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 L7,000,000 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
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
L350 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.