Chapter III: The Budget (1)

THE BUDGET RESOLUTIONS (May 4, 1909) 277

THE BUDGET AND NATIONAL INSURANCE (May 23, 1909) 297

THE LAND AND INCOME TAXES (July 17, 1909) 318

THE BUDGET AND THE LORDS (July 26, 1909) 344

THE SPIRIT OF THE BUDGET (Sept. 5, 1909) 357

THE BUDGET AND PROPERTY (Oct. 7, 1909) 384

THE CONSTITUTIONAL MENACE (Oct. 9, 1909) 405

THE BUDGET RESOLUTIONS

HOUSE OF COMMONS, _May 4, 1903_

The Leader of the Opposition this afternoon told us that we were at the beginning of what would be a very complex and a very protracted discussion. If that discussion continues as it has begun, the Government will have no reason to complain of it. We have made extensive and even daring proposals. Those proposals have been accepted and, on the whole, even acclaimed by the public at large, and they have not been substantially challenged in this House. The Leader of the Opposition, it is true, devoted his reasoned and temperate speech to making a careful inquiry into the foundations and the character of certain of the taxes by which my right hon. friend proposes to raise the revenue for the year; and I gathered he accepted, with such reservations as are proper to all engaged in a large discussion, and as are particularly appropriate to a Party leader, the general principle of differentiation of taxation in regard to the amount of property, but that he demurred to and condemned differentiation in regard to the character of property. The right hon. gentleman singled out for special censure and animadversion the two sets of taxes in relation to land and to the licensed trade. He used an expression about some of the forms of taxation proposed by the Chancellor of the Exchequer which was a striking one. He said that they diverged from the principles which have hitherto dominated civilised society.

Even at the risk of that accusation we on this side of the House have always taken and will always assert an entirely different position in regard to the taxation of land and of liquor licences from that of the taxation of other classes of property. The immemorial custom of nearly every modern State, the mature conclusions of many of the greatest thinkers, have placed the tenure, transfer, and obligations of land in a wholly different category from other classes of property. The mere obvious physical distinction between land, which is a vital necessity of every human being and which at the same time is strictly limited in extent, and other property is in itself sufficient to justify a clear differentiation in its treatment, and in the view taken by the State of the conditions which should govern the tenure of land from that which should regulate traffic in other forms of property. When the right hon. gentleman seeks by comparisons to show that the same reasoning which has been applied to land ought also in logic and by every argument of symmetry to be applied to the unearned increment derived from other processes which are at work in our modern civilisation, he only shows by each example he takes how different are the conditions which attach to the possession of land and speculation in the value of land from those which attach to other forms of business speculation.

"If," he inquires, "you tax the unearned increment on land, why don't you tax the unearned increment from a large block of stocks? I buy a piece of land; the value rises; I buy stocks; their value rises." But the operations are entirely dissimilar. In the first speculation the unearned increment derived from land arises from a wholly sterile process, from the mere withholding of a commodity which is needed by the community. In the second case, the investor in a block of shares does not withhold from the community what the community needs. The one operation is in restraint of trade and in conflict with the general interest, and the other is part of a natural and healthy process, by which the economic plant of the world is nourished and from year to year successfully and notably increased.

Then the right hon. gentleman instanced the case of a new railway and a country district enriched by that railway. The railway, he explained, is built to open up a new district; and the farmers and landowners in that district are endowed with unearned increment in consequence of the building of the railway. But if after a while their business aptitude and industry creates a large carrying trade, then the railway, he contends, gets its unearned increment in its turn. But the right hon. gentleman cannot call the increment unearned which the railway acquires through the regular service of carrying goods, rendering a service on each occasion in proportion to the tonnage of goods it carries, making a profit by an active extension of the scale of its useful business--he cannot surely compare that process with the process of getting rich merely by sitting still. It is clear that the analogy is not true.

We are further told that the Budget proposals proceed on the assumption that there is a corner in land, and that communities are denied the opportunity of getting the land required, whereas, it is asserted, there is in fact nothing approaching a corner in land. I do not think the Leader of the Opposition could have chosen a more unfortunate example than Glasgow. He said that the demand of that great community for land was for not more than forty acres a year. Is that the only demand of the people of Glasgow for land? Does that really represent the complete economic and natural demand for the amount of land a population of that size requires to live on? I will admit that at present prices it may be all that they can afford to purchase in the course of a year. But there are one hundred and twenty thousand persons in Glasgow who are living in one-room tenements; and we are told that the utmost land those people can absorb economically and naturally is forty acres a year. What is the explanation? Because the population is congested in the city the price of land is high upon the suburbs, and because the price of land is high upon the suburbs the population must remain congested within the city. That is the position which we are complacently assured is in accordance with the principles which have hitherto dominated civilised society.

But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement. Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener--the market-gardener liable to be disturbed on the outskirts of great cities, if the population of those cities expands, if the area which they require for their health and daily life should become larger than it is at present.

I should like to point out to the Committee that the right hon. gentleman, in using this argument about the market-gardener, recognises very clearly--and I think beyond the possibility of a withdrawal--the possibility of these cities expanding and taking up a larger area of ground in consequence of the kind of taxation which my right hon. friend in his land taxes seeks to impose. But let that pass. What is the position disclosed by the argument? On the one hand we have one hundred and twenty thousand persons in Glasgow occupying one-room tenements; on the other, the land of Scotland. Between the two stands the market-gardener, and we are solemnly invited, for the sake of the market-gardener, to keep that great population congested within limits that are unnatural and restricted to an annual supply of land which can bear no relation whatever to their physical, social, and economic needs--and all for the sake of the market-gardener, who can perfectly well move farther out as the city spreads, and who would not really be in the least injured.

We take the view that land cannot be regarded as an ordinary commodity, nor are we prepared to place publicans' licences in the same position as ordinary property. A licence is a gift from the State, and the licensed trade is subject to special restrictions and special taxation; this has been recognised by all parties and by all Governments. The position in regard to licences, as we know perfectly well, has been sensibly and, indeed, entirely altered in the course of the last few years. We have seen the assertion on the part of the licensed trade of their right to convert their annual tenancy of a licence from what it has been understood to be, to a freehold, and in that position they must face the logical consequences of the arguments they have used and of their action. If there are any hardships to them in the taxation proposed, let the hardships be exposed to Parliament and they will be considered in no spirit of prejudice or malice. Do not, however, let us have attempts to represent that the tax which involves an increase in the cost of production extinguishes the profits of the industry. It does not necessarily affect the profits of the industry; it is not a deduction from resultant profits; it is an incident in the turnover. If there are hard cases and special instances, we are prepared to meet them with the closest attention and with a desire to avoid severity or anything like the appearance of harsh treatment of individuals. But we decline to regard licences or land on the same footing as ordinary property. Licences are not to be regarded as ordinary private property, but as public property which ought never to have been alienated from the State.

No one will deny that we are making very considerable proposals to Parliament for the finance of the year; but the Conservative Party have gravely compromised their power of resistance. Those who desire to see armaments restricted to the minimum consistent with national security, those who labour to combat the scares of war, and to show how many alarms have no foundation,--those are not ill-situated, if they choose to make criticisms on the scale and scope of the finance required for the year's expenditure. But an Opposition that day after day exposes the First Lord of the Admiralty and the Prime Minister to a rain of questions and cross-questions, the only object of which, or an important object of which, is to promote a feeling of insecurity, involving demands for new expenditure of an almost indefinite character, those who, like the right hon. Member for Dover,[16] hurry to and fro in the land saying--or was it singing?--"We want eight, and we won't wait"--they, at least, are not in the best position to tell the taxpayer to call on some one else. Surely a reputation for patriotism would be cheaply gained by clamouring for ships that are not needed, to be paid for with money that is to come from other people.

There is another set of arguments to which I should like to refer. We have been long told that this Budget would reveal the bankruptcy of free-trade finance, and the Leader of the Opposition, seeking from time to time for a sound economic foothold in the fiscal quicksands in which he is being engulfed, has endeavoured to rest the sole of his foot on tariff for revenue. The adoption of a policy of tariff reform, we have been told, had become absolutely necessary if the revenue of the country was to be obtained and if a natural expansion were to be imparted to it. But now, if we may judge from the newspapers, one of the complaints made against the free-trade system and the free-trade Budget of my right hon. friend is not that the revenue will expand too little, but that there is the possibility that it will expand too much. It is not that we have reached the limits of practicable free-trade taxation, but that the taxation we now ask Parliament to assent to, will yield in the second year a much more abundant return than in the first year, and that in subsequent years the yield will increase still further. In the words of _The Times_ newspaper: "The Chancellor of the Exchequer has laid broad and deep the basis of further revenue for future years."

Those who lately taunted us with being arrested by a dead wall of Cobdenite principles are now bewailing that we have opened up broad avenues of financial advance. They came to bewail the deficit of this year: they remained to censure the surplus of next. We may, no doubt, in the future hear arguments of how protection will revive industry and increase employment, as we have heard them in the past; but there is one argument which I should think it unlikely would be effectively used against us in the future, and that is that a free-trade system cannot produce revenue, because one of the criticisms which is emphatically directed against this Budget is on account of that very expansiveness of revenue which it was lately declared a free-trade system never could produce.

But that is not the only vindication of free-trade finance which is at hand. How have foreign countries stood the late depression in trade? The shortfall of the revenue from the estimates in this country was last year less than two millions, in Germany it was eight millions, and in the United States over nineteen millions. Let the House see what fair-weather friends these protectionist duties are. In times of depression they shrink. In times of war they may fail utterly. When they are wanted, they dwindle, when they are wanted most urgently, they fade and die away altogether.

And what is true of the taxation of manufactured articles as a foundation for any fiscal policy is true still more of the taxation of food, and of no country is it so true as of this island. For if you were ever engaged in a war which rendered the highways of the ocean insecure the rise in prices would be such that all food taxes would have to be swept away at once by any Government which desired to use the whole vigour of its people in prosecuting the war. This year, with its trade depression and its excellent maintenance of the revenue, has seen the vindication of free trade as a revenue-producing instrument; next year will see its triumph.

I have no apprehensions about the Budget which is now before the Committee. As Mr. Gladstone said, in introducing the Reform Bill of 1884, what is wanted to carry this measure is concentration and concentration only, and what will lose this measure is division and division only. And I venture to think that it will not only be a demonstration of the soundness of the economic fiscal policy we have long followed, but it will also be a demonstration of the fiscal and financial strength of Great Britain which will not be without its use and value upon the diplomatic and perhaps even upon the naval situation in Europe.

The right honourable Member for East Worcestershire[17] said this Budget was the work of several sessions, if not indeed of several Parliaments. The statement is exaggerated. The proposals outlined do not in any degree transcend the limits of the practical. A social policy may be very large, but at the same time it may be very simple. All these projects of economic development, of labour exchanges, of insurance for invalidity, and unemployment, which depend on money grants, may require very careful and elaborate administrative adjustment; but so far as Parliament is concerned they do not impose difficulties or make demands upon the time of the House in any way comparable to those which are excited by the passage of an Education or a Licensing Bill, and I see no reason whatever why we should not anticipate that in the course of this session and next session we should be able to establish a wide and general system of national insurance, which, more than any other device within the reach of this generation of the workers of our country, will help to hold off from them some of the most fatal and most cruel perils which smash their households and ruin the lives of families and of workmen.

On many grounds we may commend this Budget to the House. It makes provision for the present. It makes greater provision for the future. Indirect taxation reaches the minimum. Food taxation reaches the minimum since the South African war. Certainly the working classes have no reason to complain. Nothing in the Budget touches the physical efficiency and energy of labour. Nothing in it touches the economy of the cottage home. Middle-class people with between L300 and L2,000 a year are not affected in any considerable degree, except by the estate duties, and in that not to a large extent, while in some cases they are distinctly benefited in the general way of taxation. The very rich are not singled out for peculiar, special, or invidious forms of imposition.

The chief burden of the increase of taxation is placed upon the main body of the wealthy classes in this country, a class which in number and in wealth is much greater than in any other equal community, if not, indeed, in any other modern State in the whole world; and that is a class which, in opportunities of pleasure, in all the amenities of life, and in freedom from penalties, obligations, and dangers, is more fortunate than any other equally numerous class of citizens in any age or in any country. That class has more to gain than any other class of his Majesty's subjects from dwelling amid a healthy and contented people, and in a safely guarded land.

I do not agree with the Leader of the Opposition, that they will meet the charges which are placed upon them for the needs of this year by evasion and fraud, and by cutting down the charities which their good feelings have prompted them to dispense. The man who proposes to meet taxation by cutting down his charities, is not the sort of man who is likely to find any very extensive source of economy in the charities which he has hitherto given. As for evasion, I hope the right hon. gentleman and his supporters underrate the public spirit which animates a proportion at any rate of the class which would be most notably affected by the present taxation. And there is for their consolation one great assurance which is worth much more to them than a few millions, more or less, of taxation. It is this--that we are this year taking all that we are likely to need for the policy which is now placed before the country, and which will absorb the energies of this Parliament. And, so far as this Parliament is concerned, it is extremely unlikely, in the absence of a national calamity, that any further demand will be made upon them, or that the shifting and vague shadows of another impending Budget will darken the prospects of improving trade.

When all that may be said on these grounds has been said, we do not attempt to deny that the Budget raises some of the fundamental issues which divide the historic Parties in British politics. We do not want to embitter those issues, but neither do we wish to conceal them. We know that hon. gentlemen opposite believe that the revenue of the country could be better raised by a protective tariff. We are confident that a free-trade system alone would stand the strain of modern needs and yield the expansive power which is necessary at the present time in the revenue. And our proof shall be the swift accomplishment of the fact. The right hon. gentleman opposite and his friends seek to arrest the tendency to decrease the proportion of indirect to direct taxation which has marked, in unbroken continuity, the course of the last sixty years. We, on the other hand, regard that tendency as of deep-seated social significance, and we are resolved that it shall not be arrested. So far as we are concerned, we are resolved that it shall continue until in the end the entire charge shall be defrayed from the profits of accumulated wealth and by the taxation of those popular indulgences which cannot be said in any way to affect the physical efficiency of labour. The policy of the Conservative Party is to multiply and extend the volume and variety of taxes upon food and necessaries. They will repose themselves, not only, as we are still forced to do, on tea and sugar, but upon bread and meat--not merely upon luxuries and comforts, but also on articles of prime necessity. Our policy is not to increase, but whenever possible to decrease, and ultimately to abolish altogether, taxes on articles of food and the necessaries of life.

If there is divergence between us in regard to the methods by which we are to raise our revenue, there is also divergence in regard to the objects on which we are to spend them. We are, on both sides, inclined to agree that we are approaching, if we have not actually entered on, one of the climacterics of our national life. We see new forces at work in the world, and they are not all friendly forces. We see new conditions abroad and around us, and they are not all favourable conditions; and I think there is a great deal to be said for those who on both sides of politics are urging that we should strive for a more earnest, more strenuous, more consciously national life. But there we part, because the Conservative Party are inclined too much to repose their faith for the future security and pre-eminence of this country upon naval and military preparations, and would sometimes have us believe that you can make this country secure and respected by the mere multiplication of ironclad ships. We shall not exclude that provision, and now indeed ask the Committee to enable us to take the steps to secure us that expansion of revenue which will place our financial resources beyond the capacity of any Power that we need to take into consideration. But we take a broader view. We are not going to measure the strength of great countries only by their material resources. We think that the supremacy and predominance of our country depend upon the maintenance of the vigour and health of its population, just as its true glory must always be found in the happiness of its cottage homes. We believe that if Great Britain is to remain great and famous in the world, we cannot allow the present social and industrial disorders, with their profound physical and moral reactions, to continue unchecked. We propose to you a financial scheme, but we also advance a policy of social organisation. It will demand sacrifices from all classes; it will give security to all classes. By its means we shall be able definitely to control some of the most wasteful processes in our social life, and without it our country will remain exposed to vital dangers, against which fleets and armies are of no avail.

FOOTNOTES:

[16] Mr. Wyndham.

[17] Mr. Austen Chamberlain.

THE BUDGET AND NATIONAL INSURANCE

THE FREE TRADE HALL, MANCHESTER, _May 23, 1909_

(From _The Manchester Guardian_, by permission.)

Considering that you have all been ruined by the Budget, I think it very kind of you to receive me so well. When I remember all the injuries you have suffered--how South Africa has been lost; how the gold mines have been thrown away; how all the splendid army which Mr. Brodrick got together has been reduced to a sham; and how, of course, we have got no navy of any kind whatever, not even a fishing smack, for the thirty-five millions a year we give the Admiralty; and when I remember that in spite of all these evils the taxes are so oppressive and so cruel that any self-respecting Conservative will tell you he cannot afford either to live or die, I think it remarkable that you should be willing to give me such a hearty welcome back to Manchester. Yes, sir, when I think of the colonies we have lost, of the Empire we have alienated, of the food we have left untaxed, and the foreigners we have left unmolested, and the ladies we have left outside, I confess I am astonished to find you so glad to see me here again.

It is commonly said that our people are becoming hysterical, and that Britain is losing her old deep-seated sagacity for judging men and events. That is not my view. I have been taught that the dock always grows near the nettle. I am inclined to think that in a free community every evil carries with it its own corrective, and so I believe that sensationalism of all kinds is playing itself out, and, overdoing, is itself undone. And the more our scaremongers cry havoc, and panic, and airships, and sea-serpents, and all the other things they see floating around, the greater is the composure and the greater is the contempt with which the mass of the nation receives these revelations, and the more ready they are to devote their mind to the large and serious problems of national and social organisation which press for solution and for action at the present time, and upon which his Majesty's Government have notable proposals to make.

I come to you this afternoon to speak about the political situation and the Budget, or rather I come to speak to you about the Budget, because the Budget is the political situation; and I ask you, as if it were at an election, whether you will support the policy of the Budget or not. Let us look into it.

What is the position in which we find ourselves? After reducing the taxes on coal, on tea, on sugar, and on the smaller class of incomes by nearly L7,000,000 a year, and after paying back L40,000,000 of debt in three years, we find that new circumstances and new needs make it necessary that we should obtain fresh revenue for the service of the State.

What are the reasons for this demand? There are three reasons--and only three. Old-age pensions, the navy, and the decrease in the revenue derived from alcoholic liquor. From those three causes we require sixteen millions more money this year than we did last year. Now who has a right--this is my first question--to reproach us for that? Certainly the Conservative Party have no right.

Take first the case of old-age pensions. I do not think their record is a very good one on that. They promised old-age pensions to win the general election of 1895. They were in power for ten years and they made no effort to redeem their pledge. Again, Mr. Chamberlain, in 1903, promised old-age pensions as a part of his Tariff Reform proposal, but the Conservative Party refused to agree to the inclusion of old-age pensions in that programme and forced that great man in the height of his power and his career to throw out old-age pensions from the Tariff Reform programme and to write a letter to the newspapers to say that he had done so.

We, the Liberal Party, did not promise old-age pensions at the election of 1906. The subject was scarcely mentioned by any of the candidates who are now your Members. Certainly it did not occupy at all a prominent position. We did not promise old-age pensions; we gave old-age pensions. When the Old-Age Pensions Bill was before the House of Commons, what was the attitude of the Conservative Party? Did they do anything to try to reduce or control the expenditure of that great departure? On the contrary. As my right honourable friend the Chancellor of the Exchequer has told the House of Commons, amendments to the Old-Age Pensions Bill were moved or received the official support of the Whips of the Conservative Party which would have raised the cost of that scheme to fourteen millions a year. And the Liberal Government, which was making this great effort, which was doing the work, which was keeping the Tory promise, was reproached and was derided for not accepting the proposals which these irresponsible philanthropists, these social reformers on the cheap, these limited-liability politicians, were so ready to move. And Lord Halsbury, the late Lord Chancellor, one of the leaders of the Conservative Party, a man with a powerful influence in their councils, said in a public speech that the old-age pensions as proposed by the Government were so paltry as to be almost a mockery.

I do not think any fair-minded or impartial man, or any average British jury, surveying the record of the Conservative Party upon old-age pensions, could come to any other conclusion than that they had used this question for popularity alone; that they never meant to give old-age pensions; that they only meant to get votes by promising to give them; that they would have stopped them being given if they could; that while the Bill was on its way they tried to embarrass the Government, and to push things to unpractical extremes; and now, even when the pensions have been given, they would not pay for them if they could help it. Let me say that I think the conclusion, which I believe any jury would come to, would perhaps be rather harsh upon the Conservative Party. I believe they meant better than their record; I am willing to admit that. But their record is before us, and it is a bad one, and upon the facts I have no hesitation in saying that it is not open to them to protest--they have not even an inch of foothold to protest--against any expenditure which we may now have to incur in order to defray the consequences of the policy of old-age pensions. So much for the first cause of the increased expenditure.

I pass to the navy. The Naval Estimates have risen by three millions this year. I regret it; but I am prepared to justify it. There will be a further increase next year. I regret it; but within proper limits necessary to secure national safety I shall be prepared to justify it; but I hope you will not expect me to advocate a braggart and sensational policy of expenditure upon armaments. I have always been against that, as my father was before me.

In my judgment, a Liberal is a man who ought to stand as a restraining force against an extravagant policy. He is a man who ought to keep cool in the presence of Jingo clamour. He is a man who believes that confidence between nations begets confidence, and that the spirit of peace and goodwill makes the safety it seeks. And, above all, I think a Liberal is a man who should keep a sour look for scaremongers of every kind and of every size, however distinguished, however ridiculous--and sometimes the most distinguished are the most ridiculous--a cold, chilling, sour look for all of them, whether their panic comes from the sea or from the air or from the earth or from the waters under the earth.

His Majesty's Government are resolved that the defensive measures of this country shall be prescribed by the policy of Ministers responsible to Parliament, and by the calculations, subject to that policy, of the experts on whom those Ministers rely, and not by the folly and the clamour of Party politicians or sensational journalists. In that determination we as a Government are united, and we shall remain united. Yet it is clear that the increase in the Naval Estimates of this year must be followed by another increase in those of next year. That is deplorable. It will impose upon our finances a strain which some other nations would not find it very easy to bear, but which, if the necessity be proved, this country will not be unwilling, and will certainly not be unable to support.

Well, but what have the Conservative Party got to say about it? Have they any right to complain of the taxes which are necessary for the maintenance of our naval power? Do we not see that they are ever exerting themselves to urge still greater expenditure upon the nation? He is a poor sort of fellow, a penny-plain-twopence-coloured kind of patriot who goes about shouting for ships, and then grudges the money necessary to build them. And when Mr. Balfour tells us that "gigantic sacrifices" are required, and that those gigantic sacrifices "must begin now," and then at the same time objects to the taxes by which the Government proposes to raise the money, he puts himself in a very queer position.

I have dealt with two of the causes which have led to our demand for further revenue--old-age pensions and the navy. Upon neither of them have the Conservative Party any ground for attacking us. What is the third? Ah, gentlemen, I agree that there is one cause of the prospective deficit for which we are budgeting for which the Conservative Party is in no way responsible. I mean the decline in the consumption of alcoholic liquors. Nothing that they have said and nothing that they have done has, in intention or in fact, contributed to the drying up of that source of revenue. On the contrary, by their legislation, by the views they have taken of the rights of the licensed trade, by their resistance to every measure of temperance reform, by their refusal even to discuss in the House of Lords the great Licensing Bill of last year, by their association with the brewers and with the liquor traffic generally, they have done all they could--I do them the justice to admit it--to maintain the Customs and Excise from alcoholic liquors at the highest level. If the habits of the people, under the influences of a wider culture, of variety, of comfort, of brighter lives, and of new conceptions, have steadily undergone a beneficent elevation and amelioration, it has been in spite of every obstacle that wealth and rank and vested interest could interpose.

The money has to be found. There is no Party in the State who can censure us because of that. Our proposals for enlarging the public revenue are just and fair to all classes. They will not, in spite of all these outcries you hear nowadays, sensibly alter the comfort or status, or even the elegance of any class in our great and varied community. No man, rich or poor, will eat a worse dinner for our taxes.

Of course, from a narrow, electioneering point of view, there are a great many people--I believe they are wrong--who think we should have done much better if we had put another penny on the income tax instead of increasing the tax upon tobacco. Well, I have come here this afternoon to tell you that we think it right that the working classes should be asked to pay a share towards the conduct of a democratic State. And we think that taxes on luxuries, however widely consumed, are a proper channel for such payment to be made. We believe that the working classes are able to pay by that channel, and we believe, further, that they are ready to pay. We do not think that in this old, wise country they would have respected any Government which at a time like this had feared to go to them for their share.

I have a good confidence that this Budget is going to go through. If there are hardships and anomalies in particular cases or particular quarters, we are ready to consider them. They will emerge in the discussions of the House of Commons, and we have every desire to consider them and to mitigate them. But we believe in the situation in which we find ourselves in this country, and in the general situation of the world at the present time--that the taxes on incomes over L3,000 a year, upon estates at death, on motor-cars before they cause death, upon tobacco, upon spirits, upon liquor licences, which really belong to the State, and ought never to have been filched away; and, above all, taxes upon the unearned increment in land are necessary, legitimate, and fair; and that without any evil consequences to the refinement or the richness of our national life, still less any injury to the sources of its economic productivity, they will yield revenue sufficient in this year and in the years to come to meet the growing needs of Imperial defence and of social reform.

This Budget will go through. It will vindicate the power of the House of Commons. It will show, what some people were inclined to forget, that in our Constitution a Government, supported by a House of Commons and the elected representatives of the people, has in fact a full control of national affairs, and has the means of giving effect to its intentions, to its policy, and to its pledges in every sphere of public affairs.

That is one thing which the passage of this Budget will show. Let not that be overlooked. But that is not the only thing; the Budget will do more than that. It will reveal the financial strength of Britain. At a time when every European country is borrowing merely for the needs of ordinary annual expenditure, when all these disturbing naval programmes, which are injuring the peace of the world and the security and progress of civilisation, are being supported by borrowed money; and when the credit of Germany has fallen below that of Italy, this country, which has necessarily to make the biggest expenditure for naval defence of any country, will be found, under a Free Trade system and by our proposals, able not only to pay its way, but to pay off the debts of the past--to pay off the debts of our predecessors--even in the worst of times at the rate of something like L7,000,000 a year.

I have spoken to you of the causes which in the past have led up to this Budget. I have spoken to you of its present justification. What of the future? If I had to sum up the immediate future of democratic politics in a single word I should say "Insurance." That is the future--Insurance against dangers from abroad. Insurance against dangers scarcely less grave and much more near and constant which threaten us here at home in our own island. I had the honour and opportunity a few days ago of explaining to the House of Commons our proposals for unemployment insurance. That is a considerable matter. It stands by itself. It is a much simpler question than invalidity insurance; but it is a great matter by itself. Indeed, I thought while I was explaining it to the House of Commons that I had not made such an important speech since I had the honour of explaining the details of the Transvaal Constitution.

Well, what is the proposal? The proposal is that you should make a beginning. We have stood still too long. We should begin forthwith, taking some of the greatest trades of the country in which unemployment is most serious, in which fluctuations are most severe, in which there are no short-time arrangements to mitigate the severity to the individual; and that a system of compulsory contributory insurance, with a large subvention from the State, should be introduced into those great industries.

But our proposals go farther than that. The State assistance to unemployment insurance will not be limited to those trades in which it is compulsory. Side by side with the compulsory system we shall offer facilities to voluntary insurance schemes in other trades, managed by trade unions or by societies or groups of workmen. Moreover, we contemplate that the State insurance office should undertake, if desired, the insurance against unemployment of any individual workman in any trade outside of those for which compulsory powers are required, and should afford to these individuals an equivalent support to that which is given in the trades which are subject to the compulsory system.

Of course you will understand that the terms, that can be offered under a voluntary or partial system, are not so good as those which can be obtained in the compulsory system of a great trade. Where all stand together, it is much better for each. But still it is certain that individuals who take advantage of the insurance policy which will be introduced, and I trust carried through Parliament next year, will be able to secure terms which will be much more favourable than any which are open to them by their unaided contributions at the present time, because their contributions will be reinforced by the contributions of the State. Further, if our beginning proves a success the attempt and the system will not stop there. It will be extended, and in proportion as experience and experiment justify its extension, in proportion as the people of this country desire its extension, it must eventually cover, in course of years, the whole of our great industrial community.

Well now, it is said that in adopting the policy of contributory insurance the Government have admitted that they were wrong in establishing old-age pensions upon the non-contributory basis. Now I do not think that is true. There is no inconsistency or contradiction between a non-contributory system of old-age pensions and a contributory system of insurance against unemployment, sickness, invalidity, and widowhood. The circumstances and conditions are entirely different. The prospect of attaining extreme old age, of living beyond threescore years and ten, which is the allotted span of human life, seems so doubtful and remote to the ordinary man, when in the full strength of manhood, that it has been found in practice almost impossible to secure from any very great number of people the regular sacrifices which are necessary to guard against old age.

But unemployment, accident, sickness, and the death of the bread-winner are catastrophes which may reach any household at any moment. Those vultures are always hovering around us, and I do not believe there is any sensible, honest man who would not wish to guard himself against them, if it were in his power to make the necessary contribution, and if he were sure--this is a very important point--that he would not by any accident or fraud or muddle be done out of the security he had paid for. And if we choose to adopt one system of State-aid for dealing with one class of need, and quite a different system for dealing with quite a different class of need, it does not lie with any one, least of all does it lie with those who have impartially neglected every problem and every solution, to reproach us with inconsistency.

But I go farther. The Old-Age Pensions Act, so far from being in conflict with a scheme of contributory insurance, is really its most helpful and potent ally. The fact that at seventy the State pension is assured to all those who need it, makes a tremendous difference to every form of insurance confined to the years before seventy, whether for old age or for invalidity. I asked an eminent actuary the other day to make me some calculations. They are rough, general calculations, and no doubt they might be more exact. But roughly, I believe it to be no exaggeration to say that the rates to cover a man till seventy are in many cases scarcely half what they would be, if they had to cover him till death. Do you see what that means? It is a prodigious fact. It is the sort of fact by the discovery of which people make gigantic fortunes; and I suggest to you that we should make this gigantic fortune for John Bull. It means that the whole field of insurance has become much more fruitful than it ever was before, that there is a new class of insurance business possible which never was possible before. It means that the whole field of insurance is far more open to the poorest class of people than it was before, and that with a proper system the benefits of the Old-Age Pensions Act would not be confined to the actual pensioners who are drawing their money, but would extend forwards in anticipation to all other classes and to all other people, and that so far as five shillings a week is concerned--that is not much unless you have not got it--the actuarial position of every man and woman in this country has been enormously improved by the Old-Age Pensions Act.

It is of that improvement that we mean to take advantage next year. Next year, when Free Trade will have yielded the necessary funds to the revenue, we mean to move forward into this great new field. But let me say one thing which is of the utmost importance. We must remember that the field of insurance is already largely covered by a great mass of benevolent and friendly societies, just as the field of unemployment insurance is already occupied to some extent by trade unions, and the Government would not approve of any development or extension of the policy of insurance which did not do full justice to existing institutions, or which did not safeguard those institutions, to whom we owe so inestimable and incommensurable a debt, or caused any sudden disturbance or any curtailment of their general methods of business. On the contrary, we believe that when our proposals are put in their full detail before the country, they will be found to benefit and encourage and not to injure those agencies which have so long been voluntarily and prosperously at work.

The decisive question is this--will the British working classes embrace the opportunities which will shortly be offered to them? They are a new departure; they involve an element of compulsion and of regulation which is unusual in our happy-go-lucky English life. The opportunity may never return. For my own part, I confess to you, my friends in Manchester, that I would work for such a policy and would try to carry it through even if it were a little unpopular at first, and would be willing to pay the forfeit of a period of exclusion from power, in order to have carried such a policy through; because I know that there is no other way within the reach of this generation of men and women by which the stream of preventable misery can be cut off.

If I had my way I would write the word "Insure" over the door of every cottage, and upon the blotting-book of every public man, because I am convinced that by sacrifices which are inconceivably small, which are all within the power of the very poorest man in regular work, families can be secured against catastrophes which otherwise would smash them up for ever. I think it is our duty to use the strength and the resources of the State to arrest the ghastly waste not merely of human happiness but of national health and strength which follows when a working man's home which has taken him years to get together is broken up and scattered through a long spell of unemployment, or when, through the death, the sickness, or the invalidity of the bread-winner, the frail boat in which the fortunes of the family are embarked founders, and the women and children are left to struggle helplessly on the dark waters of a friendless world. I believe it is well within our power now, before this Parliament is over, to establish vast and broad throughout the land a mighty system of national insurance which will nourish in its bosom all worthy existing agencies and will embrace in its scope all sorts and conditions of men.

I think it is not untrue to say that in these years we are passing through a decisive period in the history of our country. The wonderful century which followed the Battle of Waterloo and the downfall of the Napoleonic domination, which secured to this small island so long and so resplendent a reign, has come to an end. We have arrived at a new time. Let us realise it. And with that new time strange methods, huge forces, larger combinations--a Titanic world--have sprung up around us. The foundations of our power are changing. To stand still would be to fall; to fall would be to perish. We must go forward. We will go forward. We will go forward into a way of life more earnestly viewed, more scientifically organised, more consciously national than any we have known. Thus alone shall we be able to sustain and to renew through the generations which are to come, the fame and the power of the British race.

LAND AND INCOME TAXES IN THE BUDGET

EDINBURGH, _July 17, 1909_

(From _The Times_, by permission.)

We are often assured by sagacious persons that the civilisation of modern States is largely based upon respect for the rights of private property. If that be true, it is also true that such respect cannot be secured, and ought not, indeed, to be expected, unless property is associated in the minds of the great mass of the people with ideas of justice and of reason.

It is, therefore, of the first importance to the country--to any country--that there should be vigilant and persistent efforts to prevent abuses, to distribute the public burdens fairly among all classes, and to establish good laws governing the methods by which wealth may be acquired. The best way to make private property secure and respected is to bring the processes by which it is gained into harmony with the general interests of the public. When and where property is associated with the idea of reward for services rendered, with the idea of recompense for high gifts and special aptitudes displayed or for faithful labour done, then property will be honoured. When it is associated with processes which are beneficial, or which at the worst are not actually injurious to the commonwealth, then property will be unmolested; but when it is associated with ideas of wrong and of unfairness, with processes of restriction and monopoly, and other forms of injury to the community, then I think that you will find that property will be assailed and will be endangered.

A year ago I was fighting an election in Dundee. In the course of that election I attempted to draw a fundamental distinction between the principles of Liberalism and of Socialism, and I said "Socialism attacks capital; Liberalism attacks monopoly." And it is from that fundamental distinction that I come directly to the land proposals of the present Budget.

It is quite true that the land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly. It is quite true that unearned increments in land are not the only form of unearned or undeserved profit which individuals are able to secure; but it is the principal form of unearned increment, derived from processes, which are not merely not beneficial, but which are positively detrimental to the general public. Land, which is a necessity of human existence, which is the original source of all wealth, which is strictly limited in extent, which is fixed in geographical position--land, I say, differs from all other forms of property in these primary and fundamental conditions.

Nothing is more amusing than to watch the efforts of our monopolist opponents to prove that other forms of property and increment are exactly the same and are similar in all respects to the unearned increment in land. They talk to us of the increased profits of a doctor or a lawyer from the growth of population in the towns in which they live. They talk to us of the profits of a railway through a greater degree of wealth and activity in the districts through which it runs. They tell us of the profits which are derived from a rise in stocks and shares, and even of those which are sometimes derived from the sale of pictures and works of art, and they ask us--as if it were their only complaint--"Ought not all these other forms to be taxed too?"