TOPICS OF THE DAY.
Lai, DEBATE ON THE CORN-DUTY.
ALL Unionists and supporters of the present Govern- ment who agree with us in regretting the imposition of the tax on corn cannot, we venture to think, fail to derive a considerable amount of satisfaction from the course of the debate on the Finance Bill, for the effect of that debate was to bring out most clearly the non-Protective character of the intentions of the Government. Leaving aside the question whether the tax was or was not neces- sary, it is obvious that the Cabinet did not mean by its imposition to encourage in the slightest degree the Pro- tectionist aims and objects of a section of their followers. If ever a body of statesmen were committed by speeches in Parliament to a particular policy, they stand com- mitted to the non-Protective character of the duty on corn. Both Sir Michael Hicks-Beach, speaking as Chancellor of the Exchequer, and Mr. Balfour, speaking as Leader of the House, showed emphatically that the tax is to be levied for revenue purposes only, and that it is not intended to keep out foreign corn and to raise the price and encourage the growth of English corn. That Free-trade Unionists were able to obtain such clear and emphatic declarations was largely due to the over-zeal of the Opposition, and to their desire to make party capital out of the debating opportunities offered them by the duty. Their insistence that the duty was a Protectionist measure in miniature enabled the spokesmen of the Government to make their own position quite clear to the country, and to put it on record in the most solemn manner, not only that the measure was not Protective in fact, but that there was no Protective policy or intention behind. After the debate, as before, men may hold, as we ourselves hold, that the Corn-tax is a bad and wasteful and irritating method of raising revenue, but no one can in future describe it as intended to serve as the thin end of the wedge of Protection.
That lir :lion of the debate which was concerned with the que-lion of who would pay the tax was extremely interestg, both from the practical and from the theo- retical side. The Opposition very naturally, and quite properly from their standpoint, endeavoured to show that the whole weight of the tax would fall on the con- sumer, and that bread must, and certainly would, rise in direct proportion to the tax, and probably in an in- creased ratio. The Government speakers, on the other hand, scoffed at the notion that the tax would raise the price of bread, and brought arguments and facts and figures to show that, whoever paid the tax, it would not result in an increase in the price of the loaf. Which view was right? The answer is a very difficult one in practice. We cannot profess to be able to solve it off- hand, but certain considerations which govern the solu- tion may at least be set forth. To begin with, it is clear that some one must pay the tax. There will be present in the Treasury chest some two and a half million golden counters which will be witnesses of the fact. They will have come from somewhere. Some one will have parted with them. The persons who will have parted with them by actual transfer will be the per- sons who have either imported corn by buying it abroad, or else the foreign or Colonial speculators who will have sent their corn into the British market in order to sell it there to any purchaser who wants to buy it. Theoretically, no doubt, these men, having, as it were, increased their expenses in getting the corn into England by the amount of the tax, will either stop bringing it here to sell, or else will add the tax to the price at which they sell to the bakers; the bikers just in the same way will theoretically in- crease the price of the bread to their customers; and so the amount of the tax will be handed down till it is finally deposited on the shoulders of the consumer. Either that must happen, or the importers and bakers must for some reason or other agree voluntarily to bear the burden between them and , to take less in the way of profits than before. Thus either the bakers and importers must lose, or else the shock of loss must be handed down directly and undiminished to the consumer. That is the theory. Yet we know in practice that very often corn will vary in price not bye, shilling, but by three or four shillings a quarter, and yet no difference be made in the price of bread. How is this to be explained ? One explanation is that the bakers even when large fluctuations in price take place keep prices level. They average the falls against the rises. But it can be said in answer to this plea that fluctuations even of five shillings a quarter do not cause a rise in the price of bread—" Yes ; but a permanent rise will be different. Knowing that it is a permanent and a rigid rise, the bakers will pass it on to the consumer."
Possibly this is true; but even this does not exhaust all the facts. It is, we believe, quite possible that the price of bread will not be raised because of the tax. What, then, will happen ? Who will be the losers ? In theory, as we have shown, either the importers and bakers must pocket the loss or pass it on. True ; but the theory supposes that at present all possible savings that energy and organisa- tion can suggest are made in the chain of trade between the corn in the field and the consumer. As a matter of fact, however, it is extremely unlikely that this is the case. In all probability there is a vast deal of wastage going on at different points, and if there is a sufficient stimulus applied some of this wastage may be stopped and the Corn-tax paid ,out of that. We see something of the kind happen when, say, twenty people are sitting on a long bench apparently as close together as is possible. Suddenly a newcomer arrives and asks for a seat. Then comes the appeal : "Let us try to make room by each sitting a little closer." Accordingly everybody edges up a little closer to his neighbour, with the result that room is made for a twenty-first person to sit down. And the smaller the twenty-first person is, the easier it is to get him a place without driving any one else off. Thus, when a small fiscal newcomer like a shilling duty ap- pears, it is possible that room may be made for him by every- body on the bench of trade sitting a little closer and not noticing, so to speak, that he has suffered a loss of room. Hence we think that it is quite conceivable that by the process of sitting closer and saving a bit of space here and there the extra taxation will not, in fact, increase the price of bread. A five-shilling duty could not possibly have been squeezed in without dislodging some one, but a shilling duty can be, and we expect in all probability. will be, got in. But though we are obliged to admit this in view of known economic facts, we are bound to say that we think it would be most deplorable if Chancellors of the Exchequer wre to get into the habit of squeezing in a number of small taxes on the principle that there is always "room for a little one." Such a fiscal policy would be ruinous, for it would leave out of account the great waste involved in the collection of little taxes. We want our taxes to be few and lucrative, not small and many.
As regards the alternatives offered to the Corn-tax, we find ourselves in very considerable sympathy with the views expressed by Sir Henry Fowler. In our opinion, his analysis of the sources of taxation which might have been relied on was most effective, and we cannot say that we think Sir Michael Hicks-Beach by any means proved his point when he tried to show that an increase in the rate of taxation on tobacco or beer would not draw,—i.e., that the point at which fresh taxation would decrease con- sumption, and so lessen the yield of the tax, had been reached. We doubt it in both the cases quoted. If people are drinking less beer, it is because they are drink. rag more cider and more mineral waters, not because they find beer too expensive because of the taxation imposed on it. We regret to see that in the discussion of alterna. tives nothing was said about progressive Death-duties In regard to estates of over a million in value. No doubt the popular notion is that such graduation would not yield sufficient revenue, but we should greatly like to see the matter discussed by the experts. We fear that the reason why the matter is not raised is that Sir William Harcourt resolutely refused to push his graduation beyond a million, and he therefore cannot raise the point, while the Chan- cellor of the Exchequer, knowing that for the above reap= he will get no support from the Opposition, does not care . to encounter the fierce opposition thatwould fall on. Inm from a small but very powerful section of his own friends. The result is to be regretted, as there really seems no valid reason why, if an estate of a million pays more than an estate of a hundred thousand, an estate of two millions should not pay more thrn one of a million.
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