Chapter III: The Budget (2)

But see how misleading and false all these analogies are. The windfalls which people with artistic gifts are able from time to time to derive from the sale of a picture--from a Vandyke or a Holbein--may here and there be very considerable. But pictures do not get in anybody's way. They do not lay a toll on anybody's labour; they do not touch enterprise and production at any point; they do not affect any of those creative processes upon which the material well-being of millions depends. And if a rise in stocks and shares confers profits on the fortunate holders far beyond what they expected, or, indeed, deserved, nevertheless, that profit has not been reaped by withholding from the community the land which it needs, but, on the contrary, apart from mere gambling, it has been reaped by supplying industry with the capital without which it could not be carried on.

If the railway makes greater profits, it is usually because it carries more goods and more passengers. If a doctor or a lawyer enjoys a better practice, it is because the doctor attends more patients and more exacting patients, and because the lawyer pleads more suits in the courts and more important suits. At every stage the doctor or the lawyer is giving service in return for his fees; and if the service is too poor or the fees are too high, other doctors and other lawyers can come freely into competition. There is constant service, there is constant competition; there is no monopoly, there is no injury to the public interest, there is no impediment to the general progress.

Fancy comparing these healthy processes with the enrichment which comes to the landlord who happens to own a plot of land on the outskirts or at the centre of one of our great cities, who watches the busy population around him making the city larger, richer, more convenient, more famous every day, and all the while sits still and does nothing! Roads are made, streets are made, railway services are improved, electric light turns night into day, electric trams glide swiftly to and fro, water is brought from reservoirs a hundred miles off in the mountains--and all the while the landlord sits still. Every one of those improvements is effected by the labour and at the cost of other people. Many of the most important are effected at the cost of the municipality and of the ratepayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is sensibly enhanced.

He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing even to the process from which his own enrichment is derived. If the land were occupied by shops or by dwellings, the municipality at least would secure the rates upon them in aid of the general fund; but the land may be unoccupied, undeveloped, it may be what is called "ripening"--ripening at the expense of the whole city, of the whole country--for the unearned increment of its owner. Roads perhaps have to be diverted to avoid this forbidden area. The merchant going to his office, the artisan going to his work, have to make a detour or pay a tram fare to avoid it. The citizens are losing their chance of developing the land, the city is losing its rates, the State is losing its taxes which would have accrued, if the natural development had taken place--and that share has to be replaced at the expense of the other ratepayers and taxpayers; and the nation as a whole is losing in the competition of the world--the hard and growing competition in the world--both in time and money. And all the while the land monopolist has only to sit still and watch complacently his property multiplying in value, sometimes manifold, without either effort or contribution on his part. And that is justice!

But let us follow the process a little farther. The population of the city grows and grows still larger year by year, the congestion in the poorer quarters becomes acute, rents and rates rise hand in hand, and thousands of families are crowded into one-roomed tenements. There are 120,000 persons living in one-roomed tenements in Glasgow alone at the present time. At last the land becomes ripe for sale--that means that the price is too tempting to be resisted any longer--and then, and not till then, it is sold by the yard or by the inch at ten times, or twenty times, or even fifty times, its agricultural value, on which alone hitherto it has been rated for the public service.

The greater the population around the land, the greater the injury which they have sustained by its protracted denial, the more inconvenience which has been caused to everybody, the more serious the loss in economic strength and activity, the larger will be the profit of the landlord when the sale is finally accomplished. In fact you may say that the unearned increment on the land is on all-fours with the profit gathered by one of those American speculators who engineer a corner in corn, or meat, or cotton, or some other vital commodity, and that the unearned increment in land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.

It is monopoly which is the keynote; and where monopoly prevails, the greater the injury to society, the greater the reward of the monopolist will be. See how this evil process strikes at every form of industrial activity. The municipality, wishing for broader streets, better houses, more healthy, decent, scientifically planned towns, is made to pay, and is made to pay in exact proportion, or to a very great extent in proportion, as it has exerted itself in the past to make improvements. The more it has improved the town, the more it has increased the land value, and the more it will have to pay for any land it may wish to acquire. The manufacturer purposing to start a new industry, proposing to erect a great factory offering employment to thousands of hands, is made to pay such a price for his land that the purchase-price hangs round the neck of his whole business, hampering his competitive power in every market, clogging him far more than any foreign tariff in his export competition; and the land values strike down through the profits of the manufacturer on to the wages of the workman. The railway company wishing to build a new line finds that the price of land which yesterday was only rated at its agricultural value has risen to a prohibitive figure the moment it was known that the new line was projected; and either the railway is not built, or, if it is, is built, only on terms which largely transfer to the landowner the profits which are due to the shareholders and the advantages which should have accrued to the travelling public.

It does not matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself, and everywhere to-day the man, or the public body, who wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an inferior use, and in some cases to no use at all. All comes back to the land value, and its owner for the time being is able to levy his toll upon all other forms of wealth and upon every form of industry. A portion, in some cases the whole, of every benefit which is laboriously acquired by the community is represented in the land value, and finds its way automatically into the landlord's pocket. If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more. If the opening of a new railway or a new tramway, or the institution of an improved service of workmen's trains, or a lowering of fares, or a new invention, or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are able to charge them more for the privilege of living there.

Some years ago in London there was a toll-bar on a bridge across the Thames, and all the working people who lived on the south side of the river, had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings appealed to the public conscience: an agitation was set on foot, municipal authorities were roused, and at the cost of the ratepayers the bridge was freed and the toll removed. All those people who used the bridge were saved 6d. a week. Within a very short period from that time the rents on the south side of the river were found to have advanced by about 6d. a week, or the amount of the toll which had been remitted. And a friend of mine was telling me the other day that in the parish of Southwark about L350 a year, roughly speaking, was given away in doles of bread by charitable people in connection with one of the churches, and as a consequence of this the competition for small houses, but more particularly for single-roomed tenements is, we are told, so great that rents are considerably higher than in the neighbouring district.

All goes back to the land, and the landowner, who in many cases, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched, is enabled with resistless strength to absorb to himself a share of almost every public and every private benefit, however important or however pitiful those benefits may be.

I hope you will understand that when I speak of the land monopolist, I am dealing more with the process than with the individual landowner. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land, is morally a worse man than any one else, who gathers his profit where he finds it, in this hard world under the law and according to common usage. It is not the individual I attack; it is the system. It is not the man who is bad; it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy, were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law. Look at our actual proposal.

We do not go back on the past. We accept as our basis the value as it stands to-day. The tax on the increment of land begins by recognising and franking all past increment. We look only to the future; and for the future we say only this: that the community shall be the partner in any further increment above the present value after all the owner's improvements have been deducted. We say that the State and the municipality should jointly levy a toll upon the future unearned increment of the land. A toll of what? Of the whole? No. Of a half? No. Of a quarter? No. Of a fifth--that is the proposal of the Budget. And that is robbery, that is plunder, that is communism and spoliation, that is the social revolution at last, that is the overturn of civilised society, that is the end of the world foretold in the Apocalypse! Such is the increment tax about which so much chatter and outcry are raised at the present time, and upon which I will say that no more fair, considerate, or salutary proposal for taxation has ever been made in the House of Commons.

But there is another proposal concerning land values which is not less important. I mean the tax on the capital value of undeveloped urban or suburban land. The income derived from land and its rateable value under the present law depend upon the use to which the land is put. In consequence, income and rateable value are not always true or complete measures of the value of the land. Take the case to which I have already referred, of the man who keeps a large plot in or near a growing town idle for years, while it is "ripening"--that is to say, while it is rising in price through the exertions of the surrounding community and the need of that community for more room to live. Take that case. I daresay you have formed your own opinion upon it. Mr. Balfour, Lord Lansdowne, and the Conservative Party generally, think that that is an admirable arrangement. They speak of the profits of the land monopolist, as if they were the fruits of thrift and industry and a pleasing example for the poorer classes to imitate. We do not take that view of the process. We think it is a dog-in-the-manger game. We see the evil, we see the imposture upon the public, and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development, and in congested centres of population, and we say here and now to the land monopolist who is holding up his land--and the pity is, it was not said before--you shall judge for yourselves whether it is a fair offer or not--we say to the land monopolist: "This property of yours might be put to immediate use with general advantage. It is at this minute saleable in the market at ten times the value at which it is rated. If you choose to keep it idle in the expectation of still further unearned increment, then at least you shall be taxed at the true selling value in the meanwhile." And the Budget proposes a tax of a halfpenny in the pound on the capital value of all such land; that is to say, a tax which is a little less in equivalent, than the income-tax would be upon the property, if the property were fully developed.

That is the second main proposal of the Budget with regard to the land; and its effects will be, first, to raise an expanding revenue for the needs of the State; secondly that, half the proceeds of this tax, as well as of the other land taxes, will go to the municipalities and local authorities generally to relieve rates; thirdly, the effect will be, as we believe, to bring land into the market, and thus somewhat cheapen the price at which land is obtainable for every object, public and private. By so doing we shall liberate new springs of enterprise and industry, we shall stimulate building, relieve overcrowding, and promote employment.

These two taxes, both in themselves financially, economically, and socially sound, carry with them a further notable advantage. We shall obtain a complete valuation of the whole of the land in the United Kingdom. We shall procure an up-to-date Doomsday-book showing the capital value, apart from buildings and improvements, of every piece of land. Now, there is nothing new in the principle of valuation for taxation purposes. It was established fifteen years ago in Lord Rosebery's Government by the Finance Act of 1894, and it has been applied ever since without friction or inconvenience by Conservative administrations.

And if there is nothing new in the principle of valuation, still less is there anything new or unexpected in the general principles underlying the land proposals of the Budget. Why, Lord Rosebery declared himself in favour of taxation of land values fifteen years ago. Lord Balfour has said a great many shrewd and sensible things on this subject which he is, no doubt, very anxious to have overlooked at the present time. The House of Commons has repeatedly affirmed the principle, not only under Liberal Governments, but--which is much more remarkable--under a Conservative Government. Four times during the last Parliament Mr. Trevelyan's Bill for the taxation of land values was brought before the House of Commons and fully discussed, and twice it was read a second time during the last Parliament, with its great Conservative majority, the second time by a majority of no less than ninety votes. The House of Lords, in adopting Lord Camperdown's amendment to the Scottish Valuation Bill, has absolutely conceded the principle of rating undeveloped land upon its selling value, although it took very good care not to apply the principle; and all the greatest municipal corporations in England and Scotland--many of them overwhelmingly Conservative in complexion--have declared themselves in favour of the taxation of land values; and now, after at least a generation of study, examination, and debate, the time has come when we should take the first step to put these principles into practical effect. You have heard the saying "The hour and the man." The hour has come, and with it the Chancellor of the Exchequer.

I have come to Scotland to exhort you to engage in this battle and devote your whole energy and influence to securing a memorable victory. Every nation in the world has its own way of doing things, its own successes and its own failures. All over Europe we see systems of land tenure which economically, socially, and politically are far superior to ours; but the benefits that those countries derive from their improved land systems are largely swept away, or at any rate neutralised, by grinding tariffs on the necessaries of life and the materials of manufacture. In this country we have long enjoyed the blessings of Free Trade and of untaxed bread and meat, but against these inestimable benefits we have the evils of an unreformed and vicious land system. In no great country in the new world or the old have the working people yet secured the double advantage of free trade and free land together, by which I mean a commercial system and a land system from which, so far as possible, all forms of monopoly have been rigorously excluded. Sixty years ago our system of national taxation was effectively reformed, and immense and undisputed advantages accrued therefrom to all classes, the richest as well as the poorest. The system of local taxation to-day is just as vicious and wasteful, just as great an impediment to enterprise and progress, just as harsh a burden upon the poor, as the thousand taxes and Corn Law sliding scales of the "hungry 'forties." We are met in an hour of tremendous opportunity. "You who shall liberate the land," said Mr. Cobden, "will do more for your country than we have done in the liberation of its commerce."

You can follow the same general principle of distinguishing between earned and unearned increment through the Government's treatment of the income-tax. There is all the difference in the world between the income which a man makes from month to month or from year to year by his continued exertion, which may stop at any moment, and will certainly stop, if he is incapacitated, and the income which is derived from the profits of accumulated capital, which is a continuing income irrespective of the exertion of its owner. Nobody wants to penalise or to stigmatise income derived from dividends, rent, or interest; for accumulated capital, apart from monopoly, represents the exercise of thrift and prudence, qualities which are only less valuable to the community than actual service and labour. But the great difference between the two classes of income remains. We are all sensible of it, and we think that that great difference should be recognised when the necessary burdens of the State have to be divided and shared between all classes.

The application of this principle of differentiation of income-tax has enabled the present Government sensibly to lighten the burden of the great majority of income-tax payers. Under the late Conservative Government about 1,100,000 income-tax payers paid income-tax at the statutory rate of a shilling in the pound. Mr. Asquith, the Prime Minister, when Chancellor of the Exchequer, reduced the income-tax in respect of earned incomes under L2,000 a year from a shilling to ninepence, and it is calculated that 750,000 income-tax payers--that is to say, nearly three-quarters of the whole number of income-tax payers--who formerly paid at the shilling rate have obtained an actual relief from taxation to the extent of nearly L1,200,000 a year in the aggregate. The present Chancellor of the Exchequer in the present Budget has added to this abatement a further relief--a very sensible relief, I venture to think you will consider it--on account of each child of parents who possess under L500 a year, and that concession involved a further abatement and relief equal to L600,000 a year. That statement is founded on high authority, for it figured in one of the Budget proposals of Mr. Pitt, and it is to-day recognised by the law of Prussia.

Taking together the income-tax reforms of Mr. Asquith and Mr. Lloyd-George, taking the two together--because they are all part of the same policy, and they are all part of our treatment as a Government of this great subject--it is true to say that very nearly three out of every four persons who pay income-tax will be taxed after this Budget, this penal Budget, this wicked, monstrous, despoliatory Budget--three out of every four persons will be taxed for income-tax at a lower rate than they were by the late Conservative Government.

You will perhaps say to me that may be all very well, but are you sure that the rich and the very rich are not being burdened too heavily? Are you sure that you are not laying on the backs of people who are struggling to support existence with incomes of upwards of L3,000 a year, burdens which are too heavy to be borne? Will they not sink, crushed by the load of material cares, into early graves, followed there even by the unrelenting hand of the death duties collector? Will they not take refuge in wholesale fraud and evasion, as some of their leaders ingenuously suggest, or will there be a general flight of all rich people from their native shores to the protection of the hospitable foreigner? Let me reassure you on these points.

The taxes which we now seek to impose to meet the need of the State will not appreciably affect, have not appreciably affected, the comfort, the status, or even the style of living of any class in the United Kingdom. There has been no invidious singling out of a few rich men for special taxation. The increased burden which is placed upon wealth is evenly and broadly distributed over the whole of that wealthy class who are more numerous in Great Britain than in any other country in the world, and who, when this Budget is passed, will still find Great Britain the best country to live in. When I reflect upon the power and influence that class possesses, upon the general goodwill with which they are still regarded by their poorer neighbours, upon the infinite opportunities for pleasure and for culture which are open to them in this free, prosperous, and orderly commonwealth, I cannot doubt that they ought to contribute, and I believe that great numbers of them are willing to contribute, in a greater degree than heretofore, towards the needs of the navy, for which they are always clamouring, and for those social reforms upon which the health and contentment of the whole population depend.

And after all, gentlemen, when we are upon the sorrows of the rich and the heavy blows that have been struck by this wicked Budget, let us not forget that this Budget, which is denounced by all the vested interests in the country and in all the abodes of wealth and power, after all, draws nearly as much from the taxation of tobacco and spirits, which are the luxuries of the working classes, who pay their share with silence and dignity, as it does from those wealthy classes upon whose behalf such heartrending outcry is made.

I do not think the issue before the country was ever more simple than it is now. The money must be found; there is no dispute about that. Both parties are responsible for the expenditure and the obligations which render new revenue necessary; and, as we know, we have difficulty in resisting demands which are made upon us by the Conservative Party for expenditure upon armaments far beyond the limits which are necessary to maintain adequately the defences of the country, and which would only be the accompaniment of a sensational and aggressive policy in foreign and in Colonial affairs. We declare that the proposals we have put forward are conceived with a desire to be fair to all and harsh to none. We assert they are conceived with a desire to secure good laws regulating the conditions by which wealth may be obtained and a just distribution of the burdens of the State. We know that the proposals which we have made will yield all the money that we need for national defence, and that they will yield an expanding revenue in future years for those great schemes of social organisation, of national insurance, of agricultural development, and of the treatment of the problems of poverty and unemployment, which are absolutely necessary if Great Britain is to hold her own in the front rank of the nations. The issue which you have to decide is whether these funds shall be raised by the taxation of a protective tariff upon articles of common use and upon the necessaries of life, including bread and meat, or whether it shall be raised, as we propose, by the taxation of luxuries, of superfluities, and monopolies.

I have only one word more to say, and it is rendered necessary by the observations which fell from Lord Lansdowne last night, when, according to the Scottish papers, he informed a gathering at which he was the principal speaker that the House of Lords was not obliged to swallow the Budget whole or without mincing.[18] I ask you to mark that word. It is a characteristic expression. The House of Lords means to assert its right to mince. Now let us for our part be quite frank and plain. We want this Budget Bill to be fairly and fully discussed; we do not grudge the weeks that have been spent already; we are prepared to make every sacrifice--I speak for my honourable friends who are sitting on this platform--of personal convenience in order to secure a thorough, patient, searching examination of proposals the importance of which we do not seek to conceal. The Government has shown itself ready and willing to meet reasonable argument, not merely by reasonable answer, but when a case is shown, by concessions, and generally in a spirit of goodwill. We have dealt with this subject throughout with a desire to mitigate hardships in special cases, and to gain as large a measure of agreement as possible for the proposals we are placing before the country. We want the Budget not merely to be the work of the Cabinet and of the Chancellor of the Exchequer; we want it to be the shaped and moulded plan deliberately considered by the House of Commons. That will be a long and painful process to those who are forced from day to day to take part in it. We shall not shrink from it. But when that process is over, when the Finance Bill leaves the House of Commons, I think you will agree with me that it ought to leave the House of Commons in its final form. No amendments, no excision, no modifying or mutilating will be agreed to by us. We will stand no mincing, and unless Lord Lansdowne and his landlordly friends choose to eat their own mince, Parliament will be dissolved, and we shall come to you in a moment of high consequence for every cause for which Liberalism has ever fought. See that you do not fail us in that hour.

FOOTNOTES:

[18] Lord Lansdowne has since been at pains to explain that he did not use the word "mincing." That word ought to have been "wincing" or "hesitation"--it is not clear which.

THE BUDGET AND THE LORDS

NORWICH, _July 26, 1909_

(From _The Manchester Guardian_, by permission.)

The Budget is the great political issue of the day. It involves all other questions; it has brought all other issues to a decisive test. _The Daily Mail_ has stated that the Budget is hung up. So it is. It is hung up in triumph over the High Peak; it is hung up as a banner of victory over Dumfries, over Cleveland, and over Mid-Derby. The miniature general election just concluded has shown that the policy embodied in the Budget, and which inspires the Budget, has vivified and invigorated the Liberal Party, has brought union where there was falling away, has revived enthusiasm where apathy was creeping in.

You cannot but have been impressed with the increasing sense of reality which political affairs have acquired during the last few months. What is it they are doing at Westminster? Across and beyond the complicated details of finance, the thousand amendments and more which cover the order paper, the absurd obstruction, the dry discussions in Committee, the interminable repetition of divisions, the angry scenes which flash up from time to time, the white-faced members sitting the whole night through and walking home worn out in the full light of morning--across and beyond all this, can you not discern a people's cause in conflict? Can you not see a great effort to make a big step forward towards that brighter and more equal world for which, be sure, those who come after us will hold our names in honour? That is the issue which is being decided from week to week in Westminster now, and it is in support of that cause that we are asking from you earnest and unswerving allegiance.

I do not think that there is any great country in the world where there are so many strong forces of virtue and vitality as there are in our own country. But there is scarcely any country in the world where there is so little organisation. Look at our neighbour and friendly rival Germany. I see that great State organised for peace and organised for war to a degree to which we cannot pretend. We are not organised as a nation, so far as I can see, for anything except party politics, and even for purposes of party politics we are not organised so well as they are in the United States. A more scientific, a more elaborate, a more comprehensive social organisation is indispensable to our country if we are to surmount the trials and stresses which the future years will bring. It is this organisation that the policy of the Budget will create. It is this organisation that the loss of the Budget will destroy.

But, we are told, "it presses too heavily upon the land-owning classes." I have heard it said that in the French Revolution, if the French nobility, instead of going to the scaffold with such dignity and fortitude, had struggled and cried and begged for mercy, even the hard hearts of the Paris crowd would have been melted, and the Reign of Terror would have come to an end. There is happily no chance of our aristocracy having to meet such a fate in this loyal-hearted, law-abiding, sober-minded country. They are, however, asked to discharge a certain obligation. They are asked to contribute their share to the expenses of the State. That is all they are asked to do. Yet what an outcry, what tribulation, what tears, what wrath, what weeping and wailing and gnashing of teeth, and all because they are asked to pay their share.

One would suppose, to listen to them, that the whole of the taxation was being raised from, or was about to be raised from the owners of agricultural estates. What are the facts? Nearly half the taxation of the present Budget is raised by the taxation of the luxuries of the working classes. Are they indignant? Are they crying out? Not in the least. They are perfectly ready to pay their share, and to pay it in a manly way, and two hundred thousand of them took the trouble to go to Hyde Park the other day in order to say so.

What are the facts about agricultural land? It is absolutely exempt from the operations of the new land taxation so long as agricultural land is worth no more for other purposes than it is for agricultural purposes: that is to say, so long as agricultural land is agricultural land and not urban or suburban land, it pays none of the new land taxation. It is only when its value for building purposes makes its continued agricultural use wasteful and uneconomic, it is only when it becomes building land and not agricultural land, and when because of that change it rises enormously in price and value--it is only then that it contributes under the new land taxation its share to the public of the increment value which the public has given to it.

Then take the death duties. One would suppose from what one hears in London and from the outcry that is raised, that the whole of the death duties were collected from the peers and from the county families. Again I say, look at the facts. The Inland Revenue report for last year shows that L313,000,000 of property passing on death became subject to death duties, and of that sum L228,000,000 was personalty and not real estate, leaving only L85,000,000 real estate, and of that L85,000,000 only L22,000,000 was agricultural land. These death duties are represented as being levied entirely upon a small class of landed gentry and nobility, but, as a matter of fact, there is collected from that class in respect of agricultural land only seven per cent. of the whole amount of money which the Exchequer derives from death duties.[19]

I decline, however, to judge the question of the House of Lords simply and solely by any action they may resolve to take upon the Budget. We must look back upon the past. We remember the ill-usage and the humiliation which the great majority that was returned by the nation to support Sir Henry Campbell-Bannerman in 1906 has sustained in the last three years at the hands of the House of Lords. That Assembly must be judged by their conduct as a whole. Lord Lansdowne has explained, to the amusement of the nation, that he claimed no right on behalf of the House of Lords to "mince" the Budget. All, he tells us, he has asked for, so far as he is concerned, is the right to "wince" when swallowing it. Well, that is a much more modest claim. It is for the Conservative Party to judge whether it is a very heroic claim for one of their leaders to make. If they are satisfied with the wincing Marquis, we have no reason to protest. We should greatly regret to cause Lord Lansdowne and his friends any pain. We have no wish whatever to grudge them any relief which they may obtain by wincing or even by squirming. We accord them the fullest liberty in that respect.

After all, the House of Lords has made others wince in its time. Even in the present Parliament they have performed some notable exploits. When the House of Lords rejected the Bill to prevent one man casting his vote two or three times over in the same election, every one in this country who desired to see a full and true representation of the people in Parliament might well have winced. When the House of Lords rejected or mutilated beyond repair the Land Valuation Bills for England and for Scotland, every land reformer in the country might have winced. When the House of Lords destroyed Mr. Birrell's Education Bill of 1906, every man who cared for religious equality and educational peace might have winced. When they contemptuously flung out, without even discussing it or examining it, the Licensing Bill, upon which so many hopes were centred and upon which so many months of labour had been spent, they sent a message of despair to every temperance reformer, to every social and philanthropic worker, to every church, to every chapel, to every little Sunday school throughout the land. If it should now prove to be their turn, if the measure they have meted out to others should be meted out to them again, however much we might regret their sorrows, we could not but observe the workings of poetic justice.

But I hope the House of Lords and those who back them will not be under any illusions about the Budget and the position of the Government. The Government is in earnest about the Budget. The Budget carries with it their fortunes and the fortunes of the Liberal Party. Careful argument, reasonable amendment, amicable concession, not affecting the principles at stake--all these we offer while the Bill is in the House of Commons. But when all that is said and done, as the Bill leaves the House of Commons so it must stand. It would be a great pity if Lord Curzon, the Indian pro-Consul, or the London _Spectator_--it would be a great pity if those potentates were to make the great mistake of supposing that the Government would acquiesce in the excision of the land clauses of the Budget by the House of Lords. Such a course is unthinkable. Any Liberal Government which adopted it would be swiftly ruined. The land proposals of the Government have not been made without long deliberation and full responsibility. We shall not fail to carry them effectively through the House of Commons; still less shall we accept any amendment at the hands of the House of Lords.

Is it not an extraordinary thing that upon the Budget we should even be discussing at all the action of the House of Lords? The House of Lords is an institution absolutely foreign to the spirit of the age and to the whole movement of society. It is not perhaps surprising in a country so fond of tradition, so proud of continuity, as ourselves that a feudal assembly of titled persons, with so long a history and so many famous names, should have survived to exert an influence upon public affairs at the present time. We see how often in England the old forms are reverently preserved after the forces by which they are sustained and the uses to which they were put and the dangers against which they were designed have passed away. A state of gradual decline was what the average Englishman had come to associate with the House of Lords. Little by little, we might have expected, it would have ceased to take a controversial part in practical politics. Year by year it would have faded more completely into the past to which it belongs until, like Jack-in-the-Green or Punch-and-Judy, only a picturesque and fitfully lingering memory would have remained.

And during the last ten years of Conservative government this was actually the case. But now we see the House of Lords flushed with the wealth of the modern age, armed with a party caucus, fortified, revived, resuscitated, asserting its claims in the harshest and in the crudest manner, claiming to veto or destroy even without discussion any legislation, however important, sent to them by any majority, however large, from any House of Commons, however newly elected. We see these unconscionable claims exercised with a frank and undisguised regard to party interest, to class interest, and to personal interest. We see the House of Lords using the power which they should not hold at all, which if they hold at all, they should hold in trust for all, to play a shrewd, fierce, aggressive party game of electioneering and casting their votes according to the interest of the particular political party to which, body and soul, they belong.

It is now suggested--publicly in some quarters, privately in many quarters--that the House of Lords will not only use without scruple their veto in legislation but they propose to extend their prerogatives; they are going to lay their hands upon finance, and if they choose they will reject or amend the Budget. I have always thought it a great pity that Mr. Gladstone made a compromise with the House of Lords over the Franchise Bill of 1884. I regret, and I think many of my hon. friends in the House of Commons will regret, looking back upon the past, that the present Government did not advise a dissolution of Parliament upon the rejection of the Education Bill in 1906. A dissolution in those circumstances would not merely have involved the measure under discussion, but if the Government of that day had received the support of the electors at the poll their victory must have carried with it that settlement and reform of the relations between the two Houses of Parliament which is necessary to secure the effective authority of the House of Commons. That is the question which, behind and beyond all others, even the Budget, even Free Trade, even the land--that is the question which, as the Prime Minister has said, is the dominant issue of our time.

Opportunity is fickle, opportunity seldom returns; but I think you will agree with me that if the House of Lords, not content with its recent exploits with the legislative veto, were to seize on the new power which its backers claim for it over finance--if, not content with the extreme assertions of its own privileges, it were to invade the most ancient privileges of the House of Commons--if, as an act of class warfare, for it would be nothing less, the House of Lords were to destroy the Budget, and thus not only create a Constitutional deadlock of novel and unmeasured gravity, but also plunge the whole finance of the country into unparalleled confusion, then, in my judgment, opportunity, clear, brilliant, and decisive, would return, and we should have the best chance we have ever had of dealing with them once for all.

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:

[19] Since the date of this speech the new concessions, doubling the allowance exempted from income tax for the expenses of agricultural estates, have been made public.

THE SPIRIT OF THE BUDGET

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.