The Budget
THE Socialist Chancellor of the Exchequer has not produced a Socialist Budget. His would have been in every sense a Liberal Budget if only he had insisted upon the need for public economy. He is so much a Liberal in his financial thinking that when reading his speech one almost expected to come upon an earnest exhortation in favour of "retrenchment ",----the word that used seldom to be absent from Liberal lips. Such a tentative expectation, however, was no doubt to credit Mr. Snowden with too much aggressiveness in defying the spendthrifts of his Party. Apart from the omission of retrenchment, his Budget might have been presented in the present circumstances by Mr. Gladstone or Sir William Harcourt.
The Budget from the Free Trade point of view is ex- tremely "correct," and is therefore open to the charge of being dull. It relies almost exclusively on direct tax- ation. It proposes no new indirect taxation whatever with the trifling exception of a slight rise in the beer duty which ought to be too small to be passed on to the consumer. For the rest, it sweeps away, or promises to sweep away when opportunity serves, all the Safeguarding duties and the McKenna and silk duties. We never sup- posed that Mr. Snowden could afford to abandon this year the considerable revenue from the McKenna duties, but as an impenitent Free Trader he stands by his intention to abolish them when he can. The Safeguarding duties will be ended by the simple act of not renewing them when their experimental periods expire. Thus, the duties on lace and embroidery will disappear in July and the duties on gloves, gas mantles and cutlery in December. The other Safeguarding duties will last longer—thole on packing and wrapping paper till May, 1981, those on translucent pottery till April, 1932, those on buttons till April, 1933, and those on enamelled hollow-ware till June, 1933. But, of course, the Government may not live long enough for the completion of this abolitionist career.
Faced with a prospective deficit of more than £40,000,000 Mr. Snowden had to find the money some- where by stern methods ; yet reading between the lines of his speech, we can see that he has been considerably disturbed, not to say alarmed, by the confirmation of the tradition that high taxation means lagging trade Nothing was more remarkable or more important in his speech than the promise that "barring accidents" he would propose no increase of taxation next year. Socialists who are really Socialists started from their seats at these words. Was this, then, the end of all their dreams of abruptly reconstructing the State from top to bottom ? Yet there was no mistaking the plainness of Mr. Snowden's pledge. He agrees with Mr. J. H. Thomas that the cost of the social services cannot be increased -while there is a stagnant, and still less while there is a dwindling, indus- trial revenue. The nation must pay for its benefits and amenities out of what it earns. In the long run there is no other way.
It is certain that the Left Wing of the Labour Party will organise its anger against this doctrine. Let us suppose that twenty Labour malcontents will harass the Government during the Budget debates and finally vote against them. That would mean a dangerous reduction of the Ministerial vote. On the other hand, the Budget has already secured the almost unreserved approval of the Liberals. Unless the revolt inside the Labour Party should become more serious -than • at present seems likely, Mr. Snowden will be able to keep his upper lip as stiff as usual, and the net result will be an even closer co-operation between the Government and the Liberals.
It may be said that, though Mr. Snowden has not acted so " Socialistically " as was feared, he has, at all events, in his heavy taxation of the well-to-do and his comparatively favoured treatment of the less well-to-do, gone a long way towards the satisfaction of the opportunist Socialist policy—call it the second-best Socialist policy —of arriving at its goal by taxing private capital out of existence. We do not for a moment deny that there is something in this criticism. The increased Surtax and Death Duties are in sum very heavy. All we say is that if Mr. Snowden had really intended to pursue the second- best Socialist policy, he would not have led up to that remarkable pledge about not increasing taxation.
Having made this explicit reservation, we are free to admit that it is quite arguable that Mr. Snowden has been too "correct." He is a financial purist, indeed, a pedant. He hangs on grimly to a doctrine as though no question of expediency could have any conceivable right to exist in the same context. His whole Budget implies that the preservation of the necessary amount of private capital is essential for the recovery of trade, yet he raids the hen-roosts where the birds are notoriously the best layers of capitalistic eggs. Probably he has satisfied himself that as capital has got to be called upon anyhow to pay the nation's debts, now is as good a time as any to make. the call, as money is cheap and the industrialist will not really be very hard put to it to find enough capital. All the same, Mr. Snowden's pedantic severity may have the effect of a sudden deflationary policy. In saying this we are not offering any collateral support to those who object to any and every form of deflation and who discover the source of all our distress in currency and banking methods. We mean no more than that the right cure may be too drastically. applied. Sick people have been known to die of shock when there was nothing wrong but the too strenuous application of the correct treatment. Only time can tell whether we are to suffer for Mr. Snowden's extreme rigour. At least he is taking a risk.
His inflexibility is also seen in detail in his treatment of the Debt. His methods, unpleasant though they necessarily are to those who have to pay, are perfectly straightforward. There is not a sign of a trick or a clever device, such as Mr. Churchill was fond of inventing, anywhere in the Budget. He proposes to resort to legislation to compel future Chancellors of the Exchequer to do what he himself is doing—remedy in every Budget a failure in the previous year to pass on the prescribed amount to the reduction of Debt.
The proposed taxation of undeveloped land may cause an unexpected and very interesting Parliamentary situation. So much preparatory work must be done that Mr. Snowden cannot look for any early return from such taxation, and he, therefore, means to deal with the whole matter in a separate Bill. First of all there will have to be a survey of at least all that land which is ripe for development. We imagine that a Domesday Book for the whole country is beyond his present scope.
It is quite possible that conditions have changed enough —largely owing to the opening up. of . new building land by the arterial roads—to justify a fresh adventure in a form of taxation which was an expensive failure ill Mr. Lloyd George's hands. But the Bill will upset the timetable of the Government, and the Labour rebels, dis- appointed again in-their hopes for some of their pet legisla- tive schemes, will discover yet another serious grievance.
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