LORD CROMER'S WARNING.
ONE of the very worst features of the Parliament Bill is the clause which deprives the House of Lords of all power to reject Money Bills. In the House of Commons and in the House of Lords stress has been laid upon the danger of this clause being used. to pass other measures " tacked " to a Money Bill, but we note with deep regret that the country seems to have taken it for granted that the House of Lords ought not to interfere with purely financial legislation. Against this tacit admission Lord Cromer made a very powerful protest. The unwisdom of the proposal to deprive the Second Chamber of all power over Money Bills can be best appreciated by examining the practice of other countries. In every country where a Second Chamber exists, that body has the power to reject Money Bills, and in many cases, notably in the case of France and the 'United States, the Second Chamber may not only reject but may also amend purely financial measures. In the case of Australia the Second Chamber may suggest amendments which are left to the First Chamber to insert or not, as it chooses.
The matter is one of very great importance. During the last quarter of a. century our public expenditure has been rising rapidly, and the rate of increase within the past ten years is enormously greater than in the past fifteen. Indeed, during the long Administration of Lord Salisbury the increase was but slight. The rapid rise began with the South African War, and has continued ever since, During the war period and the two or three years succeeding, the growth of expenditure was mainly due to the cost of the war and to the increased cost of the Army and Navy. With the advent of the Liberals at the end of 1905 a new direction was given to national expen- diture. Military and Naval expenditure was temporarily reduced ; civil expenditure shot upwards, and is still rapidly rising. The figures are very striking, and may be set out conveniently in the following table :— 1886-7 Mill. X. 1898-9 Mill. X. 1905-6 Mill. X. 1911-12 Mill. X.
Military and Naval Exp. 32 ... 46 ... 67 ... 72 Other Expenditure 58 ... 78 ... 90 ... 111 Total Expenditure. Mill. X90 ... 124 ... 157 ... 183 The above figures include not only expenditure charged upon the revenues of the year, but also loan expenditure.
It will be observed that while our aggregate Military and Naval expenditure has increased under the present Administration by only £5,000,600 a year in six years, the civil expenditure has increased by no less than £21,000,000 in the same period. This contrast, however, does not by itself tell the whole story, for in 1905-6 the fixed debt charge was £28,000,000, and this has been reduced in the current year to £24,500,000. It is true that the Liberals have to a large extent abolished the unsatisfactory system of meeting expenditure out of loans, but this has already been allowed for in the figures appearing in the above table, and, therefore, to get a true statement of the increased expenditure to which the Liberal Party has committed the country, it is necessary to add to the .221,000,000 of increased civil ex- penditure, the sum of £3,500,000 which Mr. Lloyd George has filched from the Sinking Fund. Nor is this the end of the story, for, in addition to permanently robbing the New Sinking Fund of this large sum, he has in the present year diverted from the Old Sinking Fund no less than £3,000,000 for building sanatoria and for certain vague purposes in- cluded under the head of national development. In any sound system of finance this expenditure, which must necessarily be spread over several years, would have been met out of each year's revenue. It constitutes an effective addition to the total with which the present Government is burdening the taxpayer. As Lord Cromer pointed out, such reckless expenditure would have horrified earlier Liberal financiers. Mr. Glad- stone at one period declared that it was impossible for this country in time of peace to face a national expenditure of £70,000,000 a year. At the present rate of progress we shall soon reach three times that figure, and vet, with the exception of a few men like Lord Cromer, hardly a word of protest is uttered. The ultimate explanation is that the country has grown so rich that it can bear a much higher amount of expenditure than could have been borne in Mr. Gladstone's time. Take as the simplest of tests the yield of the Income Tax. In 1871 a penny on the Income Tax yielded £1,654,000. In 1908 (the latest year for which figures are available), in spite of a considerable extension of the exemptions from Income Tax, one penny yielded £2,784,000. This contrast clearly shows that the Income Tax payers can provide a much larger amount of money than a generation ago, without strain upon their private resources. At the same time there has grown Up an enormous population of well-to-do artisans who pay no Income Tax, but who can afford to make considerable con- tributions to the revenue with the taxes they pay upon beer and tobacco and tea and sugar, while still remaining better off than their fathers were. These are facts that must be taken into account in any comparison of present with past expenditure. Indeed, so great has been the increase of national wealth that some people have gone so far as to contend that relatively to our wealth the present scale of expenditure is actually less than it was thirty years ago. Whether this is so or not cannot be finally decided, because there are no positive means of determining the total national wealth at the present day, and still less of determining what it was thirty years ago. But the question of less or more is of comparatively little im- portance. The broad fact is that the country is so rich that only a minority of persons seriously feel the present scale of taxation, and that is the ultimate reason why public extravagance is permitted to continue. While, therefore, we entirely endorse Lord Cromer's demand that the Second Chamber should have financial control, and while we equally endorse his protest against public extravagance, we feel that the case against extrava- gance requires to be restated. The primary objection to increased State expenditure is that it involves the multi- plication of Government officials, and as a necessary consequence the subordination of the free action of the individual to the red tape rules of a bureaucracy. That means the extinction of the spirit of enterprise upon which the progress of the nation depends, and the loss of that personal liberty for which all men crave. The second objection is equally important, but comes more slowly into operation. In effect, the present de- mand for lavish expenditure comes from those voters who anticipate an improvement in their own economic position from the taxation of wealth. This is no new phenomenon. In every generation those classes which have possessed political power have shamelessly used that power to secure economic privileges for them- selves at the expense of the community. To-day it is the turn of the masses, and they and their leaders, influenced equally by past example and by future hopes, believe that they can continue the same process indefinitely. They forget that a privilege by the nature of things can only be enjoyed by a, minority. The word. " privilege " ceases to have any meaning if the favour conferred is extended to all. The idea of obtaining privileges for the masses at the expense of the masses is a contradiction in terms. It is true that the masses can, by exercising their present power of taxation, strip the minority of their riches, but, apart from the con- sideration that the attempt to do this would involve such an amount of economic disturbance as gravely to imperil our whole system of wealth production, the process must in any case come to an end. When the few have been stripped bare, the masses would have only themselves to plunder, and though exceptional communities are reported to have maintained a precarious livelihood by taking in one another's washing, no body of men have ever yet succeeded in maintaining any kind of livelihood by plun- dering one another. The real effect of financial legislation of the present type is to provide rewards not for industry but for poverty, and thus to destroy the motive for industry. The ultimate ending of such a policy must be complete communism, and when we get to complete communism, if ever we get there, the world will quickly turn round again, and re-establish individualism. Is it wise to allow our national policy to drift in a direction which cannot be permanently maintained, and must, while being pur- sued, imperil the very sources of our national pro- sperity ?
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