Finance—Public & Private
• A Lesson From America
OF the many decisive measures adopted by President Roosevelt since he assumed Office less than a fortnight ago, there is probably none which has evoked more approval both in America and in other countries than the attack made upon extravagant National expenditure. Nowadays it seems to require a severe crisis before any statesman can achieve economies in public expenditure. We know that in this country two years ago the Govern- ment in Office was quite unable to check the growth in expenditure ; yet when the moment of crisis came not only were great reductions effected, but they met with instant approval by the nation, even though increased burdens of taxation• were involved. And in the United States although the need for an overhauling of the "Veterans' "Pensions was recognized, it required a crisis and a change of Government to bring about the required action. When the acute phase of the crisis in America has passed there will, no doubt, be a further examination into the matter of other superfluous national expenditure, for it is quite certain that if there is to be a recovery of con- fidence in America, and also if the evils of inflation are to be avoided, an equilibrium must be established in the nation's accounts.
THE ONLY WAY.
We have then, surely, two object lessons very clearly before us : the one arising out of our own experience some two years ago, and the other arising out of the admitted causes of the financial trouble in the United States. It is true that in both countries statesmen have also to contend with the problem of unemployment, but never- theless past experience should show the necessity for dealing even with that problem on lines consistent with sound finance and a Budget equilibrium. It seems neces- sary to emphasize these points at the present moment, because there would seem to be lacking in the financial administration here some of the zeal for economy which was apparent a year ago, while taxpayers who are naturally weary, as is result of many years of heavy taxation, are now beginning to press for relief even at the expense of an unbalanced Budget. We are told that if only. the Chancellor of the Exchequer will take his courage in both hands and reduce the Income Tax, even at the cost of a prospective deficit, he will be pursuing a wise course, the reduction in the tax giving a stimulus to spending power which would react favourably not only upon the unemployment problem but also, at a later stage, upon the revenues of the Exchequer. That relief from taxation is urgently needed there can be no question. That it might have a favourable effect upon the ability and willingness in spending with subsequent favourable reactions upon the Exchequer can also be admitted, but those good effects would be minimized if not entirely destroyed if the public were to be in doubt about the state of the National Finances themselves, for the Income Taxpayers would be inclined to cling to their additional resources from fear of some further increase in the tax in the not distant future. It is for the Govern- ment to discover some further directions in which savings in expenditure can be achieved so as to give the necessary relief to the taxpayer without the fear of a Budget deficit. As a matter of fact, many of the economies recommended by the May Committee have not yet been put into force.
UNEMPLOYMENT.
This is not to say, however, that a case could not be made out for some relief of unemployment along the lines of capital expenditure designed for "relief works." It must be shown, of course, that the works in question are of a character calculated at some future time to be of use to the country, and ultimately to yield income. Granted these provisions, there is no reason why moderate amounts in Government loans should not be raised for certain relief works. I suggest, however, that it is at this point a very practical question arises and one, moreover, which tests the sincerity of Labour. The taxpayer may be asked to stand behind the security of new loans for under- takings where no immediate financial return is to be expected. Is the taxpayer then also to be bound by Trade Union regulations as to the amount of pay to be given to those employed or the number of hours in which work is to be carried on ? "No one for a moment ,would suggest that because of the distress of the unemployedanything like a sweated wage or sweated hours of labour should he introduced. On the other hand, if the cost of the works is to be based upon Trade Union wages and Trade Union regulations we may reckon that these Trade Unions are something whose power is greater than the Government, and we may expect to see a continuance of their control over the enterprises of the country, a control which has cost us dearly for generations and not least during the period immediately following the War, when foreiga countries were competing with us so severely for post.
Previous page
