CHAPTER XI_The Framework of Home Rule

UNION FINANCE

I ask the reader to follow with particular care the following historical

summary of Anglo-Irish finance. None of it is irrelevant, I venture to

say. It is not possible to construct a financial scheme, or to criticize

it when framed, without a fairly accurate knowledge of the historical

facts.

BEFORE THE UNION.[97]

Before the Union Ireland had a fiscal system distinct from that of Great

Britain, a separate Exchequer, a separate Debt, a separate system of

taxation, a separate Budget. Yet she can never truly be said to have had

financial independence, because she was never a truly self-governing

country. Until 1779, when the Protestant Volunteers protested with arms

in their hands against the annihilation of Irish industries in the

interest of British merchants and growers, her external trade and,

consequently, her internal production, were absolutely at the mercy of

Great Britain. As I showed in Chapter I., Ireland was treated

considerably worse than the most oppressed Colony, with permanently

ruinous results. On the other hand, her internal taxation, never above a

million a year, and her Debt, never above two millions in amount, were

not heavy. But from 1779, through Grattan's Parliament to the Union, a

short period of twenty-one years, Ireland, though still governed on the

ascendancy system by an unrepresentative and corrupt Parliament of

exactly the same composition as before, nevertheless had financial

independence in the sense that her Parliament had complete control of

Irish taxation, revenue, and trade. It was, moreover, in these financial

matters that the Parliament showed most genuine national patriotism,

together with a greatly enhanced measure of the Imperial patriotism

traditional with it. Internal taxation, except in time of war, was still

comparatively light; depressed home industries were judiciously

encouraged by bounties; no attempt was made at vindictive retaliation

upon British imports, though Irish exports to Great Britain were still

unmercifully penalized; and sums, growing to a relatively enormous size

during the French War, which began in 1793, were annually voted for the

Imperial forces. This voluntary contribution, which had averaged

£585,000 in the eleven years of peace, from 1783 to 1793, rose to

£3,401,760 in 1797,[98] and in 1799, when Ireland was paying the bill

for British troops called in to suppress her own Rebellion, to

£4,596,762, out of a total Irish expenditure for the year on all

purposes, military and civil, of £6,854,804. Not more than half, on the

average, of these war expenses were met out of the annual taxes. Debt

was created to meet the balance; but neither the debt, heavy as it was,

nor the taxes, were intolerably burdensome--that is, if we regard

Ireland as financially responsible for Imperial wars and for the

suppression of a Rebellion which was provoked by scandalous

misgovernment. Tax revenue rose from £1,106,504 in 1783, when the free

Parliament first prepared a Budget, to £3,017,758 in 1800, and averaged

a million and a half. In the same period the total amount of the funded

and unfunded Irish Debt rose from £1,917,784 to £28,541,157, almost the

whole of this increase having taken place in the seven years of war

immediately preceding the Union. In Great Britain both Debt and taxation

had risen in a larger ratio, and were relatively far greater. For

example, in the six years, 1793-1798 inclusive, £186,000,000 had been

added to the British Debt, only £14,000,000 to the Irish Debt. In 1801

the British Debt stood at £489,127,057; the Irish Debt at £32,215,223.

II.

FROM THE UNION TO THE FINANCIAL RELATIONS COMMISSION OF 1894-1896.

The Union of 1800, therefore, could not be justified on the ground that

a poor country would profit by fiscal amalgamation with a rich country,

and Pitt and Castlereagh, when framing the Union Act, recognized that

truth by leaving Ireland with a separate fiscal system, as before;

though the administration of this system was, of course, now to be

wholly in British hands. There were to be separate Exchequers,

Debts,[99] taxes, and balance-sheets, with the following restrictions:

That prohibitions against imports and bounties on exports (corn

excepted), should cease reciprocally in both countries; that, with the

exception of 10 per cent. ad valorem duties on a variety of articles

named, there should be mutual free trade; and that no tax on any article

of consumption should be higher in Ireland than in Great Britain.

But although Pitt and Castlereagh ostensibly carried out the principle

of separate fiscal systems, they laid the foundations for a fiscal

amalgamation which was disastrous to Ireland. Since his Commercial

Propositions of 1785, Pitt had never abandoned the idea of obtaining

from Ireland an obligatory annual contribution to Imperial services

based on some fixed principle. By Clause 7 of the Act of Union he

achieved his aim. It was settled that for twenty years Ireland should

contribute in the proportion of 1 to 71/2 (or 2 to 15)--that is, that

Great Britain should pay 15/17, or 88.24 per cent., of common Imperial

expenses, including the charge for debt contracted for Imperial

services, and Ireland 2/17, or 11.76 per cent. Nobody now denies that

this ratio was grossly unjust to Ireland. It took no account of the

relative pre-Union Debts; it took no account of the tribute of nearly

four millions paid in rents to absentee English proprietors; it was

based on superficial deductions from inadequate and misleading data, and

the Act was hardly passed before its absurdity became manifest. Fifteen

years of almost incessant war followed the Union. Ireland, even by

raising taxation to the highest possible point, was unable to pay her

contribution without contracting a Debt colossal in proportion to her

resources. While Great Britain only doubled her Debt, and paid 71 per

cent. of her expenses out of current taxation, the Irish Debt

quadrupled, and in 1817 reached the portentous total of £112,634,773;

while only 49 per cent. of Irish expenditure was paid for out of

revenue. Here is a little table which shows the effect upon Ireland of

Clause 7 of the Act of Union:

Five Years. Average Average

Revenue. Expenditure.

£ £

{ 1785-1790 1,246,000 1,247,000

Before Union ---{ 1790-1795 1,340,000 1,646,000

{ 1795-1800 2,100,000 4,601,000

{ 1801-1806 3,643,000 7,270,000

After Union ---{ 1806-1811 4,885,000 9,061,000

{ 1811-1816 5,927,424 13,188,000

The scandal could no longer be overlooked. It was impossible to raise

the Irish taxes. Their yield was already showing signs of diminishing.

But the Act of Union had provided for the situation which had arisen.

One of the sections of the famous Clause 7 enacted that if and when the

separate Debts of the two countries should reach the proportion of their

respective Imperial contributions, Parliament might, if it thought fit,

declare that all future expenses of the United Kingdom should be

defrayed indiscriminately by equal taxes imposed on the same articles in

both countries, "_subject only to such exemptions and abatements in

favour of Ireland as circumstances may appear from time to time to

demand_." The framers of this section had anticipated that the English

Debt would sink to the level of the Irish Debt. Anglo-Irish finance

teems with grim jokes of this sort; but the section was useful in either

event. With its terms before them, a Committee sat to consider the state

of Ireland, with the result that, by an Act which came into operation on

January 5, 1817, the Exchequers, Debts, revenues, and expenditures, but

not as yet the taxes, of the two countries were amalgamated. In

Professor Oldham's words,[100] "the corpse of Ireland's insolvency was

huddled into the grave, and no questions were to be asked." The whole

expenditure, Imperial and local, of the United Kingdom, Ireland

included, was to be defrayed out of a Consolidated Fund, and the

arrangements, therefore, for a separate Irish contribution on a fixed

basis to Imperial services were cancelled. Henceforth her Imperial

contribution, for anyone who troubled to calculate it, was represented

by the excess of revenue raised within Ireland over the expenditure in

Ireland. A mutual free trade was also established, not instantaneously,

but in the course of a few years. By 1824 all duties, as between Ireland

and England, had ceased, and in 1826 the custom-houses ceased to record

the transit of goods between England and Ireland, except in articles

such as spirits, on which a different excise duty was charged. No

statistics were compiled, therefore, of Anglo-Irish trade until ninety

years later, when the Irish Department of Agriculture began to prepare

returns. Such was the origin of our Customs Union against the world

(for, needless to say, those were still the days of high Protection),

and it is instructive to compare it with the voluntary pacts of the

German States and South African Colonies, and with their political

results.

In one important point unification was left incomplete. It was

impossible in 1817 to equalize internal taxation in the two countries,

though it was held desirable to do so, because Ireland could not have

borne the higher British scale, and suffered enough under her own.

Regard, too, was had at first to those important words in the Act of

Union which guaranteed to Ireland such "exemptions and abatements" as

might appear fair. But they were soon forgotten. Without any inquiry

into the taxable capacity of Ireland, the stamp, tea, and tobacco duties

were equalized early in the period, the enhancement in Ireland of the

last duty from 1s. to 3s. on raw tobacco, and from 1s. to 16s. on

manufactured tobacco, laying an exceptionally heavy burden on the Irish

poor. Meanwhile the abolition, after the close of the war, of taxes

representing about sixteen millions a year, and purely affecting Great

Britain, gave a relief to her which Ireland did not feel. But it was not

until 1853, when Mr. Gladstone extended the income-tax to Ireland, and

raised the Irish spirit duty, that the principle of "exemptions and

abatements" was most seriously infringed. Mr. Disraeli followed in 1855

with a further elevation of the spirit duty, which was finally equalized

with the British duty in 1858, at 8s. a gallon; while in 1860 both

duties were raised to 10s. In the seven years 1853-1860 the taxation of

Ireland was raised by no less than two and a half millions per annum. It

will be recalled that the great famine had taken place in 1846-47, and

that between the Census of 1841 and that of 1861 the population sank

from eight to six millions, while the British population rose from

eighteen and a half to twenty-three millions. The statistical result of

the increased taxes, therefore, was to show a rise in taxation per head

of the Irish people from 13s. 11d. in 1849 to £1 5s. 4d. in 1859, while

in Great Britain it rose only from £2 7s. 8d. to £2 10s. during the same

period. Equality of taxation has never been wholly established, for to

this day a few quite unimportant taxes are not levied, or are levied on

a lower scale in Ireland;[101] but from 1858 onward we may regard the

taxation of the two countries as almost identically the same.

In the meantime a great revolution, also beginning at the time of the

famine, had taken place in the fiscal system of the United Kingdom. Free

Trade with the outside world had been established, and whatever we may

conclude about its effect, it had been established, as we know, with a

special view to British industrial interests, and without the smallest

concern for Irish interests, which were predominantly agricultural. It

was certainly followed by an immense industrial expansion and prosperity

in Great Britain; it was certainly initiated at the lowest point of

Ireland's moral and physical wretchedness. Opinions differ as to the

precise economic effect upon Ireland. Miss Murray, in her thoughtful and

exhaustive study of the commercial relations between England and

Ireland, holds that, as agricultural producers, the Irish lost far more

than they have gained as consumers of foodstuffs, while a number of

small and struggling rural industries, whose powerful counterparts in

Great Britain could easily withstand foreign competition, did undeniably

succumb in Ireland.

My own opinion is that the past influence upon Ireland of free trade, in

the first instance with Great Britain, and later with the outside world,

though a highly interesting and important topic in itself, is commonly

exaggerated, to the neglect of the vastly more important question of the

tenure of land. Free trade did not cause the famine. On the contrary,

the presage of the famine was one of the minor causes which induced Peel

to take up Cobden's policy for the free importation of foodstuffs. The

effect of that policy upon Ireland sinks into insignificance beside an

agrarian system which had reduced the mass of the Irish peasants to

serfs, kept them near the borders of destitution, and in a state of

sporadic crime for a century and a half before, and for forty years

after the repeal of the Corn Laws, and, at the climax of a period of

high protection for agricultural products, rendered it possible for a

mere failure of the potato-crop to cause death to three-quarters of a

million persons. These things do not happen in properly governed, in

other words in self-governed, countries, whatever their fiscal system,

and they have never happened to Irishmen in any other part of the world

but in their own fertile island. Manufacturing industries stand on a

different footing. Most of the staple industries of Ireland, notably the

woollen industry, and the aptitudes which brought them into being, were

deliberately destroyed long ago by fiscal measures imposed by England,

and their destruction aggravated the misery and exhaustion produced by a

bad land system. How far their partial revival under the fiscal Home

Rule of Grattan's Parliament was genuine, and might, with a continuance

of fiscal Home Rule, have been permanent, it is impossible to say. The

retarding effect of the Rebellion, and the long start already obtained

by Great Britain in the industrial race, are factors beyond accurate

calculation. But one thing is certain, that the revival of industries

was, at that stage, of trivial importance beside the rural regeneration

of Ireland, and that Grattan's Parliament had not the remotest influence

for good upon the land question, which it neglected as heartlessly as

its predecessors for a century before and its successors for seventy

years afterwards.[102]

Industries are valuable assets for any country; but countries almost

wholly agricultural, like Denmark, can prosper remarkably, and without

Protection, provided that they possess or evolve a sound system of

agrarian tenure, in other words, a sound relation between tenant and

landlord, or, in default of that, peasant ownership. In every country in

the world that has been a _sine qua non_ of prosperity. Suppose that

English labourers had built out of their own money and by their own

hands the factories, docks, and railways in which they worked, and that

the resulting profits, wages deducted, went solely to ground landlords.

That gives us some idea of the old Irish land system, whose overthrowal

began only in 1870; a system under which the landlord put no capital

into the land, though his rent represented the full profits of the

tenant's capital and labour, less an amount equivalent to a bare

subsistence wage, governed by competition.

The present influence upon Ireland of the Imperial fiscal system, now

that peasant proprietorship has been half accomplished, is another

matter upon which I shall have to say more presently, when we have

completed our review of Anglo-Irish finance. Let us return to the point

we had reached: that free trade with the outside world and the

equalization of taxation between Great Britain and Ireland approximately

coincided in point of time, and were also contemporaneous with rapid and

continuous growth in the wealth and population of Great Britain, and a

steady and continuous decline in the Irish population. We know now,

moreover, though nobody knew it then, because the calculation was not

yet made, that Ireland was paying a large contribution to Imperial

services, over and above her local expenditure. In the half-century

between 1810 and 1860 she had paid an average yearly sum of nearly four

millions, and a total sum of nearly two hundred millions. In the year

1859-60, when the now equalized spirit duties were raised to 10s., she

paid £5,396,000; a sum considerably more than double the expenditure on

Irish services, and equivalent to no less than five-sevenths of the

revenue raised in Ireland.

Parliament gave no serious attention to any of these phenomena from the

time of the fiscal union in 1817 until after the introduction of Mr.

Gladstone's second Home Rule Bill in 1893. No settled conclusions were

arrived at as to the relative wealth of the two countries, as to the

capacity of Ireland to bear the British scale of taxation, or even as to

the amount of revenue derived from and expended in the countries

respectively, with the consequent contributions made to common Imperial

services. A Committee sat in 1864-65, which compiled some interesting

information and heard some important witnesses, but ignored the main

questions at issue and produced what Sir Edward Hamilton described later

as an "impotent" Report. Sir Joseph MacKenna, an able Irish banker,

again and again, between 1867 and 1876, pleaded for an inquiry into

Anglo-Irish finance, alleging gross injustice in the incidence of Irish

taxation, and obtained nothing more than a rough return showing that

between 1841 and 1871 the gross tax revenue per head of the population

had risen in Ireland from 9s. 6.7d. to £1 6s. 2.2d. and had fallen in

Great Britain from £2 9s. 9.5d. to £2 4s. 1.6d. For the first time also

it was shown that the national beverages of England and Ireland, beer

and whisky, respectively, were taxed in a ratio unfair to Ireland. In

1886 Mr. Gladstone, in preparing his first Home Rule Bill, had to

re-open the question of the relative resources of Ireland and Great

Britain for the first time since the Union, because he proposed a fixed

annual contribution, unchangeable for thirty years, from Ireland towards

the Imperial services. He fixed the contribution at one-fifteenth or

approximately half that of two-seventeenths fixed by Pitt in 1800, and

the new figure was certainly not too low. In 1888 the question was again

incidentally raised by Mr. Goschen, who apportioned certain equivalent

grants towards local taxation in England, Scotland, and Ireland, in the

proportion of 80, 11, 9, apparently on the principle that those were the

proportions in which each country respectively contributed to Imperial

expenditure. Mr. Gladstone, in preparing the Home Rule Bill of 1893,

made investigations which threw additional light on the true amount of

revenue derived from Ireland, with allowance made for revenue from

dutiable goods taxed in Ireland but consumed in Great Britain, and _vice

versa_, but his financial scheme, as revised in the course of the

Session and passed by the House of Commons, evaded the crucial issue by

making Ireland's contribution to Imperial services a quota, one-third,

of her true annual revenue. This quota, moreover, was indirectly

reduced by temporary subsidies in aid of Irish charges (_e.g._, for

Police) and was estimated, with these deductions, not to exceed at the

outset one-fortieth.

III.

THE FINANCIAL RELATIONS COMMISSION OF 1894-1896.

It was now apparent that, with or without Home Rule, the whole subject

needed serious investigation, and in 1894, after the defeat of Mr.

Gladstone's Bill, a Royal Commission under the Presidency of Mr. Hugh

Childers was appointed to consider the "Financial Relations between

Great Britain and Ireland." Their Report deserves careful study, because

it contains within it all the essential materials for forming a judgment

upon the financial problem of to-day. All that it lacks are the

complementary figures of the subsequent seventeen years, and these

figures, which I shall presently add, do not affect the conflict of

principles, though they throw into more vivid relief than ever the

outcome of conflicting principles.

In composition it was a very strong Commission; it consulted the highest

financial authorities in the Kingdom; it made for two years an

exhaustive examination, historical and practical, of the questions

submitted to it, and although the members disagreed on some important

points, the conclusions upon which they were unanimous cannot be

impugned. The terms of reference were:

"1. Upon what principles of comparison, and by the application of what

specific standards, the relative capacity of Great Britain and Ireland

to bear taxation may be most equitably determined.

"2. What, so far as can be ascertained, is the true proportion, under

the principles and specific standards so determined, between the taxable

capacity of Great Britain and Ireland.

"3. The history of the financial relations between Great Britain and

Ireland at and after the Legislative Union, the charge for Irish

purposes on the Imperial Exchequer during that period, and the amount of

Irish taxation remaining available for contribution to Imperial

expenditure; also the Imperial expenditure to which it is considered

equitable that Ireland should contribute."

It will be observed that Questions 1 and 2 deal with abstract points,

No. 3 (except the last clause) with concrete facts.[103]

In their short unanimous Report the Commissioners began by stating that

"Great Britain and Ireland must, for the purposes of this inquiry, be

considered as separate entities."

To Question 1 they made no unanimous answer. This was immaterial,

because, as a result of numerous tests (assessment to estate duties and

income-tax, consumption of commodities, population, etc.) all arrived

unanimously at an answer to the next question.

Answer to Question 2 (and incidentally, as will be seen, to part of

Question 3): "That whilst the tax revenue of Ireland is about

_one-eleventh_ of that of Great Britain, the relative taxable capacity

of Ireland is very much smaller, _and is not estimated by any of us as

exceeding one-twentieth_."

The wording of the answer needs to be explained by reference to the text

of the Report.

(_a_) In saying "tax revenue" the Commissioners meant to exclude non-tax

revenue--_e.g._, Post Office receipts, etc.--but the Commissioners in

their various separate Reports generally employed the figures of total

revenue. Taking these as our basis, the Irish revenue then raised would

have been nearly one-twelfth instead of one-eleventh of the British

revenue. In other words, of the total revenue of the United Kingdom,

Ireland paid nearly _one-thirteenth_. (_b_) As to the true Irish taxable

capacity of "one-twentieth," some confusion arises owing to the use of

the phrase by different Commissioners in different senses. Mr. Childers

and Sir David Barbour appear to have meant one-twentieth of the United

Kingdom's taxable capacity, the others one-twentieth of Great

Britain's. In order to be on the conservative side, I shall adopt the

former estimate. The discrepancy is not material to the conclusions of

the Commissioners, as, for reasons which I need not go into, they agreed

that the minimum amount of over-taxation was two millions and

three-quarters.

This was the main outstanding conclusion of the Royal Commission.

Translated into figures, it showed the following facts: In 1893-94 the

total revenue of the United Kingdom from all sources was £96,855,627. Of

this sum the revenue contributed by Great Britain from all sources was

£89,286,978; by Ireland, £7,568,649--that is, between one-eleventh and

one-twelfth of the British revenue.

If Ireland in 1893-94 had paid in proportion to her true taxable

capacity of one-twentieth, the maximum arrived at by any member of the

Commission, the revenue derived from her would have been £4,842,781.

In other words, there was held to be an excess payment from Ireland of

£2,725,868.

It was not suggested by any member of the Commission that Ireland, since

the Union, had grown richer at a more rapid rate than England, and was

therefore more capable of bearing taxation. On the contrary, it was

admitted that she had grown, relatively, much poorer. On the most

moderate estimate, therefore, the over-taxation of Ireland since the

Union, computed strictly on the principle laid down, could be

represented as amounting in 1894 to something like two hundred and fifty

millions, or, if we date from the fiscal union of 1817, two hundred

millions.

The answer given by the Commissioners to Question 3, so far as it goes,

is explanatory of the previous answer.

"That the Act of Union imposed upon Ireland a burden which, as events

showed, she was unable to bear.

"That the increase of taxation laid upon Ireland between 1853 and 1860

was not justified by the then existing circumstances."

And they added the opinion "that identity of rates of taxation does not

necessarily involve equality of burden."

Their answers, so far as they were complete, to the other inquiries

contained in Question No. 3 about the tax revenue of Ireland and the

net contribution of Ireland in the past to Imperial services, are to be

found in figures included in the body of the Report, and these figures

formed, of course, the basis of their unanimous conclusion as to the

over-taxation of Ireland.

These figures, to which I have often alluded in this volume, necessitate

a short digression, because they and subsequent Returns of the same sort

form the only official data upon which to estimate the present financial

position of Ireland.

They were extracted partly from annual Returns originally issued by the

Treasury for the Home Rule Bill of 1893, and entitled "Financial

Relations (England, Scotland, and Ireland)," and partly from a new

document known as the "Pease" Return, No. 313 of 1894. These Returns,

taken together, represented the first serious attempt by the Treasury to

construct an account covering a period from 1819-20 to 1890-91, and

showing (_a_) the exact revenue derived from Ireland and Great Britain

respectively; (_b_) the local expenditure in Ireland and Great Britain

respectively, as distinguished from Imperial expenditure incurred for

the benefit of the whole United Kingdom; (_c_) the net contribution of

Ireland and Great Britain respectively to this latter expenditure for

Imperial services only.

Since 1894 two regular annual Returns have been compiled, the one

showing the revenue, local expenditure, and net Imperial contribution of

Scotland, Ireland, and England (including Wales), the other giving an

historical summary of similar figures for Great Britain and Ireland

only, from 1819-20 to the current date.

Two insoluble problems have had to be grappled with by the Treasury in

preparing these Returns: first, to differentiate Imperial expenditure

from local expenditure; second, to arrive at the "true" net revenue of

the partners as distinguished from the revenue collected within their

respective limits. Both these problems arise whenever an attempt is made

to look behind a system of unitary finance into the burdens and

contributions of different portions of a united realm, and the latter,

though not the former, of the two may arise in just as acute a form if

the realm consists of federated States with a common system of Customs

and Excise.

With regard to the first problem, it is, of course, easy, in the case of

a Federation, to distinguish between central, or Federal, expenditure

and local, or State, expenditure, because the functions of the Federal

Government and State Governments are delimited in the Constitution, and

the separate expenditures form the subject of separate balance-sheets.

But in a Union, and above all in a Union to which one part of the realm

is an unwilling party, like that of the British Isles, it is clear that

no absolutely accurate line can be drawn between Imperial and local

expenditure. The Army, the Navy, and a number of other things are

clearly enough Imperial, but there are many debatable items. For

example, Is the upkeep of the Lord-Lieutenant an Irish or an Imperial

charge? Is a loss on Post Office business in Ireland to be charged

against Ireland, or should Ireland be credited with a proportion of the

profits of the whole postal business of the United Kingdom? More

searching questions still: Is the enormous charge for the Irish Police,

which is under Imperial control, and exists avowedly for the purpose of

forcibly maintaining, in the Imperial interest, an unpopular form of

government in Ireland, to be charged against Ireland? Or, again, should

Ireland be debited with the cost of the machinery for carrying out Land

Purchase, a policy admittedly rendered necessary by the enforced

maintenance in the past of bad land laws? Obviously such questions can

never be answered so as to satisfy both Irishmen and Englishmen, because

they go to the root of the political relations between Ireland and Great

Britain. The Royal Commission, therefore, was naturally unable to give a

unanimous answer to the last clause of Question No. 3 of their Terms of

Reference--namely, "What is the Imperial expenditure to which Ireland

should equitably contribute?" Some members held that under the Union

even a theoretical classification was unjustifiable, while it was

obvious that under the Union no effect could be given to it. Still, the

classification had to be made, in order to arrive at a theoretical

estimate of the financial situations of Great Britain and Ireland

respectively, and the Treasury, charged with the preparation of this

estimate, took the only course open to it in reckoning as Irish

expenditure all expenditure which would not have to be incurred if

Ireland did not exist. It was the perfectly correct course for the

Treasury to take in dealing with the task set before them, and, as we

shall see, it provides the only basis on which to construct the

balance-sheet of a financially independent Ireland.

The insolubility of the second problem--that of discovering the "true"

revenue of Ireland and Great Britain respectively--arises from the

difficulty of tracing the passage of dutiable articles from one part of

the kingdom to the other, and of tracing the incidence of direct imposts

such as income-tax and stamps. The great bulk of Irish revenue is

derived from indirect taxes on commodities, liquor, tobacco, tea, sugar,

etc. Since the consumer pays the tax, revenue is rightly credited to the

country of consumption. The tax, for example, on tobacco manufactured in

Ireland may be collected in Ireland, but the revenue from Irish-made

tobacco exported to and consumed in Great Britain is rightly credited to

Great Britain. The converse holds true. Half the tea consumed in Ireland

has paid duty in London, but the whole of the revenue from tea consumed

in Ireland must be credited to Ireland. Now, since 1826, no official

records had been kept by the Customs-houses of the transit of goods

between Ireland and England, except in the solitary case of spirits. The

data, therefore, did not exist, and do not exist now, except in the case

of spirits, for an accurate computation. This is frankly confessed by

the Treasury officials. They base their published figures on certain

arbitrary methods of calculation which have never been submitted to any

public inquiry, and which, as they admit, contain an element of

guesswork. The matter is an exceedingly important one to Ireland,

because ever since 1870 an increasingly heavy deduction has been made by

the Treasury from her "collected" revenue, and her "true" revenue has

proportionately diminished. Part of this deduction is no doubt due to

the fact that her exports of tobacco and liquor have, in recent times,

much exceeded her imports, but the margin for error is nevertheless

large. Mr. Gladstone, in framing his Home Rule Bill of 1886, was so

sensible of the inherent difficulties of the calculation that, while

retaining Customs and Excise under Imperial control, he credited to the

Irish Exchequer the whole of the revenue collected within Ireland. On

the balance of Anglo-Irish exchange in dutiable articles, as roughly

estimated at that time, this provision meant an annual allowance to

Ireland of nearly a million and a half pounds, the principal reason

being that Ireland, which is a larger manufacturer of spirits and

tobacco, was exporting more than she consumed of these commodities. In

the Bill of 1893, as part of a wholly different financial scheme, Mr.

Gladstone abandoned the plan just described, and provided for the annual

calculation of "true" Irish revenue, as distinguished from "collected"

revenue; but it is a proof of the obscurity and intricacy of the whole

business that the Treasury officials made a mistake of £400,000 in the

initial calculation, with the result that Mr. Gladstone had to recast

his financial scheme from top to bottom.

In the Return of 1894, as presented to the Royal Commission, this error

was eliminated, but the method of calculation remained imperfect. Nobody

knows now what the true figures are, and there is good reason to think

that Irish revenue has always been, and still is, substantially

underestimated.

The same obscurity shrouded, and still shrouds, the "true" Irish revenue

from income-tax and stamps, whose proceeds it is exceedingly difficult

to trace under a system of unitary finance, and which are traced by the

Treasury in a fashion again admittedly unreliable.[104]

In regard to taxes on consumption the same difficulty has been met with

in Australia since the federation of the Colonies and the delegation to

the Commonwealth Government of exclusive control over Customs and

Excise. The product of these duties makes up the bulk of Australian

revenue, and is far too large for the needs of the Commonwealth

Government. The Constitution of 1900 provided that the surplus should be

returned to the individual States in proportion to their "true"

contributions to the revenue, and for the calculation of these "true"

contributions an elaborate system of book-keeping was instituted, in

order to trace the ultimate place of consumption of dutiable articles.

Each State was then credited with its "true" revenue, and debited, among

other things, with a proportionate share of the expense of any

Department transferred by the Constitution from the State to the

Commonwealth. The system caused general dissatisfaction, owing, as the

Australian Official Year Book puts it, "to the practical impossibility

of ensuring that in every case a consuming State will be duly credited

with revenue collected on its behalf in a distributing State." That is

the well-founded complaint of Ireland in regard to the Treasury returns.

Hitherto in Australia efforts to change the system for another

allocating the surplus on a basis of population have not been

successful.[105] The Canadian Federal Constitution uses the basis of

population for the distribution of small subsidies to the Provinces, but

complaints have arisen as to its fairness. British Columbia, for

example, for a long time complained that her subsidy was too small, one

of the grounds being that her consumption of dutiable goods was

unusually large. No means existed of verifying this complaint by

figures.[106]

With this explanatory digression about a very important feature of

Anglo-Irish finance, I return to the findings of the Royal Commission of

1894-1896. The figures supplied to them were as shown on the opposite

page.

It will be noticed that the average "true" revenue of Ireland was

stationary at a little over five millions from 1820 to 1850, rose with a

bound to seven and a half millions with the equalization of taxes in the

decade 1850-1860, and remained stationary at that figure for the

remaining thirty-four years. Expenditure in Ireland quadrupled in the

whole sixty-four years; and the net contribution to Imperial services,

after rising from three and a half millions (in round numbers) in 1820

to five and a half millions in 1860, fell automatically, as the

expenditure rose, and had stood at two millions from 1890 afterwards.

Population had fallen by two millions, but the "true" revenue raised per

head of population rose from 15s. 5d. in 1819 to £1 13s. 5d. in 1894,

while the local expenditure rose from 4s. 7d. per head in 1820 to £1 5s.

in 1894.

STATEMENT SHOWING THE ESTIMATED LOCAL EXPENDITURE INCURRED IN IRELAND,

AND THE BALANCE OF TRUE REVENUE WHICH IS AVAILABLE FOR IMPERIAL SERVICES

AFTER SUCH EXPENDITURE HAS BEEN MET:

Revenue as Adjustment Estimated Estimated Balance Population

Collected (+) or (-) True Local available

Revenue Expenditures for

Imperial

Services

Decadal

figures. £ £ £ £ £

--------------------------------------------------------------------------------

1819-20 5,253,909 + 2,655 5,256,564 1,564,880 3,691,684 6,801,000

1829-30 4,161,217 +1,040,908 5,502,125 1,345,579 4,156,576 7,767,401

1839-40 4,571,150 + 841,739 5,412,889 1,789,567 3,626,322 8,175,124

1849-50 4,338,091 + 523,374 4,861,465 2,247,687 2,613,778 6,574,278

1859-60 7,097,994 + 602,430 7,700,334 2,304,334 5,396,000 5,798,967

1869-70 7,331,058 + 95,274 7,426,332 2,938,122 4,488,210 5,412,377

1879-80 7,831,316 - 550,520 7,280,856 4,054,549 3,226,307 5,174,836

1889-90 9,005,932 -1,271,254 7,734,678 5,057,708 2,676,970 4,704,750

Annual

figures. £ £ £ £ £

--------------------------------------------------------------------------------

1890-91 9,301,463 -1,506,988 7,734,475 5,723,399 2,071,076 --

1891-92 9,639,344 -1,671,226 7,968,105 6,021,810 1,946,295 --

1892-93 9,425,177 -1,986,780 7,438,397 5,540,508 1,897,880 --

1893-94 9,650,649 -2,082,000 7,568,649 5,602,555 1,966,094 1,638,000

In 1893-94, the last year under review, Ireland, in round figures, was

producing a net revenue of seven and a half millions, was costing five

and a half millions, and was, therefore, contributing to Imperial

services a surplus of two millions. In the same year, while contributing

her two millions, she was overtaxed, according to the lowest estimate of

the Commissioners, by two and three-quarter millions.

But the significance of these figures cannot be discerned without an

examination of their counterparts on the British side of the account. In

the whole period Great Britain's "true" revenue had risen from

£51,445,764 to £89,286,978; her local expenditure from £4,439,333 to

£30,618,586, and her net contribution to Imperial services from

£47,006,431 to £58,668,392. Her population had increased from

13,765,000 in 1820 to 33,469,000 (estimated) in 1893, but her "true"

revenue had _fallen_ per head of the population from £3 13s. to £2 13s.

4d. (approximately), although her local expenditure had risen from 4s.

7d. to £1 2s. (approximately). In other words, a great increase of

wealth had enabled the British taxpayer to pay far more while feeling

the burden far less. The converse was true of Ireland.

The current state of the account in 1893-94 was as follows:

Great Britain Ireland

1893-94 (Population, (Population, Totals.

33,469,000). 4,638,000).

£ £ £

"True" Revenue 89,286,978 7,568,649 96,855,627

Local Expenditure 30,618,586 5,602,555 36,221,141

Net contribution to Imperial

Services 58,668,392 1,966,094 60,634,486

Great Britain, though raising in "true" revenue between eleven and

twelve times as much as Ireland, was costing only between five and six

times as much to administer as Ireland, and was therefore contributing

to Imperial services twenty-eight times as much as Ireland.

Now the Commissioners had stated that the taxable capacity of Ireland

was not one-eleventh, but, at the utmost, one-twentieth --in other

words, that she ought to contribute not more than one-twentieth of the

United Kingdom revenue. On that basis she should as we have seen, have

been showing a revenue in 1893-94 not of £7,568,649, but of £4,842,781.

But, if her local expenditure had also been proportionate to her true

taxable capacity of one-twentieth, instead of standing at £5,602,555, it

would have stood at £1,811,057, or two-thirds less, while if her net

contribution to Imperial services had likewise been a twentieth, instead

of paying £1,966,094, she would have had to pay £3,031,724, or a million

more.

The conclusion, therefore, might be extracted from the figures that,

although by hypothesis overtaxed, Ireland was drawing a balance of

profit, because, by having more spent on her--or, to put it in another

way, by costing more to govern, she paid a million less to the common

purse than if she had been taxed according to her capacity.

This was precisely the conclusion drawn by one member of the Commission,

Sir David Barbour, and implicitly acquiesced in by one other member, Sir

Thomas Sutherland. All the other Commissioners agreed that there was

something seriously amiss, and declined to regard the disproportionately

high expenditure on Ireland as compensation for the over-high taxation.

The O'Conor Don, as successor in the chairmanship to Mr. Childers, and

four others contented themselves with setting forth the facts, but made

no recommendations, on the ground that the Commission had not been asked

to make any. Mr. Childers, who died before the completion of the

inquiry, left a Draft Report recommending that a special grant,

amounting to two millions a year, should for the future be allocated to

Ireland. The other six members, dividing into two groups of three, under

Lord Farrer and Mr. Sexton respectively, and stating their views in two

different Reports, all agreed that a form of Home Rule giving financial

independence to Ireland was the only solution of the difficulty.

The questions at issue were not at all obscure. Any apparent obscurity

was caused by the terms of reference to the Commission, which assumed

the permanence of the Union, while it was absolutely impossible for the

Commission, divided though its members were in politics, to start work

at all without, as they said, considering Great Britain and Ireland as

"separate entities." The reader must be on his guard against

exaggerating the "over-taxation of Ireland" in its purely cash aspect.

The really important points were: (1) The suitability of the Irish taxes

and the responsibility for levying them; (2) the amount and suitability

of the expenditure in Ireland and the responsibility for its

distribution. In order to see conflicting principles stated in their

clearest form the reader should compare the terse and vigorous reports

of Sir David Barbour on the one hand, and of Lord Farrer, Lord Welby,

and Mr. Currie on the other.

It was Sir David Barbour's great merit that he was not afraid of his own

conclusions. He frankly stated, like all the other Commissioners, that

Ireland's taxation, considered by itself, without regard to Irish

expenditure, was unsuitable and unjust. He recognized that a system of

taxation which was suitable for a rich, industrial, and expanding

country like Great Britain was unsuitable for a poor, agricultural, and

economically stagnant country like Ireland. He had before him the

figures showing that two-thirds of the Irish population was rural, and

that between three and four-fifths of the English population was

urban.[107] He laid special stress on the fact that five-sevenths of

Irish revenue, as compared with less than half the British revenue, was

derived from taxes on commodities of general consumption, pressing

heavily on the poor, and set forth the figures showing that the product

of these taxes represented a charge of £1 2s. 0.95d. per head of the

population in Ireland, and £1 1s. 0.05d. in Great Britain, although the

wealth per head of Great Britain, as he admitted, "was much greater than

the wealth of Ireland per head."[108] His conclusion was that this state

of affairs, though regrettable, could not be helped, because, under the

Union, whose permanence he took for granted, a change of general

taxation to suit Ireland was simply impracticable. He did, it is true,

point out incidentally that the same hardship might be said to affect

poor localities in Great Britain and poor individuals in Great Britain,

but he recoiled from the absurd fallacy involved in saying that on that

account Ireland was not unjustly taxed. If he had gone to that length he

could never have signed the unanimous Report.

I only mention this latter point because some outside critics have been

bold enough to assert the fallacy in its completeness, proving, as they

easily can, that the purchase of a pound of tea or a pint of beer is as

great an expense to a man with 10s. a week in Whitechapel as to a man

with 10s. a week in Connemara. Such reasoning nullifies the whole

science of taxation. It would be as sensible to say that our whole

fiscal system might wisely be transplanted in its entirety to any

foreign country or to any self-governing Colony absolutely irrespective

of their social and economic conditions and of their habits. Yet Ireland

in these respects has always differed from Great Britain at least as

much as any self-governing Colony and many European countries. The

tea-tax produces scarcely anything in France; it produces an enormous

amount relatively in Ireland, and is a greater burden there than in

Great Britain. The wine-tax is not felt by Ireland; it is felt more by

England; it would cause a revolution in France. Beer is taxed lightly in

the United Kingdom, but the Irishman drinks only half as much beer as

the Englishman. Meat is untaxed, but the Irish poor eat no meat. Spirits

and tobacco are highly taxed, and they are consumed more largely in

Ireland than in England. And so on. The whole Commission recognized that

the circumstances of the two countries were different, and stated "that

identity of rates of taxation does not necessarily involve equality of

burden."

Nor could Sir David Barbour have dissociated himself from these

conclusions without destroying the rest of his argument. He pointed out

with truth that merely to reduce Irish taxation to its correct level,

and to leave Irish expenditure where it was, would be to wipe out

Ireland's contribution to Imperial purposes and leave her with a subsidy

from Great Britain of three-quarters of a million. On the other hand, he

held, as I have already indicated, that unduly heavy taxation in Ireland

was already compensated for by an excess of local expenditure in Ireland

as compared with Great Britain. But how, on its merits, and apart from

the question of taxation, could such an excess be justified? The Act of

Union had provided for indiscriminate expenditure in the event of a

fiscal union. Most of the other Commissioners, indeed, had objected to

the idea of distinguishing between "Imperial" expenditure and "local"

expenditure, and striking a balance called an "Imperial contribution,"

without, at the same time, distinguishing politically between Ireland

and Great Britain. In other words, they took up the not very logical

position that Ireland must be considered as a separate entity for

purposes of finance owing to the phrase about "abatements and

exemptions," but not for purposes of expenditure. Whether this was a

correct interpretation of the Act of Union has always been a matter of

dispute, but the practical problem is little affected thereby. Sir David

Barbour thought it an incorrect interpretation, and reached the more

logical position that Ireland, both for revenue and expenditure, could

be regarded as a separate entity. This view enabled him to put forward

an argument which, while ostensibly palliating the over-taxation of

Ireland, in reality condemned the whole of the political system

established by the Union. We can, he said, in effect, rightly

distinguish between Imperial and local expenditure, and it is

permissible to spend more on Ireland than on Great Britain. By so

spending more we not only cancel our debt to Ireland, but make her a

present of a million which would otherwise go to swell her contribution

to Imperial purposes. Now, to get at the pith of this argument, the

reader must bear in mind what Sir David Barbour thought it needless to

remark upon, that Ireland had, and has, a separate quasi-colonial system

of administration of her own, but outside her own control, a system of

which he approved. In other words, besides having to be considered in

finance as a "separate entity," she was to a large extent in actual

fact, politically, a "separate entity," though not a self-governing

entity, to which through the channel of the Irish Government Departments

a special large quota for local expenditure could be easily allocated.

As an economist, therefore, and as an upholder of the strangely

paradoxical system set up by the so-called "Union," Sir David Barbour

was absolutely consistent.

So were Lord Farrer, Lord Welby, and Mr. Currie in coming to

diametrically opposite conclusions. The crux of the discussion, stripped

of academical reasoning, was simple. Everything turned, obviously, on

the nature, amount, and origin of Irish expenditure. Sir David Barbour

had passed lightly over these vital points, recommending only that any

future _saving_ of expenditure in Ireland ought to be used for Irish

purposes--a further admission of Ireland's separate political

existence--and shutting his eyes to future _increases_ of expenditure.

Lord Farrer and his colleagues, while agreeing that it was impossible to

alter the taxation of Ireland so long as the Union lasted, agreed that

additional local expenditure in Ireland could not be regarded as a

set-off to undue taxation, not only because such a doctrine was

inherently fallacious on economic grounds, and would hardly be listened

to in the case of any other country than Ireland, but because Irish

expenditure was subjected to no proper means of control. Both Irish

revenue and Irish services, the former being only theoretically, the

latter actually, distinct and separate, were outside the control of

Irishmen, who had therefore no motive for economy. Nor was there any

proper measure of determining what expenditure was good for Ireland and

what was bad, though they held that there was reason to believe that

much of Irish administration was both bad and costly. With regard to the

extensive system of Imperial loans, whose charge swelled the Irish

expenditure, they quoted the unchallenged evidence of Mr. Murrough

O'Brien[109] to the effect that the system of Imperial loans for

temporary emergencies and charity loans--"made to keep the people quiet

or to keep them alive"--tends to increase the poverty of Ireland, "does

not prevent the recurrence of famine, distress, and discontent," and

that "a great deal of the money nominally meant to be spent on

productive works has been misspent and wasted." They also dwelt, with

emphasis, on official figures showing the extravagance of Civil

Government in Ireland, the cost having risen from 1s. 10d. per head of

the population in 1820 to 19s. 7d. per head in 1893, whereas the cost of

Civil Government in Great Britain had only risen from 1s. 7d. to 11s.

5d. The charge for legal salaries and five principal Departments in

Ireland was double the right figure according to population, and

represented an excess cost of nearly £200,000. In wealthy and

progressive Belgium, Civil Government cost 10s. per head, or little more

than half as much per head as in Ireland.[110] The absurdity of

representing such excess charges and the wasteful expenditure of a

blundering philanthropy, as a recompense for over-taxation, was

manifest.

Meanwhile, the rise in the cost of Irish Government, coupled with a

stagnant revenue, had decreased the annual contribution of Ireland to

Imperial services, which had fallen from five and a half millions in

1860 to two millions in 1894; unless, indeed, half the cost of Irish

police, virtually a branch of the Imperial Army, and costing double the

amount of Scottish and English police, were to be reckoned, not as an

Irish expense, on the principle adopted by the Treasury, but as a part

of Imperial expenditure. In any case both partners suffered from

excessive and unwise expenditure in Ireland.

The gist of their conclusions was as follows:[111]

1. It is impossible, under the Union, to vary taxation for the benefit

of Ireland.

2. Additional benevolent expenditure in Ireland is not a remedy for

over-taxation.[112]

"We entertain a profound distrust of benevolences, doles, grants-in-aid,

by whatever name they are called, ... or by whatever machinery it is

proposed to distribute them, convinced, as we are, that in some form or

other political influence or personal interest will creep in so as to

defeat, in part at any rate, the attainment of the objects for which the

expenditure is made."

3. "We believe that the expenditure of public funds cannot be wisely and

economically controlled unless _those who have the disposal_ of public

money are made _responsible_ for raising it as well as spending it."

Grants of money "tend to weaken the spirit of independence and

self-reliance," the absence of which qualities "has been the main cause

of the backward condition" of Ireland.

4. "One sure method of redressing the inequality which has been shown to

exist between Great Britain and Ireland will be to put upon the Irish

people the duty of levying their own taxes and of providing for their

own expenditure."

5. "If it is objected that the course we suggest may lead to the

imposition of new Customs duties in Ireland, we might reply that in this

case, as in that of the Colonies, _freedom is a greater good than free

trade._ We doubt, however, whether Irishmen, if entrusted with their own

finance, would attempt to raise fiscal barriers between the two

countries; for we are satisfied that Ireland, and not Great Britain,

would be the loser by such a policy. The market of Great Britain is of

infinitely greater importance to Ireland than that of Ireland to Great

Britain." The only point on which the three Commissioners differed

concerned Ireland's contribution to Imperial services. Lord Farrer and

Mr. Currie, taking Home Rule as the foundation of their argument, and

prophesying, quite correctly, that under the Union, in a few years,

Ireland's contribution would disappear altogether, recommended that no

such contribution should be exacted by law until Ireland's taxable

capacity approximately reached that of Great Britain. Lord Welby,

regarding Home Rule as an essential but a distant ideal, was for an

immediate reorganization of Anglo-Irish finances which should provide

for a large reduction of Irish Civil expenditure, the saving to be

devoted, on Sir David Barbour's principle, to Irish purposes, and for a

fixed contribution from Ireland to the Army, Navy, National Debt, etc.

How Lord Welby, consistently with his previous argument, could count

upon any reduction of expenditure in Ireland under the existing

political system it is difficult to see. At any rate, subsequent events

proved both him and Sir David Barbour signally wrong on this important

point.[113]

In every other point the wisdom of the three Commissioners has been

abundantly proved by lapse of time. Do not the conclusions set forth

above bear upon them the stamp of common sense? If it were not for the

inveterate prejudice against Home Rule on other than financial grounds,

no one would dream of disputing them; for they are based on principles

universally accepted in every part of the British Empire but Ireland,

and in most parts of the civilized world. They constitute, in fact,

financially, one of the strongest arguments possible for political Home

Rule.

There, at any rate, lies a clear issue. Seventeen years have not altered

the essential principles involved. On the contrary, it will be seen that

every year of the seventeen has strengthened the argument of Lord Farrer

and his colleagues, and weakened the argument of Sir David Barbour. But,

before proceeding to this final demonstration, let me in general terms

describe what befell the Royal Commission's Report, which was published

in 1896. For a moment all Ireland, irrespective of class or creed, was

alight with patriotic excitement. Few listened to Sir David Barbour's

view, namely, that so long as Irish expenditure came near Irish revenue

there could be no Irish grievance. Home Rulers and Unionists met on

friendly platforms to denounce the over-taxation of Ireland and to

display figures showing the hundreds of millions of profit made by

Great Britain out of an unconscionable fiscal bargain. This criticism

missed the real point and the unanimity was short-lived. No change could

be made in the system without Home Rule, and the dissension about Home

Rule was strong enough to prevent Irishmen from uniting against a fiscal

system which was not only unjust but demoralizing to Ireland. A Unionist

Government was in power for nine more years after 1896, and a Liberal

Government, pledged temporarily not to give Home Rule, for four further

years. The natural result was that, in default of Home Rule, all parties

in Ireland embraced Sir David Barbour's insidiously attractive

reservation, and have ever since fallen into the habit of regarding

additional expenditure on Ireland, not only on its merits, but as a

set-off to excessive taxation and as something having no relation

whatever to the taxable resources of the country. Nobody took seriously

Sir David Barbour's counsel of perfection about the reduction of the

cost of Irish Civil Government and the allocation of the saving to

Ireland, because such a process was, humanly speaking, impossible.

Expenditure is never reduced except by those who raise the money for it.

On the other hand, in the face of the findings of the Royal Commission,

and in the face of Ireland's economic condition, no Government which

refused Home Rule could have refused large additional Irish expenditure.

Much of it, indeed, was merely an automatic reflection of the immense

growth of national expenditure in the wealthy and expanding

partner-country over the water, and took the form of "equivalent

grants," whether for the corresponding British head of expense or for

something totally different. No doubt some of the money was well spent,

but all of it came in a wrong form, through wrong channels, and was

regarded in Ireland in a false light. Lastly came Old Age Pensions

applied on the British scale to a far poorer population.

Every word of Lord Welby's and Lord Farrer's condemnation was justified

by events; every prophecy they made has been fulfilled. And the worst of

it is that the delay has damaged the prospects of Home Rule. The habit

of dissociating income from revenue becomes inveterate. The habit of

nursing an old grievance and of expecting "restitution" for funds

unwarrantably levied in the past is hard to shake off. Restitution has

gone too far already. Perpetuated, it would ruin Ireland. Home Rulers

worth their salt must leave this cry to those Unionists who descend to

use it; but it is surely amazing that any Irishman, least of all those

who claim to represent the wealth and intelligence of the country,

should tolerate a political system which inexorably involves a fiscal

system so humiliating to Ireland. Until three years ago it could easily

have been put an end to without affecting the independent solvency of

Ireland, even on the basis of an enormously swollen civil expenditure,

and with the inclusion of services strictly Imperial in origin and

character. Now it is a different matter, and we are faced with the

opposition of British statesmen who, by sustaining the Union, drove

Ireland to the verge of insolvency, and now use insolvency as an

argument against Home Rule.

One respects the clean and honest side of Unionism, but there can be

nothing but reprobation for the meanness of this latter-day argument.

For generations Ireland herself has asked to be free both from coercion

and bribes, sanely conscious in her soul that both are equally

demoralizing. The aim--though in the past not generally the conscious

aim--of Unionism was to sap the moral fibre of Ireland now by one means,

now by the other. At last the aim is avowed, so that men who applauded

Mr. Chamberlain in 1893 for sneering at Irish patriotism as a "sickly

plant which needed to be watered by British gold" merely because her

contribution under the Home Rule Bill was to be small are now urging

Ireland to maintain the Union--in Mr. Walter Long's words--for its

"eleemosynary benefits."[114] Ireland herself must and will rise to a

higher moral level than that, when she is fully awake to the gravity of

the situation. Those who love her most will not lose a minute in

explaining that situation. Too much time already has been lost.

FOOTNOTES:

[97] The Treasury Returns of 1869, "Public Income and Expenditure," in

two volumes, are the basis of all information up to that date.

[98] Mr. Secretary Pelham in this year estimated that Ireland, though

contributing nothing in money to the Navy, had furnished no less than

38,000 men to the Navy since the beginning of the war.

[99] Pre-Union Debts were to be separate. Post-Union Debt _contracted

for Imperial services_ was to be regarded as joint, and its charge was

to be borne by the two countries in the proportions of their respective

contributions (see below); but post-Union Debt contracted by Ireland for

domestic services was to be kept separate.

[100] Eight lectures delivered in the National University, Dublin, in

1911.

[101] Inhabited house duty, railway passenger tax, carriages, armorial

bearings, etc. The license for dogs is half the English scale.

[102] On Foster's Corn Law of 1784, see p. 51.

[103] The text of the unanimous conclusions was as follows:

1. That Great Britain and Ireland must, for the purpose of this inquiry,

be considered as separate entities.

2. That the Act of Union imposed upon Ireland a burden which, as events

showed, she was unable to bear.

3. That the increase of taxation laid upon Ireland between 1853 and 1860

was not justified by the then existing circumstances.

4. That identity of rates of taxation does not necessarily involve

equality of burden.

5. That, whilst the actual tax revenue of Ireland is about one-eleventh

of that of Great Britain, the relative taxable capacity of Ireland is

very much smaller, and is not estimated by any of us as exceeding

one-twentieth.

[104] Detailed criticism of the current Treasury accounts under this

head will be found on pp. 276-278.

[105] A referendum taken on April 13, 1910, defeated the new proposals.

See "Report of Premiers' Conference held at Brisbane, May, 1907"

(Commonwealth Parliamentary Sessional Paper, No. 13, 1907), and for a

clear statement of the whole subject, the "Year-Book (1911) of the

Commonwealth of Australia." (The relevant clauses of the Constitutional

Act are Nos. 88 to 93.) The reasons for the failure of the system were

summarized as follows:

"1. The trouble and expense which the necessary record entails.

"2. The practical impossibility of ensuring that in every case a

consuming State will be duly credited with revenue collected on its

behalf in a distributing State.

"3. The difficulty involved in equitably determining the amount to be

debited to the several States in respect of general Commonwealth

expenses.

"4. The uncertainty on the part of the State Governments as to the

amount which will become available.

"5. The impossibility of securing independent State and Commonwealth

finance."