Finance Public & Private
The Comm' g Budget WE arc now rapidly approaching the close of the present national financial year, which terminates on March 31st. It is usually followed within two or three weeks by the introduction of the Budget for the coming year. Whether on this occasion we shall have the Budget immediately after Easter, or whether Mr. Snowden's mast regrettable indisposition will cause a postponement, remains to be seen, but within a few weeks, at most, Budget secrets will be disclosed and the taxpayer will know the worst or the best, as the case may be, with regard to the demands to be made upon him for 1931-2. I have, however, frequently explained in these columns that while the Budget may be a profoundly interesting document in the sense of disclosing the policy of the Government of the day with regard to taxation, the real point of interest to those concerned with the question of national economy centres on the Estimates of Expendi- ture for the coming year. When once these have been settled by Parliament, nothing remains but to find the wherewithal to meet the outlays. During the past week these Estimates have been published, but before dealing briefly with them in this article it may be useful, perhaps, to make one comment with regard to the misunder- standing which seems to exist with regard to the expres- sions " Budget Surplus " and " Budget Deficit." A few weeks ago Mr. Snowden, when making his grave statement in Parliament upon the National Finances, suggested that he might have a Budget Deficit of about £50,000,000. By this, of course, he meant that for the coming year until new taxes of some kind were applied his estimated Expenditure was likely to exceed the estimated Revenue by about that amount. Mean- while, each weekly Statement of Income and Expenditure - for the current year has shown that the Revenue has been coming in much better than was expected, and some of the newspapers have had paragraphs headed " Budget Deficit declining." This has led some people to suppose that the estimated .Deficit of £50,000,000 was crumbling n and, as some papers have even spoken" a Budget Surplus, it has -been thought that Mr. Snowden's antici- pated Budget Deficit Might not wine to pass. It is, how- ever, of course, an error to speak of the possible state of the National Accounts on March 31st as a " Budget ". Deficit or Surplus, as the case may -be; the true expression is a " realized " Surplus or " realized " Deficit. Thus, supposing, for example, that on March 31st there was a small balance on the right side—in other words, th"at there was a realized Surplus—that would not affect the question of the Budget Surplus or Deficit for the coming year except in so far as the resiliency of the Revenue might occasion the Chancellor to estimate a little more hopefully for the new. year.
THE NEW ESTIMATES.
The 'conspicuous feature of the Expenditure Estimates for _1931-2 is the further great increase in Civil Service outlays and particularly in outlays under the head of Pensions, the Ministry of Labour, and Education. Alto- gether the total_ increase in the Civil Service votes is just over £22,000,000, and in the entire Ordinary Expenditure, as distinct from the amount required for the Debt service, the increase is just over £21,000,000. In view of the lower money rates now prevailing, it is probable that the amount required for interest on the National Debt will be smaller than a year ago; but, on the other hand, the Chancellor is pledged to add another £5,000,000 to the Sinking Fund for the new year, while it must also be remembered that Mr. Snowden will not have another £16,006,000 to draw upon from the Rating Relief Suspense Account, though there arc one or two other smaller nest eggs which he.may possibly seize. The broad facts of the coming- Budget seem likely, however, to be that while on the ane hand the Expenditure will show a considerable expansion the Revenue is likely to show a considerable diminution-. under the head of Income and Supertax owing to .the Returns. covering. a year of exceptional financial' and industrial depression. It would not. be at all Siirprisiiv„,. therefore, if the Chancellor's estimated deficit on the existing basis of taxation were to be not far short of the forecasted figure of £50,000,000.
It will be time enough a little later on to discuss the possible means to be taken for meeting any estimated Budget Deficit. Already rumour is crediting the Chan- cellor of the Exchequer with consenting to some general tax on imports for revenue purposes, a rumour which has been strengthened latterly by the recommendations of Mr. J. M. Keynes in that direction. As a matter of fact,. it is difficult to conceive of any form of taxation which will not have a disturbing effect, first, because of the taxation itself, which must necessarily take a .certain amount of resources which might otherwise be employed for control by the Exchequer, while in the second place the cause of the taxation, namely, the further great increase in un- productive expenditure, must have a psychological effect just as Mr. Snowden's Budget had -a twelvemonth ago. It was felt then, and it will be felt now, that the growth in expenditure seems to have passed beyond the control of the nation or of Parliament, and there can be but one ultimate result. Moreover, it is increasingly perceived that those who would desire to effect drastic reductions in unproductive expenditure are likely to find _their task, so far as the immediate future is concerned, a wellnigh impossible one, owing to past legislation and existing contracts having placed the nation and the House of Commons in fetters, as it were, when any attempts are made to bring about the much needed economies. And yet there can be no real return of confidence and, there-. fore, no enduring revival in prosperity, so long as legisla- tion ministers to extravagance in the National Expendi- ture and to those forces of labour which make for the undermining of confidence and the .destruction of every form of private enterprise.
ARTHUR W. KIDDY.
BANKING IN 1930: A CORRECTION.
I regret to find that in my article in last week's Financial Supplement the reduction I referred to in the balance of net profit available after allowing for the dividends in the ease, of each of the members of the Big Five was given as a reduction in the amounts carried forward. As a matter of fact, with one or two exceptions, there was little change in the balances carried forward, and I hasten to place these on record. In the case, for example, of Barclays, there was an actual increase of about £7,000 in the carry forward ; in the case of Lloyds there was also an increase of about £3,000 ; in the case of the Midland a decrease of £8,000 ; in the case of the National Pro- vincial a decrease of 1175,000 ; while in the case of the Westminster the decline in the carry forward was
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