THE BUDGET AND DEFENDING THE POUND
[To the Editor of the SPECTATOR.]
Sin,—Mr. Snowden's supplementary Budget for 1931-32 and advance Budget for 1932-33 purport to defead the pound sterling, but actually fail to touch the main point at issue.
It should be realized that our external Budget, the account of our transactions as a community with the world at large, • has been seriously deranged by the world crisis. I estimate that in 1931, whereas our total visible imports are likely to exceed our total visible exports by roundly 380 millions, what Sir Robert Giffen termed our " invisible imports"— shipping income, oversea investments, &c.—are hardly likely to exceed 340 millions, leaving a debit balance of 40 millions. This deficit is unlikely to be less than 30 millions and may reach 50 millions or more.
This adverse balance is moving the exchanges against us, and nothing can save the pound sterling if it is not stayed. Mr. Runciman perceives this clearly, and suggests, as a bigoted Free Trader, that the Government should prohibit the importation of luxuries such as champagne. This sug- gestion ignores the fact that in August, 1931, we imported roundly as many manufactured articles as we exported, the imports including great groups of articles which we are peculiarly able to make in these islands, such as pig iron, bricks and artificial silk. Our imports are abnormal and largely represent the bargain sales of depression made in the only available market, Thus unemployment, the external Budget and the defence of the pound are intimately connected, and Mr. Snowden's two simultaneous Budgets utterly fail of their purpose, even while by grievous punitive taxation they depress the home market and must throw another army of workpeople into idleness and the receipt of what is called the dole.
The Government has it in its power, by a single Budget resolution, to bring hundreds of thousands of workpeople into profitable employment, and so to cancel some of its proposed taxes and to prevent the further unemployment arising from those taxes. It is both wicked and cruel to make such levies, even while refusing to tighten the main screw which is so conspicuously loose. Mr. Runciman would prohibit champagne. I suggest it would be better to flood the streets of Sheffield with imported champagne than to flood our markets with imported pig iron. I, too, am a Free Trader, but, as in the War, I know when Free Trade ceases to have virtue.
. Another point in conclusion. 'Why is it thought wise to frame now a second Budget relating to a period beginning April 1st, 1932, and not ending until March 31, 1933 ? Why does Mr. Snowden pretend to be able to perform such an impossible feat for any man as to forecast that there will be three million unemployed in this country at the beginning of 1933, and to tax our people upon such sheer and unpardon- able guesswork ? Obviously the guesswork is unnecessary, for the proper time to frame the Budget of 1932-03 is not now, but in April, 1932, six months hence. Of course, the Government must now introduce a proper Budget to take the place of Mr. Snowden's former sham Budget of this year, but it is reprehensible to accompany a necessary and adequate Budget for the financial year ending March, 1932, with a Budget for the year ending March, 1933, for which no proper or reasonable estimates can yet be framed. It is, however, perfectly true that the guesswork put forward is only too likely to bring about further depression and consequent disaster, including many millions of unemployed.--I am, Royal Societies Club, September 17th.
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