TOPICS OF THE DAY.
THE BUDGET.
MR. CHILDERS on Thursday had to explain what is called a very tame Budget to the House of Commons. That is to say, he had no deficit to meet, no surplus to dispose of, and no financial transformation scene to suggest. Never- theless he made his Budget one of exceeding interest by four impressive features,—first, his exposition of the reduction of debt by the present Government, and especially by the National Debt Act of last year ; next, his explanation of the steady rise in the yield of every penny of the Income-tax ; thirdly, his boldness and ingenuity in dealing with that wasting away of the gold coinage which has long been a crying evil ; and lastly, his perhaps too cautious and tentative step, but still his definitively taken step, towards reduction of the interest of the Debt.
Mr. Childers tells us that since the present Government came into power they have reduced the National Debt by £25,198,000, have paid off £4,500,000 of the Afghan War Debt of the late Government, and have increased the balances in the Exchequer by £2,349,000 ; in other words, in spite of the special military expenditure in Egypt, all of which they have met out of income, they have improved the financial position of the country to the amount of £32,000,000 in four years. And even in the last year alone, though the military expenditure has been considerably over the estimated amount, and the Revenue has not been elastic, they have diminished the Debt by about £8,000,000 sterling, besides paying off,—though at the ex- pense of the balances remaining in the Exchequer,—a million of the debt to India, which we undertook by way of sharing the liability of the Afghan War. That is a very good financial record, which we only wish that the Conservatives who attack the Government so fiercely and so ignorantly would take note of, and compare with the negative financial quantities by which their own lauded Government distinguished the Budgets of the preceding years.
The second point of interest on which Mr. Childers dwelt is one which may give satisfaction to Conservatives and Liberals alike,—we mean the steadily increasing yield of every penny of the Income-tax. It is monstrous to tell us, as so many Conservative croakers do, that the country is going to rack and ruin, that Protection must be reintroduced if it is to be saved from rack and ruin, when Mr. Childers meets them with this great and most instructive fact,—that " a penny of Income- tax produced in 1880-1, £1,850,000 ; in 1881-2, £1,900,000 ; in 1882-3, £1,950,000 ; in 1883-4, £1,970,000 ; and that this steady increase justifies our present estimate that next year it will produce £2,000,000." Not twenty years ago it was always estimated at £1,250,000, so that the yield of every penny in the pound imposed on income has increased by no less than three-quarters of a million sterling in that time. What would not Lord Melbourne and Lord John Russell have given for evidence of such prosperity in the years before Free-trade ! What would not Sir Robert Peel have given for evidence of such prosperity in the years of his last Administration 1 And yet young ignoramuses like Lord Randolph Churchill have the ineffable impudence to go down to the capital of the Midlands and sneer at Free-trade, and declare the complete failure of all the prophecies of the Free- traders. The simple truth is, that the cry about bad times is a cry raised chiefly by the classes who, instead of accumulating profits as they used to do at a rate which pro- duced a large fortune in a very few years, are now compelled to share those profits freely with their workmen, to the very great good of the whole community, though the result may be disappointing to those who have inherited the traditions of a previous generation. No doubt, too, landlords and farmers have lately been real losers,—that is not to be denied. But that the wealth of the general community is steadily in- creasing, in spite of the partial suffering in certain classes, Mr. Childers's figures prove beyond confutation. When every penny levied in the pound on the income of the community at large,—the poorest class being alone excluded,—produces about a million sterling more in one generation than it yielded in the previous generation, it is trifling to talk of the decay of trade and the ruin of the country. We should like to hear of another country in Europe which could give anything like the same sign of solid prosperity. The third point of interest in the Budget speech was Mr. Childers's bold and, as it seems to us, perfectly wise proposal to meet the wasting away of the gold coinage by the issue of
token gold pieces in the place of half-sovereigns of the old value; pieces worth only nine shillings, at a profit which would enable the Government to call in all the thin coins and to keep the sovereigns of full weight for the future. This proposal seems• to have greatly annoyed and irritated some of Mr. Childers's critics, though on grounds which seem to us quite un- intelligible even to themselves, and, so far as we can judge,. entirely wanting in solidity. We have long had a silver coinage • which every one knew to be of considerably less intrinsic value in relation to gold than the value for which it exchanges. If the silver serves us just as well as a token• coinage, i.e., is kept at its full value by its statutory relation• to the gold, in spite of its intrinsically less value, why should not the same be true of a gold token I It is, of course, true that the higher the value of the coin the greater is the profit of the private coiner, and the more possible is it to preserve secrecy in private coining. But that is a point which Mr.. Childers and his advisers have of course most carefully weighed, and on which their opinion must be worth infinitely more than that of casual critics in the Press. If they have carefully considered the danger of encouraging private attempts. of this sort, and have convinced themselves that it is not serious,. it seems to us idle for persons who are not experts to set up their opinion against that of the Government. And apart from this danger, we believe that there is absolutely no• objection to Mr. Childers's proposal. Of course, the £1 note fanatics will cry out against it, simply because they hoped to get a £1 note into English circulation through the necessities of the Government. But, however defensible the principle of a strictly limited note circulation of that kind may be, it is clear that all the objections apply to the issue of £1 notes which apply to the issue of a token gold coin, and apply in a very much stronger form. If the gain of a coiner who. puts 9s. worth of gold coin into circulation at the value of 10s. is great, the gain of a forger who puts a note intrinsically valueless into circulation at the value of £1 is vastly greater. So far as we can judge, Mr. Childers's proposal is not only the most convenient, but much the most cautious of all those which have been made for the purpose of defraying the cost of renovating the gold coinage.
Lastly comes the proposal to initiate the lowering of the rate of interest by permitting the holders of Consols to ex- change £100 of Three per Cents. for such quantity as. the Treasury may determine, not exceeding £102, of a new security which is to pay 2/ per cent., or not exceeding £108' of the present Two-and-a-half per Cents.,—the Two-and-three- quarter per Cents, to be redeemable at par in 1905 ; the Two- and-a-half per Cent. Stock not being liable to be paid off at all. The difficulty to ordinary people is to see why the holder of Three per Cents. should accept what looks like so bad a bargain. At the same time, it is certain that Two-and-a-hall per Cents, have really steadily increased in value, chiefly owing, no doubt, to the dislike of trustees for a stock which may be at any time paid-off at par, and the preference for a stock of which the interest is paid quarterly, as the Two-and-a-half per Cent. Stock is, and the new Two-and-three-quarter per Cent. Stock will be. These advantages more than balance to many people the disadvantage of a slight loss of interest ; and it is likely enough that the Two-and-a-half per Cent. Stock will rise at once in value under the effect of Mr. Childers's proposal. Whether the intermediate Stock by which he hopes to bridge the passage from Three per Cents. to Two-and-a-half per Cents. will be a success, we cannot but question. It is to be redeem- able in 1905, and will therefore not have the advantages of an absolutely unredeemable stock, and the advantage in interest is so slight that it will hardly tempt that portion of the public which has lately been investing largely in the Two-and-a-half per Cent. Stock. On the whole, we should have thought that the bridge was not needed, and that the transaction might have been made at one step. But here again we must admit that Mr. Childers is in possession of far better advice than any private critic can command, and that the chances are greatly in favour of his understanding the conditions of the case better than we can do. On the whole, Mr. Childers's " tame " Budget proves decidedly more interesting than some former budgets, which were rather exciting,—like those, for instance, produced by Lord Sherbrooke.
Previous page
