6 AUGUST 1921, Page 4



THE past fortnight has been marked by great public perturbation in regard to finance. Not only were there the debates in the House of Lords and in the Commons, but we had the inauguration of the very significant move- ment of the Income Tax payers headed by Lord Inchcape, with which we dealt last week, and a multitude of individual speeches by leaders of industry whether at company meetings or on public platforms. Finally, there was the appeal of the National Association of Merchants and Ship Owners to resist State interference with trade. But though all of these are of great value in themselves, and also urgent danger signals which we shall be mad to neglect, we are bound to say that there is not in them sufficient concentration of effort. Further, such cone nitration as there is is not directed to the right points. We are con- vinced by studying the various movements connected with the thrift campaign that there are certain essentials to success. The first thing is concentration on the matter of taxation, a matter, by the way, which Lord Buckmaster, the chief speaker in the Lords debate, has always put in the forefront. We have reached the point, and none is more perilous, where our taxation cannot be increased. If the taxes are made heavier, instead of producing more money for the State they produce less. We are killing the goose. We are sapping the primary sources of our financial strength. Of this there can be no sort of doubt.

But when such conditions as these prevail, the only policy to follow is that bold policy pursued by Mr. Gladstone on a famous occasion when he largely reduced the number and the intensity of taxes and duties and yet increased the revenue. Yet another example, one which used to be very popular, is that afforded by Rowland Hill at the Post Office. He saw that high postal rates were not only checking commerce, but actually checking Post Office business, as they are now. He boldly struck out for the flat rate and the Penny Post. Though he had been told that the thing was impossible, he ended by giving us not only the immense boon of cheap communication but increased income from the Post Office. We want men in command of our finance who will have both the sagacity and the courage to follow these examples.

So vital is this matter that, in our opinion, we must always think first of taxation, and not, as people are apt to do now, first of expenditure. The prime policy is to consider what is the maximum of money which we can safely raise from the taxes. When we have ascertained that (we can do so approximately if not absolutely) half our task is done. We know how much we dare spend without ruin. We have done what the ordinary sensible citizen does when he reforms his establishment in bad times. He begins by ascertaining his exact spending income, his gross income minus interest on debts and mortgages. Our spending income is .the maximum raisable without injury to trade and commerce. That ascertained, the task of economy becomes comparatively easy. The economist may net have actually increased his arguments against too great expenditure, but he has made these arguments so clear that even the wildest spendthrift cannot help being impressed by them. He has got a sure and certain way of meeting the plea, " We must have this " or " We must have that." He can at once say : " There is no ' must ' in.the matter. You cannot have more money than there is in the till. Further, there is no way of getting more money into the till which would not prove infinitely worse than the cutting down which we now tell you has become an absolute necessity."

The next step is almost automatic—the step of rationing the Departments and telling them that they have got so much to spend and no more, or rather, that if they want more it can only be got by .persuading the Cabinet to reduce expenditure in some other office. These being the conditions, it is the duty of the Government—an unpleasant duty, we admit—to apportion the money in hand. The heads of the Departments must carry out the necessary retrenchments. When this has been actually accomplished, but of course not till then, rulers and ruled will be surprised how relatively easy reducing expenditure is in practice. What makes the approach to or even the discussion of retrench- ment so difficult is the human resistance thereto. Retrench- ment, unfortunately, is bound to mean taking away a comfortable living or comfortable expectations from a great many people. The persons involved naturally object, and, entrenched as they are in our public offices, fight to the death.

In private life individuals and groups of people quickly realize that if retrenchment does not take place in the home or in the business they themselves will be ruined. Therefore there are always men as ready to fight for retrenchment as there are men to fight against it.

In the case of public affairs there are no such instinctive and natural upholders of thrift. Unless somebody can inspire the Government with a passion for retrenchment, which, however, is not so difficult as it sounds, the opponents of economy are apt to hold the field. Nobody feels that he will immediately suffer in his own person or purse unless there is a radical reduction of staff throughout the Depart- ment in which he serves. He does not realize, as do the directors and managers in an ordinary business, that unloi there is a reduction of expense he will lose his livelihood. For these reasons the key to the whole matter is to con- centrate upon reducing taxation. If we cut down the taxes sufficiently—that is, to the point where they are not injuring trade and commerce—the other reforms will follow by themselves. You cannot waste what you have not got. But to set this brake at work on taxation we must find some man to lead who not only understands what is wanted, and why it is wanted, but who is capable of impassioning himself as well as of leading his countrymen. The country itself is more than ready. All it wants is a leader.

This depth of popular feeling does not belong merely to the merchant and employer classes. It is instinctively affecting the minds of the manual workers. They realize as fully as the former that our bloated taxes are going to destroy them. The nation is a great crowd standing with its back to the Dark River of Want. The sound of the turbid and menacing waters is always in its ears. The last ranks in the crowd, the ranks on the very edge of the river, are the ranks of the manual workers. They know that if there is disturbance or panic, or anything that pushes the men in front back, they will be the first to go into the water, there to perish miserably.

Therefore they are the first instinctively to feel that the tax-collector, who is causing so much disturbance in the crowd and making it sway backwards and forwards so dangerously, is their mortal enemy. And they are right. Panic in the crowd is the worst peril. It may cause a disaster long before it is actually due, or rather a disaster which might have been quite easily avoided by care, discipline, and organization. Therefore the country at large is longing for a politician who will lead it on the way to thrift. It is, we fear, useless to look for a leader of this kind to be thrown up by the people themselves. In existing circumstances we have got to look in the ranks of the present Government for the man who will lead us out of Egypt. Obviously, the regular Liberal Opposition is too scanty and too heavily weighted with political " Strulbugs" to be able to produce the man we want. For example, Mr. Asquith, though he has had tremendous opportunities, has done nothing practical to help in the matter of economy. Lord Buckmaster, though a peer, and by training a lawyer and not a financier or a man of business, has done ten times as much to emphasize the state of our finances. But, unfortunately, we cannot look to him for leadership. Our leader must be in the Commons. Mr. McKenna has, no doubt, the root of the matter in him, but he also, unfortunately, is not in the House, and is as unable to undertake the sort of campaign we want to see put in motion as though he were a peer. As to the Labour Party, they are, we fear, quite hopeless in the matter of finance. Their leaders, no doubt, can make an occasional abstract speech about " bloated " Government expenditure, but when it comes to the test they are the greatest spendthrifts of all. The men who gave their moral support to the coal strike, or at any rate failed to do anything to prevent the strike, who have for their organ a paper like the Daily Herald, and who by their speeches and acts have stimulated and encouraged every sort of demand for increased civil expenditure, will never produce economic reform. We have no doubt that Mr. Clynes in private would express a great and sincere horror of extravagance, but who would have the hardihood to assert that we shall get a policy of retrenchment and financial reform from the Labour Party—the party which has never dared to deal effectively with the men who declare that the great thing is to adopt the revolutionary method of reducing a nation to a condition of bankruptcy, famine, and chaos in order to arrive the quicker at the dictatorship of the proletariat ? No one can take up any of the extreme Labour papers without finding proofs that the extremists believe that under various forms we may be and ought to be taxed into the millennium advocated by organ- ized Labour. We know well that the majority of the Parliamentary leaders do not approve ; but as long as they show no signs of dealing faithfully with those who hold the opinions we have just described, but rather excuse or even encourage them, we should be mad to trust them as Economic Reformers.

The man to lead the country in the matter of safe taxation and public thrift, and to re-establish its finance, must not only be able to inspire the nation with the passion for economy and to satisfy the nation's intense and instinctive desire to save itself from destruction by taxation, but must be a man of wide experience in our public administration, a man who has seen so much from the inside—i.e., from the Cabinet standpoint—of the way in which the money goes, that he will be able to meet the heads of the great spending departments — the Army, the Navy, the Home Office, and the Board of Trade —on their own ground and talk to them with equal knowledge. When they resist on this or that point, and say that reduction is impossible, he must know how to show them and the country that at such a time as the present the word is untenable. It is not only treason- able, but ridiculous.

The time is not ripe to suggest the name of any par- ticular man who fits this description. We must to-day be content with a negative statement. The Prime Minister is not the man. He might have played the part of which we have been writing, but, unfortunately, after the Armistice he took the wrong turn and assumed the part of the gay Lothario of finance, the politician who in effect told the country that it need not let its enjoyment, its grandeur, its pride or its indolence be in the least affected by such sordid matters as financial embarrassments. Let us eat, drink, and be merry, for to-morrow we go to the Poll. Mr. Lloyd George could not now, even if he would, take such a sharp curve as that required of him. He is also by nature in- capable of the dogged fight over details which is required by the man who must combine the offices of the Chancellor of the Exchequer and of the Prime Minister. That combination is essential to effective retrenchment. If we do not obtain it, and if there is always an appeal to Caesar whenever the Chancellor of the Exchequer has to fight with a Depart- ment, things will go wrong. We are in such a state that when the head of a Department says to the Treasury that he will appeal to Caesar, the answer must be : " I am Caesar."

The man who is to save us financially must come from the ranks of the Coalition statesmen. The Coalition cannot be turned out of office by outside pressure. If the Cabinet has got to be re-made, as we believe it must be, the motive power_must come from the inside. In other words, it must be a member of the present Coalition Government who will lead us out of our troubles and be the new Premier. It is in the Cabinet itself that the alternative is to be discovered which is always thrown interrogatively, into the faces of those who demand a change of financial heart in the Government. To the question, " What is the alternative to Mr. Lloyd George ? " we would say, " The alternative is on the Treasury Bench just as he was when Mr. Lloyd George politically slew Mr. Asquith." Mr. Lloyd George, indeed, is in the position of the Priest of Nemi. He is " The priest who slew the slayer, And shall himself be slain."