LORD CROMER AT LEEDS. L ORD CROMER covered so much ground
in his valuable speech at Leeds that it is impossible here to do mare than refer to one or two of the points he raised, In particular, we wish at once to express our entire agreement with what he said about the House of Lords and the Referendum. The Spectator may fairly claim the credit of having pressed the importance of the Referendum upon public opinion long before that question reached its present urgency. As worked in Switzerland, the Referendum can only be applied after a Bill has passed both Houses of Parliament, and is then set in motion on the petition of a given number of electors. In this country it would be necessary to make a certain, though by no means an essential, modification of the Swiss plan. In the first place, the majority of the House of Commons ought to have the power to set up a Referendum as a means of overriding the House of Lords. The Liberal Party may fairly claim that it ought to have this method of overcoming the permanent Tory majority of the Upper House. This power could easily be given them. It might be enacted that if the Commons refused to agree to the Lords' amendments, the Bill as it finally left the Commons should be submitted to a poll of the people. To put it in another way, the Lords would be deprived of the power of altering clauses twice passed by the Commons, or of rejecting Bills in tato, but might add a Referendum clause to Bills which contained such clauses. The result would be that the Lords, though losing the power of absolute rejection, would possess the power in all cases of dispute of referring the Bill to the decision of the electors. In the second place, a minority of the House of Commons—say one of not less than a third—ought to have the power to demand a Referendum when a Bill has passed both Houses, for otherwise it would be possible for a Tory majority in the House of Commons to combine with the permanent Tory majority in the Lords to pass an Act of which the electors might conceivably disapprove. Estab- lished on these principles, the Referendum would remove the whole of the legitimate grievance of the Liberal Party' against the House of Lords. That House would then be on surer ground in opposing Liberal legislation, or in criticising Tory legislation, for in the last resort it would be conscious that its interpretation of the will of the people could be checked by appealing to the people themselves.
A large part of Lord Cromer's speech was devoted to the general question of finance, and in particular to the coming Budget. Of the intimate connexion between sound public finance and the commercial prosperity of the country it ought to be almost superfluous to speak. Yet, as Lord Cromer pointed out, it can hardly be superfieous to insist upon this point whoa the Chancellor of the Exchequer uses language which must tend to destroy confidence throughout the commercial classes. The members of the Government themselves are aware that by their legislation and by their speeches they have largely lost the confidence of the commercial classes because they have shaken that feeling of security upon which commerce must be based. Mr. Haldane, for example, on Wednesday pointed out in a passage of great seriousness the dangers produced by a lack of confidence.
Nor are they likely to restore confidence, so far as can yet be seen, by their Budget. With most of what Lord Cromer said on this point wo are entirely in agreement ; but we regret that he went so far as to advocate, or at any rate to assent to, a reduction of the Sinking Fund. It is perfectly true that at the present time the Sinking Fund is exceptionally large, amounting now to nearly £10,000,000. If we were only dealing with a Debt incurred in past generations, £10,000,000 a year would be a very large sum to demand from the existing generation of taxpayers. The real fact, however, is that a considerable portion of the present Debt was incurred only a few years ago for a war which the existing generation of taxpayers sanctioned and approved by their votes. We believe that war to have been justified in its inception and its results, but that does not alter the fact that it should be paid for within a reasonable time, and that the burden should not be laid upon generations which will have burdens enough of their own to deal with. On March 31st, 1899, the National Debt was £635,000,000; in 1908 it was £762,000,000. Thus the increase of In- debtedness in ten years is no leas than £127,000,000. This is the sum which we of this generation ought, in justice to our successors, to wipe out as rapidly as possible, and a Sinking Fund of £10,000,000 a year is not a penny too much for this purpose. There is another strong reason why the Sinking Fund should be maintained intact. In previous periods when the fixed charge for the Debt has been reduced Consols were at a premium, sometimes at a very high premium ; they are now at a heavy discount. Consequently there is a double advantage in now making a special effort to pay off Debt ; there is a greater profit to the taxpayer by buying up Consols at a low figure, and it is more important to sustain national credit when that credit is low than when it is high. The general importance of maintaining the national credit is obvious to every one, but there is a particular reason why Consols should be restored to a par value as soon as possible to which insufficient attention has yet been directed. Mr. Gibson Bowles, in the very useful pamphlet on " National Finance " which we noticed four weeks ago, has clearly pointed out the dangerous position in which the country stands with regard to the savings- banks in consequence of the fall in the price of Consols. The State has undertaken a liability not only for the Post Office Savings Bank, but also for the savings-banks maintained by trustees and for certain funds belonging to Friendly Societies. With Consols at 84k, Mr. Bowles calculates that the deficiency of assets as compared with liabilities is no less than £25,000,000. At the present time Console are nearly 1 per cent. cheaper, thus increasing this uncovered liability to over £30,000,000. If, owing to any cause, there were large withdrawals from the savings- hanks, the Government would have to meet the claims of depositors at a great disadvantage.
There is a final reason why no tampering with the Sinking Fund should be permitted. Last year Parliament Passed an Act which relieved a large part of the com- munity from the obligation of accumulating capital to make provision for their own old age. Having ilium said to its subjects, "You need not trouble to save," it becomes obligatory on the State itself to do its own saving. Some- body must accumulate capital, and if individuals are to be deprived of one of the principal motives for voluntary accumulation, they must be compelled by taxation to accumulate enough, at any rate, to wipo out their collective debts. This question is of the utmost importance to the wage-earning classes. People too often forget that it is ultimately impossible to increase the wage-earners' share of the wealth of the world except by increasing capital, and thus reducing the price which capital can command. In view of all these considerations, and also of the reckless manner in which local authorities are piling up Debt, we sincerely hope that all sound financiers—among whom we naturally place Lord Cromer in the front rank—will combine to resist any reduction of the Sinking Fund. /led as the financial situation is, it is not so bad that we are forced to leave off paying our debts in order to pay °ex way. A Sinking Fund is absolutely essential to Bound finance.
Among possible sources of revenue, Lord Cromer alluded to the increased taxation of licensed houses. What amount ,ef revenue can be obtained from this source nobody yet Knows. It is certain that if the License-duties are ap p re oi ably increased, a good many of the inferior houses will voluntarily surrender their licenses, and to that extent the revenue will suffer, while in other respects the com- munity will gain. Even the brewers themselves admit in their more conciliatory moments that there are too many licensed houses in the country, and the most scientific !ay of reducing the number is to increase the License- duty, so that the uneconomical houses may go out of existence. It is obvious, however, that the increase of the (Lutes must not be so great as to amount to confiscation under the name of taxation, for, apart from the injustice of such a method of dealing with licensed property, it would be destructive of revenue. While hoping, therefore, that some additional revenue may be derived from the increased taxation of licensed houses—perhaps as much as iwc, or even three, millions a year—it is safer to confine our calculations to those staple sources of revenue with which everybody is familiar. That these are still capable of g.lving a sufficient yield to meet the needs of the present situation nobody can deny. Let us suppose for the sake 14 argument that the Chancellor of the Exchequer were to ask the House of Commons to put existing taxes back ._`? the figure at which they stood during the pressure of l'ee war. That would mean an addition of threepence oa the Inennwtax, of threepence on the Ten•duty, and the restoration of the Sugar-duty to the figure at which it stood last year. At the present rate of a shilling in the pound the Income-tax this year is expected to yield .233,000,000, after allowing for the heavy abatement of threepence on earned incomes. Continuing that abate- ment, but increasing the tax by threepence, we ought upon this scale to get an additional revenue of about £8,000,000. It will be noticed that the Income-tax payer whose income is earned will still be only paying a shilling in the pound, whereas during part of the war he was paying fifteenpence. The increase of the Tea-duty from fivepence to eightpence would mean at least another £3,000,000, and the restoration of the Sugar-duty to its old figure about £3,500,000. Thus it is possible to raise more than £14,000,000 of additional revenue from existing taxes, and still to leave the country less taxed, both as regards Income-tax and as regards the Coal-duty and the Corn-tax, than it was during the war. If, in addition, the Chancellor of the Exchequer adopted the proposal made in these columns for a universal Income-tax of moderate amount, levied on all incomes, whether paid in weekly wages or otherwise, above £50 a year, the finance of the country . would be placed on a sound foundation in spite of the profligate spending of the present Government. It will be said, of course, that in time of peace a country ought to be less taxed than in time of war. Of course it ought. But what this country has to learn is that it cannot avoid high taxation in time of peace if it will persist in adding to expenditure. The whole of the present financial trouble arises from the recklessness with which the House of Commons has committed the country to vast schemes of expenditure without for a moment pausing to consider where the money is to come from to pay for them. That trouble will be even worse in the future, if we once admit that the present generation can justifiably escape from the liabilities which it has incurred by throwing the burden on its descendants. Let those who have called the tune pay the price.
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