THE BY-ELECTIONS AND THEIR LESSON.
WHEN we have protested against the betrayal of Free-trade involved in the policy of the present Government, a policy which has robbed them of the confidence of moderate men, it has been urged by the apologists of the Liberal Party that our view is absurd and Utopian. We have been told that, instead of injuring the cause of Free-trade by such concessions to Socialism as general outdoor relief to persons over seventy, by their schemes of Socialistic taxation, and by declarations that they mean to solve a great Con- stitutional problem on the strictest party lines, the GOvernment's action tends to popularise Free-trade, and to earn it a support among the masses which it could not hope to obtain on its own merits. The voters must be assured that Free-trade is no obstacle to Radical measures, but perfectly consistent with them, even though those measures involve the actual negation of the central doctrines of free exchange, except in the one particular of exports and imports. One half of, Free-trade is to be abandoned in order to save the remainder, and even this remainder can only be saved if the pill is sufficiently gilded with the gold of State con- tributions. That, in brief, has been the official answer to the protests made by the Spectator against the Government's policy.
Into the question of the political morality here involved wo will not enter. We merely desire to test the policy by its results, and to ask what has in fact been accom- plished by the plan of making Free-trade palatable by mixing it with "Social Reform." The group of by- elections held .• in Scotland during the present week enables us to apply the test. What do we see? Instead of Free-trade having . been made or kept popular by the Government's policy, we find that the very reverse is the case. When the essential issue of Free-trade versus Pro- tection was put to the nation in Forfarshire in1906 there was a majority of 3,519 votes for Free-trade. When the electors have learnt from bitter experience that voting for a Liberal Free-trader also involves such things as expending some nine or ten millions a year on old-age pensions, and an attempt to place the whole of the laws of the United Kingdom at the mercy of a ".snap " vote of the House of Commons, the majority falls by over a thousand! In Central Glasgow the proof is even stronger. There the Free- trade majority of 431 in 1906 is converted into a Unionist majority of 2,113. In our opinion, the only explanation that will bear investigation is to be found in the fact that the moderate and balancing voters felt that they could no longer express their adherence to Free-trade by voting for a Liberal, but were, on the contrary, obliged to protest against Socialistic legislation, the violation of the chief principles of free exchange, and the destruc- tion of one of the principal safeguards of the Constitution by voting against him. The figures of the South Edinburgh election tell the same story. The Liberal majority has dwindled to a third of its total in 1906, and for the same reasons. What makes the matter all the more striking is the circumstance that these things have happened in Scotland, though we were confidently told that, though fickle England might have got tired of the present Government, Scotland remained loyal and true I To recapitulate our argument. The latest batch of by- elections show conclusively that the policy of allying Free-trade with Socialism and extreme Radicalism in order to make it palatable has been a complete failure, and has done exactly the opposite of what it set forth to do.
It may be argued, no 'doubt, that even if our advice had been taken, and if the Government had considered them- selves trustees and guardians of Free-trade, whose duty it was to refrain from using a triumph obtained in the name of a, great principle for mere party advantage, they would have done. no better. To deny this contention absolutely is, of course, impoSsible, for we cannot have the proof both ways. We behove, however, that we shall have the secret, if not the open, support of most non-official Liberals when we declare our confident belief that the Government would have done much better by adopting moderate courses. Where they have done best—that is, in foreign affairs and in Colonial affairs, and here we fully admit they have done very well indeed—they have acted on Central lines. Can it be doubted by any sane man that if they had been as moderate and as prudent in home affairs they would have strengthened their position, though they would no doubt have met with a good deal of abuse from the Socialists' and the Irish ? After all, the support of the Irish and the Socialists, though so dearly bought, has not done them much good. In Taunton the alliance of Socialism and Liberalism produced something little short of a fiasco, while in Central Glasgow Mr. Bowles's willingness to betray the cause of the Union in order to get the Irish vote as well as the Radical vote 'brought upon him, as it deserved to bring upon him, the wholesale condemnation of the best part of the electorate. If the Government, instead of bringing about a condition of the national finances which will require some ten or twelve millions at least of new taxation, besides the depletion of the Sinking Fund, had pursued the course which they pursued in the first two years of their adminis- tration, and had continued paying off Debt and reducing taxation, they would not only have won the confidence of the business part of the community, but would also have pleased the democracy.
Let us, however, assume that there is no truth in any of these considerations, and that if the Government had pursued the Spectator's policy instead of their own they would have done no better than they have done,—obviously they could not have done much worse. Even making this admission—which is the worst that can be made froM our point of view—the Government would have done infinitely better for the cause of Free-trade, which, we take it, they, or most of them, are willing to agree is an object of very real importance. Granted that, owing to the " swing of the pendulum" and other analogous causes, they were bound to lose popularity and to go out at the next General Election, think for a moment of the immense difference in the position of Free-trade in the two cases. As it is, when they go out in two years' time, as they almost certainly will, they will, if present tendencies continue, leave the country in a situation extraordinarily unfavourable to Free-trade, and extraordinarily favourable to the putting in practice of the vicious policy of the Tariff Reformers. Either there will be a very large bill to pay which can only be paid by the imposition of fresh taxation, or else they will leave the present payers of direct taxes in this country with so huge a new burden upon their shoulders that they will be ready to try any quack remedy that may be recommended to them as sure to cure the ills from which they are suffering. The Tariff Reformers will say, in effect :—" Look at your boasted Free-trade. Instead of proving the surest and best engine of public finance, it has utterly broken down, and has proved unable to endure the strain placed upon it even by its most whole-hearted votaries. That being so, and Free-trade having proved n. fiscal failure, the only sensible thing is to try Tariff Reform." Cau we doubt the very great likelihood of such an appeal being accepted in the circumstances we have described ? If, however, when the Government went out, they had left our finances in a specially favourable condition, and had been able to point to a reduction of many millions in taxation during their term of office, Free-trade would haire needed no apologies for its existence. Its advantages would have been patent to all. Still more important, the Tariff Reformers would not have had that excuse for trying their quack remedy which they are now almost certain to possess when the Opposition regain office.
Many Unionist Free-traders and moderate Liberals, having road so far, though agreeing with all we have said, will perhaps be inclined to be annoyed at our persistence, and to ask what is the use of thus crying over spilt milk and reiterating " We told you so !" It is no good, they will assort, to keep on deploring the situation. " Bad as it is, it will not be made better by being wailed over." We agree ; and we should not have thought it worth while to write as we have written merely to show the folly of the Government, or to gain the barren satisfaction of proving that we had shown the wiser way. Our object is, if possible, to make the Government and the Liberal Party realise that there still exists one way, and only one way, in which, we will not say they can entirely retrieve the position, but can at any rate do something to prevent the absolute ruin which they now seem intent on bringing upon the cause of Free-trade. One barrier which they can still oppose to Tariff Reform is to create a system of direct taxation so powerful and so equitable that, once established, the Tariff Reformers will have no excuse for sweeping it away and substituting their own system. But if they are to do this they must abandon all thought of making themselves popular with the Socialists or the Radical section of their own party. They can only do it by exposing themselves to the taunt of increasing taxation upon the poor, though in reality they will only be making the taxation which must fall upon the poor man in any case open instead of hidden.
If the Government will establish a universal Income- tax such as exists in Prussia and many other parts of Germany—a tax which will touch all wage-earners —they may not only pay the tremendous bill they have incurred for old-age pensions and the like, but may even relieve the taxpayer of the remainder of the Sugar-tax. While imposing an Income-tax upon incomes below the present level of exemption, the Government might at the same time increase the existing Income- tax. To do this would be very much better than to enter upon the dangerous expedient of graduated taxation, an expedient which, though perhaps not to be condemned per se, would be almost certain to injure that splendid and trustworthy instrument of taxation, the present Income-tax. When we propose a universal Income-tax or Wages-tax we do not, of course, suggest that it should be levied at the rate of a shilling in the pound. A tax at one- sixth of this rate would probably be sufficient. In the case of a man with a pound a week this would mean that not much more than a penny a week should be deducted as his contribution to the State. Can anybody say that to forfeit half a glass of beer once a week would be more than a working man could fairly be asked to pay ? No doubt the Tapers and Tadpoles of the Liberal Party will explode with laughter at our suggestion that the Liberals, the working man's only true friends (see posters), should actually propose to tax him. Very possibly the suggestion from that point of view is ridiculous ; but at any rate it is not more ridiculous than for the Liberal Party, in existing circumstances, to pretend to be the only true and loyal upholders of Free-trade. If they want the nation to believe in their sincerity as Free-traders, they must show themselves willing to make some sacrifice for the cause. Hitherto they have made none, and have contented themselves with scouting all suggestions to that effect as " the folly of the Spectator."
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