SIR LOUIS MALLET ON OUR NATIONAL POLICY AND FINANCE.
THE Cobden Club has just published* a remarkable pamphlet by Sir Louis Mallet, which he modestly calls a pamphlet on our " National Income and Taxation," though it is a great deal more than that. Sir Louis Mallet goes into a most careful discussion of tho burden of taxation on each particular class, and treats the subject with the highest scientific ability. He shows, we think, that, contrary to Mr. Chamberlain's estimate, if we take the local and Imperial taxation together, the working classes pay not more than 7 per cant. on their income, the middle classes between 7 and 8 per cent., and the Income-tax-paying classes about 9 per cent. ; so that there is no special case for the diminution of taxation pressing on the labouring class rather than on any other. Sir Louis Mallet, who goes accurately into the whole case. believes that there is no sufficient pretext for a revision of the financial system on the ground that at present the poorer classes bear a heavier share of the burden of taxation than they ought ; and with regard to the doctrine that equality of sacrifice should be the measure of just taxation, not equality in the proportion between taxation and income, he shows how very awkwardly and unexpectedly this doctrine would often work,—as, for example, that it would compel the State to tax the man who had spent the whole of his earnings equally with the man who had saved a great part of the same earnings, and had consequently now acquired a much larger income than the other, since both of these would have incurred precisely the same sacrifices, though the one had used these sacrifices to buy passing enjoyments, and the other to buy security for his old age. In other words, the doctrine that just taxation means the enforcement of an equal sacrifice, tells not only against the same scale for the saving man's income and the spending man's income, but in favour of a lower rate for the richer man who had grown rich by saving, and a higher rate for the poorer who had not grown rich at all ; otherwise the man who had saved would have to sacrifice more to the State than the man who had spent freely. This would be a very surprising result for Mr. Chamberlain, and yet we think he will have to face it, if he insists on the doctrine of equality of sacrifice.
• With Messrs. Cassell and CO. However, the political interest of Sir Louis Mallet's able pamphlet lies much more in its conclusion than in its very able discussion of the standard of wealth and of the standard of taxation. For he puts before us with great vigour in the last few pages of his pamphlet the very close relation between our financial condition and our general political policy, and enforces the necessity of looking at them both together, and not apart. He points out that there is absolutely no reason to suppose that even when commercial prosperity returns, we can expect it to advance by leaps and bounds, as it did between 1856 and 1874. Many of the reasons for that marvellously rapid advance were more or less special, and are unlikely to recur. We can hardly again expect such a stimulus as the striking-off of Protective duties gave to our commerce ; we can hardly again expect such a stimulus as the sudden expansion of the railway system gave to it ; we can hardly again expect such a stimulus as the great gold dis- coveries gave to it All these are favourable conditions not likely to recur ; and though other favourable conditions may arise in their place of which we see no sign now, it is far from probable that so many will ever again concur in the same period of time as concurred in the twenty years following the close of the Crimean War. Yet, as Sir Louis Mallet shows, not merely has the expenditure of the nation risen very rapidly in the last forty years, but, in spite of the enormous stimulus to trade and revenue which the causes to which we have just referred have produced, the proportion of that expenditure to the income of the nation has sensibly risen within the same period. Sir Louis Mallet calculates that while in 1843 the expenditure of the nation (local and Imperial) was only 5.6 per cent. of the national income, the expenditure (local and Imperial) in 1884 was 6.4 per cent. of the national income. In other words, while our prosperity and our income have been rising rapidly " by leaps and bounds," our expenditure has been rising by leaps and bounds which have more than outstripped the leaps and bounds of our income. Even this, however, would not be so formidable as it is, were it not obvious that the nation is entirely unconscious of the danger into which it is running. The popular advisers of the people,—those very advisers who have most cordially advocated the rapid extension of popular representation, and who have rejoiced most sincerely in their success,—seem in many cases to be not only entirely unconscious of the narrow limits within which the increase of our revenue may now be confined, but almost contemptuous of the thrift which cries out that we must not let our expenditure get ahead of that revenue. Let us count - up the various directions in which our expenditure not only has been increasing, and is increasing, but in which popular counsels urge that it is increasing far too slowly, and ought to be increased with a much more liberal hand. In the.forty-one years referred to between 1843 and 1884, the " local " charges alone have increased, in round numbers, from £7,000,000 to £34,000,000, or have nearly quintupled. Yet the popular cry is still for increase, and even for rapid increase, for it is the local charges which have to bear the cost not only, to some extent, of edu- cation,—so far as that cost presses on the rates,—but of the renovation of the dwellings of the working classes in town and country alike, for which both parties press urgently,—and also of the proposed measure, now so popular, for satisfying the land-hunger of the rural labourer, and securing him his three acres and his cow. The taxation, which has been in- creased nearly fivefold in forty-one years, is the very taxation for the still more rapid increase of which there is, at the present moment, the most urgent demand. And when we pass to Imperial taxation, the case is not, indeed, so bad, but -still by no means cheerful. The Imperial taxation, using the word taxation in the strict sense, and excluding all profit- able businesses conducted by the State, like the Post Office, has increased in these forty-one years, in round numbers, from £50,000,000 to £72,-000,000 ; and so far as this increase is affected by the rapid rise of the grant for education and the naval and military expenditure,—and these are, of course, its chief elements,—the whole popular pressure of theday is towards increase, and even very rapid increase. Every one cries out that it is mere shortsightedness to stint the nation in its most productive investment, the investment in national intelligence ; and if we could only secure that the chief part of the educa- tion grant should really go to open the mind and stimulate the observing and reasoning powers of the mass of the people, there would be a good deal in the contention. But that excuse cannot be given for the increase of our military and naval ex- penditure, which almost everybody urges on, and urges on with a sort of scorn for those who hang back. Yet in forty-one years it has risen from about £16,160,000 to about £29,000,000, and every effort is made to increase it year by year, to urge Parliament to build more ironclads, to spend largely in torpedoes, to fortify our coaling-stations, to make our Colonies safer against attack,
to secure better and better-served artillery, to strengthen the reserves,—in a word, to do all that the great military Powers are doing for the Continental armies, and a great deal more than all that the chief naval Powers of the Continent are doing for the Continental navies.
Now, is it not seriously worth considering whether it is possi- ble to burn the candle in this way at both ends ? Sir Louis Mallet says, with all the force which his very able financial review of the position has given to his words :—" Of all the dreams in which modern Radicals indulge, there is none so idle as that any country, and least of all an old and thickly peopled country such as England, with a limited territory, can be a great military Power, rivalling in its schemes of aggrandisement and influence the fighting organisations of Europe, subjugating and ruling, and aspiring to civilise, vast continents of subject races, and at the same time accomplish the very different task—requiring all its energies, all its available wealth, and its highest ability—of ' raising the condition of its people,' and securing to the children of toil their due share in the reward of labour. So long as England is content to form a part of a political system such as that which now prevails on the continent of Europe, and which is little better than an armed camp, all hope of effectual social progress must be set aside.' " And, again, describing what happened after Sir Stafford North- cote had, in 1874, abolished the last remains of the Sugar- duties, Sir Louis remarks that then came " the parting of the waters ;" the aims of statesmen were wholly changed. Mr. Dis- raeli succeeded in creating a wave of Imperialism :—" The nobler elements of the national character were invoked, and a successful effort made to extirpate, once for all, the pernicious doctrine of ' non-intervention' as unworthy of English traditions. It was forgotten that among them there are traditions of generations decimated by pauperism and crime, of unnecessary suffering and remediable wrong ; and those who could not forget these aspects of the nation's life were denounced as the mean and unmanly advocates of peace at any price." Mr. Gladstone did his beat to restore the nation to reason ; but the circumstances of the time, in Egypt especially, were too strong for him. We had undertaken to defend the frontiers of Asia Minor under Lord Beaconsfield, and we have under- taken to defend the Northern frontiers of Afghanistan under Mr. Gladstone. " We have made ourselves practically respon- sible for the Government's defence of Egypt. We have entangled ourselves in infinite liabilities in Southern Africa, and are preparing in the Dark Continent an empire far vaster than any which we have guarded in Hindostan." " Probably no country," says Sir Louis Mallet, "in so short a time has incurred responsibilities of so grave a nature with such immense complacency ;" and yet both parties have concurred in the liabilities and have shared the complacency. Moreover, as Sir Louis Mallet adds, " all this has been done deliberately by both parties in the State, and apparently with the general acquiescence of the people. It is not surprising, therefore, that little has been heard of finance."
Is it not, then, full time to face the real issue ? If we are to devote ourselves to these external enterprises, we certainly ought to give up at once and for ever the prospect of embarking in vast internal changes such as the rehousing of the working classes and the settling the labourers comfortably on the land, as well as improving at serious cost the character
of their education. Our income is not at present an increasing, but a decreasing one ; our wealth in coal is lessening year by year ; and our financial liabilities are advancing by leaps and bounds. If we are disposed to lessen the burdens on the people, to raise their general con- dition, to give them a free breakfast-table and cheap tobacco, to rehouse them, and perhaps to teach them the scientific agriculture of the small-farm system, we must withdraw as soon as possible from those enormous external liabilities so recklessly incurred in the last ten years. Especially if a vast liability is to be incurred on behalf of Ireland, which will raise the National Debt again to the highest point at which it has ever stood in this century,—and that too, we believe,•without even tending to secure a better understanding between the two peoples,—the career of expenditure in which we appear to be embarking is sheer madness and leads to bank- ruptcy. We must stop short somewhere. Shall it be in the direction of foreign enterprise, or shall it be in the direction of home investments I
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