeks in which we seem to be marching towards a grave constitutional crisis. But I should like to tell you that a general election, consequent upon the rejection of the Budget by the Lords, would not, ought not to be, and could not be fought upon the Budget alone. "Budgets come," as the late Lord Salisbury said in 1894—"Budgets come and Budgets go." Every Government frames its own expenditure for each year; every Government has to make its own provision to meet that expenditure. There is a Budget every year, and memorable as the Budget of my right hon. friend may be, far-reaching as is the policy depending upon it, the Finance Bill, after all, is in its character only an annual affair. But the rejection of the Budget by the House of Lords would not be an annual affair. It would be a violent rupture of constitutional custom and usage extending over three hundred years and recognised during all that time by the leaders of every Party in the State. It would involve a sharp and sensible breach with the traditions of the past; and what does the House of Lords depend upon if not upon the traditions of the past? It would amount to an attempt at revolution not by the poor, but by the rich; not by the masses, but by the privileged few; not in the name of progress, but in that of reaction; not for the purpose of broadening the framework of the State, but of greatly narrowing it. Such an attempt, whatever you may think of it, would be historic in its character, and the result of the battle fought upon it, whoever wins, must inevitably be not of an annual, but of a permanent and final character. The result of such an election must mean an alteration of the veto of the House of Lords; if they win they will have asserted their right, not merely to reject legislation of the House of Commons, but to control the finances of the country, and if they lose, we will deal with their veto once and for all.
We do not seek the struggle, we have our work to do; but if it is to come, it could never come better than now. Never again perhaps, certainly not for many years, will such an opportunity be presented to the British democracy. Never will the ground be more favourable; never will the issues be more clearly or more vividly defined. Those issues will be whether the new taxation, which is admitted on all sides to be necessary, shall be imposed upon luxuries, superfluities, and monopolies, or upon the prime necessaries of life; whether you shall put your tax upon the unearned increment on land or upon the daily bread of labour; whether the policy of constructive social reform on which we are embarked, and which expands and deepens as we advance, shall be carried through and given a fair chance, or whether it shall be brought to a dead stop and all the energies and attention of the State devoted to Jingo armaments and senseless foreign adventure. And, lastly, the issue will be whether the British people in the year of grace 1909 are going to be ruled through a representative Assembly, elected by six or seven millions of voters, about which almost every one in the country, man or woman, has a chance of being consulted, or whether they are going to allow themselves to be dictated to and domineered over by a minute minority of titled persons, who represent nobody, who are answerable to nobody, and who only scurry up to London to vote in their party interests, in their class interests, and in their own interests.
These will be the issues, and I am content that the responsibility for such a struggle, if it should come, should rest with the House of Lords themselves. But if it is to come, we shall not complain, we shall not draw back from it. We will engage in it with all our hearts and with all our might, it being always clearly understood that the fight will be a fight to the finish, and that the fullest forfeits, which are in accordance with the national welfare, shall be exacted from the defeated foe.
FOOTNOTES:
[20] We do not, of course, ask it of the individual taxpayer. That would be an impossible inquisition. But the House of Commons asks itself when it has to choose between taxes on various forms of wealth, "By what process was it got?"
THE BUDGET AND PROPERTY.[ToC]
Abernethy, October 7, 1909
(From The Daily Telegraph, by permission of the Editor.)
This is a very fine gathering for a lonely glen, and it augurs well for the spirit of Liberalism. Much will be expected of Scotland in the near future. She will be invited to pronounce upon some of the largest and most complicated questions of politics and finance that can possibly engage the attention of thoughtful citizens, and her decision will perhaps govern events.
There is one contrast between Parties which springs to the eye at once. One Party has a policy, detailed, definite, declared, actually in being. The other Party has no policy. The Conservative Party has no policy which it can put before the country at the present time on any of the great controverted questions of the day. On most of the previous occasions when we have approached a great trial of strength, the Conservative Party have had a policy of their own which they could state in clear terms. You would naturally expect some reticence or reserve from the head of a Government responsible for the day-to-day administration of affairs. But what do you see at the present time? Mr. Asquith speaks out boldly and plainly on all the great questions which are being debated, and it is the Leader of the Opposition who has to take refuge in a tactical and evasive attitude. Why, Mr. Balfour is unable to answer the simplest questions. At Birmingham, the Prime Minister asked him in so many words: What alternative did he propose to the Budget? What did he mean by Tariff Reform? and what was his counsel to the House of Lords?
It would not be difficult to frame an answer to all these questions. Mr. Chamberlain, for instance, was quite ready with his answers to all of them. At Glasgow in 1903 he stated what his Budget would have been, and he explained precisely what he meant by Tariff Reform. At Birmingham last month he was equally clear in urging the Lords to reject the Budget. There is no doubt whatever where Mr. Chamberlain and those who agree with him stand to-day. They would raise the extra taxation which is required, by protective import duties on bread, on meat, on butter, cheese, and eggs, and upon foreign imported manufactured articles; and in order to substitute their plan for ours they are prepared to urge the House of Lords to smash up the Budget and to smash up as much of the British Constitution and the British financial system as may be necessary for the purpose.
That is their policy; but, after all, it is Mr. Balfour who is the leader of the Conservative Party. He is the statesman who would have to form and carry on any administration which might be formed from that Party, and he will not state his policy upon any of the dominant questions of the day. Why will he not answer these simple questions? He is the leader, and it is because he wishes to remain the leader that he observes this discreet silence. He tells us he is in favour of Tariff Reform, he loves Tariff Reform, he worships Tariff Reform. He feels that it is by Tariff Reform alone that the civilisation of Great Britain can be secured, and the unity of the Empire achieved; but nothing will induce him to say what he means by Tariff Reform. That is a secret which remains locked in his own breast. He condemns our Budget, he clamours for greater expenditure, and yet he puts forward no alternative proposals by which the void in the public finances may be made good. And as for his opinion about the House of Lords, he dare not state his true opinion to-day upon that subject. I do not say that there are not good reasons for Mr. Balfour's caution. It sometimes happens that the politics of a Party become involved in such a queer and awkward tangle that only a choice of evils is at the disposal of its leader; and when the leader has to choose between sliding into a bog on the one hand and jumping over a precipice on the other, some measure of indulgence may be extended to him if he prefers to go on marking time, and indicating the direction in which his followers are to advance by a vague general gesture towards the distant horizon.
Whatever you may think about politics, you must at least, in justice to his Majesty's Government, recognise that their position is perfectly plain and clear. Some of you may say to me, "Your course, your policy may be clear enough, but you are burdening wealth too heavily by your taxes and by your speeches." Those shocking speeches! "You are driving capital out of the country." Let us look at these points one at a time. The capital wealth of Britain is increasing rapidly. Sir Robert Giffen estimated some years ago that the addition to the capital wealth of the nation was at least between two hundred and three hundred millions a year. I notice that the paid-up capital of registered companies alone, which was 1,013 millions sterling in 1893, has grown naturally and healthily to 2,123 millions sterling in 1908. And, most remarkable of all, the figures I shall submit to you, the gross amount of income which comes under the view of the Treasury Commissioners who are charged with the collection of income-tax, was in the year 1898-9 762 millions, and it had risen from that figure to 980 millions sterling in the year 1908-9: that is to say, that it had risen by 218 millions in the course of ten years.
From this, of course, a deduction has to be made for more efficient methods of collection. This cannot be estimated exactly; but it certainly accounts for much less than half the increase. Let us assume that it is a half. The increase is therefore 109 millions. I only wish that wages had increased in the same proportion. When I was studying those figures I have mentioned to you I looked at the Board of Trade returns of wages. Those returns deal with the affairs of upwards of ten millions of persons, and in the last ten years the increase in the annual wages of that great body of persons has only been about ten million pounds: that is to say, that the increase of income assessable to income-tax is at the very least more than ten times greater than the increase which has taken place in the same period in the wages of those trades which come within the Board of Trade returns.
When we come to the question of how burdens are to be distributed, you must bear these facts and figures in mind, because the choice is severely limited. You can tax wealth or you can tax wages—that is the whole choice which is at the disposal of the Chancellor of the Exchequer. Of course I know there are some people who say you can tax the foreigner—but I am quite sure that you will not expect me to waste your time in dealing with that gospel of quacks and creed of gulls. The choice is between wealth and wages, and we think that, in view of that great increase in accumulated wealth which has marked the last ten years, and is the feature of our modern life, it is not excessive or unreasonable at the present stage in our national finances to ask for a further contribution from the direct taxpayers of something under eight millions a year. That is the total of all the new taxes on wealth which our Budget imposes, and it is about equal to the cost of four of those Dreadnoughts for which these same classes were clamouring a few months ago. And it is less than one-thirteenth of the increased income assessable to income-tax in the last ten years.
It is because we have done this that we are the object of all this abuse and indignation which is so loudly expressed in certain quarters throughout the country at the present time. While the working-classes have borne the extra taxation upon their tobacco and whisky in silence, all this rage and fury is outpoured upon the Government by the owners of this ever-increasing fund of wealth, and we are denounced as Socialists, as Jacobins, as Anarchists, as Communists, and all the rest of the half-understood vocabulary of irritated ignorance, for having dared to go to the wealthy classes for a fair share of the necessary burdens of the country. How easy it would be for us to escape from all this abuse if we were to put the extra taxation entirely upon the wages of the working classes by means of taxes on bread and on meat. In a moment the scene would change, and we should be hailed as patriotic, far-sighted Empire-builders, loyal and noble-hearted citizens worthy of the Motherland, and sagacious statesmen versed in the science of government. See, now, upon what insecure and doubtful foundations human praise and human censure stand.
Well, then, it is said your taxes fall too heavily upon the agricultural landowner and the country gentleman. Now, there is no grosser misrepresentation of the Budget than that it hits the agricultural landowner, and I think few greater disservices can be done to the agricultural landowner, whose property has in the last thirty years in many cases declined in value, than to confuse him with the ground landlord in a great city, who has netted enormous sums through the growth and the needs of the population of the city. None of the new land taxes touch agricultural land, while it remains agricultural land. No cost of the system of valuation which we are going to carry into effect will fall at all upon the individual owner of landed property. He will not be burdened in any way by these proposals. On the contrary, now that an amendment has been accepted permitting death duties to be paid in land in certain circumstances, the owner of a landed estate, instead of encumbering his estate by raising the money to pay off the death duties, can cut a portion from his estate; and this in many cases will be a sensible relief. Secondly, we have given to agricultural landowners a substantial concession in regard to the deductions which they are permitted to make from income-tax assessment on account of the money which they spend as good landlords upon the upkeep of their properties, and we have raised the limit of deduction from 12½ per cent. to 25 per cent. Thirdly, there is the Development Bill—that flagrant Socialistic measure which passed a second reading in the House of Lords unanimously—which will help all the countryside and all classes of agriculturists, and which will help the landlord in the country among the rest. So much for that charge.
Then it is said, "At any rate you cannot deny that the Budget is driving capital out of the country." I should like to point out to you that before the Budget was introduced, we were told that it was Free Trade that was driving capital out of the country. Let that pass. It is said we cannot deny that the Budget is driving capital out of the country. I deny it absolutely. To begin with, it is impossible to drive the greater part of our capital out of this country, for what is the capital of the country? The greatest part of that capital is the land, the state of cultivation which exists, the roads, the railways, the mines, the mills—this is the greatest part of the capital. The owners of that capital might conceivably, if they thought fit, depart from the country, but their possessions would remain behind.
I shall be asked, What about all this foreign investment that is going on? Is not British credit now being diverted abroad to foreign countries, to the detriment of our own country? Is not British capital fleeing from The Socialistic speeches of the Chancellor of the Exchequer, and the President of the Board of Trade, and taking refuge in Germany, where of course there are no Socialists, or in other countries, where there is never any disturbance, like France, or Spain, or Russia, or Turkey? Now let us look into that. There are only two ways in which capital can leave this country for foreign investments. It is no good sending bits of paper to the foreigner and expecting him to pay a dividend in return. There are only two ways—one is by exports made by British labour, and the other by bullion. Now, if the exports were to increase, surely that should be a cause of rejoicing, especially to our Tariff Reformers, who regard the increase in exports as the index of national prosperity. As for the second—the export of bullion—would you believe it, it is only a coincidence, but it is an amusing coincidence, there are actually six million pounds' worth more gold in the country now, than there were at the beginning of the year before the Budget was introduced. The active and profitable investment abroad which has marked the last two or three years, which is bound to swell the exports of the next few years, has not been attended by any starvation of home industry. On the contrary, the amount of money forthcoming for the development of new industries and now enterprises in this country during the last two or three years has compared very favourably with the years which immediately preceded them, when the Conservative Government was in power.
Property in Great Britain is secure. It would be a great mistake to suppose that that security depends upon the House of Lords. If the security of property in a powerful nation like our own were dependent upon the action or inaction of 500 or 600 persons, that security would long ago have been swept away. The security of property depends upon its wide diffusion among great numbers and all classes of the population, and it becomes more secure year by year because it is gradually being more widely distributed. The vital processes of civilisation require, and the combined interests of millions guarantee, the security of property. A society in which property was insecure would speedily degenerate into barbarism; a society in which property was absolutely secure, irrespective of all conceptions of justice in regard to the manner of its acquisition, would degenerate, not to barbarism, but death. No one claims that a Government should from time to time, according to its conceptions of justice, attempt fundamentally to recast the bases on which property is erected. The process must be a gradual one; must be a social and a moral process, working steadily in the mind and in the body of the community; but we contend, when new burdens have to be apportioned, when new revenues have to be procured, when the necessary upkeep of the State requires further taxes to be imposed—we contend that, in distributing the new burdens, a Government should have regard first of all to ability to pay and, secondly, that they should have regard to some extent, and so far as is practicable, to the means and the process by which different forms of wealth have been acquired; and that they should make a sensible difference between wealth which is the fruit of productive enterprise and industry or of individual skill, and wealth which represents the capture by individuals of socially created values. We say that ought to be taken into consideration. We are taking it into consideration now by the difference we have made in the income-tax between earned and unearned incomes, by the difference we make between the taxation which is imposed upon a fortune which a man makes himself and the fortune which he obtains from a relative or a stranger. We are taking it into consideration in our tax on mining royalties, in our licence duties and in our taxes on the unearned increment in land. The State, we contend, has a special claim upon the monopoly value of the liquor licence, which the State itself has created, and which the State itself maintains from year to year by its sole authority. If that claim has not previously been made good, that is only because the liquor interest have had the power, by using one branch of the Legislature, to keep the nation out of its rights. All the more reason to make our claim good now.
Again we say that the unearned increment in land is reaped in proportion to the disservice done to the community, is a mere toll levied upon the community, is an actual burden and imposition upon them, and an appropriation by an individual, under existing law, no doubt, of socially created wealth. For the principle of a special charge being levied on this class of wealth we can cite economic authority as high us Adam Smith, and political authority as respectable as Lord Rosebery; and for its application we need not merely cite authority, but we can point to the successful practice of great civilised neighbouring States.
Is it really the contention of the Conservative Party that the State is bound to view all processes of wealth-getting with an equal eye, provided they do not come under the criminal codes? Is that their contention? Are we really to be bound to impose the same burden upon the hardly won income of the professional man and the extraordinary profits of the land monopolist? Are we really to recognise the liquor licence which the State created, which the law says is for one year only—as if it were as much the brewers' or the publicans' property for ever as the coat on his back? No; it is absurd. Of the waste and sorrow and ruin which are caused by the liquor traffic, of the injury to national health and national wealth which follows from it, which attends its ill-omened footsteps, I say nothing more in my argument this afternoon. The State is entitled to reclaim its own, and they shall at least render unto Cæsar the things which are Cæsar's.
The money must be found, and we hold that Parliament, in imposing the inevitable taxes, is entitled not only to lay a heavier proportionate burden upon the rich than on the poor, but also to lay a special burden upon certain forms of wealth which are clearly social in their origin, and have not at any point been derived from a useful or productive process on the part of their possessors. But it may be said, "Your plans include other expenditure besides the Navy and Old-age Pensions. What about Insurance, Labour Exchanges, and economic development?" Those objects, at least, it may be urged are not inevitable or indispensable. It is quite true that the taxation which we seek to impose this year, and which is sufficient, and only sufficient for the needs of this year, will yield more abundant revenues in future years, and if at the same time a reduction in the expenditure on armaments becomes possible, we shall have substantial revenues at our disposal. That is perfectly true, but is that a reason for condemning the Budget? When we see on every hand great nations which cannot pay their way, which have to borrow merely to carry on from year to year, when we see how sterile and unproductive all the dodges and devices of their protective tariffs have become, when we remember how often we have ourselves been told that under Free Trade no more revenue could be got, is it not a welcome change for our country, and for our Free Trade policy, to find our opponents complaining of the expansive nature of a Free Trade revenue? I don't wonder that Tory Protectionists have passed a resolution at Birmingham declaring that the Budget will indefinitely postpone—that was the phrase—the scheme of Tariff Reform.
And upon what objects and policies do we propose to spend the extra revenue which this Budget will unquestionably yield in future years? People talk vaguely of the stability of society, of the strength of the Empire, of the permanence of a Christian civilisation. On what foundation do they seek to build? There is only one foundation—a healthy family life for all. If large classes of the population live under conditions which make it difficult if not impossible for them to keep a home together in decent comfort, if the children are habitually underfed, if the housewife is habitually over-strained, if the bread-winner is under-employed or under-paid, if all are unprotected and uninsured against the common hazards of modern industrial life, if sickness, accident, infirmity, or old age, or unchecked intemperance, or any other curse or affliction, break up the home, as they break up thousands of homes, and scatter the family, as they scatter thousands of families in our land, it is not merely the waste of earning-power or the dispersal of a few poor sticks of furniture, it is the stamina, the virtue, safety, and honour of the British race that are being squandered.
Now the object of every single constructive proposal to which the revenues raised by this Budget will be devoted, not less than the object of the distribution of the taxes which make up the Budget, is to buttress and fortify the homes of the people. That is our aim; to that task we have bent our backs; and in that labour we shall not be daunted by the machine-made abuse of partisans or by the nervous clamour of selfish riches. Whatever power may be given to us shall be used for this object. It is for you to say whether power will be given us to prevail.
But they say, "This uncertainty about the Budget is causing unemployment; you are aggravating the evils you seek to remedy." The Budget has not increased unemployment. Unemployment is severe in the country this year, but it is less severe this year than it was last, and it is less severe since the Budget was introduced than before it was introduced. The proportion of trade unionists reported to be unemployed in the Board of Trade returns at the end of September was 7.4 per cent., and that is lower than any month since May 1908, and it compares very favourably with September of last year, when the proportion was not 7.4, but 9.3 per cent.
I can well believe that the uncertainty as to whether the House of Lords will, in a desperate attempt to escape their fair share of public burdens, plunge the country into revolution and its finances into chaos—I can well believe that that uncertainty is bad for trade and employment, and is hampering the revival which is beginning all over the country. I do not doubt that all this talk of the rejection of the Budget is injurious to business, to credit, and to enterprise; but who is to blame for that? When did we ever hear of a Budget being rejected by the Lords before? When did we ever hear of a leader of the House of Lords proposing, like Lord Lansdowne, to decide whether he would tear up the British Constitution after consultation with the leaders of the drink trade? The uncertainty is not due to our action, but to their threats. Our action has been regular, constitutional, and necessary. Their threats are violent, unprecedented, and outrageous. Let them cease their threats. Let one of their leaders—let Mr. Balfour, for instance, say this year what he said last year, in the month of October, at Dumfries. Let him say, "It is the House of Commons and not the House of Lords which settles uncontrolled our financial system." Let him repeat these words, and all uncertainty about the Budget will be over.
I am amazed and I am amused when I read in the newspapers the silly and fantastic rumours which obtain credence, or at any rate currency, from day to day. One day we are told that it is the intention of the Government to seek a dissolution of Parliament before the Budget reaches the House of Lords—in other words, to kill the child to save its life. The next day we are told the Government have decided to have a referendum—that is to say, they will ask everybody in the country to send them a postcard to say whether they would like the Budget to become law or not. Another day we are told that the Government are contemplating a bargain with the House of Lords to alter the Budget to please them, or that we should make a bargain with them that if they pass the Budget we should seek a dissolution in January. Why should we make a bargain with the House of Lords? Every one of those rumours is more silly, more idiotic, than the other. I wish our Conservative friends would face the facts of the situation. "Things are what they are, and their consequences will be what they will be." The House of Lords has no scrap of right to interfere in finance. If they do, they violate the Constitution, they shatter the finances, and they create an administrative breakdown the outcome of which no man can foresee. If such a situation should occur a Liberal Government can look only to the people. We count on you, and we shall come to you. If you sustain us we shall take effectual steps to prevent such a deadlock ever occurring again. That is the whole policy of his Majesty's Government—blunt, sober, obvious, and unflinching.
THE CONSTITUTIONAL MENACE[ToC]
National Liberal Club, October 9, 1909
(From The Times, by permission.)
I have never been able to rank myself among those who believe that the Budget will be rejected by the House of Lords. It is not that I take an exaggerated view of the respect which that body would bear to the constitutional tradition upon which alone they depend. It is not that I underrate at all the feelings of personal resentment and of class-prejudice with which they regard, naturally, many of the provisions of the Budget. But I have a difficulty in believing that the responsible statesmen by whom they are led, and by whom we think they are controlled, would not hesitate as patriotic men before they plunged the finances of the country into what would be a largely irremediable confusion. And still more I find it difficult to believe that Party leaders, anxious no doubt for office on the most secure terms and at the shortest notice, would voluntarily run unusual risks in order to be able to fight a decisive battle upon exceptionally unfavourable ground. In common with most of us who are here to-night, I hold that the rejection of the Budget by the House of Lords would be a constitutional outrage. I do not think we are entitled at this stage to assume that such an outrage will be committed. We cannot credit such intentions, even though we read them every day brutally and blatantly affirmed by a powerful Party Press. We do not credit such intentions. We are, however, bound to be fully prepared against all contingencies. The necessary precautions must be taken. The fighting machine must undergo all those preliminary processes necessary for a rapid and efficient mobilisation. And the ground on which a great battle might take place, the theatre of war, must be scanned beforehand with military foresight. And that is being done.
But those who lightly estimate the crisis which will follow the rejection of the Budget by the House of Lords must be either strangely unimaginative or else they must be strangely ignorant of British history and of the British Constitution. The control of finance by the representative Assembly is the keystone of all that constitutional fabric upon which and within which all of us here have dwelt safely and peacefully throughout our lives. It is by the application of the power of the purse, and by the application of the power of the purse almost alone, that we have moved forward, slowly and prosaically, no doubt, during the last two hundred years, but without any violent overturn such as has rent the life and history of almost every other considerable country, from a kind of mediæval oligarchy to a vast modern democratic State based on the suffrages of six million or seven million electors, loyal to the Crown, and clothed with all the stately forms of the venerable English monarchy. Finance has been the keystone. Take finance away from the House of Commons, take the complete control of financial business away from the representative Assembly, and our whole system of government, be it good, bad, or indifferent, will crumble to pieces like a house of cards.
The rejection of the Budget by the House of Lords would not merely be a question of stopping a money Bill or of knocking out a few taxes obnoxious to particular classes; the rejection of the Budget by the House of Lords would mean the claim of the House of Lords—that is, the claim of a non-elective and unrepresentative Chamber—to make and to unmake Governments; and a recognition of that claim by the country would unquestionably mean that the House of Lords would become the main source and origin of all political power under the Crown. Now that is a great quarrel; that is a quarrel on which we had hoped, on which we had been taught, that the sword had been sheathed victoriously for ever. And that is the issue that is before us now. We do not intend to soften it in any way. The responsibility for the consequences must rest with the aggressor who first violates the constitutional tradition of our land.
The Budget is through Committee. We have had not merely an exhaustive but an exhausting discussion. I am told by ingenious calculators in the newspapers that over six hundred hours, from some of which I confess I have been absent, of debate have been accorded to the Committee stage. No guillotine closure has been applied. Full, free, unfettered debate has been accorded—has been accorded with a patience and with a generosity unprecedented in Parliamentary annals, and which in effect has left a minority not merely satisfied in all the conditions of reasonable debate, but unable even on grounds of the most meticulous partisanship to complain that the fullest opportunity has not been accorded to them. In all this long process of six hundred hours and upwards we have shown ourselves willing to make concessions. They are boasting to-day that they, forsooth, are in part the authors of the Budget. Every effort has been made to meet honest and outspoken difference; every effort has been made to gather for this Budget—the people's Budget, as they know full well it is—the greatest measure of support not only among the labouring classes, but among all classes in our vast and complicated community.
It has been a terrible strain. Lord Rosebery the other day at Glasgow paid his tribute to the gallant band who had fought in opposition to the Budget. Had he no word for his old friends? Had he no word for those who were once proud to follow him, and who now use in regard to him only the language of regret? Had he no word for that other gallant band, twice as numerous, often three times as numerous, as the Tory Opposition, who have sat through all these months—fine speakers silent through self-suppression for the cause, wealthy men sitting up to unreasonable hours to pass taxes by which they are mulcted as much as any Tory? Men who have gone on even at the cost of their lives—had he no word for them? We to-night gathered together here in the National Liberal Club have a word and a cheer for the private members of the Liberal Party in the House of Commons who have fought this battle through with unequalled loyalty and firmness, and who have shown a development of Parliamentary power to carry a great measure which I venture to say has no counterpart in the Parliamentary history of this country.
Well, that long process of debate, of argument, of concession, of compromise, of conciliation will very soon come to an end. When the Budget leaves the House of Commons the time of discussion, so far as we are concerned, will have come to an end. It will leave the House of Commons in a final form, and no amendment by the House of Lords will be entertained by us. I have heard it often said, and I have read it more often still, that there are some members of the Cabinet who want to see the Budget rejected, and I have even been shocked to find myself mentioned as one of these Machiavellian intriguers. To those who say we want to see the Budget rejected I reply, That is not true. As Party men we cannot be blind to the great tactical advantages which such an event would confer upon us. We cannot pretend that our feelings in such an event would be feelings of melancholy; but we have our work to do. Politics is not a game. It is an earnest business. We have our work to do. We have large, complex schemes of social organisation and financial reform on which we have consumed our efforts, and which we desire to see, at the shortest possible date, brought to conception and maturity. We do not want to see the finances of the country plunged into inextricable confusion, and hideous loss inflicted on the mass of the people and the taxpayers. For my part, I say without hesitation I do not at all wish to see British politics enter upon a violent, storm-shaken, and revolutionary phase. I am glad, at any rate, if they are to enter upon that phase, it shall be on the responsibility of others.
Our intentions are straightforward. We seek no conflict; we fear no conflict. We shall make no overtures to the House of Lords; we shall accept no compromise. We are not called upon to offer them any dignified means of escape from a situation into which they have been betrayed by the recklessness of some of their supporters. They have no right whatever to interfere in financial business directly or indirectly at any time. That is all we have to say, and for the rest we have a powerful organisation, we have a united Party, we have a resolute Prime Minister, we have a splendid cause.
I do not think we need at this stage speculate upon the result of a battle which has not yet been, and which may never be at this juncture fought. I have seen enough of the ups and downs of real war to know how foolish forecasts of that character often are. But when an army has been brought into the field in the best condition, in the largest possible numbers, in a spirit of the highest enthusiasm, at the most favourable season, and on the best possible ground—then I think, when our army has been brought into that situation, we can afford to await the supreme arbitrament with a cool and serene composure; and this mood of composure and of calmness may ripen into a kind of joyous and warlike heartiness, if we can also feel that the cause for which we are fighting is broadly and grandly a true and righteous cause.
Error, of course, there is always in all human affairs—error of conception, error of statement, error of manner, error of weakness, error of partisanship. We do not deny that, but strip both the great political Parties which to-day present themselves before the people of Britain, strip them of their error, strip them of that admixture of error which cloys and clogs all human action, divest them of the trappings of combat in which they are apparelled, let them be nakedly and faithfully revealed. If that were done, cannot we feel soberly and assuredly convinced that, on the main contested issues of the day, upon the need of social organisation, upon the relations between the two Houses of Parliament, upon the regulation and control of the liquor traffic, upon a national settlement with Ireland as we have made with Africa, upon Free Trade, upon the land—upon all of them separately, still more upon all of them together, if we ask ourselves in our most silent and reflective mood alone—cannot we feel a sober conviction that, on the whole, we hold the larger truth?
Printed by Hazell, Watson & Viney, Ld., London and Aylesbury.
Typographical errors corrected in text: