The financial relations between Great Britain and Ireland have been a subject, at intervals of time, no doubt, of strong controversy during a whole century. I shall not harp on the saying of Johnson to an Irish friend, ‘Avoid a Union with England, she will only rob you;’ but, in the opinion of well-informed Irishmen, the fiscal treatment of Ireland, since 1800-01, strikingly illustrates the significant remark of Burke, ‘When any community is subordinately connected with another, the great danger of the connection is, the extreme pride and self-complacency of the superior, which, in all matters of controversy, will probably decide in its own favour.’ There is no reason to impeach the good faith of Pitt and Castlereagh; but the financial arrangements they made for Ireland, when the Union became law, were denounced by the most distinguished Irishmen of the day; these imposed on Ireland an overwhelming burden, and, in fact, reduced her to the very edge of bankruptcy. A compromise was effected in 1816-17; this has been described as a generous boon to Ireland; but it was at best a slight relief from injustice; and it weakened securities she had against fiscal exaction, while it involved her in liabilities which, if remote, were not the less possible. It is a most significant fact that Peel, who, as Chief Secretary from 1812 to 1818, was familiar with the economic state of Ireland, refused, though under the strongest inducements, to apply to Ireland the fiscal charges extended to her by one of his brilliant successors; the most sagacious financier of the nineteenth century played, in this matter, a very different part from the most impulsive and not the least unscrupulous. In 1853, and from thence in other years, Mr. Gladstone, in order to carry out a policy distinctly opposed to many Irish interests, subjected Ireland to a sudden and heavy load of taxation, exactly at the time when, for the plainest reasons, she ought to have been exempted from it; from that day to this, Irishmen, who understand the question, are agreed that this was gross, nay, cruel, injustice. The whole subject of British and Irish financial relations was sent by Mr. Gladstone to a Commission in 1893, here following the example of Mr. Goschen; a careful inquiry was held during many months; the Report of the Commission was startling and important in the extreme. This tribunal, mainly composed of eminent English experts, announced, and that almost with one voice, that Ireland was being enormously overtaxed, and had been for upwards of forty years; and it plainly intimated that a remedy for this wrong should be found. No real answer has been made to this remarkable judgment; the attempts at answers that have been made are nearly all mere trifling; Lord Salisbury’s Government evidently believes that an answer is not possible; it promised to appoint another Commission to investigate certain parts of the subject; years have passed, and it has not performed its promise. Meanwhile, even amidst the hurly-burly of Irish politics, Irishmen of all parties have united in a demand for redress; and if the demand is not pressed with extreme vehemence, it is sustained by all that is best in Irish opinion. It is obviously unwise, and it may become dangerous, to continue to ignore such a claim; in any event the financial relations of the Three Kingdoms are not the least important of ‘Present Irish Questions;’ I shall briefly examine it in this chapter.
It is unnecessary to dwell on the financial relations of Great Britain and Ireland before 1782 and the Union. England held the position of an absolutely dominant State before 1782, Ireland that of a conquered and despised colony; Ireland was under the control of the British Parliament, and was governed by English officials supreme at the Castle. Ireland was excluded from the foreign and colonial trade of Great Britain; her agriculture and manufactures were half destroyed by the selfish jealousy and greed of her imperious neighbour. She contributed, on the other hand, nothing to the treasury of the ruling power; she had little or no part in British wars, or in building up the edifice of the Empire, except through her soldiers in the British army; she was free from British debt and from British taxation. In these circumstances, grievous as was the incubus of Protestant ascendency upon the land, it is remarkable what material progress she made; her Parliament, though little more than a local vestry, unquestionably promoted her material welfare; she was very lightly taxed, and was free from debt for many years. She was still so completely distinct from Great Britain, that it was not until 1769 that her Parliament agreed that 15,000 men, of whom 12,000 were to remain in Ireland, should be enrolled for the defence of the State; before that time, she was only obliged to maintain a small British force within her borders. After a partial relaxation of the restraints on her commerce caused by the stress of the American War, and by the famous volunteer movement, Ireland obtained legislative independence in 1782; she ceased to be subject to the British Parliament, and to fill the position of a degraded colony; she became, in theory at least, an independent State in many respects. Her Parliament was all but sovereign in name; Ireland was now united to Great Britain only by the link of the Crown; by an executive always despatched from Downing Street; and, it must be added, by the corruption of her Houses of Lords and Commons. She was thus more than ever a distinct country; in fact, most British statesmen had soon perceived that the celebrated settlement of 1782 greatly weakened her old connection with England. She advanced, however, markedly in prosperity for many years, until the French Revolution arrested this; her debt was little more than £2,000,000 for a long time, her taxation only about £1,000,000. But by the close of the eighteenth century these figures had been disastrously changed; her debt had risen to upwards of £28,000,000, her taxation to about £2,500,000. This great increase had been partly caused by the costly expenditure of her transformed Parliament, which had spent considerable sums on public works, and on economic experiments of different kinds; but five-sixths of it was probably caused by the enormous charge incurred by the Rebellion of 1798—one of the most woeful tragedies of Irish history—and by the suppression of that ill-starred movement.[151]
The Rebellion led at once to the Union; it precipitated what had perhaps become a necessity of State. The great measure of Pitt was badly designed, and was, moreover, tainted by a grave breach of faith; it was only what was called a ‘Protestant Union,’ that is, it rested upon false and narrow foundations; it deceived Catholic Ireland, and did her gross wrong; above all, it did not effect its main object, and incorporate the lesser with the more powerful country. It left Ireland, hitherto completely distinct, still, to a very considerable extent, a distinct State; she retained a separate Government and Administration, separate Courts of Justice, a separate Exchequer for many years; this shadow of separation, as Foster, one of her ablest worthies, foretold, would give a demand for separation substance.[152] The financial arrangements between Great Britain and Ireland were practically altogether the work of Pitt. A disciple of Adam Smith, the minister’s wish was to ‘assimilate the two countries in finance;’ to place both under the same fiscal system, to make taxation in both uniform. But in 1800, the National Debt of Great Britain was more than £446,000,000, and her taxation was about £3 a head; the National Debt of Ireland, we have seen, was some £28,000,000, and her taxation by the head not more than 10s.; this immense inequality made ‘assimilation in finance’ impossible. Besides, Pitt, as a matter of course, knew that Great Britain was a very rich country, and Ireland perhaps the poorest in Europe; he was too great a financier to accept the false and shallow theory that, as between two communities wholly unequal in wealth, equal taxes were really equal burdens, and could be just; he had emphatically remarked in 1785, when his celebrated ‘Commercial Propositions’ were opposed by the selfish monopolies of British commerce, ‘If one country exceeded another in wealth, population, and established commerce in a proportion of two to one, he was nearly convinced that that country would be able to bear near ten times the burden that the other would be equal to.’[153] It had become necessary, therefore, at the time of the Union, to place the financial relations between Great Britain and Ireland on a basis that had nothing in common with uniformity of taxation, and a common fiscal system; ‘assimilation in finance’ was for the present to be indefinitely postponed.
The financial settlement made at the Union distinctly embodied these principles, and was carried by Castlereagh through the Irish Parliament, by what methods history records with shame. Like Pitt, the Chief Secretary looked forward to a time when Great Britain and Ireland might be under the same fiscal system; but at this juncture, this consummation was, he acknowledged, hopeless. Ireland was, financially, to remain a separate country; she was to have a separate exchequer and separate taxes; her National Debt was to be kept distinct from that of Great Britain. She was to furnish only a contribution to the State; and Castlereagh declared, over and over again, that this contribution was to be only in proportion to her means, and that in no event was she to be unduly taxed. ‘The great point to be ascertained is the best criterion that can be found of the relative means of the two countries, in order to fix the relative proportions of their contributions.... As to the future, it is expected that the two countries will move forward together, and unite with regard to their expenses in the measure of their relative abilities.’ By a comparison made between British and Irish imports and exports, and between the values of certain commodities, Castlereagh came to the conclusion that the contributions which Great Britain and Ireland ought to be expected to make for the general support and administration of the State, should be, respectively, fifteen- and two-seventeenths, that is, Great Britain was to pay about 88 per cent., and Ireland about 12 per cent. of the sum total. This proportion was to be made liable to revision at the end of twenty years; for this provision, Castlereagh remarked, gave ‘Ireland the utmost possible security that she cannot be taxed beyond the measure of her comparative ability, and that the ratio of her contributions must ever correspond with her relative wealth and prosperity;’ and then followed arrangements which undoubtedly had the ‘assimilation of Great Britain and Ireland in finance’ remotely in view; but subject to limitations that would preserve for Ireland her fiscal rights, and would secure her from taxation beyond her means, and unjust. It was proposed that if, at some future time, the debts of both countries should be discharged, or if their debts and their contributions were in the same proportion, Great Britain and Ireland might be ‘assimilated in finance,’ and placed under the same fiscal system; but this was to be on two express conditions, that the circumstances of the two countries should admit of this change, and that, in any case, should the change be made, Ireland—as was the case of Scotland when her Union took place-should have the benefit of such ‘exemptions and abatements’ of taxation as might be deemed proper, and the circumstances of the situation might allow. The meaning of the technical words, ‘exemptions and abatements,’ interpreted of late years in a pettifogging sense, was fully recognised at the time, and for a long subsequent period, indeed, has been recognised to this day by most of our leading statesmen, namely, that Ireland was not to be taxed unfairly or beyond her resources, as Castlereagh had repeatedly promised.[154]
The Opposition in the Irish Parliament had many able lawyers—the names of Saurin, of Plunket, of Bushe are still known to fame; it is to be regretted, perhaps, that these powerful minds did not examine with more jealousy the conditions under which Great Britain and Ireland might be ‘assimilated in finance,’ distant as the contingency appeared to be; did not criticise more sharply words that might be wrested from their accepted sense; and trusted too much to Castlereagh’s phrases. But the attention of the Opposition was rather directed to the Union in its political than in its financial aspect; it rather denounced the attempt to destroy the settlement of 1782 than scrutinised the terms of the fiscal system to be imposed on Ireland, at least, as these were concerned with the future. The arrangements, nevertheless, by which Ireland was to make the contribution of the two-seventeenths were fiercely assailed in both the Houses in College Green; Foster described the calculations of Pitt and Castlereagh as utterly false, and declared that the charge to be borne by Ireland was much too large; Grattan echoed this opinion in characteristic language: ‘Though I do not think the means of this country are unequal to any necessary expense, yet I do think they are inadequate to that contributory expense which the Union stipulates.... The attempt will exhaust the country, at the same time that it enslaves her. Colour it as you please, Ireland will pay more than she is able. Considering these the terms of the Union so far as they relate to revenue, they amount to a continuation of the double establishment, an increase of the separate establishment, and a military government, with a prospect of soon succeeding to the full taxes of England.’[155] The Opposition, too, in the Irish House of Commons loudly protested: ‘Your Majesty’s faithful Commons are satisfied that this calculation is extremely erroneous; and that on a just and fair inquiry into the comparative means of each country, the Kingdom ought not, and is not able to contribute anything like that proportion.’[156] And twenty Irish peers placed this emphatic protest on record; I have space for a few sentences only: ‘Under such circumstances, it appears to us that if this Kingdom should take upon herself irrevocably the payment of two-seventeenths of these expenses, she will not have means to perform her engagements unless by charging her landed property with 12s. or 13s. in the pound; it must end in the draining from her her last guinea, in totally annihilating her trade for want of capital, in rendering the taxes unproductive, and consequently in finally putting her in a state of bankruptcy. We think ourselves called upon to protest against a measure so ruinous to our country, and to place the responsibility of its consequences upon such persons as have brought it forward and supported it.’[157]
The Treaty of Union left Ireland, financially, still a separate country, paying a fixed contribution for the uses of the State. The great war with France soon broke out again; England was involved with Napoleon in a life-and-death struggle; her fiscal resources were strained to the utmost; her expenditure became prodigious for a series of years. In these circumstances, the debt of Ireland rose from £28,000,000 to upwards of £112,000,000; and her taxation from about £2,500,000 to about £4,500,000; while the debt of Great Britain advanced from some £446,000,000 to some £737,000,000, and her taxation from some £24,000,000 to £54,000,000; the taxation of Ireland being by the head about £1 in 1816, that of Great Britain being about £5, the figures sixteen years before being 10s. and £3. The immense increase in the debt of Ireland, much greater in proportion than that of Great Britain, was certainly due to a large extent to the fact—and this was frankly admitted by Grattan—that the poorer country could not keep pace with the richer in the gigantic charges of the war; the case, it has justly been remarked, may be compared to a case of this kind: ‘If one man, A, who has been living at the rate of £100 per annum, arranges to keep house with another man, B, who has for some time been living at the rate of £700 per annum, and to spend £1 for every £7 which B spends, then so long as B continues to live at the same rate as before, the expenses of A will not be increased. But if B begins to live at the rate of £2100 a year, A will have to spend £300 a year, and if his means are not sufficient for this, he must become bankrupt.’[158] Allowing, nevertheless, for all this, it is not the less certain that the calculations of Pitt and Castlereagh were utterly falsified by the event, and that the warnings of Foster, Grattan, and other well-informed Irishmen, besides the protests made in the Irish Parliament, were verified to the fullest extent; as has been remarked by a distinguished English expert, ‘The calculations of Mr. Pitt and Lord Castlereagh, the ministers who promoted the Union, and who declared that Ireland would be able to pay, and ought to pay, two-seventeenths of the joint expenses of the United Kingdom, turned out to be mistaken, and the opinions of Mr. Grattan, Mr. Foster, and other Irish members, who denied that she would be able to contribute so large a proportion, are proved by the event to have been well founded.’[159]
This contrast, it is hardly necessary to say, to persons acquainted with Irish history, is only one of the innumerable proofs of the ignorance of Ireland too common to British statesmen, and of their too common disregard of the best Irish opinion. In 1815-16, at the close of the war, Ireland was financially in a bankrupt condition; she could not pay the interest on her debt; she could not bear the weight of further taxation; she was exhausted and sucked dry by fiscal injustice. Her social state, too, had become very alarming; her population had rapidly increased, and, mainly depending on the frail potato, was already becoming an incubus on the land; the collapse of the high war prices had caused a sudden fall in rents and the wages of labour; there was general distress in several counties, and Whiteboy and agrarian disorder widely prevailed. The financial position of Ireland was necessarily taken up by Parliament; a Committee of the House of Commons was selected to report upon it. By this time one of the contingencies had taken place for the possible ‘assimilation in finance’ with Great Britain of the much weaker country; the contribution of Ireland, compared with her debt, was even in less proportion than the contribution of Great Britain to her own; she had been left far behind in the effort to pay her way. In this position of affairs the Committee made its report, after a long and careful examination of the case; the House of Commons passed these resolutions in May, 1816: ‘That it is the opinion of this Committee that the values of the respective debts of Great Britain and Ireland, estimated according to the provisions of the Acts of Union, have been, at a period subsequent to these Acts, in the same proportion to each other (within one-hundredth part of the said value), with the respective contributions of each country respectively, towards the annual expenditure of the United Kingdom; and that the respective circumstances of the two countries will henceforth admit of their contributing indiscriminately by equal taxes imposed upon the same articles upon each, to the future expenditure of the United Kingdom; subject only to such particular exemptions and abatements in Ireland and in Scotland as circumstances may appear from time to time to demand; and that it is no longer necessary to regulate the contribution of the two countries according to any specific proportion, or according to the rules prescribed by the Acts of Union, with respect to such proportions. That it is the opinion of this Committee, that it is expedient that all expenses henceforth to be incurred, together with the interest and charges of all debts hitherto contracted, shall be so defrayed indiscriminately by equal taxes to be imposed on the same articles in each country; and that from time to time, as circumstances may require, such taxes should be imposed and applied accordingly, subject only to such exemptions and abatements in Ireland and Scotland as circumstances may appear to demand. That it is the opinion of this Committee that such legislative measures should be adopted as may be necessary to carry into further effect the purposes of the said Acts of Union, by consolidating the public revenues of Great Britain and Ireland into one fund, and applying the same to the general services of the United Kingdom.’[160]
These resolutions were partly embodied in an Act which received the Royal assent in June, 1816. By this law the separate exchequer of Ireland was shut up; there was to be but one exchequer for the Three Kingdoms; all the revenues of Great Britain and Ireland were thrown into a general fund to be applied to the requirements of the State; the separate debt of Ireland was fused into that of Great Britain, the two making a common National Debt. By these means Ireland was relieved from an intolerable load of debt; but those who contend that an immense boon was thus conferred on her, only illustrate the aphorism of Burke referred to before; the matter was decided by the opinion of the dominant power. Ireland, no doubt, was set free from an overwhelming burden; but the burden was one improperly cast on her by the Union; the relief was only a small redress of injustice.[161] On the other hand, the arrangements of 1816 abolished the contribution of the two-seventeenths, and made Ireland less a separate country, financially, than she had been before; the resolutions of the House of Commons did not all become law, but they at least declared that she might become ‘assimilated in finance’ to Great Britain at a convenient time, and thus diminished her security against undue taxation; and the amalgamation of her debt with that of Great Britain made her subject, at least conceivably, to a gigantic charge, for which she was not in any way liable. The compromise, however, effected at this time, rather contemplated the relief of Ireland from existing debt than her ultimate ‘assimilation in finance to Great Britain,’ and the extension to both countries of the same fiscal system. For many years after 1816 Ireland remained, financially, completely distinct from Great Britain, and under a scheme of taxation altogether different. Nor is the reason difficult to seek; she was declared entitled, by the resolutions before mentioned, to the ‘exemptions and abatements’ secured to her by the Treaty of Union; and the Parliament of that day respected the treaty, interpreting these terms in their true sense, that Ireland was not to be taxed beyond her means. Her fiscal wrongs, besides, from 1800 to 1816, were still fresh in the minds of statesmen; these did not wish to repeat injustice; above all, she had many representatives of real weight at Westminster—Grattan was a tower of strength in himself, and he had very able followers; these men would certainly have fiercely resented attempts to impair the financial rights of their country.
The fiscal systems of Great Britain and Ireland, still altogether distinct, continued nearly on this footing for a series of years. Great Britain was gradually relieved from taxation peculiar to herself, amounting to very considerable sums; Ireland was not relieved in the same proportion; but this was hardly a real grievance; the taxation of Great Britain during the war had been enormously higher than that of Ireland. In 1819-20 the charge on Great Britain, which had been about £5 per head, had been reduced to £3 13s.; that on Ireland, which had been about £1 a head, had been reduced to 15s. 5d. There seems to have been little to complain of in these figures. Some steps, however, but tentative only, were made by degrees in ‘assimilating the two countries in finance,’ according to the resolutions of 1816; the duties on tea were made equal for the Three Kingdoms, and the duties on tobacco, as early as 1819; but it deserves special notice that this policy was angrily opposed by many Irishmen in the House of Commons, the most conspicuous of these being Sir John Newport, a real master of Irish finance, who had been Chancellor of the Irish Exchequer in 1806-07. Still, notwithstanding innovations like these, the fiscal systems of Great Britain and Ireland remained substantially distinct for a long period; this was notably made manifest as late as 1842. At this time the population of England was in an alarming state; the Chartist agitation was in full swing; British commerce was half strangled by heavy duties on foreign imports; the corn laws crippled and burdened industry. Peel was at the head of his great Ministry; he began to carry into effect the policy of free trade, inaugurated by Pitt, but unhappily delayed; in order to accomplish this he had to diminish or get rid of the charges on foreign imports, and generally to substitute direct for indirect taxation. He was under a strong temptation to ‘assimilate Great Britain and Ireland in finance;’ but he had been a friend and colleague of Castlereagh; he understood the true import of the Treaty of Union; above all, he knew Ireland well for an Englishman; he had practically been her ruler for nearly six years. In these circumstances he imposed the income tax on Great Britain as an equivalent for many indirect taxes; but he pointedly abstained from extending the tax to Ireland; he felt that this would be an act of financial wrong; and though he increased for a short time the duty on Irish spirits, he took off the increase within a few months. The only ‘assimilation in finance’ he effected was to make the stamp duties in Great Britain and Ireland equal, and this was rather a legal than an economic reform.
The life of the great minister was prematurely cut short; time brought with it its changes on its wings. The statesman who had living traditions of the Union and its finance had passed away; O’Connell had disappeared from the scene; the representation of Ireland had fallen into a deplorable state. Meanwhile the free trade policy of Peel had achieved great results in England and Scotland; free trade had given an immense impulse to our manufactures and our foreign commerce; the repeal of the corn laws had wonderfully quickened industry, and had been a magnificent boon to the mass of the people; the prosperity of Great Britain was advancing by leaps and bounds. The development of free trade was the object of nearly all our statesmen; to accomplish this it was essential still further to lessen or to abolish the duties on foreign imports, and to let in the raw materials of manufactures free; indirect taxation was still further to give place to direct. In 1853, and during part of the subsequent period, our finances were in the hands of a minister whose impulsive nature was upheld by a most imperious will, and who, whatever was his policy, seldom stuck at trifles. Apparently without mature reflection, and, it is to be hoped, with little knowledge of the facts of the case, Mr. Gladstone, setting the example of Peel at nought, suddenly subjected Ireland to the income tax, and began to raise the duties on Irish spirits; by 1860 these duties had been more than trebled; and the taxation of Ireland had been increased by upwards of two millions sterling. And what were the circumstances, during a large part of this period, of the country on which this enormous burden had been laid? Ireland, no doubt, had begun to revive from the effects of the catastrophe of 1845-47; but, compared with Great Britain, she was miserably poor; and the Great Famine had shaken her social structure to its base. Two millions of her population had fled from their homes into exile; a large part of the upper and of the middle classes had been involved in ruin; whole tracts of her lands were derelict wastes; her local taxation was exceedingly high. The imposition of this load of taxation on a country in such a condition, unjustifiable in the abstract, and from every point of view, was, in the existing position of affairs, an act of cruel wrong; no wonder even one of Mr. Gladstone’s colleagues has remarked, measured as is his language, ‘We think that if the House of Commons, in the period 1853 to 1860, when the great enhancement of taxation took place, had fully considered the circumstances of Ireland, they would not have felt themselves justified in increasing the taxation of that country by means of the income tax and the equalisation of the spirit duties.’[162] At this time, in a word, the future Solon of Home Rule proved himself to be the merciless Draco of Irish finance.