III (continued 2)

These circumstances may never occur. I don't believe they will occur. If we only all stand firm together I believe the Budget will be carried. I believe the Budget will vindicate the strength of the Government supported by the House of Commons. I believe it will vindicate the financial strength of this great country. I don't believe, if we pursue our course without wavering or weakening, there is any force in this country which can stand against us. The Conservative Whip in the House of Lords, a friend of mine, Lord Churchill, said the other day that the House of Lords when they received the Budget would do their duty. I hope they will. But in any case be sure of this—that the Government and the House of Commons will do their duty. Then if there is anything more to be done, see that you are ready to do your duty too.

FOOTNOTES:

THE SPIRIT OF THE BUDGETToC

Leicester, September 5, 1909

(From The Times, by permission.)

I have done my best to study the political history of the last forty or fifty years, and I cannot find any Government which, at the end of its fourth year, enjoyed the same measure of support, prestige, and good fortune that we do. The only Administration which could compare in the importance and the volume of its legislation with the present Government is Mr. Gladstone's great Government of 1868. That was a Government of measures and of men; but no measure of that Government could equal in importance the Old-Age Pensions Act which we have placed on the Statute-book. The settlement of the Irish Church question by Disestablishment was not a more baffling and intricate business, than the settlement of the Irish University question which Mr. Birrell has achieved. The labour legislation of the Government of 1868, although very important, shows nothing which equals in importance the Trades Disputes Act, which we have carried through, and Mr. Cardwell's reforms in army organisation were not more successful, and were certainly much less generally accepted, than those which have been effected by Mr. Haldane. In the fourth year of its administration the Government of 1868 was genuinely unpopular. It had quarrelled with the Nonconformists without gaining the support of the Church; it had offended the liquor interest without satisfying the Temperance forces in the country; it had disturbed and offended many vested interests without arousing popular enthusiasm.

Indeed, if you look back, you will find that the fourth year in the history of a Government is always a very critical and has often been a very unfortunate year. It is quite true that Mr. Disraeli's Government, which assumed office in 1874, did enjoy in its fourth year a fleeting flush of success, which, however, proved illusory. With that single exception, every other modern Government that has lasted so long, has occupied an unsatisfactory position in its fourth year. The Government of 1880 in the year 1884 was brought very low, and was deeply involved in disastrous enterprises beyond the sea which ultimately resulted in sorrow and misfortune. The Conservative Government which took office in 1886 was by the year 1890, owing to its strange proceedings against Mr. Parnell, brought to the depths of humiliation. The Government of 1895 was in the year 1899 thoroughly unpopular, and if they had not plunged into the tumult of war in South Africa, they would very shortly have been dismissed from power. As for the Government of 1900, in the fourth year of Mr. Balfour's late Administration, I am sure I could not easily do justice to the melancholy position which they occupied.

Where do we stand to-day at the end of our fourth year of office? I put it plainly to you to consider, whether one is not justified in saying that we occupy a position of unexampled strength at the present time. The Government is strong in its administrative record, which reveals no single serious or striking mistake in all the complicated conduct of affairs. There have been no regrettable incidents by land or sea and none of those personal conflicts between the high officials that used to occur so frequently under a late dispensation. We have had no waste of public treasure and no bloodshed. We are strong in the consciousness of a persistent effort to sweep away anomalies and inequalities, to redress injustice, to open more widely to the masses of the people the good chances in life, and to safeguard them against its evil chances. We also claim that we are strong in the support and enthusiasm of a majority of our fellow-countrymen. We are strong in the triumph of our policy in South Africa; most of all we are strong in the hopes and plans which we have formed for the future.

It is about this future that I will speak to you this afternoon. And let me tell you that when I think about it, I do not feel at all inclined to plead exhaustion in consequence of the exertions we have made, or to dwell upon the successes which we have had in the past, or to survey with complacency the record of the Government or to ask you to praise us for the work which we have done. No; when I think of the work which lies before us, upon which we have already entered, of the long avenues of social reconstruction and reorganisation which open out in so many directions and ever more broadly before us, of the hideous squalor and misery which darken and poison the life of Britain, of the need of earnest action, of the prospects of effective and immediate action—when I dwell upon this, it is not of feelings of lassitude or exhaustion that I am conscious, but only of a vehement impulse to press onwards.

The social conditions of the British people in the early years of the twentieth century cannot be contemplated without deep anxiety. The anxiety is keen because it arises out of uncertainty. It is the gnawing anxiety of suspense. What is the destiny of our country to be? Nothing is settled either for or against us. We have no reason to despair; still less have we any reason to be self-satisfied. All is still in our hands for good or for ill. We have the power to-day to choose our fortune, and I believe there is no nation in the world, perhaps there never has been in history, any nation which at one and the same moment was confronted with such opposite possibilities, was threatened on the one hand by more melancholy disaster, and cheered on the other by more bright, yet not unreasonable hopes. The two roads are open. We are at the cross-ways. If we stand on in the old happy-go-lucky way, the richer classes ever growing in wealth and in number, and ever declining in responsibility, the very poor remaining plunged or plunging even deeper into helpless, hopeless misery, then I think there is nothing before us but savage strife between class and class, with an increasing disorganisation, with an increasing destruction of human strength and human virtue—nothing, in fact, but that dual degeneration which comes from the simultaneous waste of extreme wealth and of extreme want.

Now we have had over here lately colonial editors from all the Colonies of the British Empire, and what is the opinion which they expressed as to the worst thing they saw in the old country? The representatives of every Colony have expressed the opinion that the worst they saw here, was the extreme of poverty side by side with the extreme of luxury. Do not you think it is very impressive to find an opinion like that, expressed in all friendship and sincerity, by men of our own race who have come from lands which are so widely scattered over the surface of the earth, and are the product of such varied conditions? Is it not impressive to find that they are all agreed, coming as they do from Australia, or Canada, or South Africa, or New Zealand, that the greatest danger to the British Empire and to the British people is not to be found among the enormous fleets and armies of the European Continent, nor in the solemn problems of Hindustan; it is not the Yellow peril nor the Black peril nor any danger in the wide circuit of colonial and foreign affairs. No, it is here in our midst, close at home, close at hand in the vast growing cities of England and Scotland, and in the dwindling and cramped villages of our denuded countryside. It is there you will find the seeds of Imperial ruin and national decay—the unnatural gap between rich and poor, the divorce of the people from the land, the want of proper discipline and training in our youth, the exploitation of boy labour, the physical degeneration which seems to follow so swiftly on civilised poverty, the awful jumbles of an obsolete Poor Law, the horrid havoc of the liquor traffic, the constant insecurity in the means of subsistence and employment which breaks the heart of many a sober, hard-working man, the absence of any established minimum standard of life and comfort among the workers, and, at the other end, the swift increase of vulgar, joyless luxury—here are the enemies of Britain. Beware lest they shatter the foundations of her power.

Then look at the other side, look at the forces for good, the moral forces, the spiritual forces, the civic, the scientific, the patriotic forces which make for order and harmony and health and life. Are they not tremendous too? Do we not see them everywhere, in every town, in every class, in every creed, strong forces worthy of Old England, coming to her rescue, fighting for her soul? That is the situation in our country as I see it this afternoon—two great armies evenly matched, locked in fierce conflict with each other all along the line, swaying backwards and forwards in strife—and for my part I am confident that the right will win, that the generous influences will triumph over the selfish influences, that the organising forces will devour the forces of degeneration, and that the British people will emerge triumphant from their struggles to clear the road and lead the march amongst the foremost nations of the world.

Well, now, I want to ask you a question. I daresay there are some of you who do not like this or that particular point in the Budget, who do not like some particular argument or phrase which some of us may have used in advocating or defending it. But it is not of these details that I speak; the question I want each of you to ask himself is this: On which side of this great battle which I have described to you, does the Budget count? Can any of you, looking at it broadly and as a whole, looking on the policy which surrounds it, and which depends upon it, looking at the arguments by which it is defended, as well as the arguments by which it is opposed—can any one doubt that the Budget in its essential character and meaning, in its spirit and in its practical effect, would be a tremendous reinforcement, almost like a new army coming up at the end of the day, upon the side of all those forces and influences which are fighting for the life and health and progress of our race?

In the speeches which I have made about the country since the Budget was introduced I have explained and defended in detail the special financial proposals upon which we rely to provide the revenue for the year. You are, no doubt, generally acquainted with them. There is the increase in the income-tax of twopence, the further discrimination between earned and unearned income, and the super-tax of sixpence on incomes of over £5,000 a year. There are the increases in estate duties and in the legacy duties, and there are the new duties on stamps; there is the tax on motor-cars and petrol, the proceeds of which are to go to the improvement of the roads and the abatement of the dust nuisance; there are the taxes on working class indulgences—namely, the increase in the tax on tobacco and on whisky, which enable the working man to pay his share, as indeed he has shown himself very ready to do; there are the taxes on liquor licences, which are designed to secure for the State a certain special proportion of the monopoly value created wholly by the State and with which it should never have parted; and, lastly, there are the three taxes upon the unearned increment in land, upon undeveloped land, upon the unearned increment in the reversion of leases, and then there is the tax upon mining royalties.

Now these are the actual proposals of the Budget, and I do not think that, if I had the time, I should find any great difficulty in showing you that there are many good arguments, a great volume of sound reason, which can be adduced in support of every one of these proposals. Certainly there is no difficulty in showing that since the Budget has been introduced there has been no shock to credit, there has been no dislocation of business, there has been no setback in the beginning of that trade revival about the approach of which I spoke to you, when I was in Leicester at the beginning of the year and which there are now good reasons for believing is actually in progress. The taxes which have been proposed have not laid any burden upon the necessaries of life like bread or meat, nor have they laid any increased burden upon comforts like tea and sugar. There is nothing in these taxes which makes it harder for a labouring man to keep up his strength or for the small man of the middle class to maintain his style of living. There is nothing in these taxes which makes it more difficult for any hard-working person, whether he works with his hands or his head, to keep a home together in decent comfort. No impediment has been placed by these taxes upon enterprise; no hampering restrictions interrupt the flow of commerce. On the contrary, if the tax upon spirits should result in a diminution in the consumption of strong drink, depend upon it, the State will gain, and all classes will gain. The health of millions of people, the happiness of hundreds of thousands of homes, will be sensibly improved, and money that would have been spent upon whisky will flow into other channels, much less likely to produce evil and much more likely to produce employment. And if the tax on undeveloped land, on land, that is to say, which is kept out of the market, which is held up idly in order that its owner may reap unearned profit by the exertions and through the needs of the surrounding community, if that tax should have the effect of breaking this monopoly and of making land cheaper, a tremendous check on every form of productive activity will have been removed. All sorts of enterprises will become economically possible which are now impossible owing to the artificially high price of land, and new forces will be liberated to stimulate the wealth of the nation.

But it is not on these points that I wish to dwell this afternoon. I want to tell you about the meaning and the spirit of the Budget. Upon the Budget and upon the policy of the Budget depends a far-reaching plan of social organisation designed to give a greater measure of security to all classes, but particularly to the labouring classes. In the centre of that plan stands the policy of national insurance. The Chancellor of the Exchequer has been for more than a year at work upon this scheme, and it is proposed—I hope next year, if there is a next year—it is proposed, working through the great friendly societies, which have done so much invaluable work on these lines, to make sure that, by the aid of a substantial subvention from the State, even the poorest steady worker or the poorest family shall be enabled to make provision against sickness, against invalidity, and for the widows and orphans who may be left behind.

Side by side with this is the scheme of insurance against unemployment which I hope to have the honour of passing through Parliament next year. The details of that scheme are practically complete, and it will enable upwards of two and a quarter millions of workers in the most uncertain trades of this country—trades like ship-building, engineering, and building—to secure unemployment benefits, which in a great majority of cases will be sufficient to tide them over the season of unemployment. This scheme in its compulsory form is limited to certain great trades like those I have specified, but it will be open to other trades, to trade unions, to workers' associations of various kinds, or even to individuals to insure with the State Unemployment Insurance Office against unemployment on a voluntary basis, and to secure, through the State subvention, much better terms than it would be possible for them to obtain at the present time.

It would be impossible to work a scheme of unemployment insurance except in conjunction with some effective method of finding work and of testing willingness to work, and that can only be afforded by a national system of labour exchanges. That Bill has already passed through Parliament, and in the early months of next year we shall hope to bring it into operation by opening, all over the country, a network of labour exchanges connected with each other and with the centre by telephone. We believe this organisation may secure for labour—and, after all, labour is the only thing the great majority of people have to sell—it will secure for labour, for the first time, that free and fair market which almost all other commodities of infinitely less consequence already enjoy, and will replace the present wasteful, heartbreaking wanderings aimlessly to and fro in search of work by a scientific system; and we believe that the influence of this system in the end must tend to standardising the conditions of wages and employment throughout the country.

Lastly, in connection with unemployment I must direct your attention to the Development Bill, which is now before Parliament, the object of which is to provide a fund for the economic development of our country, for the encouragement of agriculture, for afforestation, for the colonisation of England, and for the making of roads, harbours, and other public works. And I should like to draw your attention to a very important clause in that Bill, which says that the prosecution of these works shall be regulated, as far as possible, by the conditions of the labour market, so that in a very bad year of unemployment they can be expanded, so as to increase the demand for labour at times of exceptional slackness, and thus correct and counterbalance the cruel fluctuations of the labour market. The large sums of money which will be needed for these purposes are being provided by the Budget of Mr. Lloyd-George, and will be provided in an expanding volume in the years to come through the natural growth of the taxes we are imposing.

I have hitherto been speaking of the industrial organisation of insurance schemes, labour exchanges, and economic development. Now I come to that great group of questions which are concerned with the prevention and relief of distress. We have before us the reports of the majority and minority of the Royal Commission on the Poor Law, and we see there a great and urgent body of reforms which require the attention of Parliament. The first and most costly step in the relief of distress has already been taken by the Old-Age Pensions Act, supplemented, as it will be if the Budget passes, by the removal of the pauper disqualification. By that Act we have rescued the aged from the Poor Law. We have yet to rescue the children; we have yet to distinguish effectively between the bonâ fide unemployed workman and the mere loafer and vagrant; we have yet to transfer the sick, the inebriate, the feeble-minded and the totally demoralised to authorities specially concerned in their management and care.

But what I want to show you, if I have made my argument clear, is that all these schemes—which I can do little more than mention this afternoon, each one of which is important—are connected one with the other, fit into one another at many points, that they are part of a concerted and interdependent system for giving a better, fairer social organisation to the masses of our fellow-countrymen. Unemployment insurance, which will help to tide a workman over a bad period, is intimately and necessarily associated with the labour exchanges which will help to find him work and which will test his willingness to work. This, again, will be affected by the workings of the Development Bill, which, as I told you, we trust may act as a counterpoise to the rocking of the industrial boat and give a greater measure of stability to the labour market.

The fact that everybody in the country, man and woman alike, will be entitled, with scarcely any exception, to an old-age pension from the State at the age of seventy—that fact makes it ever so much cheaper to insure against invalidity or infirmity up to the age of seventy. And, with the various insurance schemes which are in preparation, we ought to be able to set up a complete ladder, an unbroken bridge or causeway, as it were, along which the whole body of the people may move with a certain assured measure of security and safety against hazards and misfortunes. Then, if provision can be arranged for widows and orphans who are left behind, that will be a powerful remedy against the sweating evil; for, as you know, these helpless people, who in every country find employment in particular trades, are unable to make any fair bargain for themselves, and their labour, and this consequently leads to the great evils which have very often been brought to the notice of Parliament. That, again, will fit in with the Anti-Sweating Bill we are passing through Parliament this year.

Now, I want you to see what a large, coherent plan we are trying to work out, and I want you to believe that the object of the plan and the results of it will be to make us a stronger as well as a happier nation. I was reading the other day some of the speeches made by Bismarck—a man who, perhaps more than any other, built up in his own lifetime the strength of a great nation—speeches which he made during the time when he was introducing into Germany those vast insurance schemes, now deemed by all classes and parties in Germany to be of the utmost consequence and value. "I should like to see the State" (said Prince Bismarck in 1881), "which for the most part consists of Christians, penetrated to some extent by the principles of the religion which it professes, especially as concerns the help one gives to his neighbour, and sympathy with the lot of old and suffering people." Then, again, in the year 1884 he said: "The whole matter centres in the question, 'Is it the duty of the State or is it not to provide for its helpless citizens?' I maintain that it is its duty, that it is the duty, not only of the 'Christian' State, as I ventured once to call it when speaking of 'Practical Christianity,' but of every State."

There are a great many people who will tell you that such a policy, as I have been endeavouring to outline to you this afternoon, will not make our country stronger, because it will sap the self-reliance of the working classes. It is very easy for rich people to preach the virtues of self-reliance to the poor. It is also very foolish, because, as a matter of fact, the wealthy, so far from being self-reliant, are dependent on the constant attention of scores, and sometimes even hundreds, of persons who are employed in waiting upon them and ministering to their wants. I think you will agree with me, on the other hand—knowing what you do of the life of this city and of the working classes generally—that there are often trials and misfortunes which come upon working-class families quite beyond any provision which their utmost unaided industry and courage could secure for them. Left to themselves, left absolutely to themselves, they must be smashed to pieces, if any exceptional disaster or accident, like recurring sickness, like the death or incapacity of the breadwinner, or prolonged or protracted unemployment, fall upon them.

There is no chance of making people self-reliant by confronting them with problems and with trials beyond their capacity to surmount. You do not make a man self-reliant by crushing him under a steam roller. Nothing in our plans will relieve people from the need of making every exertion to help themselves, but, on the contrary, we consider that we shall greatly stimulate their efforts by giving them for the first time a practical assurance that those efforts will be crowned with success.

I have now tried to show you that the Budget, and the policy of the Budget, is the first conscious attempt on the part of the State to build up a better and a more scientific organisation of society for the workers of this country, and it will be for you to say—at no very distant date—whether all this effort for a coherent scheme of social reconstruction is to be swept away into the region of lost endeavour.

That is the main aspect of the Budget to which I wish to draw your attention. But there is another significance of the highest importance which attaches to the Budget. I mean the new attitude of the State towards wealth. Formerly the only question of the tax-gatherer was, "How much have you got?" We ask that question still, and there is a general feeling, recognised as just by all parties, that the rate of taxation should be greater for large incomes than for small. As to how much greater, parties are no doubt in dispute. But now a new question has arisen. We do not only ask to-day, "How much have you got?" we also ask, "How did you get it? Did you earn it by yourself, or has it just been left you by others? Was it gained by processes which are in themselves beneficial to the community in general, or was it gained by processes which have done no good to any one, but only harm? Was it gained by the enterprise and capacity necessary to found a business, or merely by squeezing and bleeding the owner and founder of the business? Was it gained by supplying the capital which industry needs, or by denying, except at an extortionate price, the land which industry requires? Was it derived from active reproductive processes, or merely by squatting on some piece of necessary land till enterprise and labour, and national interests and municipal interests, had to buy you out at fifty times the agricultural value? Was it gained from opening new minerals to the service of man, or by drawing a mining royalty from the toil and adventure of others? Was it gained by the curious process of using political influence to convert an annual licence into a practical freehold and thereby pocketing a monopoly value which properly belongs to the State—how did you get it?" That is the new question which has been postulated and which is vibrating in penetrating repetition through the land.[20]

It is a tremendous question, never previously in this country asked so plainly, a new idea, pregnant, formidable, full of life, that taxation should not only have regard to the volume of wealth, but, so far as possible, to the character of the processes of its origin. I do not wonder it has raised a great stir. I do not wonder that there are heart-searchings and angry words because that simple question, that modest proposal, which we see embodied in the new income-tax provisions, in the land taxes, in the licence duties, and in the tax on mining royalties—that modest proposal means, and can only mean, the refusal of the modern State to bow down unquestioningly before the authority of wealth. This refusal to treat all forms of wealth with equal deference, no matter what may have been the process by which it was acquired, is a strenuous assertion in a practical form, that there ought to be a constant relation between acquired wealth and useful service previously rendered, and that where no service, but rather disservice, is proved, then, whenever possible, the State should make a sensible difference in the taxes it is bound to impose.

It is well that you should keep these issues clearly before you during the weeks in which we seem to be marching towards a grave constitutional crisis. But I should like to tell you that a general election, consequent upon the rejection of the Budget by the Lords, would not, ought not to be, and could not be fought upon the Budget alone. "Budgets come," as the late Lord Salisbury said in 1894—"Budgets come and Budgets go." Every Government frames its own expenditure for each year; every Government has to make its own provision to meet that expenditure. There is a Budget every year, and memorable as the Budget of my right hon. friend may be, far-reaching as is the policy depending upon it, the Finance Bill, after all, is in its character only an annual affair. But the rejection of the Budget by the House of Lords would not be an annual affair. It would be a violent rupture of constitutional custom and usage extending over three hundred years and recognised during all that time by the leaders of every Party in the State. It would involve a sharp and sensible breach with the traditions of the past; and what does the House of Lords depend upon if not upon the traditions of the past? It would amount to an attempt at revolution not by the poor, but by the rich; not by the masses, but by the privileged few; not in the name of progress, but in that of reaction; not for the purpose of broadening the framework of the State, but of greatly narrowing it. Such an attempt, whatever you may think of it, would be historic in its character, and the result of the battle fought upon it, whoever wins, must inevitably be not of an annual, but of a permanent and final character. The result of such an election must mean an alteration of the veto of the House of Lords; if they win they will have asserted their right, not merely to reject legislation of the House of Commons, but to control the finances of the country, and if they lose, we will deal with their veto once and for all.

We do not seek the struggle, we have our work to do; but if it is to come, it could never come better than now. Never again perhaps, certainly not for many years, will such an opportunity be presented to the British democracy. Never will the ground be more favourable; never will the issues be more clearly or more vividly defined. Those issues will be whether the new taxation, which is admitted on all sides to be necessary, shall be imposed upon luxuries, superfluities, and monopolies, or upon the prime necessaries of life; whether you shall put your tax upon the unearned increment on land or upon the daily bread of labour; whether the policy of constructive social reform on which we are embarked, and which expands and deepens as we advance, shall be carried through and given a fair chance, or whether it shall be brought to a dead stop and all the energies and attention of the State devoted to Jingo armaments and senseless foreign adventure. And, lastly, the issue will be whether the British people in the year of grace 1909 are going to be ruled through a representative Assembly, elected by six or seven millions of voters, about which almost every one in the country, man or woman, has a chance of being consulted, or whether they are going to allow themselves to be dictated to and domineered over by a minute minority of titled persons, who represent nobody, who are answerable to nobody, and who only scurry up to London to vote in their party interests, in their class interests, and in their own interests.

These will be the issues, and I am content that the responsibility for such a struggle, if it should come, should rest with the House of Lords themselves. But if it is to come, we shall not complain, we shall not draw back from it. We will engage in it with all our hearts and with all our might, it being always clearly understood that the fight will be a fight to the finish, and that the fullest forfeits, which are in accordance with the national welfare, shall be exacted from the defeated foe.

FOOTNOTES:

THE BUDGET AND PROPERTY.ToC

Abernethy, October 7, 1909

(From The Daily Telegraph, by permission of the Editor.)

This is a very fine gathering for a lonely glen, and it augurs well for the spirit of Liberalism. Much will be expected of Scotland in the near future. She will be invited to pronounce upon some of the largest and most complicated questions of politics and finance that can possibly engage the attention of thoughtful citizens, and her decision will perhaps govern events.

There is one contrast between Parties which springs to the eye at once. One Party has a policy, detailed, definite, declared, actually in being. The other Party has no policy. The Conservative Party has no policy which it can put before the country at the present time on any of the great controverted questions of the day. On most of the previous occasions when we have approached a great trial of strength, the Conservative Party have had a policy of their own which they could state in clear terms. You would naturally expect some reticence or reserve from the head of a Government responsible for the day-to-day administration of affairs. But what do you see at the present time? Mr. Asquith speaks out boldly and plainly on all the great questions which are being debated, and it is the Leader of the Opposition who has to take refuge in a tactical and evasive attitude. Why, Mr. Balfour is unable to answer the simplest questions. At Birmingham, the Prime Minister asked him in so many words: What alternative did he propose to the Budget? What did he mean by Tariff Reform? and what was his counsel to the House of Lords?

It would not be difficult to frame an answer to all these questions. Mr. Chamberlain, for instance, was quite ready with his answers to all of them. At Glasgow in 1903 he stated what his Budget would have been, and he explained precisely what he meant by Tariff Reform. At Birmingham last month he was equally clear in urging the Lords to reject the Budget. There is no doubt whatever where Mr. Chamberlain and those who agree with him stand to-day. They would raise the extra taxation which is required, by protective import duties on bread, on meat, on butter, cheese, and eggs, and upon foreign imported manufactured articles; and in order to substitute their plan for ours they are prepared to urge the House of Lords to smash up the Budget and to smash up as much of the British Constitution and the British financial system as may be necessary for the purpose.

That is their policy; but, after all, it is Mr. Balfour who is the leader of the Conservative Party. He is the statesman who would have to form and carry on any administration which might be formed from that Party, and he will not state his policy upon any of the dominant questions of the day. Why will he not answer these simple questions? He is the leader, and it is because he wishes to remain the leader that he observes this discreet silence. He tells us he is in favour of Tariff Reform, he loves Tariff Reform, he worships Tariff Reform. He feels that it is by Tariff Reform alone that the civilisation of Great Britain can be secured, and the unity of the Empire achieved; but nothing will induce him to say what he means by Tariff Reform. That is a secret which remains locked in his own breast. He condemns our Budget, he clamours for greater expenditure, and yet he puts forward no alternative proposals by which the void in the public finances may be made good. And as for his opinion about the House of Lords, he dare not state his true opinion to-day upon that subject. I do not say that there are not good reasons for Mr. Balfour's caution. It sometimes happens that the politics of a Party become involved in such a queer and awkward tangle that only a choice of evils is at the disposal of its leader; and when the leader has to choose between sliding into a bog on the one hand and jumping over a precipice on the other, some measure of indulgence may be extended to him if he prefers to go on marking time, and indicating the direction in which his followers are to advance by a vague general gesture towards the distant horizon.

Whatever you may think about politics, you must at least, in justice to his Majesty's Government, recognise that their position is perfectly plain and clear. Some of you may say to me, "Your course, your policy may be clear enough, but you are burdening wealth too heavily by your taxes and by your speeches." Those shocking speeches! "You are driving capital out of the country." Let us look at these points one at a time. The capital wealth of Britain is increasing rapidly. Sir Robert Giffen estimated some years ago that the addition to the capital wealth of the nation was at least between two hundred and three hundred millions a year. I notice that the paid-up capital of registered companies alone, which was 1,013 millions sterling in 1893, has grown naturally and healthily to 2,123 millions sterling in 1908. And, most remarkable of all, the figures I shall submit to you, the gross amount of income which comes under the view of the Treasury Commissioners who are charged with the collection of income-tax, was in the year 1898-9 762 millions, and it had risen from that figure to 980 millions sterling in the year 1908-9: that is to say, that it had risen by 218 millions in the course of ten years.

From this, of course, a deduction has to be made for more efficient methods of collection. This cannot be estimated exactly; but it certainly accounts for much less than half the increase. Let us assume that it is a half. The increase is therefore 109 millions. I only wish that wages had increased in the same proportion. When I was studying those figures I have mentioned to you I looked at the Board of Trade returns of wages. Those returns deal with the affairs of upwards of ten millions of persons, and in the last ten years the increase in the annual wages of that great body of persons has only been about ten million pounds: that is to say, that the increase of income assessable to income-tax is at the very least more than ten times greater than the increase which has taken place in the same period in the wages of those trades which come within the Board of Trade returns.

When we come to the question of how burdens are to be distributed, you must bear these facts and figures in mind, because the choice is severely limited. You can tax wealth or you can tax wages—that is the whole choice which is at the disposal of the Chancellor of the Exchequer. Of course I know there are some people who say you can tax the foreigner—but I am quite sure that you will not expect me to waste your time in dealing with that gospel of quacks and creed of gulls. The choice is between wealth and wages, and we think that, in view of that great increase in accumulated wealth which has marked the last ten years, and is the feature of our modern life, it is not excessive or unreasonable at the present stage in our national finances to ask for a further contribution from the direct taxpayers of something under eight millions a year. That is the total of all the new taxes on wealth which our Budget imposes, and it is about equal to the cost of four of those Dreadnoughts for which these same classes were clamouring a few months ago. And it is less than one-thirteenth of the increased income assessable to income-tax in the last ten years.

It is because we have done this that we are the object of all this abuse and indignation which is so loudly expressed in certain quarters throughout the country at the present time. While the working-classes have borne the extra taxation upon their tobacco and whisky in silence, all this rage and fury is outpoured upon the Government by the owners of this ever-increasing fund of wealth, and we are denounced as Socialists, as Jacobins, as Anarchists, as Communists, and all the rest of the half-understood vocabulary of irritated ignorance, for having dared to go to the wealthy classes for a fair share of the necessary burdens of the country. How easy it would be for us to escape from all this abuse if we were to put the extra taxation entirely upon the wages of the working classes by means of taxes on bread and on meat. In a moment the scene would change, and we should be hailed as patriotic, far-sighted Empire-builders, loyal and noble-hearted citizens worthy of the Motherland, and sagacious statesmen versed in the science of government. See, now, upon what insecure and doubtful foundations human praise and human censure stand.

Well, then, it is said your taxes fall too heavily upon the agricultural landowner and the country gentleman. Now, there is no grosser misrepresentation of the Budget than that it hits the agricultural landowner, and I think few greater disservices can be done to the agricultural landowner, whose property has in the last thirty years in many cases declined in value, than to confuse him with the ground landlord in a great city, who has netted enormous sums through the growth and the needs of the population of the city. None of the new land taxes touch agricultural land, while it remains agricultural land. No cost of the system of valuation which we are going to carry into effect will fall at all upon the individual owner of landed property. He will not be burdened in any way by these proposals. On the contrary, now that an amendment has been accepted permitting death duties to be paid in land in certain circumstances, the owner of a landed estate, instead of encumbering his estate by raising the money to pay off the death duties, can cut a portion from his estate; and this in many cases will be a sensible relief. Secondly, we have given to agricultural landowners a substantial concession in regard to the deductions which they are permitted to make from income-tax assessment on account of the money which they spend as good landlords upon the upkeep of their properties, and we have raised the limit of deduction from 12½ per cent. to 25 per cent. Thirdly, there is the Development Bill—that flagrant Socialistic measure which passed a second reading in the House of Lords unanimously—which will help all the countryside and all classes of agriculturists, and which will help the landlord in the country among the rest. So much for that charge.

Then it is said, "At any rate you cannot deny that the Budget is driving capital out of the country." I should like to point out to you that before the Budget was introduced, we were told that it was Free Trade that was driving capital out of the country. Let that pass. It is said we cannot deny that the Budget is driving capital out of the country. I deny it absolutely. To begin with, it is impossible to drive the greater part of our capital out of this country, for what is the capital of the country? The greatest part of that capital is the land, the state of cultivation which exists, the roads, the railways, the mines, the mills—this is the greatest part of the capital. The owners of that capital might conceivably, if they thought fit, depart from the country, but their possessions would remain behind.

I shall be asked, What about all this foreign investment that is going on? Is not British credit now being diverted abroad to foreign countries, to the detriment of our own country? Is not British capital fleeing from The Socialistic speeches of the Chancellor of the Exchequer, and the President of the Board of Trade, and taking refuge in Germany, where of course there are no Socialists, or in other countries, where there is never any disturbance, like France, or Spain, or Russia, or Turkey? Now let us look into that. There are only two ways in which capital can leave this country for foreign investments. It is no good sending bits of paper to the foreigner and expecting him to pay a dividend in return. There are only two ways—one is by exports made by British labour, and the other by bullion. Now, if the exports were to increase, surely that should be a cause of rejoicing, especially to our Tariff Reformers, who regard the increase in exports as the index of national prosperity. As for the second—the export of bullion—would you believe it, it is only a coincidence, but it is an amusing coincidence, there are actually six million pounds' worth more gold in the country now, than there were at the beginning of the year before the Budget was introduced. The active and profitable investment abroad which has marked the last two or three years, which is bound to swell the exports of the next few years, has not been attended by any starvation of home industry. On the contrary, the amount of money forthcoming for the development of new industries and now enterprises in this country during the last two or three years has compared very favourably with the years which immediately preceded them, when the Conservative Government was in power.

Property in Great Britain is secure. It would be a great mistake to suppose that that security depends upon the House of Lords. If the security of property in a powerful nation like our own were dependent upon the action or inaction of 500 or 600 persons, that security would long ago have been swept away. The security of property depends upon its wide diffusion among great numbers and all classes of the population, and it becomes more secure year by year because it is gradually being more widely distributed. The vital processes of civilisation require, and the combined interests of millions guarantee, the security of property. A society in which property was insecure would speedily degenerate into barbarism; a society in which property was absolutely secure, irrespective of all conceptions of justice in regard to the manner of its acquisition, would degenerate, not to barbarism, but death. No one claims that a Government should from time to time, according to its conceptions of justice, attempt fundamentally to recast the bases on which property is erected. The process must be a gradual one; must be a social and a moral process, working steadily in the mind and in the body of the community; but we contend, when new burdens have to be apportioned, when new revenues have to be procured, when the necessary upkeep of the State requires further taxes to be imposed—we contend that, in distributing the new burdens, a Government should have regard first of all to ability to pay and, secondly, that they should have regard to some extent, and so far as is practicable, to the means and the process by which different forms of wealth have been acquired; and that they should make a sensible difference between wealth which is the fruit of productive enterprise and industry or of individual skill, and wealth which represents the capture by individuals of socially created values. We say that ought to be taken into consideration. We are taking it into consideration now by the difference we have made in the income-tax between earned and unearned incomes, by the difference we make between the taxation which is imposed upon a fortune which a man makes himself and the fortune which he obtains from a relative or a stranger. We are taking it into consideration in our tax on mining royalties, in our licence duties and in our taxes on the unearned increment in land. The State, we contend, has a special claim upon the monopoly value of the liquor licence, which the State itself has created, and which the State itself maintains from year to year by its sole authority. If that claim has not previously been made good, that is only because the liquor interest have had the power, by using one branch of the Legislature, to keep the nation out of its rights. All the more reason to make our claim good now.

Again we say that the unearned increment in land is reaped in proportion to the disservice done to the community, is a mere toll levied upon the community, is an actual burden and imposition upon them, and an appropriation by an individual, under existing law, no doubt, of socially created wealth. For the principle of a special charge being levied on this class of wealth we can cite economic authority as high us Adam Smith, and political authority as respectable as Lord Rosebery; and for its application we need not merely cite authority, but we can point to the successful practice of great civilised neighbouring States.

Is it really the contention of the Conservative Party that the State is bound to view all processes of wealth-getting with an equal eye, provided they do not come under the criminal codes? Is that their contention? Are we really to be bound to impose the same burden upon the hardly won income of the professional man and the extraordinary profits of the land monopolist? Are we really to recognise the liquor licence which the State created, which the law says is for one year only—as if it were as much the brewers' or the publicans' property for ever as the coat on his back? No; it is absurd. Of the waste and sorrow and ruin which are caused by the liquor traffic, of the injury to national health and national wealth which follows from it, which attends its ill-omened footsteps, I say nothing more in my argument this afternoon. The State is entitled to reclaim its own, and they shall at least render unto Cæsar the things which are Cæsar's.

The money must be found, and we hold that Parliament, in imposing the inevitable taxes, is entitled not only to lay a heavier proportionate burden upon the rich than on the poor, but also to lay a special burden upon certain forms of wealth which are clearly social in their origin, and have not at any point been derived from a useful or productive process on the part of their possessors. But it may be said, "Your plans include other expenditure besides the Navy and Old-age Pensions. What about Insurance, Labour Exchanges, and economic development?" Those objects, at least, it may be urged are not inevitable or indispensable. It is quite true that the taxation which we seek to impose this year, and which is sufficient, and only sufficient for the needs of this year, will yield more abundant revenues in future years, and if at the same time a reduction in the expenditure on armaments becomes possible, we shall have substantial revenues at our disposal. That is perfectly true, but is that a reason for condemning the Budget? When we see on every hand great nations which cannot pay their way, which have to borrow merely to carry on from year to year, when we see how sterile and unproductive all the dodges and devices of their protective tariffs have become, when we remember how often we have ourselves been told that under Free Trade no more revenue could be got, is it not a welcome change for our country, and for our Free Trade policy, to find our opponents complaining of the expansive nature of a Free Trade revenue? I don't wonder that Tory Protectionists have passed a resolution at Birmingham declaring that the Budget will indefinitely postpone—that was the phrase—the scheme of Tariff Reform.

And upon what objects and policies do we propose to spend the extra revenue which this Budget will unquestionably yield in future years? People talk vaguely of the stability of society, of the strength of the Empire, of the permanence of a Christian civilisation. On what foundation do they seek to build? There is only one foundation—a healthy family life for all. If large classes of the population live under conditions which make it difficult if not impossible for them to keep a home together in decent comfort, if the children are habitually underfed, if the housewife is habitually over-strained, if the bread-winner is under-employed or under-paid, if all are unprotected and uninsured against the common hazards of modern industrial life, if sickness, accident, infirmity, or old age, or unchecked intemperance, or any other curse or affliction, break up the home, as they break up thousands of homes, and scatter the family, as they scatter thousands of families in our land, it is not merely the waste of earning-power or the dispersal of a few poor sticks of furniture, it is the stamina, the virtue, safety, and honour of the British race that are being squandered.

Now the object of every single constructive proposal to which the revenues raised by this Budget will be devoted, not less than the object of the distribution of the taxes which make up the Budget, is to buttress and fortify the homes of the people. That is our aim; to that task we have bent our backs; and in that labour we shall not be daunted by the machine-made abuse of partisans or by the nervous clamour of selfish riches. Whatever power may be given to us shall be used for this object. It is for you to say whether power will be given us to prevail.

But they say, "This uncertainty about the Budget is causing unemployment; you are aggravating the evils you seek to remedy." The Budget has not increased unemployment. Unemployment is severe in the country this year, but it is less severe this year than it was last, and it is less severe since the Budget was introduced than before it was introduced. The proportion of trade unionists reported to be unemployed in the Board of Trade returns at the end of September was 7.4 per cent., and that is lower than any month since May 1908, and it compares very favourably with September of last year, when the proportion was not 7.4, but 9.3 per cent.

I can well believe that the uncertainty as to whether the House of Lords will, in a desperate attempt to escape their fair share of public burdens, plunge the country into revolution and its finances into chaos—I can well believe that that uncertainty is bad for trade and employment, and is hampering the revival which is beginning all over the country. I do not doubt that all this talk of the rejection of the Budget is injurious to business, to credit, and to enterprise; but who is to blame for that? When did we ever hear of a Budget being rejected by the Lords before? When did we ever hear of a leader of the House of Lords proposing, like Lord Lansdowne, to decide whether he would tear up the British Constitution after consultation with the leaders of the drink trade? The uncertainty is not due to our action, but to their threats. Our action has been regular, constitutional, and necessary. Their threats are violent, unprecedented, and outrageous. Let them cease their threats. Let one of their leaders—let Mr. Balfour, for instance, say this year what he said last year, in the month of October, at Dumfries. Let him say, "It is the House of Commons and not the House of Lords which settles uncontrolled our financial system." Let him repeat these words, and all uncertainty about the Budget will be over.

I am amazed and I am amused when I read in the newspapers the silly and fantastic rumours which obtain credence, or at any rate currency, from day to day. One day we are told that it is the intention of the Government to seek a dissolution of Parliament before the Budget reaches the House of Lords—in other words, to kill the child to save its life. The next day we are told the Government have decided to have a referendum—that is to say, they will ask everybody in the country to send them a postcard to say whether they would like the Budget to become law or not. Another day we are told that the Government are contemplating a bargain with the House of Lords to alter the Budget to please them, or that we should make a bargain with them that if they pass the Budget we should seek a dissolution in January. Why should we make a bargain with the House of Lords? Every one of those rumours is more silly, more idiotic, than the other. I wish our Conservative friends would face the facts of the situation. "Things are what they are, and their consequences will be what they will be." The House of Lords has no scrap of right to interfere in finance. If they do, they violate the Constitution, they shatter the finances, and they create an administrative breakdown the outcome of which no man can foresee. If such a situation should occur a Liberal Government can look only to the people. We count on you, and we shall come to you. If you sustain us we shall take effectual steps to prevent such a deadlock ever occurring again. That is the whole policy of his Majesty's Government—blunt, sober, obvious, and unflinching.

THE CONSTITUTIONAL MENACEToC

National Liberal Club, October 9, 1909

(From The Times, by permission.)

I have never been able to rank myself among those who believe that the Budget will be rejected by the House of Lords. It is not that I take an exaggerated view of the respect which that body would bear to the constitutional tradition upon which alone they depend. It is not that I underrate at all the feelings of personal resentment and of class-prejudice with which they regard, naturally, many of the provisions of the Budget. But I have a difficulty in believing that the responsible statesmen by whom they are led, and by whom we think they are controlled, would not hesitate as patriotic men before they plunged the finances of the country into what would be a largely irremediable confusion. And still more I find it difficult to believe that Party leaders, anxious no doubt for office on the most secure terms and at the shortest notice, would voluntarily run unusual risks in order to be able to fight a decisive battle upon exceptionally unfavourable ground. In common with most of us who are here to-night, I hold that the rejection of the Budget by the House of Lords would be a constitutional outrage. I do not think we are entitled at this stage to assume that such an outrage will be committed. We cannot credit such intentions, even though we read them every day brutally and blatantly affirmed by a powerful Party Press. We do not credit such intentions. We are, however, bound to be fully prepared against all contingencies. The necessary precautions must be taken. The fighting machine must undergo all those preliminary processes necessary for a rapid and efficient mobilisation. And the ground on which a great battle might take place, the theatre of war, must be scanned beforehand with military foresight. And that is being done.

But those who lightly estimate the crisis which will follow the rejection of the Budget by the House of Lords must be either strangely unimaginative or else they must be strangely ignorant of British history and of the British Constitution. The control of finance by the representative Assembly is the keystone of all that constitutional fabric upon which and within which all of us here have dwelt safely and peacefully throughout our lives. It is by the application of the power of the purse, and by the application of the power of the purse almost alone, that we have moved forward, slowly and prosaically, no doubt, during the last two hundred years, but without any violent overturn such as has rent the life and history of almost every other considerable country, from a kind of mediæval oligarchy to a vast modern democratic State based on the suffrages of six million or seven million electors, loyal to the Crown, and clothed with all the stately forms of the venerable English monarchy. Finance has been the keystone. Take finance away from the House of Commons, take the complete control of financial business away from the representative Assembly, and our whole system of government, be it good, bad, or indifferent, will crumble to pieces like a house of cards.

The rejection of the Budget by the House of Lords would not merely be a question of stopping a money Bill or of knocking out a few taxes obnoxious to particular classes; the rejection of the Budget by the House of Lords would mean the claim of the House of Lords—that is, the claim of a non-elective and unrepresentative Chamber—to make and to unmake Governments; and a recognition of that claim by the country would unquestionably mean that the House of Lords would become the main source and origin of all political power under the Crown. Now that is a great quarrel; that is a quarrel on which we had hoped, on which we had been taught, that the sword had been sheathed victoriously for ever. And that is the issue that is before us now. We do not intend to soften it in any way. The responsibility for the consequences must rest with the aggressor who first violates the constitutional tradition of our land.

The Budget is through Committee. We have had not merely an exhaustive but an exhausting discussion. I am told by ingenious calculators in the newspapers that over six hundred hours, from some of which I confess I have been absent, of debate have been accorded to the Committee stage. No guillotine closure has been applied. Full, free, unfettered debate has been accorded—has been accorded with a patience and with a generosity unprecedented in Parliamentary annals, and which in effect has left a minority not merely satisfied in all the conditions of reasonable debate, but unable even on grounds of the most meticulous partisanship to complain that the fullest opportunity has not been accorded to them. In all this long process of six hundred hours and upwards we have shown ourselves willing to make concessions. They are boasting to-day that they, forsooth, are in part the authors of the Budget. Every effort has been made to meet honest and outspoken difference; every effort has been made to gather for this Budget—the people's Budget, as they know full well it is—the greatest measure of support not only among the labouring classes, but among all classes in our vast and complicated community.

It has been a terrible strain. Lord Rosebery the other day at Glasgow paid his tribute to the gallant band who had fought in opposition to the Budget. Had he no word for his old friends? Had he no word for those who were once proud to follow him, and who now use in regard to him only the language of regret? Had he no word for that other gallant band, twice as numerous, often three times as numerous, as the Tory Opposition, who have sat through all these months—fine speakers silent through self-suppression for the cause, wealthy men sitting up to unreasonable hours to pass taxes by which they are mulcted as much as any Tory? Men who have gone on even at the cost of their lives—had he no word for them? We to-night gathered together here in the National Liberal Club have a word and a cheer for the private members of the Liberal Party in the House of Commons who have fought this battle through with unequalled loyalty and firmness, and who have shown a development of Parliamentary power to carry a great measure which I venture to say has no counterpart in the Parliamentary history of this country.

Well, that long process of debate, of argument, of concession, of compromise, of conciliation will very soon come to an end. When the Budget leaves the House of Commons the time of discussion, so far as we are concerned, will have come to an end. It will leave the House of Commons in a final form, and no amendment by the House of Lords will be entertained by us. I have heard it often said, and I have read it more often still, that there are some members of the Cabinet who want to see the Budget rejected, and I have even been shocked to find myself mentioned as one of these Machiavellian intriguers. To those who say we want to see the Budget rejected I reply, That is not true. As Party men we cannot be blind to the great tactical advantages which such an event would confer upon us. We cannot pretend that our feelings in such an event would be feelings of melancholy; but we have our work to do. Politics is not a game. It is an earnest business. We have our work to do. We have large, complex schemes of social organisation and financial reform on which we have consumed our efforts, and which we desire to see, at the shortest possible date, brought to conception and maturity. We do not want to see the finances of the country plunged into inextricable confusion, and hideous loss inflicted on the mass of the people and the taxpayers. For my part, I say without hesitation I do not at all wish to see British politics enter upon a violent, storm-shaken, and revolutionary phase. I am glad, at any rate, if they are to enter upon that phase, it shall be on the responsibility of others.

Our intentions are straightforward. We seek no conflict; we fear no conflict. We shall make no overtures to the House of Lords; we shall accept no compromise. We are not called upon to offer them any dignified means of escape from a situation into which they have been betrayed by the recklessness of some of their supporters. They have no right whatever to interfere in financial business directly or indirectly at any time. That is all we have to say, and for the rest we have a powerful organisation, we have a united Party, we have a resolute Prime Minister, we have a splendid cause.

I do not think we need at this stage speculate upon the result of a battle which has not yet been, and which may never be at this juncture fought. I have seen enough of the ups and downs of real war to know how foolish forecasts of that character often are. But when an army has been brought into the field in the best condition, in the largest possible numbers, in a spirit of the highest enthusiasm, at the most favourable season, and on the best possible ground—then I think, when our army has been brought into that situation, we can afford to await the supreme arbitrament with a cool and serene composure; and this mood of composure and of calmness may ripen into a kind of joyous and warlike heartiness, if we can also feel that the cause for which we are fighting is broadly and grandly a true and righteous cause.

Error, of course, there is always in all human affairs—error of conception, error of statement, error of manner, error of weakness, error of partisanship. We do not deny that, but strip both the great political Parties which to-day present themselves before the people of Britain, strip them of their error, strip them of that admixture of error which cloys and clogs all human action, divest them of the trappings of combat in which they are apparelled, let them be nakedly and faithfully revealed. If that were done, cannot we feel soberly and assuredly convinced that, on the main contested issues of the day, upon the need of social organisation, upon the relations between the two Houses of Parliament, upon the regulation and control of the liquor traffic, upon a national settlement with Ireland as we have made with Africa, upon Free Trade, upon the land—upon all of them separately, still more upon all of them together, if we ask ourselves in our most silent and reflective mood alone—cannot we feel a sober conviction that, on the whole, we hold the larger truth?

Printed by Hazell, Watson & Viney, Ld., London and Aylesbury.

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