THE PRESENT FINANCIAL SITUATION
I.
ANGLO-IRISH FINANCE TO-DAY.
The finances of Ireland since the Union, when reviewed by the Royal
Commission in 1894-1896, exhibited five principal features:
1. A declining population.
2. An estimated true taxable capacity falling as compared with that of
Great Britain, and standing in 1893-94 at a maximum of 1 to 19.
3. A revenue stationary for thirty-four years, and showing in 1893-94 a
ratio of 1 to 12 with that of Great Britain.
4. A growing local expenditure (though stationary for the last four
years).
5. A dwindling net contribution to Imperial services (though stationary
for the last four years).
If we review the subsequent seventeen years, we find:
1. A population still declining, though at a slower rate.
2. An estimated true taxable capacity still falling as compared with
that of Great Britain, and now standing at a maximum of 1 to 24.[115]
That is, Ireland ought strictly to be paying no more than
one-twenty-fifth of the United Kingdom revenue.
3. A revenue rising, but very slowly and inelastically as compared with
that of Great Britain, and now showing a ratio of 1 to 15; so that the
"over-taxation" of Ireland, as reckoned on the Royal Commission's
principles, is still at least three millions.[116]
4. A local expenditure growing rapidly and disproportionately to Irish
revenue; now just double the expenditure of 1893-94.
5. A net contribution to Imperial services automatically diminishing
with the growth of Irish expenditure, disappearing altogether in
1909-10, and now converted into an adverse balance against Ireland of
£1,312,500.
In Great Britain during the same seventeen years, population, taxable
capacity, revenue, expenditure, and net contribution to Imperial
services have all grown steadily, and, what is more important, in
healthy proportions to one another.
On the next page will be found the comparative figures for Ireland and
Great Britain of revenue, expenditure, and contribution for 1893-94 and
1910-11.
Let me remark at the outset _(a)_ that they and other official figures
given in this chapter are taken from the annual Treasury returns alluded
to at p. 242, "Revenue and Expenditure (England, Scotland, and Ireland)"
and "Imperial Revenue (Collection and Expenditure) (Great Britain and
Ireland)." For the current year 1910-11 the official numbers of these
Returns are 220 and 221, and the latter of the two is virtually a
continuation of the original return, No. 313 of 1894; _(b)_ that the
non-collection of a large part of the revenue of 1909-10, owing to the
delay in passing the Budget, makes the revenue figures of the last two
years, regarded in isolation, misleading; those of the first year being
abnormally low, those of the last abnormally high. I therefore give the
mean figures of the two years. Expenditure is, of course, unaffected,
_(c)_ That the Irish revenue shown as "true" is reduced by heavy
deductions from the revenue as actually collected in Ireland. At p. 244
I explained that this adjustment can be regarded only as approximately
correct, owing to the admittedly unreliable methods adopted by the
Treasury, _(d)_ That the revenue shown includes non-tax as well as tax
revenue.
Ireland. Great Britain.
1893-94. 1910-11. 1893-94. 1910-11.
Population 4,638,000 4,381,951 33,469,000 40,834,790
(estimated)
"Collected" revenue £9,650,649 £11,704,500 £88,728,428 £156,574,250
(including non-tax (mean of two (mean of two
revenue) years, 1910- years, 1910-
11, 1909-10) 11, 1909-10)
"True" revenue £7,568,649 £10,032,000 £89,286,978 £155,137,250
(including (mean of two (mean of two
non-tax revenue) years, 1910- years, 1910-
11, 1909-10) 11, 1909-10)
Local Expenditure £5,602,555 £11,344,500 £30,618,586 £60,544,000
Contribution to £1,966,094 Nil[A] £58,668,392 £94,593,250
Imperial Services
[A] Local Expenditure in excess of "true" revenue (as averaged for
years, 1910-11, 1909-10): £1,312,500.
Irish expenditure has been rapidly overtaking Irish revenue during the
last three years. In 1907-08 there was a balance available for Imperial
services of £1,811,000; in 1908-09, of only £583,000; and in 1910-11, on
the basis of a mean of that and the previous year, the deficit shown
above of £1,312,500. The principal cause is the Old Age Pensions Vote,
which began in 1908.
If all the elements of the problem be considered together, it will be
seen that the fiscal partnership is as ill-matched as ever, and has
produced results increasingly anomalous. Each of the partners and their
united interests suffer. Ireland is still more heavily taxed relatively
to Great Britain, yet Ireland's contribution to Imperial services has
been converted into a minus quantity. Why? Because Irish expenditure,
paid out of the common purse, has doubled, while Irish revenue has
increased by less than a third.
Let me give the final survey of Anglo-Irish finance since the Union, in
the tabular form shown by Professor Oldham at the meeting of the British
Association in September, 1911:
NET BALANCES PAID BY IRELAND TO GREAT BRITAIN.
Single Irish "True" Expenditure Balance Decadal
Year. Revenue. in Ireland. One Year. Balance.
£ £ £ £
1819-20 5,256,564 1,564,880 3,691,684 36,916,840
1829-30 5,502,125 1,345,549 4,156,576 41,565,760
1839-40 5,415,889 1,789,567 3,626,322 36,263,220
1849-50 4,861,465 2,247,687 2,613,778 26,137,780
1859-60 7,700,334 2,304,334 5,396,000 53,960,000
1869-70 7,426,332 2,938,122 4,488,210 44,882,100
1879-80 7,280,856 4,054,549 3,226,307 32,263,070
1889-90 7,734,678 5,057,708 2,676,970 26,769,700
1899-1900 8,664,500 6,980,000 1,684,500 16,845,000
Averaged Balances for 90 years 315,603,470
Add, Actual Balances, 1900-09 16,214,000
Net Payments, in 99 years 331,817,470
Deduct Drawings, deficit of 1909-10 2,357,500
Net Payments, in 100 years 329,459,970
Add, Actual Balance, 1910-11 321,000
Net Balances paid by Ireland to Great Britain, 1809-1911 329,780,970
What has become of Sir David Barbour's argument in favour of the
existing fiscal system? He admitted that Ireland was overtaxed by two
millions and three-quarters. But he showed, it will be remembered, that
if not only the revenue, but the expenditure and contribution to
Imperial services had all been in proportion to Ireland's real taxable
capacity of one-twentieth, she would have been a loser by a
million.[117] Ireland, therefore, he argued, had certainly no grievance,
while Great Britain received the substantial, though not strictly
sufficient, sum of two millions as Ireland's contribution to Imperial
expenses.
Let us apply the same reasoning to the present situation. Ireland, by
hypothesis, is "overtaxed" by three millions,[118] but if not only the
revenue, but the expenditure and contribution to Imperial services of
Ireland were all in proportion to her real taxable capacity, which we
may estimate now at one-twenty-fifth, we find that she would be a loser
by five millions. Her "true" revenue from all sources _ought_ on this
supposition to be £6,605,900; it _is_ £10,032,000. Her local expenditure
_ought_ to be £2,875,540; it _is_ £11,344,500. Her contribution to
Imperial services _ought_ to be £3,730,360; it _is_ a minus quantity of
£1,312,500. Sir David Barbour's reasoning, then, leads us to this
astounding paradox, that Ireland, while overtaxed by three millions,
gains five millions by the arrangement. Moreover, whether we accept Sir
David Barbour's reasoning or not, it is a fact that to-day Ireland,
which contributed to Imperial services five and a half millions in 1860,
and two millions in 1894, now, so far from contributing anything, costs
a million and a quarter more than she brings in. This, certainly, was
not a result he either anticipated or would have approved of. On the
contrary, he anticipated a reduction in Irish civil expenditure, to be
saved for Irish purposes, without prejudice to the Imperial
contribution. It makes the brain dizzy to compare his anticipation with
the reality.
How, on the other hand, stands the argument of Lord Farrer and Mr.
Currie? They prophesied a great increase in Irish expenditure and the
disappearance of the contribution to Imperial services. That has come
true. Lord Welby (and indeed the majority of the Commission) was with
them in declining to regard excessive local expenditure as a set-off to
excessive and unsuitable taxation, and in condemning root and branch the
system of grants, aids, and doles as wasteful in itself and as sapping
the self-reliance of Irishmen. There again they were right. They were at
one with all their colleagues in holding that under the Union it was
impossible to differentiate between the taxation of Ireland and Great
Britain, and they prescribed, as the only sound remedy, Home Rule. Once
more they were right.
The figures of to-day constitute the _reductio ad absurdum_ of the
Union. For over a century in Ireland we have defied the laws of
political economy, but they have conquered us at last. Sound finance
demands that revenue and expenditure should be co-related. Ireland's
economic circumstances are widely different from those of Great Britain,
but she has been included, without any regard to her needs and without
any reference to Irish expenditure, in a system of taxation designed
exclusively for the capacities and needs of Great Britain. Hence Irish
revenue is both excessive and inadequate.
"Excessive"? "Inadequate"? What do these terms really mean? Let us once
and for all clear our minds of all obscurity and look the facts in the
face. No one knows what Irish revenue and expenditure ought to be, or
would be, if Irishmen had controlled their own destinies. It is useless
to parade immense sums as the cash equivalent of over-taxation; it is
idle to array against them rival figures of over-expenditure. Normal
Irish revenue and normal Irish expenditure are matters of speculation.
For all we know, Ireland, had she been permitted normal political
development, would be raising a larger revenue, and feeling it less;
while it is absolutely certain that she would be paying her own way and
contributing to Imperial services more, in proportion to her resources,
than she did before the Union. The political and therefore the economic
development of Ireland have been deliberately and forcibly arrested. I
do not say malignantly, because there was no malignant intention. But
the action, if mistaken, was deliberately and consistently sustained.
Much of Irish industrial talent was lost irrevocably before the old
industrial restrictions were removed. There remained the land, an
immense source of potential wealth, if properly developed under a
rational system of agrarian tenure. For the best part of a century after
the Union, the agrarian tenure, dating from the first genuine
colonization of Ireland, when the land was confiscated wholesale and the
peasantry enslaved, was maintained by force of arms. Thirty years ago
(if we date from the Land Act of 1881) we began to change this tenure
into another equally defective, though far more favourable to the
tenant. A little later, but only eight years ago, on a thorough and
systematic scale, we began the parallel policy of Land Purchase. Even
now, having transferred half the land to peasant ownership, and placed
the other half under judicial rents, many of our statesmen are unwilling
to give Ireland the control of its own affairs. On the contrary, step
by step with the economic enfranchisement of the farmers, has gone the
policy of destroying their personal and political independence, and
forcing them to look outside their own country for financial aid, by
spending money upon Ireland which Irishmen have no direct responsibility
for raising. What a travesty of statesmanship! First, having assisted
the farmer to buy his own land, to clap him on the back with "Now, my
fine fellow, you are a free man." In the same breath to tell him that he
is not fit to have a direct voice in the management of his own country's
affairs, and to try and reconcile him to this insult by sapping that
very independence of character which the acquirement of a freehold has
begun to instil in him.
I described in Chapter IX. how a number of patriotic Irishmen, working
both at industrial and agricultural development, have striven to
counteract this fatal tendency, and to persuade their countrymen to rely
on themselves alone. But I venture to repeat what I said then, that
without the bracing discipline of Home Rule, and, above all, of the
financial Home Rule, these efforts are doomed to comparative failure.
It is absolutely necessary to produce an equilibrium between revenue and
expenditure in Ireland, as in every other country in the world. Whatever
the temporary strain upon Ireland, whatever the sacrifices involved, the
thing must be done, and done now or never. Great Britain's interest is
something, but it is trivial beside that of Ireland. The situation is
growing worse, not better, and Irishmen should unite to insist that the
whole system should stop.
II.
IRISH EXPENDITURE.
Let us look a little more closely at Irish expenditure, as disclosed in
the Treasury returns.
For purposes of comparison, I set out first the main heads of Civil
Expenditure for England, Scotland, and Ireland in the year 1910-11:[119]
Population. England, Scotland, Ireland,
36,075,269. 4,759,521. 4,381,951.
£ £ £
Civil Government Charges, 1910-11:
(_a_) On Consolidated Fund:
(1) Civil List, Salaries, Pensions,
and Miscellaneous Charges 340,500 148,000 138,500
(2) Development and Road
Improvement Funds
(3) Payments to Local Taxation
Accounts, etc. 7,199,500 1,204,500 1,477,500
(_b_) Voted 26,121,500 4,180,500 8,026,000
Total Civil Government Charges 33,661,500 5,533,000 9,642,000
Customs and Excise and Inland Revenue 3,157,000 464,000 298,000
Post Office Services 15,798,500 1,930,000 1,404,500
Total Expenditure 52,617,000 7,927,000 11,344,500
£ s. d. £ s. d. £ s. d.
Per head of population 1 9 2 1 13 31/2 2 11 9
The totals, if we consider relative populations, appear startling.
Look at the third, or Irish, column, and set aside the two last items,
"Customs, Excise, and Inland Revenue," and "Post-Office Services," which
represent the cost of collecting Irish Revenue and maintaining the Irish
postal, telegraph, and telephone services. We may note in passing,
however, that the Post-Office receipts in Ireland in 1910-11, according
to the Treasury estimate, were less than the outgoings by £249,000
(receipts, £1,155,500; outgoings, £1,404,500).
The Civil Government Charges are the most important heads of expense,
and these are divided into two main classes: (_a_) charged on
Consolidated Fund; (_b_) Voted.
Class (_a_) consists of (1) Salaries, Pensions, etc.; (2) Development
and Road Improvement Funds; (3) Payments to Local Taxation Accounts.
In other parts of Return No. 220 will be found the details of
expenditure in these various classes:
(1) The Salaries and Pensions need not detain us long. The principal
item is judicial salaries, £102,000, as compared with £282,000 for
England, which has more than eight times the population of Ireland.
Another item, £20,000 for the Lord-Lieutenant, is double the sum
allotted to any Colonial Governor, even of the Dominion of Canada, which
has nearly twice the population of Ireland. But the extravagance lies,
not in the cash amount, but in the fact that the Irish Lord-Lieutenancy
is, under present conditions, an anomalous institution. No Irishman
would grudge a penny of the sum if the Lord-Lieutenant, like a Colonial
Governor, presided over a responsibly governed Ireland.
(2) Road Improvement and Development Funds. This category is blank for
the year 1910-11. There will be payments for the current year which will
swell the Irish expenditure.
(3) Payments to Local Taxation Accounts, £1,477,500. This raises an
intricate subject, into which I cannot enter in great detail. It is well
known that the whole system of relieving local taxation out of Imperial
taxation needs thorough revision. Meanwhile Ireland, like other parts of
Great Britain, has been allotted at various times a multitude of
different grants under various Acts, but principally under the Local
Government (Ireland) Act, 1898, and the Finance Acts of recent years.
Local Government on the British pattern was, as I have already
described, extended to Ireland only in 1898. The money now raised in
Ireland by Local Taxation is about £4,800,000, exclusive of the Grants
in Aid which we are now considering, and which appear, rightly, on the
national balance-sheet because they come from the common purse.[120]
They are based on different principles, and originated in many different
ways. Some are fixed annual sums, determined either by some arbitrary
standard or (as in the case of the Licence Duty grants and the Customs
and Excise grants[121]) on the Irish proceeds of certain duties in a
year taken as standard. The Estate Duty grants still vary with the total
product of duties in the United Kingdom, and are still allocated on the
proportion settled by Mr. Goschen in 1888--namely, 9 parts to Ireland,
11 to Scotland, and 80 to England.[122] If the proportion were to be
revised now, and, on Mr. Goschen's method, made to correspond to the
respective estimated contributions to Imperial Services, Ireland,
instead of getting £418,000, would get nothing at all. The largest item
in the list--namely, the "Agricultural Grant," a fixed annual sum of
£728,000, dating from the Local Government Act of 1898--was designed
partly to reconcile Irish landlords to the passage of that Act. Nearly
half of it represented the remission of the landlord's half-share of the
poor-rate on agricultural land, as estimated in the standard year
1896-97. The English precedent for this was the Agricultural Rates Act
of 1896, which relieved the English owner of agricultural land in a
similar way. Irish conditions were so different, however, that it was
felt necessary in this case to balance the landlord's boon with an
equivalent boon to the tenant; so that half the tenant's share of the
county cess was also remitted. The result was a disproportionately large
grant as compared with those received by England and Scotland.[123] We
must remark, as one of the minor intricacies of Irish finance, that all
these grants do not actually go in relief of Local Taxation. Some of
them are diverted to public Departments, such as the Board of
Intermediate Education, the Congested Districts Board, and the
Department of Agriculture.
All these grants will cease, as such, after Home Rule, while their
amount must be reckoned as part of the cost of Irish Government. The
Irish Parliament will have to revise the whole system of relief to Local
Taxation and establish it on some simple and rational basis. Meanwhile,
it is important to remember that the Irish grants form the major part of
the Guarantee Fund set up by the Land Purchase Acts, and, until the last
amending Land Act of 1909, were chargeable--the Estate Duties Grant, hi
the first instance, the Agricultural Grant in the second instance--with
the increasingly heavy losses incurred in floating Land Stock below par.
In 1908-09 the sums so withdrawn amounted to £90,000. That liability was
removed by Mr. Birrell's Act, and they now remain chargeable only with
any arrears in the annuities paid by the purchasing tenants. This is a
negligible liability, and should properly be placed upon the Irish
Government as a whole, which, if it pleased, could recover the money
from localities.[124]
We now reach the category _(b)_ "Voted," and find in the Irish column
the truly enormous sum of £8,026,000--nearly double that of Scotland
(£4,180,500), which has a population slightly greater, and more than a
third of that of England (£26,121,500), which has a population eight
times as great.
When we search the various tables of detailed expenditure, three
prominent items arrest our attention:
Constabulary and Dublin Metropolitan Police[125] £1,464,500
Old Age Pensions £2,408,000
Public (_i.e._, Primary) Education £1,632,000
£5,504,500
Those three items may be said to epitomize the history of Ireland under
the Union--coercion, pauperization, deficient education. The first two
are, of course, intimately connected. The existing cost of police,
surviving needlessly at the monstrous figure shown, represents the past
cost of enforcing laws economically hurtful to Ireland. The economic
hurt is reflected in the cost of Old Age Pensions paid to a
disproportionately large number of old people, below the official
standard of wealth, in a country drained by emigration for seventy years
past of its strongest sons and daughters. Police in Ireland costs twice
as much as in England and Scotland, where (with the exception of the
_London Metropolitan Police_) it is a local, not a national charge,
while Irish Old Age Pensions cost in 1910-11 more than twice as much as
Scottish Pensions, and amounted to two-fifths of English Pensions.[126]
With full allowance for excess payments owing to the lack of all birth
records prior to a certain date, the Irish figure is relatively
enormous. It is £100,000 greater than the whole cost of Irish Government
in 1860, and, with the addition made in the estimates of the present
year, it is just a million more than what, according to Sir David
Barbour's reasoning, would have been the whole cost of Irish Government
in 1893-94, had Irish expenditure, like Irish revenue, been in
proportion to the taxable capacity of Ireland.
I touched upon the Irish aspect of the policy of Old Age Pensions at p.
181. Whatever the pecuniary charge, I suggest that it is absolutely
necessary for Ireland in the future to control both payment and policy,
and she might find it in her best interest, with due notice and due
regard to present interests, to halve the scale of pensions. It is not a
question of the general policy of Old Age Pensions, but of the
applicability of a certain scale to Ireland, where agricultural wages
(for example) average only 11s. 3d. as compared with 18s. 4d. for
England, and 19s. 7d. for Scotland.[127] Of all ways of remedying a
backward economic condition, that of excessive pensions is the worst.
The cost of Irish Primary Education--£1,632,000, as I pointed out in
Chapter IX.--is at once too high and too low; too high in the sense that
much of it is wasted owing to the lack of popular control, too low in
the sense that it is a scandal to spend nearly as much on police as on
the education of children, and £800,000 more on Old Age Pensions than on
the education of children. If part or even the whole of the additional
expense eventually necessary is raised by rates, so much the better.
Accurate comparison is difficult with the English and Scottish
expenditure on elementary education, because the greater part of the
cost in those countries is borne by private endowments and local rates,
whereas in Ireland no local rate is raised for elementary education,
there are no endowments, and private subscriptions are very small.[128]
It is certain, however, that far greater sums, in proportion to
population, are spent in England and Scotland than in Ireland. This is
little to be wondered at if we consider the painful history of education
in Ireland; but we cannot recall the past, and, as I urged in Chapter
IX., one of the first duties of a free Ireland will be to improve the
education of the children.
The Irish vote for Universities and Colleges, £166,000, has been swelled
by the recent establishment of the National University. No item in the
whole list represents money better spent.
With regard to other Irish services, I shall make use, with Professor
Oldham's consent, of some interesting tables compiled by him, showing
the principal variations in Irish expenditure since the year
1891-92.[129]
They include certain expenses which I have already alluded to, and
others which I shall have to remark upon further, besides giving a
general view of the growth in the cost of Irish government. Neither of
lists A or B is exhaustive:
A. INCREASES OF EXPENDITURE.
1910-11. 1891-92.
£ £
1. Old Age Pensions 2,408,000 --
2. Primary Education 1,632,000 843,755
3. Universities and Colleges 166,000 26,000
4. Payments to Local Taxation Account 1,477,500 399,260
5. Ireland Development Grant 191,500 --
6. Post Office 1,404,500 749,046
7. Cost of collecting Irish Revenue 298,000 223,362
8. Surveys of the United Kingdom 81,000 47,603
9. Land Commission 414,500 91,826
10. Department of Agriculture 415,000 44,630
11. Other items (five[130]) 240,500 172,918
--------- ---------
8,728,500 2,598,400
Nos. 1 to 4 I have already dealt with, but it is interesting to note the
contrasting figures of 1893-94.
No. 5. The Ireland Development Grant of £191,500 is interesting as an
example of the haphazard methods of Anglo-Irish finance. It is an annual
sum voted for various development purposes, and was originally
established (at the figure of £185,000) in 1903 as an equivalent for the
capitation grants for school attendance in England, given under the
Education Act of 1902 in lieu of school fees. In allotting the Irish
equivalent, Mr. Goschen's proportion of 80, 11, 9 was for the first time
condemned by all parties. What the proportion ought to be was a matter
of dispute, but it was fixed in this case on the basis of population.
Since the English grant has now risen to £2,500,000, the Irish
proportion therefore is now, strictly speaking, inadequate.
Nos. 6, 7, and 8 are examples of charges debited by the Treasury against
Ireland which are open to criticism as long as the Union lasts, and
which meet with much complaint in Ireland. Obviously, however, the first
two at any rate are charges which an Ireland financially independent
would have to bear.
No. 9. The Land Commission vote of £414,500 is of course the direct
result of an abnormally bad system, necessitating abnormal and costly
remedial administration. Ireland herself is not morally responsible for
a penny of it, but if she is wise she will shoulder the cost as a
corollary of responsible government. Small administrative economies may
be made, and the cost will disappear altogether with the completion of
Land Purchase, say in fifteen years, but in the immediate future no
reduction can be counted on with certainty. The figure given includes
the cost of the Land Commission proper, which deals with Judicial Rents
and manages finance, as well as the cost of the Estates Commissioners
who conduct the machinery of Land Purchase. It also includes losses on
the flotation of Land Stock at a discount, and the interest and
sinking-fund on the Stock raised to pay the bonus to landlords.
No. 10. The vote of £415,000 for the Department of Agriculture, whose
origin and functions I described in Chapter IX., does not accurately
show the actual cost of the Department, because it excludes the greater
part of an Endowment Income of £166,000 a year, derived partly from the
Irish Church Fund, partly from the Irish Local Taxation Account, and
partly from the interest on a capital endowment of £200,000, as well as
other small miscellaneous grants. But it includes a sum of about £44,000
for some museums, colleges, gardens, etc., whose English counterparts
are subsidized under different votes, as well as the sum of £144,000
for the Congested Districts Board.[131] Nor does this latter sum
represent the full cost of the Congested Districts Board, which has also
an Endowment Income from the Irish Church Fund of £41,250, a subsidy
from the Ireland Development Grant, and a fluctuating income from
various sources--rents, etc.
Part of the expense of the Department itself must be regarded as
abnormal, in view of the extraordinarily backward economic condition of
the country when it was founded. Nor, valuable as the Department's work
is, can it be safely assumed that the cost is not extravagant. As long
as any Department relies on an Imperial vote there can be no certainty
that the expenditure will be economical. The whole cost of the Congested
Districts Board is abnormal. Its very existence is evidence of the
failure of external government in Ireland, and, as I urged in Chapter
IX., the whole question of the treatment of the congested districts
needs thorough investigation at the hands of a responsible Irish
Government.
B. REDUCTIONS IN EXPENDITURE.
1910-11. 1891-92.
£ £
1. Relief of Distress 5,000 183,675
2. Pauper Lunatics Grant 111,655
3. Teachers' Pensions Grant 90,000
4. Railways (Ireland) Grant 61,000 341,934
5. Local Government Board 92,500 132,748
6. Chief Secretary's Offices 27,500 39,681
7. Registrar-General's Office 13,000 29,926
8. Justice and Police 2,090,500 2,129,849
--------- ---------
2,289,500 3,059,468
Most of these reductions are deceptive. No. 1 is the saving of an
abnormal grant, Nos. 2 and 5 signify mere transfers to Grants in Aid of
Local Taxation, No. 7 a transfer of duties to the Department of
Agriculture.
The table shows a total reduction of £769,968, while Table A shows a
total increase of £6,130,000. Together they account for an increase
since 1891-92 of £5,360,032.
Here is a similar table, confined to Justice and Police:
C. EXPENDITURE ON JUSTICE AND POLICE.
1910-11. 1891-92.
£ £
1. Judicial Salaries ... ... ... 102,000 110,244
2. Dublin Metropolitan Police ... 93,500 91,998
3. Royal Irish Constabulary ... ... 1,371,000 1,362,348
4. Judicial Pensions, etc. ... ... 15,000 18,656
5. Law Charges ... ... ... ... 65,500 71,977
6. Superior Courts Offices ... ... 110,500 116,851
7. County Courts Offices ... ... 109,000 112,895
8. Prisons, etc. ... ... ... ... 112,000 134,429
9. Reformatories, etc. ... ... ... 112,000 110,451
2,090,500 2,129,849
To Nos. 1, 2, and 3 I have already referred. The whole charge of two
millions, though it shows a slight decrease in twenty years, is grossly
out of proportion to the resources of Ireland. Under heads 6 and 7 are
included a number of posts which are notoriously little more than
sinecures.
To sum up once more, the cost of the Irish Government as paid out of the
common purse in the last completed financial year was £11,344,500, or £2
11s. 9d. per head of the population, as compared with a cost per head of
£1 9s. 2d. in England, and in Scotland of £1 13s. 31/2d. But this is not
the minimum figure with which we have to reckon in considering the Home
Rule scheme; some items show a marked increase in the Estimates of the
current year: (1) The increase in Old Age Pensions, not certain yet,
will be at least £250,000. (2) The Land Commission is £544,000, as
compared with £414,500. (3) Universities and Colleges, £186,256, as
compared with £166,000. (4) Department of Agriculture, £426,609, as
compared with £415,000. (5) Registrar-General's Office, £29,020, as
compared with £13,000. (6) Valuation and Boundary Survey, £44,581, as
compared with £30,000. (7) Public Works and Buildings in Ireland,
£273,370, as compared with £215,000. Even with allowance for
over-estimates, especially in the last of these items,[132] we must
anticipate an increase of nearly half a million under the above heads,
to which we must add £150,000 recently allocated by the Road Board to
Ireland for the year 1911-12, and £34,750 already allocated by the
Development Commissioners. If Ireland comes prematurely into the
National Insurance scheme, and assumes eventual financial responsibility
for her share of the cost, that will be an additional source of expense;
but it is to be hoped that her leaders, in common prudence, will
henceforth endeavour to stem the rising flood of Irish expenditure, and
so facilitate the retrenchments imperatively necessary under Home Rule.
As it is, the total outgoings of the current year (1911-12), swelled by
the increases shown above, will probably amount to £12,000,000, while
this total will in its turn be added to by the office costs of the Irish
Legislature and the salaries of Ministers.
The scheme framed cannot assume immediate economies, and a responsible
Ireland alone can decide the nature and extent of the drastic economies
which must be made in the future. Beyond the brief remarks and hints
made in the course of this chapter, I myself venture only to lay down
the broad proposition that, to the last farthing, Irish revenue must
govern and limit Irish expenditure. For any hardship entailed in
achieving that aim Ireland will find superabundant compensation in the
moral independence which is the foundation of national welfare. She will
be sorely tempted to sell part of her freedom for a price. At whatever
cost, she will be wise to resist.
If Irish revenue is to be the measure of Irish expenditure, it follows
that it must be wholly, or at any rate predominately, under Irish
control. Let us look a little more closely, therefore, into its amount
and composition.
III.
IRISH REVENUE.
As I have already pointed out, in order to arrive at the present revenue
of Ireland, our best course is to take the mean tax revenue of the two
years 1909-10 and 1910-11, and to add to it the non-tax revenue of
1910-11, which was, of course, unaffected by the delay in passing the
Budget of 1909. For clearness, however, I first set out separately the
Irish figures of these two years, distinguishing between tax revenue and
non-tax revenue, and giving the "collected" revenue and the "true"
revenue in different columns:
1909-10. 1910-11.
Revenue as Revenue as
Collected. "True." Collected. "True"
TAX REVENUE. £ £ £ £
Customs 2,742,000 2,755,000 3,103,000 2,977,000
Excise 4,487,000 2,898,000 5,826,000 3,734,000
Estate, etc., Duties 684,000 684,000 1,144,000 1,144,000
Stamps 293,000 315,000 326,000 351,000
Income Tax 388,000 451,000 1,825,000 2,164,000
Land Value Duties -- -- 1,000 1,000
Total Irish Revenue from
Taxes 8,594,000 7,103,000 12,225,000 10,371,000
NON-TAX REVENUE.
Postal Service 900,000 900,000 935,000 935,000
Telegraph Service 180,000 180,000 185,500 185,500
Telephone Service 30,000 30,000 35,000 35,000
Crown Lands 26,000 26,000 24,500 24,500
Miscellaneous 116,000 116,000 114,500 114,500
Total Irish Non-Tax
Revenue 1,252,000 1,252,000 1,294,500 1,294,500
Aggregate Irish 9,846,000 8,355,000 13,519,500 11,665,500
Revenue
Percentage of the Aggregate
Revenue of the
United Kingdom 7.52 6.38 6.57 5.67
On p. 276 are the details of the mean tax revenue, "collected" and
"true," of the two years 1909-10, 1910-11, with the non-tax revenue of
the latest year, 1910-11, added to them.
PRESENT IRISH REVENUE (MEAN OF THE LAST TWO YEARS).
Details of Revenue. Mean Collected Mean "True" or
Tax "Contributed" Tax
Revenue of the Revenue of the
Years 1909-10, Years 1909-10,
1910-11. 1910-11.
TAX REVENUE. £ £
Indirect{Customs 2,922,500 2,866,000
Taxation{Excise 5,156,500 3,316,000
(incl. licences
£284,500)
Total Indirect Taxation 8,079,000 6,182,000
{Estate Duties 914,000 914,000
Direct Taxation{Stamps 309,500 333,000
{Income Tax 1,106,500 1,307,500
{Land Value Duties 1,000 1,000
Total Direct Taxation 2,331,000 2,555,500
Total Tax Revenue 10,410,000 8,737,500
NON TAX REVENUE (1910 11).
Postal Service 935,000 935,000
Telegraph Service 185,500 185,500
Telephone Service 35,000 35,000
Crown Lands 24,000 24,500
Miscellaneous 114,500 114,500
Total Non Tax Revenue (1910 11) 1,294,500 1,294,500
Collected "True" or
Revenue "Contributed"
at the Revenue at the
Present Day. Present Day,
Aggregates 11,704,500 10,032,000
The two aggregate figures at the bottom, £11,704,500 and £10,032,000,
approximately represent the Treasury estimate of the "collected" and the
"true" revenue of Ireland, respectively, at the present day. They are
confirmed by the figures of previous years; for the average revenue of
the five years, 1904-09, was as follows: "collected," £11,320,000;
"true" or "contributed," £9,612,400, the new taxation of 1909-10 having
added £500,000 to the "true" revenue. I must again remind the reader,
however, that the figures are open to the criticism that the adjustment
between the "collected" tax revenue and the "true" revenue is inaccurate
owing to the methods employed by the Treasury. It will be observed that
the resulting net deduction from the "collected" tax revenue of to-day,
a deduction attributable, on the balance of the various figures, almost
exclusively to Excise,[133] and mainly to the Excise duty on spirits,
amounts to £1,672,500, and makes all the difference between the solvency
and insolvency of Ireland regarded as an independent financial unit. Her
expenditure, it will be remembered, was £11,344,500, her "collected"
revenue £11,704,500, leaving a surplus of £360,000, which becomes a
deficit of £1,312,500 if we reckon only the "true" or "contributed"
revenue of £10,032,000. On the other hand, the principle, as
distinguished from the methods of adjustment, is perfectly sound if we
wish to arrive at a correct idea of the financial position of Ireland.
The £1,672,500 virtually represents the duties on goods exported from
Ireland, and consumed in Great Britain, or rather the excess of these
duties over those levied on goods exported from Great Britain and
consumed in Ireland. The consumer pays the tax on dutiable commodities,
and a financially independent Ireland could not raise revenue twice over
from the same commodity. She would, for example, have to give a drawback
from the Excise duty on spirits exported to England, since a Customs
duty would be levied on its import into England. On the other hand, she
would be entitled to every penny of revenue derived from the tea and
sugar imported into and consumed within her borders, and to the full
income tax on property held by Irishmen.
Now, for two reasons, I do not propose to make any exhaustive inquiry
into the accuracy of Treasury adjustments for "true" revenue. My first
reason is, that full material for calculation cannot be obtained by any
private individual, and could not be obtained and worked up even by the
Treasury without an enormous expenditure of time and trouble. The most
careful inquiry I have seen is embodied in an exceedingly able pamphlet
by "an Irishman," entitled "The Financial Relations of Ireland with the
Imperial Exchequer," and I mention below a few of the criticisms made by
the writer. His and other investigations seem to prove that Irish
revenue is considerably underestimated, perhaps by half a million.[134]
My second reason is that errors of adjustment in either direction cannot
affect in any substantial way the kind of financial scheme we are to
adopt in the Home Rule Bill.
Let us fix our attention, then, on the second of the two columns in the
table on p. 276, showing the aggregate "true" revenue of Ireland at the
present day. Disregard the non-tax revenue from the various postal
services (which represents payment for services rendered, and is
swallowed up by an excess on the expenditure side of £249,000), and
examine the heads of tax revenue shown in the upper half of the column.
It will be seen that 70-75 per cent. of Irish "true" revenue is derived
from Customs and Excise duties, which, with the exception perhaps of
licence duties, may be classed as indirect taxation. The deduction for
"true" revenue, it will be observed, has considerably modified the
proportion, which for "collected" revenue works out at 77.61 per cent.,
or nearly four-fifths.
As the reader is aware, this is not a new feature in Irish finance. It
formed the basis of the Report of the Financial Relations Commission
with regard to the over-taxation of Ireland. Much the greater part of
Irish revenue, even since the abolition of protective duties and the
substitution of direct taxation, has always been derived from taxes on
articles of common consumption, the simple reason being that Ireland is
a country where there is little accumulated wealth from which to extract
direct taxation. In Great Britain, whose circumstances dictate the
finance of the United Kingdom, no less than 54.79 per cent. of the tax
revenue is derived from direct taxation, only 45.21 per cent. from
Customs and Excise.[135]
The Irish figures show that to retain in the hands of the Imperial
Parliament the control of Irish Customs and Excise will be to retain
almost paramount control over Irish revenue; to deny Ireland the main
lever she needs for co-ordinating her expenditure and her revenue, and
for making her taxation suitable to her economic conditions. It will be
to preserve the framework of a fiscal system which the highest financial
authorities have pronounced to be unfair to Ireland, and which
incontrovertible facts show to be uneconomical both for Ireland and
Great Britain.
Meanwhile that system has at length produced a deficit, with which I
shall deal in the next chapter. Its amount, probably exaggerated, must
necessarily remain uncertain under the present fiscal Union. One thing
alone is certain, that it will grow as long as that Union lasts.
FOOTNOTES:
[115] _I.e._, on the generally accepted basis of (1) assessment to death
duties, (2) assessment to income-tax. With regard to (1), in the last
report of the Inland Revenue Commissioners, the figure for the United
Kingdom was £371,808,534; for Ireland, £15,872,302, or 1/234. With
regard to (2), the figure for the United Kingdom was 1009.9 millions;
for Ireland, 39.7 millions, or 1/254. Deduct a small allowance for the
difference between resources and taxable capacity, and the result
approximately is one-twenty-fifth.
[116]
Total revenue (including non-tax revenue) of United
Kingdom (mean of two years. 1909-10, 1910-11) £165,147,500
One-twenty-fifth £6,605,900
Actual "true" revenue contributed by Ireland (mean
of two years, 1909-10, 1910-11) £10,032,000
-----------
"Over-taxation" £3,426,100
If only the tax-revenue be taken, the over-taxation amounts to
£3,109,800 (total revenue for United Kingdom, £140,680,000;
one-twenty-fifth=£5,627,200; actual Irish revenue, £8,737,000). Some
members of the Royal Commission made certain allowances for education
grants, etc., which it would be useless to parallel now.
[117] See pp. 248-249.
[118] See p. 259, footnote.
[119] Treasury Return, No. 220, 1911.
[120] A list is given at p. 10 of Return 220 (1911), and an admirable
exposition of the whole subject from the Irish standpoint will be found
in Professor Oldham's seventh published lecture on the "Public Finances
of Ireland" (1911).
[121] The "Whisky Money" was so treated under the Finance Act of 1910.
[122] See p. 238.
[123] Between 1896 and 1898 the equivalent grants to Scotland and
Ireland were based on the Goschen proportion, 80, 11, 9, the English
grant being taken as standard. Scotch grants are now determined by
special legislation.
[124] See Chapter XIV.
[125] Only part of the Dublin Metropolitan Police is paid out of State
Funds, the rest by the City of Dublin.
[126] The relative figures were: Ireland, £2,408,000; Scotland,
£1,064,000; England, £6,325,500. The recent removal of the
disqualification for Poor Law Relief adds considerably to these amounts.
[127] In the poorest parts of Ireland they range as low as 9s.
[128] See pp. 174-176. In 1908, England and Wales spent £21,987,004 on
elementary education, and raised £10,467,804 for it in rates. Of the
rest, £11,104,305 came from Parliamentary grants. Fees and endowment
incomes of voluntary schools are not included (Statistical Abstract of
United Kingdom, 1910).
The actual Parliamentary Votes, as they appear in the accounts for
1910-11, are: England (Class IV.), "Board of Education," £14,166,500;
Scotland, "Public Education," £2,250,000; Ireland, "Public Education,"
£1,632,000. But the English Votes include sums devoted to technical
education, museums, etc., whose counterparts in Ireland come under other
departments.
[129] Two years earlier than the date I have chiefly used for the
purposes of comparison, but the difference is not material. In point of
fact, the expenditure was £300,000 less in the later than in the earlier
year.
[130] (1) Rates on Government Buildings; (2) Superannuation; (3)
Government Printing; (4) Board of Works; (5) Home Office.
[131] Department of Agriculture, Endowment Fund:
{ (1) Local Taxation Account £78,000
Income from --{ (2) Irish Church Fund £70,000
(3) Interest on Capital sum of £200,000.
Also (in 1909-10):
From Ireland Development Fund £7,000
Under an Act of 1902 £5,000
[132] The amount _voted_ for Public Works in 1910-11 was £259,848 [see
"Civil Service Estimates" for 1911-12 (No. 63--1911)]; the amount
_spent_, according to Return No. 220, £215,000.
[133] Under the heads of Excise, the principal deduction is in Spirits
(£1,793,000 in 1910-11) and Beer (£309,000 in 1910-11).
The items of Irish tax revenue in which the Treasury make _no_
adjustment are: Excise Licenses (£356,000 in 1910-11); Club Duty (£2,000
in 1910-11); "other items" (£10,000 in 1910-11); Cards and Patent
Medicines (£10,000 in 1910-11); "Estate, etc., Duties" (£1,144,000 in
1910-11); Income Tax (Schedules A and B) (£694,000 in
1910-11--abnormally large figure owing to non-collection in previous
year); Land Value Duties (£1,000 in 1910-11).
All the heads of Customs revenue are subject to adjustment, though the
total result is only a small deduction from Ireland (£126,000 in
1910-11). In all but two the adjustment is in favour of Ireland. The two
exceptions are "Foreign Spirits," where a deduction of £25,000 is made
in 1910-11, and Tobacco, where a deduction of £620,000 is made in
1910-11.
[134] _Income Tax_, Schedules C and D (dividends from Government Stocks,
public companies, foreign dividends, etc.). The Treasury estimate (as
stated in a side-note to the Return) is based on statistics of _Estate
Duty_ for the five years ending 1908. But what light can Estate Duty
throw on (for example) the dividends collected at the source from
British or foreign securities held by Irish banks? Schedule C deals with
"Government Stocks, etc.," Schedule D with "Public Companies, Foreign
Dividends, etc.," but in the adjustment for "true" revenue no
distinction is made between them. Now the Banking Statistics (Ireland)
of 1910 show that dividends were payable at the Bank of Ireland on
£38,732,000 of Government securities, and that, in addition, a debt
bearing interest was due to the Bank from the Government of 21/2 millions.
Income Tax on these items alone would be £65,000, less rebates; but the
whole of Schedule C, which includes Foreign and Colonial Government
Stocks, is given in 1909-10 as only £30,000.
No attempt is made to credit Ireland with a share of the profits made by
English and Scottish companies through business done in Ireland.
The only reliable items in Income Tax are those of A and B (Land,
Houses, and Occupation of Land), where in 1908-09 Ireland contributed
about 6 per cent. of the total; under other heads, according to the
Treasury, only 3.5 per cent. The writer estimates the true contribution
as several hundred thousand pounds more.
_Post Office_.--The Treasury give no clue as to how they calculate the
profit and loss on Postal Services. Figures of letters, telegrams,
parcels, etc., delivered in Ireland are known from the
Postmaster-General's report, but the report does not distinguish Irish
from English postal orders, of which 1211/2 millions were issued in the
United Kingdom in 1909-10. There is good reason to believe that a part
of the postal profit now wholly credited to England should in reality be
credited to Ireland.
_Stamps_.--Far too little allowance is made by the Treasury for stamps
on transfers executed through English and Scottish exchanges for shares
bought or sold by Irishmen, and for bonds, deeds, insurances, issues of
capital, etc.
_Tea and Sugar_.--The Treasury base their calculation "on quantities
inter-changed between Great Britain and Ireland in 1903-04," and I learn
from the Inland Revenue Department that by this means the consumption
per head of the population was arrived at, and that the present official
figures are based on the assumption that the relation of consumption per
head in Ireland to consumption per head in the United Kingdom as a whole
has not altered since 1903-04. The unreliability of this assumption is
manifest. It is probable that the heavy additional duty on spirits has
raised the consumption of tea in Ireland more than in Great Britain, and
the figures of Imports compiled by the Department of Agriculture seem to
confirm this view.
[135] On the basis of the mean revenue of 1909-10 and 1910-11.
CHAPTER XIII
FINANCIAL INDEPENDENCE
I.
THE ESSENCE OF HOME RULE.
Let us now sum up this financial question, and give its place in the
general problem of Home Rule. In Chapter X. I argued that, on broad
grounds of political policy, Ireland, in her own interest, and in the
general interest of the United Kingdom, should have "Colonial" Home Rule
without representation in the Imperial Parliament. Leaving finance
temporarily aside, while observing that any substantial Imperial control
over Irish finance would defeat the "colonial" solution of the problem,
I endeavoured to show that there were no tenable grounds of a
non-financial character for retaining Irish Members at Westminster, nor
any dangers to be feared from excluding them. I have now reviewed the
history of Anglo-Irish finance up to the present day, and I hope in so
doing to have proved that, so far from presenting an obstacle to
"Colonial" Home Rule, the financial conditions demand such a solution.
Finance and policy are inseparably one. All the considerations which
render Home Rule desirable lead irresistibly to the financial
independence of Ireland, with complete control assigned to her over all
branches of taxation. Without financial independence it is impossible to
realize the objects of Home Rule. It would be a miracle were the case
otherwise. Ireland would, indeed, be abnormal if, after her history, she
could reach prosperity and stability without passing through a phase of
financial independence. No parallel, even in the most distant degree,
could be found for any such metamorphosis in the whole of the British
Empire.
If we study Ireland's interest, we shall promote Imperial interests. The
main object of Home Rule is to make Ireland self-reliant. Lord Welby and
his colleagues were right in 1896 when they declared that ideal to be
impracticable without giving Ireland entire responsibility both for her
revenue and her expenditure. This declaration is as true as ever. The
situation has changed only in one respect: that financial independence
will now mean a financial sacrifice to Ireland, whereas in 1896 it would
have meant a financial gain to Ireland--that is, if Lord Welby's
recommendation in favour of remitting the Irish contribution to Imperial
services had been carried out. At that time Ireland contributed two
millions. Now Great Britain contributes over a million to Ireland.
Sooner or later that subsidy must stop, and the sooner it stops the
better.
But it is of vital importance that Ireland should understand the
situation. The present position is dangerous, because the Irish people
at large are ignorant of the facts, and their leaders are taking no
steps to enlighten them. The reasons are intelligible, but they are not
sound reasons. Paced with the facts and the choice, Ireland would not
hesitate, but she must know the facts and understand the nature of the
choice.
II.
THE DEFICIT.
Let us deal at once with the question of the deficit. It is
inconceivable surely that the existence of a deficit should be used as
an argument against financial independence, much less as an argument
against Home Rule in general. Will anyone be found to say that an island
with a fertile soil, several nourishing industries, and a clever
population of four and a half millions, is to be regarded, whatever its
past history, as incapable of supporting a Government of its own out of
its own resources? Let nobody be tempted by the fallacy that, given
time, Ireland will regain financial stability under the fiscal Union,
and at a later stage, perhaps, be more fitted to bear the burden of
fiscal independence. The supposition is chimerical. The present system,
besides being radically vicious in a purely scientific sense, undermines
the moral power of Ireland to secure her own regeneration.
It is now 1911. The deficit, once a large surplus, came into being only
two years ago. It was the direct and inevitable result of a fiscal Union
against which Ireland has for generations unceasingly protested, and it
was a result actually foretold in 1896 by Lord Welby and his two
colleagues. It could have been averted, as they pointed out, only by a
form of Home Rule giving financial independence to Ireland. But the
warning was older than the Report of the Financial Relations Commission.
Mr. Gladstone told the House of Commons in 1886, when introducing his
Home Rule Bill, that no limit could be set to Irish expenditure under
the Union; he and Sir William Harcourt repeated the warning in 1893, and
if the reader will study the debates on the financial clauses of the
Bill of 1893,[136] he will find pages of bitter diatribe founded on the
small net contribution from Ireland to Imperial services for which the
revised financial scheme provided. Ireland, said the Opposition, was to
make money out of Great Britain, and escape her fair proportion of
Imperial charges. Mr. Chamberlain showed that, with allowance for
payment from the Imperial purse of part of the cost of Irish police, the
net initial contribution was about one-fortieth, and asked: "Is Irish
patriotism a plant of such sickly growth that it has to be watered with
British gold?" The taunt was as pointless as it was cruel, for although
the Union had kept Ireland poor, Irish leaders, in spite of that
poverty, had asked for a financial independence which Mr. Gladstone in
neither of his Bills felt disposed to give her. Mr. Chamberlain had his
way; the Union was maintained, and as a result Ireland's actual
contribution of two millions at that date has been replaced by a subsidy
from Great Britain. Are we to be told now by Unionists that the Union
must be maintained in order to maintain this subsidy? or by Home Rulers
that the Irish deficit is an argument for the perpetuation of the
financial dependence which caused it, and an insuperable bar to the
financial independence which alone can extinguish it?
No; let us look the facts in the face. Here is a deficit officially
given as £1,312,000. It is probably less, owing to an underestimate of
Irish revenue. But it may grow to be more, even with allowance for an
automatic growth of revenue, owing to the increased votes of the present
year, and the expenses peculiar to the establishment of the new Irish
Legislature and Government. What her really healthy and normal revenue
should be only Ireland herself can discover in the future. What her
right expenditure should be she alone can determine. We can only work
upon the data we have before us. Economy cannot be instantaneous, either
in Ireland or anywhere else. Assume, then, an initial deficit in the
Irish balance-sheet on the basis of present taxation. Its exact size
cannot affect the manner of dealing with it. How are we to deal with it?
Let us dismiss at once the theory of "restitution" with the earnest hope
that we shall hear nothing of it in the coming controversy. No Irishman
will argue that a subsidy to the extent of, or exceeding the deficit, is
a good thing in itself, and should be large and lasting because it will
represent compensation for money unfairly exacted in the past. It is,
indeed, true that the Union impoverished Ireland, but the most grievous
wrong was moral, and for that wrong alone is reparation possible. Home
Rule is not worth fighting for if it has not as its end and aim a
self-reliant and self-supporting Ireland. Nor does it improve the
argument in the least to represent the subsidy as productive expenditure
for the purpose of raising Ireland's taxable capacity and improving her
economic position. No money raised outside of Ireland will have that
effect. Once admit the principle of restitution, and where are you to
stop? What rational or scientific limit can be set to it? More pertinent
question still, what are the conditions which will inevitably be imposed
in exchange? Ireland cannot have it both ways. She must either hold out
for financial independence or, for every financial boon, submit to a
corresponding deduction from her political liberty.
If there were no alternative between financial independence without a
farthing of temporary aid, and permanent financial dependence with a
permanent loss of liberty, it would pay Ireland a thousandfold in the
future to choose the former scheme, remodel taxation promptly to meet
the initial deficit, and with equal promptitude set on foot such a
drastic reduction of expenditure as would ensure the rapid attainment of
a proper financial equilibrium. When once the Irish realized the issue,
they would accept the responsibility with all its attendant sacrifices,
which would no doubt be severe.
But there is an alternative, and that is to make good the initial
deficit, whatever the financial authorities finally pronounce it to be,
with an initial subsidy of equal size, or perhaps of somewhat greater
size so as to admit of a small initial surplus, _but destined to
diminish by stated amounts, and within a few years to terminate_. To
such assistance, given unconditionally, Ireland has an unanswerable
claim, and to such assistance she ought, in my opinion, to limit her
claim. Until two years ago she contributed uninterruptedly, and
sometimes excessively, to the support of the Empire. With men and money
she has made efforts for the common weal which no self-governing Colony
has made, though she has been treated, politically and financially, as
not even a Crown Colony has been treated. Just at the point where the
self-governing Colonies, thanks to the liberty allowed them, are
beginning to contribute indirectly to the defence of the Empire,
Ireland, as the ultimate result of a century of coercive government,
ceases to contribute. She can claim honourably, if she wills, to be
placed, by temporary financial aid from the authority which is
responsible for her undoing, in the financial position of a
self-governing Colony.
From the British point of view it is difficult to see any valid
objection to the course suggested. There will be no stinginess in the
settlement. Even if there were any disposition in that direction, it
would be idle to grudge the initial subsidy, because an equivalent sum
is already being paid. The Union will infallibly continue to accentuate
the deficit and increase the resulting burden on the taxpayers of Great
Britain. The plan proposed would eventually remove that burden. But,
obviously, its success hinges on the concession of full financial powers
to an Ireland unrepresented at Westminster. In their own interests, if
not for very shame, Englishmen should decline to make use of the old
adage, that "he who pays the piper should call the tune." For more than
a century Ireland paid the piper and England called the tune--and what a
tune, and with what results! Representation has nothing to do with the
case. Precedents are needless, but there are, as a fact, many. Crown
Colonies have frequently received free grants for the relief of
distress--Jamaica and other West Indian islands, for example. The
Transvaal and Orange River Colony received several millions after the
war to enable the ruined farmers to start business on a footing of
solvency. During the whole period of their adolescence, and, indeed,
until quite a recent date, all the self-governing Colonies were
virtually subsidized by the allocation of British forces for local
defence, maintained at the Imperial charge. And Ireland paid her share
of this charge. Similar garrisons were, are, and will be, maintained in
Ireland. Yes, but Ireland contributed to their cost, and in course of
time will, it is to be hoped, resume her contributions with a gladder
heart and a freer conscience than ever before.
Canada was economically stagnant under coercion. If, in her case, we had
carried coercion as far as we carried it in Ireland, it would have been
necessary to give her a temporary subsidy in order to enable her to
assume the position of a self-governing Colony. Ireland's proximity does
not alter economic laws. "Facts are stubborn things," and these are the
Irish facts. Duty apart, no more profitable investment could possibly be
made by the British tax-payer than a subsidy designed to enable Ireland
to stand on her legs again. The present tribute to her is a dead loss.
The subsidy, if given, ought, I submit, on no account to be earmarked,
on the bad precedent set by the Bills of 1886 and 1893,[137] for any
particular head of expenditure in Ireland, as for Police, Pensions, Land
Commission, or Education. As I have shown previously, nothing is easier
than to pick out items of excessive expenditure, or of
under-expenditure, for which Ireland is not herself responsible. But to
allocate a grant specially to any of these purposes would be superfluous
unless the intention were to maintain Imperial control over the service
in question. As I urged in Chapter X., none of the services mentioned
above ought to be retained under Imperial control. Extravagance in the
first three will not be properly checked, save by a responsible Ireland.
Nor will extra money on Education be properly spent until it is raised
and spent by Ireland. There are no other services, with the possible
exception of Posts, to which a subsidy could possibly be applicable.
Even in that case an earmarked subsidy would be out of place. But Posts
are outside the point we are discussing. If for mutual convenience they
were to be kept under Imperial control--a step which would not render
imperative Irish representation at Westminster--their finance would
remain, as at present, common to the whole United Kingdom. There is
officially held, on bad evidence, to be a loss on Irish Posts of
£249,000, and this loss is debited against Ireland, and goes to swell
the deficit we have been considering. With the Posts under Imperial
control, the initial deficit to be made good by subsidy would be reduced
by the amount of the loss. Should it, however, be decided that Ireland
is fairly entitled to a share of the large general profit earned by the
Postal Services of the United Kingdom, the annual profit so attributable
to Ireland would be set off against the annual subsidy as long as the
subsidy lasted, and after it was at an end would be a clear item of
revenue to Ireland. My own opinion, as I stated in Chapter X., is that
the Irish postal system, whether standing by itself it shows a profit or
a loss, ought to be under Irish control.
III.
FUTURE CONTRIBUTION TO IMPERIAL SERVICES.
This must be left a voluntary matter for Ireland, as it is for the
self-governing Colonies. There is no contribution from Ireland at
present, and to fix a future date at which a fixed contribution, like
that from the Isle of Man, should begin, is a course hardly practicable
even if it were desirable.
IV.
IRELAND'S SHARE OF THE NATIONAL DEBT.
Until two years ago Ireland, of course, contributed, _inter alia_, to
the annual interest and sinking fund, amounting in 1910-11 to
£24,554,000, on the National Debt of the United Kingdom. It is
impossible to estimate her share of the capital of the Debt, and I
scarcely think that anyone would seriously propose to encumber the new
Ireland with an old Debt, based on some arbitrary estimate. For the
great bulk of Debt created in the past she has little moral
responsibility--no more, at any rate, than the self-governing Colonies.
In this respect she must begin, like them, with a clean sheet.
V.
IRELAND'S SHARE OF IMPERIAL MISCELLANEOUS REVENUE.
On the other hand, Ireland, in consideration of the remissions
mentioned, must renounce the share to which she is technically entitled
of the Imperial Miscellaneous Revenue, derived mainly from Suez Canal
shares and the Mint, and amounting altogether in 1910-11 to
£2,769,500.[138]
VI.
IRISH CONTROL OF CUSTOMS AND EXCISE.
Let us now come to close quarters with this important issue. The grand
argument on the affirmative side is that the products of these duties
represent nearly four-fifths of the tax revenue collected in Ireland.
What are the objections?
We need scarcely consider the general objection, sometimes made
ostensibly in the interests of Ireland, that her public men have little
financial experience. The fact is true, and it is not their fault. But
the financial scheme cannot reasonably be based on a recognition of a
temporary lack of experience.
I place Customs and Excise together because I believe there is no
serious question of making a distinction between the two, and of
allowing Ireland to levy and collect her own Excise duties, while
denying her authority over Customs. It is true that until 1860 such a
distinction was made, and a lower Excise duty levied upon Irish than
upon British spirits;[139] but the tendency in all modern States is to
make the authority over Customs the same as that over Excise, and any
departure from that principle, in the case of modern Ireland, is likely
to cause considerable inconvenience. License Duties, which are included
under the head of Excise, may, no doubt, without much inconvenience, be
differentiated from the rest, but their Irish proceeds (£284,000) are
too small to influence the question.
Excise, then, follows Customs. What are the objections to giving
Ireland, like the Isle of Man and the Channel Islands, control over her
own Customs? Without doubt, the establishment of a new Customs barrier
between Ireland and Great Britain is in itself a drawback. The
Custom-house machinery exists, of course, at present, because Ireland is
an island; nor would the additional function of checking British as well
as foreign imports into Ireland cause any great increase of expense; but
since the great bulk of Irish external trade is with Great Britain,
there will unquestionably be a certain amount of inconvenience and
expense both to Ireland and Great Britain in submitting merchandise on
both sides of the Irish Channel to the passage of a Customs barrier.
That seems to be the limit to which criticism can justly go in the case
of Ireland and Great Britain. That is as far as it goes in the analogous
case of New Zealand and the Australian Commonwealth, where a small
island State has a separate Customs system from that of a large,
wealthy, and populous neighbour of the same race, and with many
identical interests. That is as far as it goes in the parallel case of
little Newfoundland and the great Dominion of Canada. Neither the
Dominion nor the Commonwealth claim that proximity, power, and racial
identity give them the right to control the trade and taxation of their
small independent neighbours, nor does the smallest friction result from
the mutual independence. On the contrary, both the Dominions and the
Commonwealth were founded on that vital principle of a pre-existent
State independence surrendered voluntarily for larger ends. The whole
Empire depends on the principle of local autonomy, and, above all, on
the principle of local financial autonomy. Endeavours in America to
sustain the opposite theory led to disaster. We have for generations
regarded it as perfectly natural that the self-governing Colonies should
have Customs systems of their own, even when they are used for the
purpose of imposing heavy duties on goods coming from the Mother
Country, and we know that that liberty has borne fruit a hundredfold in
affection and loyalty to the Imperial Government. Until the Union of
Great Britain and Ireland it was regarded as equally natural that
Ireland should have control of her own Customs, along with all other
branches of revenue. Even after the Union, although there was no Irish
control over anything Irish, it was recognized, until the fiscal
unification of the two countries in 1817, that Irish conditions required
a separate Customs system, which, in fact, existed until 1826.[140] How
fiscal unification and the subsequent abolition of separate Customs was
brought about I have told in Chapter XI. It is not a pleasant story. To
say the least, the conditions, moral and material, were not such as to
warrant the inference that there is any inherent necessity for joint
Customs between Ireland and Great Britain. The presumption raised by all
subsequent events is in the opposite direction.
But the tradition of unified Customs, now nearly a century old, has
immense potency, and unless it is fearlessly scrutinized and challenged,
may be able, reinforced by the passions excited by the great controversy
over Free Trade and Protection, to defy the warnings writ large upon the
page of history. The tradition must be so challenged. Say what we will
about the proximity of Ireland and Great Britain, descant as we will in
law-books, pamphlets, leading articles, debates, on what ought
theoretically to be the fiscal relations of the two countries, we cannot
escape from the fact that, in this as in so many other respects, both
the human and economic problem before us is fundamentally a colonial
problem, and that its being so is not the fault of Ireland, but of Great
Britain.
Belief in Home Rule seems to me necessarily to involve a willingness to
give Ireland her Customs. Great Britain has no moral right to lay it
down that her views about trade shall govern the course of Irish policy;
and if Great Britain believes sincerely in Home Rule, she should be
willing to trust Ireland, regardless of the economic consequences, and
regardless of the effect upon the great Tariff controversy.
The effect upon that controversy I shall not discuss. It seems to me to
possess only a tactical and electioneering interest, and that side of
the Home Rule problem I have rigidly avoided, while expressing in
general terms my belief that sound policy and sound tactics in reality
coincide. The Home Rule Bill is far more likely to be wrecked by
timidity than by boldness, by precautions and compromises than by a
fearless accommodation of British policy to Irish facts and needs.
As to the danger to Great Britain of separate Irish Customs, it seems
to me to be greatly exaggerated. Ireland's own interests will primarily
dictate her action. What she will decide her interest to be, nobody can
foretell with certainty beyond a limited point, because Irish public
opinion is not formed. Ireland has taken little or no part in the fiscal
controversy, for the simple reason that she has been absorbed in the
task of getting Home Rule, and until she gets it she is precluded from
formulating a trustworthy national opinion on most of the great subjects
which agitate modern societies. There is, however, no tradition in
favour of high Protection, even from Grattan's commercially free
Parliament. The question of a low protective or purely revenue tariff on
imports has not received any serious investigation. Let us frankly admit
at the outset that no country in the world, economically situated as
Ireland is, dispenses with a general tariff of some sort, and
undoubtedly there are to-day a good many Irishmen outside political life
who advocate the encouragement of infant Irish manufacturing industries
by sufficient protective duties directed against Great Britain as well
as against the outside world. It would be strange if there were not, in
view of the distressing past history of Ireland's throttled industries,
and in view of the strenuous efforts now being made by the Development
Associations to push the manufacture and sale of Irish goods in all
parts of the world. There are many avowed Free Traders also; nor are the
Development Associations themselves officially protectionist. The
opinion is sometimes expressed that Ireland, which could easily be
self-supporting in the matter of food, occupies an unhealthy position in
exporting a large proportion of her own agricultural produce, butter,
bacon, meat, etc., and in importing for her own consumption inferior
British and foreign qualities of some of the principal foodstuffs; but,
so far as it is possible to ascertain it, the predominant opinion seems
to be that an agricultural tariff would not be a good remedy for this
weakness, if it be one, and that Ireland's future development, like that
of Denmark, lies in the increasingly scientific organization of her
agricultural industries, and in the better cultivation of her own soil.
"Better farming, better business, better living," to use the admirable
motto invented by Sir Horace Plunkett for the I.A.O.S. In the absence of
an Irish Legislature, no special importance can be attached to
individual expressions of opinion. Yet a measure of prophecy is
permissible. The Irish Legislature will have to study the national
interest, and it is possible to say with certainty at least this--that
Ireland's interest lies in maintaining close and friendly trade
relations with Great Britain. Unfortunately, we have no means of
accurately ascertaining the amount of trade done by Ireland with Great
Britain and with foreign and colonial countries respectively. Irish
commerce takes, of course, three forms: _(a)_ Direct trade with
countries outside Great Britain; _(b)_ indirect trade with these
countries via Great Britain; _(c)_ direct local trade with Great
Britain. The statisticians of the Irish Department of Agriculture make
only an imperfect attempt to distinguish between these classes, but
their figures, so far as they go, prove beyond question that the great
bulk of Irish external commerce belongs to Class _(c)_--local trade with
Great Britain. The total value of Irish trade in 1909 is estimated at
£125,675,847, of which £63,947,155 was for imports, £61,728,692 for
exports. Probably 80 per cent., at least, of this trade was strictly
local. Certainly Great Britain is the market for very nearly the whole
of Irish agricultural produce, and for most of her exports of linen,
ships, tobacco, liquor, etc. Any aggressive action likely to provoke a
tariff war would be ruinous to Ireland, while it would hurt Great
Britain far less in proportion. But, in fact, both countries would
suffer, Great Britain from the loss of an easily accessible food-supply
of extraordinary value, not only for economic, but for strategical
reasons; Ireland from the loss of an excellent and indispensable
customer.
On the other hand, whatever Ireland's trade policy may be, she certainly
needs the power of fixing her own duties upon commodities like tea and
sugar, which are of foreign origin, and are now merely transported to
her through British ports. Taxation of this sort is a matter of the
deepest concern to a country where agricultural wages average only
eleven shillings a week, and which cannot reduce its exorbitant Old Age
Pensions Bill without giving some compensatory relief to the classes
concerned. Tobacco, of which in its manufactured forms Ireland is a
considerable producer as well as a large consumer, belongs to the same
category. Liquor is an important article of production in Ireland, as
well as of consumption, and the Irish Legislature ought to be able to
form and carry out its own liquor policy. Ireland is just as able and
willing to promote temperance as Great Britain, and just as competent to
reconcile a temperance policy with due regard to producing and
distributing interests.
The Customs tariff is an Irish question, not an Ulster question. The
interests of the Protestant farmers of North-East Ulster are identical
with those of the rest of Ireland, and obviously it will be a matter of
the profoundest importance for Ireland as a whole to safeguard the
interests of the shipbuilding and linen industries in the North in
whatever way may seem best. The Industrial Development Associations,
which are affiliated in a national organization, and are far above petty
sectarian jealousies, may be trusted to see that Ireland steers a safe
financial course in her trade policy.
If there is little or no danger that a Home-Ruled Ireland will commit
tariff follies of her own, she has unquestionably a right to escape from
further entanglement in the tariff policy of Great Britain. What may be
the issue of Great Britain's great fiscal controversy nobody can
foretell. But as long as a protective tariff remains the cardinal point
in the constructive policy of one of the British parties, there is a
strong likelihood of such a tariff, which would be uniform for the whole
United Kingdom, being carried into law. Free Traders, like myself, may
deplore the possibility, but we cannot shut our eyes to it. That tariff,
if and when it is framed, will, like the Free Trade tariff of the past,
be framed without regard to Irish interests, which are predominantly
agricultural, and with exclusive regard to British interests, which are
mainly industrial. Whatever may have been the original ideal of the
Conservative Protectionists, however highly they may once have valued
the protection of agriculture, irresistible political forces have driven
them in the direction of a tariff framed mainly to secure the adhesion
of the great manufacturing towns. The electoral power of these towns,
the growing resentment of the working classes in most parts of the world
at the increasing cost of living, the fact that Great Britain cannot
under any conceivable circumstances feed her own population, have been
reflected in the definite abandonment by the party leaders of the
proposed small duty against colonial imports, and in the admission by
Mr. Bonar Law at Manchester, during the last General Election, that the
proposed tariff would not benefit the farmers. Nor will the failure of
the Reciprocity Agreement between Canada and the United States
appreciably diminish the obstacles to food-taxes in the United Kingdom.
Any practicable protective tariff, therefore, on the ground of its
injustice to Ireland, would cause strong and legitimate resentment in
that country, which is subjected to the most formidable competition from
foreign and colonial foodstuffs, but whose great competition in
manufactured goods is Great Britain herself. The one Irish industry
which might favour it is the linen industry of the North. It would have
no attraction for the shipbuilding industry, which in no part of the
British Isles has anything to gain by Protection, as I believe all
parties to the controversy agree. Other small manufacturing industries
would complain that they gained nothing; while the agricultural
population would complain that, as consumers, they would be damaged by
higher prices for clothing and other manufactured articles, while as
producers they were ignored.
The difficulty is only one further proof of the dissimilarity of
economic conditions between Great Britain and Ireland, and of the
artificial and unnatural character of the present fiscal union. Justice
to Ireland demands its dissolution. The dangers are imaginary. Liberals,
however firm their belief in Free Trade, should hold, with Lord Welby
and his Home Rule colleagues on the Financial Relations Commission, that
"even if Ireland initiates a protective policy, in this case, as in that
of the Colonies, freedom is a greater good than Free Trade." As for the
Protectionists, I have never seen an argument from that source, and I do
not see how any consistent or plausible argument could possibly be
framed, to show that a uniform tariff for the United Kingdom could be
fair to Ireland. Professor Hewins, the leading Tariff Reform economist,
virtually acknowledges the impossibility in his Introduction to Miss
Murray's "Commercial Relations between England and Ireland." There were
two sound lines of policy, he points out, which might have been adopted
towards Ireland in the period prior to the Union: (1)To have placed her
on a level of equality with the Colonies, applying the mercantile
system indiscriminately and impartially to the Colonies and to her; or
(2) to have aimed from the first at the financial and commercial unity
of the British Isles. Neither of these courses was taken. Ireland, while
kept financially and commercially separate, "was in a less favourable
position than that of a Colony." With regard to the present, "Most of
the difficulties of an economic character," says the Professor, "in the
financial relations between England and Ireland, arise from the
differences of economic structure and organization between the two
countries. If Ireland were a highly organized, populous, manufacturing
country, the present fiscal system would probably work out no worse than
it does in the urban districts of Great Britain. But whatever be the
virtues or demerits of that system, it was certainly not framed with any
reference to the economic conditions which prevail in Ireland." We wait
for the seemingly unavoidable political inference, but in vain.
Professor Hewins is a Unionist. "A 'national' policy for Ireland ... is
never likely to be possible." Well, that is plain speaking, and the more
plainly these things are said the better. Let Unionists, if they will,
tell Ireland frankly that she must eternally suffer for the Union, but
let them not pretend, as they do pretend, that Ireland profits by the
Union.
VII.
FEDERAL FINANCE.
Directly we leave the simple path of financial independence, and
endeavour to construct schemes which on the one hand disguise the
financial difficulties of Ireland, and on the other provide for Imperial
control of Irish Customs and Excise, we involve ourselves in a tangle of
difficulties. A brief examination of these schemes will throw into still
stronger relief the merits of the simpler solution.
First of all, let us dispose finally of the Federal analogy. In Chapter
X. I showed that the framework of Home Rule cannot be Federal, because
the conditions of Federation do not exist in the United Kingdom. One of
the invariable features of a Federation is the Federal control of
Customs and Excise, but I pointed out that an equally invariable
condition precedent to Federation was the willingness on the part of a
self-supporting State, previously possessing complete financial
independence, to abandon its individual control over this realm of
taxation to a Federal Government of its own choosing,[141] and that no
such condition existed in the case of Ireland. But some features of
Federal finance undoubtedly may be made to show a superficial analogy to
Anglo-Irish conditions, and may therefore have an attraction for those
who shrink from giving Ireland financial independence. In the first
place, it is possible to find Federal precedents for the payment out of
the common purse of certain large items of Irish expenditure. There is
no precedent for the payment of Police, but Old Age Pensions, for
example, are paid in Australia by the Commonwealth, not by the States.
The chief point of interest, however, is the mechanism of Federal
finance. The Australian and Canadian Federations are the only two which
suggest even a remote parallel. There the subordinate States are
actually "subsidized" by regular annual payments out of Federal
revenues, mainly derived from Customs and Excise, and in the case of
Australia, as I observed at p. 245, the process at present entails an
elaborate system of bookkeeping to distinguish between the "collected"
and "true" revenue of the several States, similar in kind to the
calculations now made by the Treasury for ascertaining the "collected"
and "true" revenue derived from Ireland, Scotland, and England.[142]
In Australia this system of bookkeeping is discredited, although the
recent attempt by a Commonwealth Referendum to abolish both it and the
financial system of which it forms a part just failed. It is to be hoped
that, whatever financial scheme is adopted for Ireland, this bad
colonial precedent, together with the precedent of the Home Rule Bill of
1893, will not be made pretexts for perpetuating a system whose defects
are so glaring, and which is a source of continual dissatisfaction to
Ireland. If Irish Customs and Excise are to be outside Irish control,
while their proceeds are to be credited to Ireland, let her whole
collected revenue from those sources be credited to her, in spite of the
excessive allocation that step would involve.
Apart from this point of similarity in mechanism, the Australian and
Canadian subsidies to the States and Provinces respectively are of no
value as models for a Home Rule Bill. Let us examine the case of
Australia. There the Commonwealth, besides having exclusive control of
Customs and Excise, has general powers of taxation concurrently with the
States, though in practice Commonwealth taxation is almost entirely
confined to Customs and Excise. All surplus Commonwealth revenue is, by
the present law, returnable to the States, and the total annual amount
so returned must not be less than three-fourths of the total proceeds of
Customs and Excise; so large are these proceeds, and so small,
relatively, the expenses of the Commonwealth Government.[143] Here at
the outset is a feature which places Australian Federal Finance in an
altogether different category to that of the United Kingdom, where only
47.6 per cent, of the revenue is from Customs and Excise. Nor are the
distributions of surplus revenue to the States really "subsidies," even
in the case of the poorest States, but repayments, on a method laid down
in the Constitution, of that part of the State contribution to Federal
services which the Federal Government does not want. Here the system of
bookkeeping is of some service to us, because it reveals, approximately,
at any rate, both the contribution and the actual repayment, which is
based on a calculation of the amount saved to the State by the
transference of certain departments to the Federal Government, set off
by a _per capita_ charge for new Federal expenditure, as, for example,
for Old Age Pensions (see Table on p. 297).
The great bulk of the tax revenue shown comes, as I have said, from
Customs and Excise, and it is unnecessary to set out the respective
figures of revenue derived from these duties.[144] It will be seen,
after deducting repayments from contributions, that even the poorest
States make a substantial net contribution to Federal purposes. On the
other hand, the relative proportion of revenue contributed by Western
Australia and Tasmania is diminishing. In Western Australia it was 12-49
per cent. of the whole in 1905, 8-13 per cent. of the whole in 1909. In
the same period, not only relatively, but actually, the gross
contribution of Western Australia has diminished from £1,431,624 in 1905
to £1,166,126 in 1909, while the repayment to her has also diminished
from £1,031,223 in 1905 to £627,933. Tasmania's repayment is also
diminishing, though her gross contribution has increased. These
circumstances suggest a slight resemblance to the growing disproportion
between the resources of Ireland and Great Britain, but they do not
assist us towards a solution of the Irish problem. Each Australian
State, while contributing the whole of its Customs and Excise to the
Federal Government, receives back at least half, and in some cases
two-thirds,[146] and adds that sum to its own independent revenue for
the maintenance of the State Government. The sum refunded amounts on
the average to a little below a quarter of the total State revenue--to
be accurate, 23.01 per cent. Of the remaining 76.99 per cent., only 10
per cent, on the average is derived from direct taxation; 10.10 per cent
from public lands, 4.15 per cent, from miscellaneous services, and no
less than 52.55 per cent, from Public Works--railways, tramways,
harbours, etc.
CONTRIBUTIONS OF, AND REPAYMENTS TO, THE STATES OF THE AUSTRALIAN
COMMONWEALTH, 1908-09.[145]
-----------------------------------------------------------
Contributions to Repayments from
Revenue. Commonwealth.
-----------------------------------------------------------
£ £
New South Wales 5,621,958 3,326,276
Victoria 3,750,161 1,987,435
Queensland 1,989,540 1,027,047
South Australia 1,307,621 716,957
Western Australia 1,166,126 627,938
Tasmania 515,387 244,747
-------------------------------
Total Common- Total
wealth Revenue. Repayments.
--------------------------------
14,350,793 7,930,395
-----------------------------------------------------------
Here are the details of revenue for 1908-1909 in the richest and the
poorest State, respectively:
Particulars. New South Wales. Tasmania.
£ £
Refunded by the Commonwealth 3,377,213 232,342
Taxation (direct) 907,249 250,835
Public Works and Services 7,309,062 329,192
Land 1,778,002 96,519
Miscellaneous 274,600 25,017
Totals 13,646,126 934,405
Now, Ireland raises no public revenues at all from Public Works, only
£24,500 out of a total of ten millions from public lands; while 29.25
per cent, of her "true" tax revenue comes from direct taxation and 70.75
per cent, from Customs and Excise. To take away even a third of her
receipts from Customs and Excise would be to leave her with a deficit of
three millions and a half, which would have to be made up by additions
to a direct taxation, which is already vastly higher than in any part of
Australia. She needs every penny of her revenue from whatever source
derived, and there is no possibility of extracting from her a
contribution to Imperial services, unless it be an illusory contribution
based on faked figures.
The real moral to be derived from the Australian comparison is that both
Australia and Ireland are countries where accumulated wealth is
comparatively small, and where the importance of indirect taxation is
very great. All the more reason for giving Ireland control of her own
indirect taxation. Canada, and, indeed, all the self-governing Colonies,
suggest the same moral. In Canada the Federal or Dominion Parliament has
an unlimited power of taxation, the Provinces being vested only with the
concurrent right of direct taxation within their respective borders
(B.N. America Act, Clauses 91 and 92). In practice, nearly the whole
Federal tax revenue is derived from Customs and Excise. We have no
materials for a comparison of gross and net provincial contributions,
because no records are compiled. Under an Act of 1907, revising the
former arrangements, two small subsidies, forming a fixed charge on the
gross Federal revenue, and bearing no specific proportion to the income
from Customs and Excise, are given to each Province.
1. A subsidy (from £20,000 to £40,000) based on the total provincial
population.
2. A payment of 80 cents per head of the provincial population.
Both together are very small by comparison with the Australian payments.
Neither is really a subsidy, though it is given that name, but the
return of a surplus indirectly contributed. It is, indeed, conceivable
that a new and poor Province might actually contribute less than she
received back. One Province, British Columbia, having long complained
that she contributed far more than her share, and received back too
little, obtained an exceptional grant of £20,000 under the Act of
1907.[147] The sums raised independently in each Province for the
support of the provincial administration are, as in Australia, derived
to a very slight extent from direct taxation, and to a very large extent
from public property; not, as in Australia, from railways, tramways,
etc., but mainly from vast tracts of public land. In this respect the
Provinces resemble the Dominion, which derives a large revenue from the
same source.
In three vital points, then, Anglo-Irish finance differs from that of
the Colonial Federations. Ireland's whole net income comes from taxes;
she needs it all; and her economic conditions are totally different from
those of Great Britain. So far from borrowing anything from Federal
finance, we should deduce from it the moral of financial independence
for Ireland. With all the powerful centripetal forces, moral and
material, which originally united, and now hold together, the federated
States of Australia and Canada, there is continual controversy, and
sometimes considerable friction, over finance, generally in connection
with the position of the poorer Provinces or States. Some problems are
still unsolved. Good authorities, among them Sir Arthur Bourinot, think
that the Canadian subsidies are unsound. Australia is dissatisfied with
her system. The American States, while giving up Customs and Excise, are
self-supporting entities; but that system has its drawback, in Federal
extravagance. We must remember, too, that even if these examples were of
any use to us, the weak States or Provinces in a Federation have a
greater control over Federal financial policy than Ireland could have
under any scheme which reserved Customs and Excise to the Imperial
Parliament; because the Federal principle, partially infringed only in
the case of Canada, is to give them disproportionately high
representation in the Upper Federal chamber, which can reject money
Bills.[148]
On all counts, Ireland's position is that of a country which
imperatively needs fiscal isolation similar to that enjoyed by States
prior to Federation, before it can dream of embarking on the perilous
sea of quasi-Federal finance. Trouble enough comes from the present
joint system. We should make a clean sweep of it, permit Ireland, with a
minimum of temporary assistance, to find her own financial equilibrium,
and so lay the foundation, perhaps, for a genuine Federation in the
future.
VIII.
ALTERNATIVE SCHEMES OF HOME RULE FINANCE[149]
Historically, these fall into two classes; though, as I shall show, they
are for all intents and purposes merged in one to-day.
The two classes are--(1) The Gladstonian; (2) the "Contract."
1. _Mr. Gladstone's Schemes_.--It is unnecessary to examine these in
close detail, though, if the reader cares to do so, he will find details
set forth in the Appendix. Four outstanding features were common to the
schemes both of 1886 and 1893: (_a_) Permanent Imperial control over the
imposition of Customs and Excise; (_b_) Irish control over all other
taxation; (_c_) an annual Irish contribution to Imperial expenditure;
(_d_) Imperial payment of part cost of the Irish Police.
With regard to (_a_), the most important point of difference in the two
Bills was that under the first Ireland was credited with her whole
"collected" revenue from Customs and Excise, under the second (as
amended) with only her "true" revenue, which was less than the former by
£1,700,000. Another point in which the two Bills differed was the
permission to Ireland, under the Bill of 1893, after six years, to
collect her own Excise. Both imposition and collection were wholly
reserved under the Bill of 1886. I have already given grounds for the
impolicy of retaining control over Customs and Excise. Let me only ask
the reader, in conclusion, to figure the situation. How could Ireland
frame a financial policy? Three-quarters of the revenue, as at present
levied, of a country profoundly dissimilar economically from Great
Britain, and in need of drastic reforms of expenditure and marked
changes in taxation, would be permanently outside the reach of an Irish
Chancellor of the Exchequer, and, in spite of the representation at
Westminster which Imperial control would entail, would in the long-run
fluctuate according to British needs and notions. In the long-run, I
repeat; but incidentally there would be sharp and damaging conflicts.
Occasions might occur like that of 1909, when the majority of Irishmen,
rightly or wrongly, resented the form of new taxation, and would have
secured the rejection of the Budget had not that step been hurtful to
the prospects of Home Rule. It will be useless to blame either Ireland
or Great Britain. Every country is bound to study its own circumstances.
A similar crisis would have imperilled even the strongest Federation. We
are not in the least concerned at the moment with the goodness or
badness of that famous Budget. We are concerned with the effect on the
relations of the two countries, and with the indefeasible right of
Ireland and Great Britain to do what they consider best for their own
interests.
With regard to (_b_), the Bill of 1893 differed from that of 1886 in the
provision of a suspensory period of six years, during which all existing
taxation in Ireland was to be under Imperial control, though Ireland
could impose additional taxes of her own. After six years--and, under
the Bill of 1886, from the outset--Ireland was to have control over all
taxation other than Customs and Excise. Where is the wisdom in
selecting direct taxation as peculiarly suitable to Irish control? It is
already higher in Ireland than in any country economically situated as
Ireland is. Yet Ireland's power to reduce it will be very small and very
difficult to use, if she is rigidly excluded from changes in the
indirect taxation which presses mainly on the poor. Would she naturally
be inclined to increase direct taxation? Land Value Duties produce next
to nothing in Ireland, and their extension would be unpopular. The
existing rates of Income-Tax and Estate Duties cannot be raised, though
their incidence might be extended to cover poorer elements of the
population, as, for example, the small farmers. That is a kind of
measure which the farmers would, if necessary, willingly agree to, in
order to balance the accounts of a financially independent Ireland, but
it is not the kind of measure they would care about when their national
finance was dictated by Great Britain. If one cared to make a
dialectical point, one could add that a common argument against Home
Rule is a fear of oppressive taxation of the rich or oppressive taxation
of North-East Ulster, at the hands of an Irish Parliament, through high
direct imposts. The fear is one of those which scarcely need serious
discussion. If Irish statesmen were as black as their most industrious
traducers paint them, they could not by any ingenuity invent any new
direct tax which would not hit all the provinces equally, saving perhaps
a tax on pasture ranches, which would hit North-East Ulster least; while
super-taxes on the exceptionally rich, if they were worth the trouble of
collecting, would drive wealth out of a poor country at the very moment
when it was most urgently necessary to gain the confidence of investors
and the few wealthy residents.
With regard to (c), Mr. Gladstone's various devices for obtaining from
Ireland a contribution to Imperial services possess now only a
melancholy and academical interest, because, without an elaborate
manipulation of the accounts, so as to disguise their true significance,
no such contribution can possibly be obtained. In 1886 Mr. Gladstone
provided for an annual payment from Ireland, fixed in amount for thirty
years; in 1893 for the contribution of a _quota_--namely, one-third--of
her "true" annual revenue from Imperial taxes, to run for six years, and
then to be revised. His calculations were conditioned to some extent by
_(d),_ the part payment from the Imperial purse of the cost of Irish
Police, coupled, of course, with continued Imperial control of that
Police, pending its replacement by a new civil force. It is easy enough
in ways like this to show a balance in Ireland's favour, and, at the
same time, to cripple the responsibility of the Irish Legislature by
transferring selected services from the Irish to the Imperial side of
the account. We can extend the process to Old Age Pensions, the Land
Commission, and what not. As I have repeatedly urged, this course is
radically unsound. As for the Police, there can be no responsible
government without control of the agents of law and order.
By crediting Ireland with her whole "collected" revenue, we can give her
at once a balance of half a million. By freeing her from the payment of
Old Age Pensions, we can make the balance three millions. With the
elimination of the Land Commission and the Police, we can make it five
millions. Then we can postulate an imaginary taxable capacity, an ideal
contribution to Imperial services, and a hypothetical share of the
National Debt, and so arrive at a Budget which will look well on paper,
but which will deceive nobody, and be open to crushing criticism.
2. "_Contract_" _Finance_.--It will be seen that both Mr. Gladstone's
schemes set up in Ireland--though under the Bill of 1893 only after six
years--a dual system of taxation, Imperial and Irish, after the Federal
model. The revenue, "collected" or "true," derived from Imperial taxes
levied in Ireland, was to be paid, after the deduction of sums due to
the Imperial Government on various accounts, into the Irish Exchequer.
And into the same Exchequer went the proceeds of taxes levied by Ireland
herself. The distinguishing feature of "Contract" finance is that it
maintains the fiscal unity of the British Isles. All taxation in Ireland
would be permanently levied and collected, as before, by the Imperial
Parliament, Ireland being allowed only the barren and illusory privilege
of levying new additional taxes of her own. Out of the Imperial
Exchequer a lump sum of fixed amount, or a sum equivalent to the revenue
_collected_ in Ireland, would be handed over to Ireland, by contract, as
it were, for the maintenance of the Administration.
The simplicity of this scheme seems to me to be its only merit. It
disposes of all complicated bookkeeping, all heart-burnings over "true"
and "collected" revenue, and all controversies, for a long time at any
rate, over an Irish contribution to the Empire; while it involves and
immensely facilitates a subsidy based on the reservation of selected
Irish services for Imperial management and payment. On the other hand,
it is not Home Rule. It annihilates the responsibility of Ireland for
her own fortunes, and is, indeed, altogether incompatible with what we
know as responsible government. Its germ appeared in the Irish Council
Bill of 1907--a Bill which did not pretend to set up anything
approaching responsible government, and to which the scheme was
therefore in a sense appropriate, though it must, I think, have produced
mischievous results if it had been carried into law.[150]
I wish to speak with the utmost respect of Lord MacDonnell and the other
patriotic Irishmen who have advocated this kind of financial solution.
There was a time when it might have been good policy for Ireland to
obtain any--even the smallest--financial powers of her own as a lever,
though a very bad lever, for the attainment of more. But we ought now to
make a sound and final settlement, and I do earnestly urge upon all
those who have Irish interests at heart to reject schemes which merely
evade, if they do not actually aggravate, some of the pressing
difficulties of the Irish problem of to-day. The fact that Contract
finance works well in India is _prima facie_ a reason why it should not
work well in Ireland. It does not exist, and it could not be made to
show good results, in any community of white men. If anyone is disposed
to trace a faint analogy--which in any case would be a false
analogy--with the lesser of the two small subsidies given by the
Dominion of Canada in aid of the Provincial administrations,[151] let
him imagine what the moral and practical consequences would be if,
instead of constituting a small fraction of the provincial income, this
subsidy were increased to a lump sum calculated by the Dominion
Government as correct and sufficient for the whole internal government
of the Province. And the pernicious results in a Canadian Province would
be trivial beside the pernicious results in Ireland, where the whole
system of expenditure and revenue needs to be recast; where large
economies are needed, together with additional outlay on education; and
where above all, the sense of national responsibility, deliberately
stifled for centuries, needs to be evoked. Nothing could be more cruel
to Ireland than to give her a fictitious financial freedom, and then to
complain that she did not use it well. No nation could use freedom well
under the Contract system of finance, whether based on a fixed grant or
on revenue derived from Ireland. It is not in human nature to reduce
expenditure unless the reduction is reflected in reduced taxation. Every
official threatened with retrenchment, even in the services under Irish
control and, _a fortiori,_ in the services outside Irish control, would
have a grievance in which the public would sympathize, while resentment
at an unequal fiscal union would be unabated. Irish statesmen, like any
other men in the same position, would be exposed unfairly to the
continual temptation of preserving institutions and payments as they
were, of making changes only of personnel, and of annually appealing to
Great Britain for more money for new expenditure. These appeals could
not possibly be refused. If Great Britain chooses to place Ireland in a
position of financial dependence, she must take the consequences and pay
the bill, as in the past, even if the bill exceeds the revenue derived
from Ireland. But, indeed, under Contract finance, attempts to make
Irish expenditure conform to Irish revenue would necessarily be
abandoned.
Bad as the results must be, we are inexorably driven to some form of
Contract finance directly we relinquish its anti-type, financial
independence. There is very little practical difference between the
Gladstonian and later plans. We may be drawn along the downward path
either by considerations of revenue, or considerations of expenditure,
or by both combined. To retain Imperial control of Customs and Excise,
while crediting the Irish proceeds to Ireland, is in itself equivalent
to making three-quarters of Irish tax revenue take the form of an annual
money grant fixed by Great Britain. If Englishmen also want to retain
control over Irish Police, and Irishmen are short-sighted enough to
desire Imperial control, as a corollary of Imperial payment, of Old Age
Pensions, National Insurance, or Land Purchase, there at once are four
millions, or more than a third of present Irish expenditure, withheld
from Irish authority. To cover the remaining seven millions by a
Contract allowance, instead of going through the pretence of allotting
items of revenue and of deducting a contribution to Imperial services,
is a step which is only too likely to commend itself to harassed
statesmen. But it would not be Home Rule.
This is not a matter of speculation, but of experience. As long ago as
1818, in the case of Canada, we discarded as vicious the old doctrine
that a dependency ought not to be allowed to provide for the whole cost
of government out of its own taxes, for fear that its Legislature would
control policy. If we are going to remove features which make Ireland
resemble a Crown Colony now, do not let us import others which recall
the ancient fallacies of a century ago.
There remains to be considered the important question of loans, and to
that I shall devote a separate chapter.
FOOTNOTES:
[136] Hansard, July 21 and 25, 1893.
[137] Both Bills provided for part payment of the cost of Irish Police
from Imperial funds.
[138] Return No. 220.
[139] See p. 234.
[140] See p. 234.
[141] I need scarcely point out that the newly-created Provinces of the
Dominion of Canada are exceptions to this rule. But there is no analogy
with Ireland. Such Provinces are carved out of newly settled public
territory and given local government.
[142] See pp. 244-245, and 277-278.
[143] Until two years ago even the remaining one-fourth, added to other
small items of Commonwealth revenue, was too large for the expenditure,
and a part of it was returned annually to the States.
[144] The other principal source of revenue is from Posts, but that is
almost exactly balanced by expenditure, so that it barely affects the
amount of the repayment to the States.
[145] These figures are taken from the Official Year-Book of the
Commonwealth of Australia, No. 3, 1901-1909.
[146] It must be understood that the law requiring three-quarters of the
Commonwealth revenue from Customs and Excise to be returned to the
States does not imply that each State should have three-quarters of its
contribution returned, but that the total amount returned should be at
least three-quarters.
[147] See p. 244.
[148] Except perhaps in the case of Canada.
[149] The Author is indebted, here and elsewhere, to papers by Messrs.
C.R. Buxton, P. MacDermot, and R.C. Phillimore, in "Home Rule Problems."
[150] By Clause 5 the following sums were allocated to the Irish Council
for five years: (1) £3,750,000 for the maintenance of eight Government
Departments; (2) £300,000 for public works; (3) £114,000 supplemental.
[151] See p. 299. Under the Act of 1867, No. 2 was earmarked for this
purpose.
CHAPTER XIV
LAND PURCHASE FINANCE[152]
I. LAND PURCHASE LOANS.
The data of the land problem are as follows:
The superficial area of Ireland is 20,350,725 acres, and in 1909 it was
utilized as follows:[153]
Acres. Percentage.
Area under tillage, hay and fruit 4,582,697 22.5
Area under pasture 9,997,445
61.6
Grazed mountain land 2,548,569
Woods, etc. 301,444 1.5
Bog, barren mountain, water,
roads, townlands, etc. 2,925,570 14.4
Total 20,350,725 100.0
The agricultural area, calculated by the exclusion of the last item in
the above column, works out at 17,425,155 acres, but since bog forms
part of a large number of farms, we may, for the purposes of Land
Purchase, place the agricultural area of Ireland at 18,739,644 acres,
the figure given in the Census of 1901, and its annual value for rating
purposes, as given in the same census, at £10,061,667.
This area is divided into 603,827 agricultural holdings, which are in
the hands of 554,060 occupiers, and vary in size from vast pasture
ranches to the tiny plots of miserable rock-sown soil, which abound in
the congested districts of the west.
But small holdings largely predominate. More than two-thirds do not
exceed 30 acres; 153,565 are between 5 and 15 acres, and 147,580 are
below 5 acres.
Size, however, is by itself an imperfect index to value. The effects of
the ancient confiscations and of the extraordinarily unequal
distribution of land which they and the bad Irish agrarian system
produced may be gauged by the valuation figures of the Census of 1901,
which showed that 335,491, or 68.5 per cent, of the total number of
holdings had an annual value (for rating purposes) not exceeding £15,
while they covered only a little more than a third of the total
agricultural area; 134,182 of these holdings were rated below £4, and
covered only 1,360,000 acres.
All farms rated below £4, and a large number of those below £15, may be
regarded as "uneconomic"--that is, incapable by themselves of supplying
a decent living to the farmer and his family.
I shall say no more here about the legislation beginning forty years
ago, which revolutionized the agrarian tenure derived directly from the
Penal Code, and converted the Irish tenant into a "judicial" tenant with
a rent fixed by the Land Commission, with security of tenure, and free
sale of the tenant-right.[154] There are now in Ireland two distinct
classes of occupying tenants, "judicial" tenants, and purchasing
tenants, and it is upon the question of the State-aided transference of
the land from the landlord to the tenant that I wish to concentrate the
reader's attention.
The principle of Land Purchase is this: The State advances money, raised
by a public loan, to the tenant, who pays off the landlord with it, and
becomes for a fixed period the tenant of the State. During this period
he pays, in lieu of rent, an annuity, which represents both interest and
sinking-fund on the capital sum advanced to him. At the end of the
period, which, of course, will vary with the fixed annual amount of the
sinking-fund, he becomes owner in fee-simple of his farm.
There is no charity to the tenant. He borrows the money and pays it back
in a perfectly regular way, and the State has made a temporary
investment of a profitable character.
And now, for the last time, I must trouble the reader with a little
indispensable history. There are four phases in the history of Irish
Land Purchase.
1. John Bright was the first British statesman to maintain that no
healthy and lasting readjustment of the relations between landlord and
tenant in Ireland could ever be made by law. He advocated State-aided
purchase; and in the Church Disestablishment Act of 1869 and the Land
Acts of 1870 and 1881, clauses were inserted allowing the State to
advance money for Land Purchase. The conditions, however, were so
onerous, both to landlord and tenant, that only 7,665 tenants out of
more than half a million were able to avail themselves of these purchase
clauses.
2. The Ashbourne Act of 1885 was the first successful measure of the
kind. Five millions were advanced under it, and five millions more under
an extending Act of 1887. Next came the Act of 1891, empowering the loan
of thirty-three millions, followed by the amending and simplifying Act
of 1896. These Acts form a body of legislation by themselves, of which I
need refer only to a few salient characteristics. They were all alike in
settling the tenant's annuity (in lieu of rent) at 4 per cent, on the
purchase money, though the proportions allocated to interest and
sinking-fund varied. Under the first two Acts the period for final
redemption of his loan by the tenant was forty-nine years, under the
third forty-two years, though this period was extended to seventy years
if the tenant availed himself of decadal reductions in the annuity,
proportionate to the capital paid off by the sinking-fund.
The average price of the holdings sold under these Acts represented
seventeen and a half years' purchase, and the tenant's great inducement
to buy was that, by the aid of cheap State credit, the annuity he paid,
even over so short a period as forty-nine years, represented a reduction
of more than 20 per cent, on his existing judicial rent.
Under the first Act, that of 1885, the landlord received the purchase
money in cash, under the other two, in guaranteed 3 per cent, or 2| per
cent, stock, an arrangement which suited him very well as long as
Government stocks maintained the high level which they reached in the
period preceding the South African War. With the heavy fall in stocks
during and after the war, purchase came to a standstill. The net result
of the operations under the Acts of 1885 to 1896 was that close upon
twenty-four million pounds were advanced to 72,000 tenants, occupying
about two and a half million acres, out of the total of 18,739,644
acres which constitute the agricultural area of Ireland.
3. Once begun, purchase had to be continued, if for no other reason than
that a purchasing tenant paid in annuity a substantially lower sum than
the non-purchasing judicial tenant paid in rent, with the additional, if
distant, prospect of an absolute fee-simple in the future.
Mr. Wyndham, acting on the recommendation of a friendly Conference
between landlords and tenants, took the bull by the horns in 1903, and
carried the great Land Act of that year. Under the Wyndham Act the
system of cash payment to the landlord, dropped since 1891, was resumed,
on a basis calculated to give a selling landlord a sum which, invested
in gilt-edged 3 or 31/4 per cent. stocks, would yield him as much as the
second term judicial rents on the holdings sold, less 10 per cent.,
representing his former cost of collection; while the annuity payable by
the tenant in lieu of rent was reduced from 4 to 31/4 per cent., of which
21/2 per cent, was interest on the purchase money advanced, and 1/2 per
cent, was sinking-fund. This reduction involved an extension of the
period of redemption from forty-nine to sixty-eight and a half years.
The annuity was calculated to represent an average reduction of from 15
to 25 per cent, on second-term judicial rents. Since the gross income of
the landlord was to be reduced only by 10 per cent. on a basis of 3 per
cent. investments, while the annual payment by the tenant was to be
reduced by an average of 20 per cent., clearly there was a gap to be
filled up, and this gap was filled by a State bonus to the selling
landlord of 12 per cent, on the purchase money, a bonus which went
wholly to him personally, clear of all reversionary rights under
settlements. A sum of twelve millions altogether was to be expended on
the bonus.
In addition to direct sales between landlord and tenant through the
Estates Commissioners, large powers were also given both to the Land
Commission and the Congested Districts Board for the purchase and resale
of certain classes of estates--land in congested districts, untenanted
land, etc.
The Act was enormously popular. The landlord, in view of the manifold
insecurities of land tenure in Ireland, made an excellent bargain, and
the tenant, tempted by the immediate transformation of his rent into an
annuity of reduced amount, ignored the extension by twenty years of the
period of redemption, and was willing to agree at high prices for the
purchase of his land. The average price of land sold rose from the
seventeen and a half years' purchase under the old Acts to over twenty
years' purchase, and the soil of Ireland rapidly began to change hands.
But the Act broke down on finance, as adapted to what were then
estimated as the requirements of the purchase operation. The estimate
for the total sum required was one hundred millions, and the purchase
money was to be raised by successive issues of 2-3/4 per cent.
Guaranteed Land Stock. Sums needed from time to time for payment of the
landlord's bonus were also raised by stock, and were placed to an
account known as the Land Purchase Aid Fund.
Now, any loss on flotation, due to stock being issued at a discount, was
to be borne, in the first instance, by the Ireland Development
Grant,[155] and, if and when that was exhausted, by the ratepayers of
Ireland through deduction from the grants in aid of Local Taxation.[156]
The stock, like all Government stocks at that period, fell heavily from
the first, and in 1908 the point was reached when further issues would
have entailed a heavy loss payable out of Irish rates, growing
ultimately, as it was calculated, to an annual charge of more than half
a million. The infliction of such a burden upon the ratepayers of
Ireland was felt to be inequitable. Ireland was not responsible for the
evils which necessitated purchase, and even if she were, the ratepayers
were not the right persons to be mulcted. Meanwhile, purchase was at a
complete standstill.
4. This serious situation led to Mr. Birrell's Land Act of 1909, which
was based upon the Report of a Treasury Committee which sat in the
previous year.[157] The problem was twofold: (a) how to deal with future
agreements to purchase, between landlord and tenant;(6) how to deal with
agreements to purchase pending under the Act of 1903, but as yet
uncompleted.
(a) With regard to future agreements, there are four main points:(1) The
old policy of payment in stock, instead of in cash, is reverted to, and
the stock is a 3 per cent. stock.
(2) The tenant's annuity is raised from 31/4 to 31/2 per cent.
(3) The period of redemption is reduced from sixty-eight and a half
years to sixty-five and a half years. (4) The landlord's bonus is
allocated on a graduated scale, under which the higher the price the
land is sold at, the less is the bonus conferred. These changes, though
no doubt somewhat prejudicial to the prospects of Land Purchase, were
absolutely necessary, owing to a cause beyond human control--the
condition of the money-market.
(b) In regard to pending purchase agreements arrived at under the old
Act, no alteration is made in the terms of the bargains already
concluded between landlord and tenant; but changes are made in the
method of financing these agreed sales. Briefly, parties can obtain
priority in treatment among the enormous mass of cases awaiting the
decision of the Land Commission by agreeing to accept 2-3/4 per cent.
stock at a price not lower than 92 per cent, (which means, at present
prices, that the loss on flotation is split between the landlord and the
State), or, by waiting their turn, they can obtain half the price in
stock at 92, and half in cash. Payments elected to be made wholly in
cash come last of all. Bonus to be paid in cash as before.
Losses caused by the flotation of stock at a discount no longer fall
upon the Irish rates. Any loss not capable of being borne by the Ireland
Development Grant is to be borne by the Imperial Exchequer.
Other important clauses gave compulsory powers of purchase to the
Congested Districts Board, and, in the case of "congested estates" and
untenanted land outside the jurisdiction of the Board, to the Estates
Commissioners. Otherwise Purchase and Sale remained voluntary.
So much for the history of Land Purchase. How exactly do we stand at the
present moment?
In round numbers, nearly 24 millions have actually been advanced under
the old Acts prior to 1903, and up to March of this year (1911) a
further sum of 421/4 millions had actually been advanced under the Wyndham
Act of 1903 and the Birrell Act of 1909.[158]
That makes a total of 661/2 millions actually advanced to 165,133 tenants
up to March of 1911, covering the purchase of nearly 6 million acres of
land, or nearly a third of the total agricultural area of Ireland. The
tenants of the land are now quasi-freeholders, and will eventually be
complete freeholders. In addition, agreements for the purchase of
properties by 150,490 tenants, under the Wyndham and Birrell Acts, at a
total price of 461/2 millions, for 41/2 million acres, were pending in
March, 1911, though the sale and vesting were not yet completed. The
properties represented by these agreements will be duly transferred in
the course of the next few years, though the congestion of business is
very great.