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 L300 and
L2,000 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
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 L7,000,000 a year, and after paying back L40,000,000 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
L3,000 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.