NATIONAL MISMANAGEMENT.—III. FINANCE.
WE are unhappily obliged to include finance in our series of articles dealing with national mismanage- ment. But though we are forced to include it, we must be careful to exempt Mr. Chamberlain from our censure. Except in so far as he shares responsibility with the Prime Minister and his colleagues for the general conduct of the affairs of the nation, the present Chancellor of the Exchequer must not be condemned for the dangerous, we had almost said the disastrous, course which the nation is pursuing in finance. If we are a spendthrift State, that is the direct fault of the spenders, not of the men who have to contrive and fashion our revenue and expenditure to support the national policy. Mr. Chamberlain came to the Treasury in circumstances which would have daunted the stoutest heart, and we are convinced that nothing but the patriotism and the devotion to public duty which are hereditary in him would have induced him to accept so ungrateful a task. Not only did he find the nation terribly embarrassed by the war, but, what is worse, there was a condition of confusion at the Treasury which must have multiplied his work and his anxieties a hundredfold. The old system of Treasury control was in ruins, and the system that had been put in its place was one essentially vicious—the system under which the Treasury, in fact if not in name, had become a spending Department instead of a Department in the first instance for controlling expenditure, and in the second for raising the money required for the State's needs in the least wasteful way. Mr. Chamberlain, situated as he has been, has done his best, and will, we may be sure, continue to do so. The position, however, cannot be improved in essentials until the Prime Minister, who is much more of a Grand Vizier than a true Prime Minister, is properly controlled, and brought to understand that money cannot be made to flow out of an ornate fountain as does his Parliamentary eloquence. The British Prime Minister is always responsible for general policy, but under present conditions that responsibility has been greatly intensi- fied. His chief colleagues, rightly or wrongly, do not feel that they can resign and risk thereby the break-up of the Ministry. Their belief that they dare not risk a Ministerial crisis makes the Prime Minister the uncon- trolled master of the situation.
Unfortunately Mr. Lloyd George is not one of the people who are steadied by the sense of power and responsibility. On the contrary, unlimited power seems to go to his head, and to make him more convinced than ever that all must be for the best in the best possible of political worlds if only he is allowed to call the tune. There may be a few troubles and difficulties no doubt, but a little talk to the House of Commons and to the country will soon make it all right. When the country is depressed he can fall in with the mood of the moment and talk about the gravity of the situation and the absolute need for retrenchment. When this mood is passing, or when it seems to have gone too far, he can brighten the situation at once by talking about the inherent strength of our posit ion and our essential prosperity, and can hint that if the c country managed to spend seven millions a day in the war and came through all right, it is wrong to think that now we are spending only half that sum there is any real danger. But whether the optim istic or the pessimistic tap is turned on, it does not really matter. Nothing is actually done. Even what is attempted is usually stopped half-way. The incoming wave is held in check by the back-wash of the wave that preceded it.
" Schemes laid this hour, the next forsaken, Advice oft asked, but never taken,"
is the motto of the Administration. And so the good ship Britain dodges zigzag through a stormy sea like a merchant ship that has been signalled to be in immediate danger from torpedo attack—a wise local and temporary device no doubt, but one which cannot be erected into a system for general navigation. No one realizes more strongly than we do that it is of no use to condemn Mr. Lloyd George for his mercurial way of managing the country's affairs without making specific suggestions for amendment. As long as we confine ourselves to generalities Mr. Lloyd George's col- leagues in the Cabinet and supporters in the House of Commons have a right to say that we are like the people who are simply made angry by a friend's or a relative's illness, and overwhelm the doctor and the nurse with vituperation, when it is the disease, not they, which is in fault. We ourselves have no doubt whatever as to the only true way to improve the situation, though we admit that it is neither a pleasant nor an easy way. The Govern- ment must adopt four simple and definite principles and act upon them " ruthlessly, relentlessly, remorselessly " —to use Lord Fisher's formula. Here are the principles of action to which the Government should pin their faith and follow out to the end :— (1) No addition to the existing burden of the National Debt.
(2) No increase of taxation. (3) No increase of inconvertible paper-money currency. (4) The best service for the nation subject to these limitations.
Provided these principles were strictly enforced, the situa- tion would soon right itself. No doubt the adoption of our suggested policy in the next Budget would make it essential to ration, the various Services. Remember that the tax revenue just now is of gigantic dimensions, and that there is nothing impossible in what we propose. The Government would have probably a difficult task in saying exactly what proportion of the revenue should be spent upon the Army, upon the Navy, upon the Flying Force, upon the civil administration, and so forth ; but we are convinced that when the money was allocated and the Services knew they could get no more, and further that a well-backel deputation of Labour men or of idealists or sentimentalists could not go to Downing Street and pick up another twenty or thirty or fifty millions a year as one picks straw- berries in July, there would be found to be sufficient money for our essential needs. And here we may note that a Government really bent upon economy and the putting of the nation's affairs to rights would gain by the adoption of the principles we have named, because they would have an answer to the thousand-and-one demands that are made upon them each year for new expenditure. Lord Cromer's question, " Where is the money to come from ? " would have a very real force when those clamouring for new expenditure were told that the Government were absolutely pledged not to raise new taxes, that every penny of revenue, as far as they could see, was already allocated, and that those who demanded costly new reforms must therefore first show where retrenchment without injury could be made.
No doubt before actually adopting the principles we have advocated the Government would have to be allowed what we may call a final " cleaning-up loan "—e.g., for getting rid of such a hideous mess as the Ministry have made over their building schemes. Presumably also they ought to be allowed an increase in taxation in one important particular. The new source of revenue which in our opinion ought to be tapped is one to which in principle we have always been opposed, and to which we should still be opposed if the need of the nation were not so desperate. Instead of the cumbrous Anti-Dumping Bill to which the Government are about to demand the assent of Parliament, we would substitute a general ad valorem duty, or, as we prefer to call it, universal market due, of 10 per cent. We would, however, give the Dominions and all other parts of the Empire a preference of half the Imperial harbour due in recognition of the similar preference accorded by them to British goods.
Obviously such a system as we advocate would be too inelastic to be permanent. It is a drastic regimen which is suitable to illness and not to normal life, where elasticity rather than rigidity is the law of health. Therefore we suggest that the principles we have named, though good in themselves, should be maintained without alteration only for seven years. After that they should be subject to revision.
Though our proposals may seem severe, they are not essentially so, for a nation which is pursuing a policy of vital retrenchment. The revenue we raise is so enormous that if taxation is kept at its present level— and we see no use in pretending that a reduction could possibly be effected within the next ten years—there need be no fear of the Chancellor of the Exchequer having no room to turn round in. Remember, though he could not either increase expenditure or take off taxation, he would be able to deal as he liked with savings, and could always devote any unexpended financial energy to the reduction of the National Debt. In this context we may make a suggestion which we have of ten desired to find an opportunity for making in regard to the National Debt. We are strongly against a capital levy for diminishing the Debt, not because we want especially to protect the shekels of the rich, but because the scheme, if carefully examined, will be found to be absolutely impracticable, or rather only practicable as a means of ruining the whole finance and industry of the country. The proper way to deal with the Debt is not by any complicated Sinking Fund or heroic fiscal measure, but by the simple if not very rapid process of converting the Debt from a permanent charge into one for long terms of years. Our scheme is in fact to take advantage of that curious trait in human nature which makes a man as to have a lease for ninety-nine years as a perpetuity. The difficulty is to set the ball rolli g in the matter of terminable annuities. We suggest that, in the very perilous situation in which we are, the Chancellor of the Exchequer should make a serious appeal to all patriotic men to convert, wherever possible, their permanent block § of loan into annuities for their own lives, or for the joint lives of themselves and their wives. A good many childless men would, we believe, be quite willing, if the appeal were properly made to them, to show their patriotism by accepting life annuities in this way and surrendering their permanent stock. Again, other men might see their way, for one reason or another, to converting permanent stock into stock for a fixed number of years, say thirty or forty or fifty. Thereby they could set an example in a patriotic voluntary effort to lighten the terrible burden of the Debt. If it is not possible, as we fear it is not, to ask a large body of men to be as patriotic as the anonymous donor who so generously cancelled a large block of stock without terms or conditions, we do think that if the appeal were judiciously made men would often convert their perpetuities into annuities. That is a sacrifice which could be made by many men without incurring that risk of ruin for themselves or those dear to them from which they naturally shrink. Such men could say : " If I can be assured that neither I nor those dear to me will die paupers, I am willing to do my bit in reducing the indebtedness of the nation." But, remember, if such an appeal is to be made, it must be made not in a half-hearted, perfunctory, unbelieving way, but by a wave of patriotic suggestion which will envelop the whole nation.
(To bs cmatinued.)
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