2 NOVEMBER 1907, Page 32

OLD-AGE PENSIONS AND FREE-TRADE.

[To TER EDITOR OF THZ " SPRCTATOR.1

In,—In your note at the end of the letter by "W. M. R." Ml"A Plea for Reasonable Socialism" in your issue of Dctober 26th you write : "It is on the merits that we condemn old-age pensions as likely to sap the strength of the nation, and, owing to the vast expenditure required, certain to destroy Free-trade." While quite agreeing with you in condemning old-age pensions as likely to sap the strength of the nation, and for many other reasons, diminishing thrift, &c., including objection to the vast expenditure it would entail, I think the statement that this expenditure would destroy Free-trade, if it were correct, would practically entirely give away the whole case for Free-trade. I am a Free-trader because I believe the country is more prosperous under it than it would be under Protection in any form. In other words, I believe that there is more spare money under Free-trade. People and the nation are better off so than they would be under Tariff Reform. I have read your paper regularly, and I always thought you were a Free-trader for the same reason. Yet once or twice I have noticed that you say old-age pensions would make Pro- tection in some form or other necessary. This seems to me to amount to saying that for the luxury of old-age pensions we must (if they come) introduce Protection to bring in more money to pay for them ; in fact, to admit that it would bring an increased sum of taxable money into the country. I ask is not this the greatest argument in favour of Protection ? If I thought as you do, I should at once be a Protectionist.— [Our correspondent has strangely mistaken our view. No doubt in theory another 230,000,000 a year could be raised by direct taxation. No doubt also, granted that this money had to be raised, say, for war charges, it would be much better and much less wasteful to raise it by direct taxation, and as Free-traders we should greatly prefer such a course. We are convinced, however, that in practice the British people, with what Peel called their ignorant impatience of taxation, would never agree to raising another £30,000,000 a year by means of increased Income-tax or other direct taxation. Imagining that they feel less what they do not see, they would, we are sure, insist on the money being raised by indirect taxation,—that is, by a tariff. But once impose a tariff capable of yielding £30,000,000 a year, and Protection would have won the day, and Free-trade be abolished. The notion that it would be possible to impose Excise-duties equal to the Custom-duties is quite illusory. No doubt the tariff of which we speak would be very wasteful, very high, and, like all tariffs with a Protective incidence, would tend to extinguish itself, and so would need increasing; but nevertheless it would in the circumstances, and in view of popular feeling, be the only instrument available. That is why we consider that vast expenditure is bound to destroy Free-trade in fact, if not in intention. That a tariff with a Protective effect is a very bad drawing tax we are as convinced as ever; but that would not prevent it being used if once the country were committed to old-age pensions. It would not, of course, bring "an increased sum of taxable money into the country "—no tax can ever add to the wealth of a country—but would diminish it. A little consideration of these facts will show our correspon- dent that even if we convince him that in practice raising another 230,000,000 a year for old-age pensions means the destruction of Free-trade, he need not become a Pro- tectionist—ED. Spectator.]