THE REAL FOES OF FREE-TRADE.
WHETHER Mr. Balfour's acceptance Of the principle, of a general tariff is made more complete by his speech on Mr. Mond's Motion, or was really accomplished on an earlier occasion at Birmingham, may be open to question. It is enough for us that he is now convinced that it is not in the power of any Government, be it Unionist or be it Liberal, to bear our enormous financial responsibilities and carry out the great social reforms to which every party is committed without "broadening the basis of taxation." We agree with Mr. Runciman that this particular form of words can only be given a practical meaning by treating it as identical with the imposition of a general tariff. When vast sums of money have to be raised by Custom-duties, a Chancellor of the Exchequer must cast his net far. He will not be able to single out one or two imports as the objects of special taxation. It is not only that those who consume them will complain that prices are exceptionally raised as against them, while the producers of other articles will resent their non- admittance to the benefits of the new system. There is another reason why he must be comprehensive in his impositions. To do what will be expected of it, a Customs revenue must be large; and to ensure its being large, it must let no article of general use go neglected. At what- ever moment the future historian may fix the date of Mr. Balfour's conversion, it cannot be later than March 31st, 1908. His speech on Tuesday leaves us in no doubt that whoever may be Chancellor of the Exchequer in the next Balfour Ministry will be given a free hand in the framing of his list of imports liable to duty. It may be—we are inclined to think that it is—even now doubtful whether Mr. Balfour altogether likes the prospect. All through his Parliamentary life, he tells us, he "has belonged to a party which has watched with anxiety the beginning of things which, though very good, may develop into something that would be bad." That, he thinks, is a Conservative attitude of mind, and so may be pardonable in a Conservative politician. We heartily wish that Mr. Balfour had never abandoned it We heartily wish that he had had no share in creating the situation which he now accepts as making inevitable the broadening of the basis of taxation. The really Conservative policy would have been to confine the national expenditure within reasonable limits, and in this way to have avoided the necessity of raising a vast additional revenue. The policy he has chosen to follow has been to make no distinction between himself and his opponents as regards the outlay for which revenue is wanted. Mr. Balfour has not a. word of blame for those who have incurred these "enormous financial responsibilities which are daily growing." It is not a fault in the Liberal Government that "more and more is daily asked" from the House of Commons. On the contrary, it is rather a merit, because the object of these increasing demands is to "carry on those great social reforms to which every party is com- mitted," and which "every party desires to carry through." Extravagance is now, and is to remain, a mark common to both parties. "We are all," cries Mr. Balfour in effect, "social reformers on a grand scale. The only difference between us relates to the source from which the cost of them is to come, and on this point I claim that our proposals are more practical than yours."
In this view of the financial situation we think that Mr. Balfour is right. If social reforms are to be taken in hand without any consideration how they are to be paid for, the position of the Tariff Reformer is more reasonable than that of the Government. For the Tariff Reformer does at least claim to have a Fortunatus' purse up his sleeve. He can talk of what he is prepared to do for this or that class of the community with no personal uneasiness as to how his words are to be made good. He really believes that Tariff Reform will do it all. Everybody is to be at work at good wages, consequently everybody is to have so much money to spend that any trifling increase of price which the new Fiscal policy may involve will be unfelt. The millions that will come rolling into the Exchequer will amply meet any demand which may be made on the Government. All that the social reformer will have to do will be to make it clear that his proposals will be beneficial to the community. With this established, the element of cost need not be taken into account. It is quite true that to some of us this picture seems to bear no likeness to the facts of the situation. The gains promised us from the new policy have, as we believe, no existence outside the imagination of the Tariff Reformer. Low duties will not produce the expected revenue, and when higher duties are substituted for them, the gain will be neutralised by diminished consumption of the goods on which they are levied. This, however, is not the point on which we wish to dwell at this moment. The Tariff Reformer does at least persuade himself that when the bill for social reforms is presented he will have the means wherewith to pay it. We are bound to suppose that when a Free-trade Government pledges itself to the introduction of social reforms conceived on a great scale, and involving a commensurate outlay of public money, it has equal confidence in its financial position. But there is this difference between the two cases. The Tariff Reformer is like Madame Humbert. He has the necessary millions hidden away in a safe which the folly of his countrymen does not as yet permit him to open. But at least he can point to the place in which they are contained, and that is more than a Liberal social reformer can do. He may, indeed, talk mysteriously of gradation and sur- taxes, of revised rates and unearned increments. But when he comes to figures, there is an uncertainty about his data which inevitably communicates itself to his con- clusions. Some future Chancellor of the Exchequer may discover some new varieties of direct taxation, but as yet they are only the creations of the fertile brains of financial amateurs. We do not question Mr. Asquith's ability to make this or that impost more productive,—the increased return from the Income-tax would alone forbid any scepticism on this head. But these modest growths in the yield of existing imposts will not go far towards meeting demands that can only be expressed in tens of millions. When Mr. Asquith rises to unfold his old-age pension scheme he must have some richer mine than this from which to draw his supplies. We will not go the length of saying that a Free-trade Government which embarks on new and costly outlays will be obliged to put its professions into its pocket, and have recourse on some pretext or other to that very broadening of the basis of taxation which it has denounced in its opponents. What is more likely to happen is that a nation • which has learned to expect vast social changes from its rulers will be dissatisfied with the slow and inadequate methods of finding the money for these projects devised by Liberal financiers, and will accept the Tariff Reform programme as the obvious means of bringing in the golden age. When once this change has been effected, a general tariff will become, though for different reasons, the accepted creed of both parties. The Liberals may remain Free-traders in theory ; but, as we may learn from the example of the United States and of our own Colonies, when once Protective duties have been imposed it is exceedingly difficult to get rid of them. For a long time even a Free-trade Government would probably have to content itself with barren aspirations for a return to a state of things the maintenance of which it had itself helped to make impossible. Yet to this conclusion, and to no other, Mr. Asquith's promises seem to point. He is still in possession of a war revenue. There have been no large remissions of taxation since the present Cabinet came into office. It cau hardly be expected that the payer of Income-tax will for ever be contented with the shilling limit, with the prospect of having to put up with a higher rate whenever any large and unforeseen demand is made on the Exchequer.
The abolition of, or at any rate a large reduction in, the Sugar-duty is certain to be pressed upon the Government, and it will not be easy to resist the demand. It is a, tax which unites an unusual amount of demerits. It is a war-tax, a food-tax, a tax on raw material which is almost a, necessary of life, and enters into a variety of great industries. In both these directions, therefore, Mr. Asquith ought to look forward to a sensible inroad upon his surplus. In a third direction —that of payment of Debt—both his Budgets have been marked by a wise regard for the national credit, and we cannot believe that the third will show any change in this particular. Yet we are told that the present year, a year in which the beginning, at all events, of a return to a peace taxation might reasonably have been looked for, is to see the first steps taken towards the imposition of a burden which in the end—an end of which, when the start has once been made, it will be almost impossible to stop short—will probably amount to some- thing like thirty millions a year. If the Cabinet are determined to make old-age pensions a cardinal feature in their policy, they ought to let us know what they are pre- pared to sacrifice in order to give shape and substance to their intentions. We do not imagine that at this stage of their progress free imports will be included in the jettisoned property. But they are going to make an immense addition to the national expenditure without, so far as we can see, making any corresponding addition to the national income. Any proposals they make in the future to supply this deficit will be purely tentative,—uncertaiu alike as regards the amounts they will yield and the means of evading them that will be discovered. By the side of this problematical finance Tariff Reform will seem a practical measure. Is that a contrast which a Free-trade Government will do well to force upon the nation ? Yet all the time there lies at their hand the true Liberal and Free-trade policy of reducing taxation,—of reducing it in respect of a corn- modity of such wide use in the household and in manu- facture as sugar, and also of a commodity now taxed at so high a rate.
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