24 OCTOBER 1908, Page 13

FINANCES AND TAXATION.

[To THE EDITOZ OP THE "SPECTAT0R."1 Lloyd George's oratorical flight—his remark that "Britain is the richest land under the sun "—has given rise to some notes of interrogation. As a matter of fact, it is extremely difficult to ascertain the relative wealth of two nations approximately equal in population,—say this country and France. Statisticians—as, e.g., Sir Robert Giffen- . usually compare the wealth of nations by ascertaining as well as they can the money incomes of all classes and then adding them up. Even if this operation can be correctly performed, the comparison of the two additions supplies a very had test of the relative wealth of two nations unless the social scheme of existence and the mode of distribution of wealth in each are closely alike. It is almost as bad a method as that of comparing the total exports and imports of two nations. Take as the simplest illustration two agricultural areas, A and B, each producing produce to the value of 210,000 a year. Suppose district A to be owned by a single landowner, who works it with a hundred hired labourers at 250 a year each, and super- intendence at 21,000 a year, so that his expenditure is £6,000 a year. Suppose also that out of the net 24.000 he spends 21,000 in paying servants and retainers for services. Suppose district B, on the other hand, to be divided between a hundred small freeholders, who work the land with their families, employ no servants, and make an average income of £100 a year each family. Then, if all the incomes in both districts are added up, district A will appear to be richer than district B. The aggregate money incomes of the landlord, plus that of his servants and retainers, plus that of his bailiffs and their servants, plus that of the hired labourers, will exceed that of the hundred freeholders of district B. It will exceed 210.000, the value of the produce. Thus, by the method of adding up every one's income, district A will fallaciously appear to be richer than district B, whereas its real wealth is just the same,—viz., 210,000 a year. I suggest that in a country like England, of great estates, great stores and factories, rapid circulation and great personal aggregations of income, the apparent wealth would be much greater than the real wealth, when compared with a country of peasant proprietors, small shops and businesses, fewer servants and retainers, and income altogether far more equally divided. Of all countries, I imagine England to be the one whose real wealth and income are most exaggerated by the statistical method of adding up all money incomes, and thereby counting much of the income twice over. If one could estimate the value of the food and clothing con- sumed by each family in England and in France in a year, and the balance of money saved by each family at the end of the year, add up these and compare the totals, one would be nearer to the mark. It used to be a subject of discussion among statisticians whether a National Debt ought to be counted as part of the wealth of a country. As a matter of fact, it is so counted, because dividends from Consols are reckoned as part of the incomes added up to make the total national income. Therefore by this method of adding up individual money incomes, a nation with a huge National Debt might be made to appear to be richer by the amount of the interest upon it than a nation which had no National