FABIAN FINANCE.*
Hans we have a recipe, compounded by Mr. Sidney Webb and his lieutenants, not for raising money to carry on the war, but for paying the bill when the war is over. For then, according to these authorities, "our financial difficulties will, in a sense, begin," with a National Debt of three or four thousand million pounds to be dealt with, and also new charges for war pensions and increased provision for defensive armaments. So the Fabians have looked ahead and thought out a plan for meeting this crisis " without crippling industry, without lowering the Standard of Life, and without hampering individual enterprise," and moreover, " without confiscation, without expense to the State, and actually with financial advantage to the Chancellor of the Exchequer."
This alluring programme can be carried out, according to its devisers, by improving and widening the work and earning power of the Post Office; by nationalizing the railways, canals, coal production and distri- bution (involving " a fixed and uniform National Price of one shilling per hundredweight delivered to cellar"), and life insurance ; and by a revolution in the Income Tax, by the substitution as the basis for assess- ment of family income for the incomes of the several members of the family, and by graduation which would relieve the small taxpayer with a family, and tax incomes of over £100,000 a year at the rate of sixteen shillings in the pound. There is also to be, once for all, a capital tax of 10 per cent. of the capital value of all private property, payable in ten yearly instalments. This tax is to be imposed on all owners of £100 worth of property, and all who fall below this line are to pay, for ten years, a Poll Tax of 10s. per head per annum.
We thus have a pleasantly blended mixture of Socialism, Income Tax reform (or revolution), and the German " Defence Levy." It is mag- nificent, but would it pay for the war i Let us take these suggestions one by one. There can be no question that the Postal Service might be considerably extended and improved, and that many conveniences now provided by Governments of other countries to their citizens might well be adopted here. But it is by no moans safe to assume that this expansion would pay. In fact, the ineptitude of Post Office management has been made painfully apparent by its helpless struggles to deal with its new duties as collector of the nation's small war savings. Even now, after some months of selling War Savings Certificates, the Post Office is continually exposed in letters to the Press as a hopeless bungler in what ought to be a very simple business. It islrue that it is overworked and understaffed, owing to the war ; but this matter of encouraging and simplifying saving is so enormously important that a Department which tackles it so ill cannot be regarded as likely *Zan,' to Pay for the War : being Ideas Offered to the Ckanceller aj Me Exchequer Sothe -EMU* itesurreh Department. Edited by Sidney Webb. London : Fabian ciety. and Allen and Unvin. I6s. net] to be able to undertake a large number of new duties without years of painful apprenticeship, during which it is quite possible that its revenue might wane rather than wax. Moreover, we were promised that all these good things could be done " without confiscation," and yet we find that the Post Office is to do a general banking business, taking deposits up to any amount, paying a higher rate of interest on them than heretlere, and providing its customers with cheque-books. This would be a serious blow to the existing banks, and though perhaps it can hardly be described as confiscation, a development of State enterprise at the expense of private firms and joint stock companies is a near approach to fiscal robbery. Dealers in exchange, would also be deprived of a living—apparently without compensation—by the develop- ment of a system of Governmental International Remittance; but in this ease the injustice would be lightened, we think, by technical flaws in the scheme which would make it quite unworkable. When it is said that " every transaction would normally be at gold par," any of our readers who are acquainted with the practical working of exchange business will need no further information on this fantastic proposal. Later on an occasional premium is suggested, and so it is hard to say what is really meant. But it is safe to expect that the net result would be loss and delay to the remitting public, or loss to the Governments which engaged in a difficult and highly technical business, or, more probably, both. At the same time the conditions of service are to be made much more comfortable for the employees, which is excellent if it can be done, but will not help to pay for the war.
As to the nationalization of railways and canals, it is easy to show that great economies might be effected by joint working of the railways, and that the revival of our waterways would be a help to the country's industry. But the latter can hardly be relied on as a source of revenue, especially under Government control, and all the economies of joint railway working might easily be wiped out, and mere, by the extrava- gance and incompetence of official administration. Unification under business management is one thing ; amalgamation under a strangling network of rod-tape is quite another. The basis of purchase is to be the current market price, with, apparently, no compensation for com- pulsory expropriation. Rates and fares are to be revised, the public is to have a better service, and " an extensive revision of wages, hours, and working conditions" would be immediately undertaken for the benefit of the employees. Very nice for the public and the workers, but it will not help to pay for the war.
It is the same story with the coal supply. Buy out the owners as the market quotations for their securities, give the public coal at a uniform price of 20s. per ton, reform the conditions of work underground, and check the terrible loss of life and limb by accidents in mining. `Admirable reforms, the last one well worth doing at a big cost, but not conducive, especially under bureaucratic management, to paying for the war. But, we are told, "one important benefit of the Nationalization of the Coal Supply would be to take this fundamental national service out of the arena of perpetual strife between Labour and Capital." Would it ? The experience of the Government dockyards and arsenals shows that when the State is the capitalist, Labour still has grievances and, very properly, does its best to right them.
Perhaps, however, the most curious item in this exhibition of Fabian jugglery is the proposal to nationalize life insurance. Some attempt is made to show that the business would be more cheaply conducted (which we beg to doubt in view of the high cost of all bureaucratic work in this country); but the chief advantage to be gained seems to be the fact that the Government " in taking over the assets and liabili- ties of the insurance offices would find itself in possession of over 550 million. pounds' worth of investments, about half of which could gradually be realized on the Stock Exchanges of the world." The proceeds thereof, and the yearly increase of the Insurance Fund, would be in- vested in " the Great War Loan, the whole unredeemed portion of which would probably, within the next few decades, be completely immobilized in the hands of the State Insurance department." But it would still be a liability of the State, which would have to pay interest on it and provide a Sinking Fund on it, as well as on all the debt created to buy the companies out. So that here again paying for the war does not seem to be among the objects achieved. As to the Income Tax and the levy on capital, there is a painful lack of originality about the former, and the latter would, in the days after the war, involve difficulties in the matter of valuation which might tax the ingenuity even of the Fabian Society.
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