[Footnote 43: Speech at Belfast, February 8, 1912.]

[Footnote 44: July 18, 1886, at Cockermouth.]

[Footnote 45: See "The Perils of Home Rule," by P. Kerr-Smiley (Cassell, 1911), p. 45, where Lord Morley's opinion to the same effect is quoted.]

[Footnote 46: Speech at Whitechapel (Times, October 11, 1911).]

[Footnote 47: Sir John Simon at Dewsbury (Times, February 8, 1912).]

[Footnote 48: No such charge of ambiguity applies to the forcible letters of "Pacificus" on "Federalism and Home Rule" (Murray, 1910).]

[Footnote 49: The changes in the Australian Constitution have been in favour of greater unity.]



IV

HOME RULE FINANCE

By THE RIGHT HON. J. AUSTEN CHAMBERLAIN, M.P.

The financial problems connected with the grant of Home Rule in 1912 are among the most complicated that call for solution, and differ fundamentally from those which faced the Governments of 1886 and 1893. And by common consent, the problems are not merely different; they are immensely more difficult. No clauses in the earlier Bills lent themselves more readily to destructive criticism; and though the provisions of the new scheme are still shrouded in mystery, it is inherent in the conditions under which it must be framed that the financial clauses will prove to be even less defensible on the grounds of logic or equity than those of either of its predecessors.

Since the first Home Rule Bill was introduced the interests of Ireland—social, economic, industrial, and political—have become increasingly identified with those of the other parts of the United Kingdom. The commercial, banking, and railway systems of Ireland are intimately associated with those of the greater and more firmly established systems of Great Britain. Irish railways are so largely controlled at the present time by British concerns, and there exist so many agreements and understandings between them and British companies as to facilities and rates, that they might be regarded as part of the same network of communications. Hardly less close are the relations which now exist between British and Irish banks.

It is not, however, on the commercial side only that greater intimacy and more firmly established relations exist now than formerly. Irish industries are agricultural, dairying and manufacturing. In each of these branches the country is increasingly dependent on the markets of England and Scotland; while reciprocally the products of the factories and workshops of Great Britain find in Ireland one of their most important markets. We do not always sufficiently realise that on the other side of the St. George's Channel lies a country whose annual imports amount to sixty-five millions sterling. Even less do we realise that one-half (thirty-two millions sterling) is the value of the imports of manufactures, mainly British, into Ireland. This trade in manufactured goods is not only already enormous; it is rapidly growing. It has increased by more than four millions in four years. Any ill-considered legislative measure which interfered with or disturbed this great volume of trade would no doubt cause serious loss to Ireland; but it would bring bankruptcy and disaster to many British firms and their workmen.

It is, nevertheless, in respect of the political changes and the legislative measures passed in the last quarter of a century that the most serious obstacles will be found in the way of framing any satisfactory scheme for financing a measure of Home Rule. The Irish Local Government system, framed on the British model by the Act of 1898, the Congested Districts Board, and the Department of Agriculture, have hitherto depended financially, either wholly or in part, on Imperial grants in aid. Local taxation payments alone from the Imperial Exchequer amounted in 1910-11 to L1,478,000. The financial scheme under Home Rule must obviously contemplate and provide for the continuance of those grants. Land Purchase schemes have been enacted which have already had the effect of converting a quarter of a million tenants into owners under a contingent liability of 120 millions sterling guaranteed by the Imperial Exchequer. No financial scheme can ignore the fact that the earliest of the annuities created under the Wyndham Act will not expire before 1972, so that the Imperial liability for the payment of the bulk of the annuities already created will continue for at least seventy years more.

Finally, we are faced with the fact that in the last twenty-five years the relations of the State to its citizens have been completely reformed and extended. Social reform is now in the programme of all parties. Education costs several times as much as in 1885. The aged poor have been provided with pensions by the State, and the Insurance Act of last year will shortly call for additional subventions from the Imperial Treasury.

In addition to the new duties thus undertaken by the State, the cost of Defence and of the Civil Services has grown by leaps and bounds. We need not look too closely into the apportionment of these charges whilst we remain partners in a United Kingdom, but if the partnership is to be dissolved at the suit of Irish Nationalism, a new balance must be struck, and on any fair basis the contribution of Ireland under present-day conditions should far exceed the amount under either of the schemes for which Mr. Gladstone made himself responsible. Both schemes recognised the equity of some contribution for these services from Ireland, and it must be assumed that the same broad principles will be applied in any scheme which may be framed hereafter.

By way of introduction to any adequate discussion of the possible financial proposals of any Home Rule measure, it is desirable to set out in some detail the existing financial relations of Ireland and Great Britain. The Treasury calculations on this subject are embodied in two White Papers which have been prepared and published annually during the last eighteen years. It is true that doubts have from time to time been cast on the accuracy of these calculations and of the methods by which the materials on which they are based have been collected. As to this, it is only necessary to say that the information in the possession of the Treasury officials is infinitely more voluminous and likely to be more accurate than any in the possession of private individuals; and there is no reason to suppose the succession of eminent public servants, who have been in turn responsible for the preparation of these returns have been moved in one direction or the other by prepossessions or bias. Their one attempt has been throughout to present a statement, as accurate as it is possible to make it on the one hand of the cost of the existing administration in Ireland and the expenditure incurred there, and on the other of the revenue derived from persons or property living or situated in that country. As the Prime Minister said on November 27 of last year—

"The utmost pains have been taken to make the estimates of 'true' revenue approximately correct, and it is believed that the total revenue as given in the revised returns approximates closely to the facts."[50]

So long as Ireland is an integral part of the United Kingdom, such an investigation has mainly an academic interest. The State is a homogeneous entity; the taxes imposed on individuals similarly circumstanced are the same (with some trifling exceptions—all in favour of Ireland) in whatever quarter of the United Kingdom the individual resides. But the case is wholly different when a proposal is made to split up the State into its constituent parts. It then becomes necessary to inquire if there is any prospect that the constituent parts will have resources sufficient for the various services, commitments and liabilities—present and contingent—which do or will belong to them. And the beginning of any such inquiry is, as has been already said, the present Irish revenue and expenditure.

The essential figures for such an investigation are contained in the following statement. This shows separately the expenditure on the various items which have been the subject of discussion or special mention in the different financial schemes proposed in connection with Home Rule. On the revenue side the effect of the delayed collection of duties under the Budget of 1909-10 has been eliminated by taking the average revenue in the two years in certain items. The figures of expenditure relate to the year 1910-11. The corresponding figures for both collection and contribution are set out in this table in consequence of the suggestion made in some quarters that we should revert to the Gladstonian proposal of 1886 and credit Ireland with the full revenue as collected. Though any such proposal is patently absurd it is mentioned here for the sake of completeness.

STATEMENT SHOWING ESTIMATED REVENUE AND EXPENDITURE IN IRELAND (BASED ON WHITE PAPERS 220 AND 221 OF 1911).

Revenue As collected. As contributed. L L 1. Customs[A] 2,922,000 2,866,000 2. Excise (ex. licences)[A] 4,872,000 2,952,000 3. Licence Duties[A] 284,000 284,000 4. Estate, etc.[A] 914,000 914,000 5. General Stamps[A] 310,000 333,000 6. Income Tax[A] 1,106,000 1,307,000 7. Postal Services 1,155,000 1,155,000 8. Miscellaneous 139,000 139,000

Total L11,702,000 L9,950,000

[A] = Average of two years, 1909-10 and 1910-11.

Expenditure. L 1. Civil list and miscellaneous charges (ex. Lord-Lieutenant's salary) 118,500 2. Lord-Lieutenant's salary 20,000 3. Local Taxation Payments 1,477,500 4. Public Works 415,500 5. Civil Service Departments 289,500 6. Department of Agriculture 415,000 7. Police 1,464,500 8. Judiciary, etc. 924,000 9. Education, etc. 1,805,000 10. Old Age Pensions 2,408,000 11. Superannuation, etc. 103,000 12. Ireland Development Grant 191,500 13. Miscellaneous 12,000 14. Revenue Departments 298,000 15. Postal Services 1,404,500

Total L11,346,500

The first striking fact in the foregoing statement is the large difference between "contributions" and "collections," i.e. between the "true" revenue derived from Ireland and the sums merely collected there. During the last two financial years this difference amounted to an average of L1,752,000. The excise collections alone represent an excess of L1,920,000 over the actual contribution. This, of course, arises from the movements of duty-paid spirits and beer between different parts of the United Kingdom. The last Report of the Commissioners of Customs and Excise (Cd. 5827) gives the amount of home-made spirits on which duty has been paid in Ireland at 5,209,000 proof gallons, whereas the quantity retained for consumption was only 2,776,000 proof gallons. A similar but smaller difference exists in the case of beer. To credit Ireland with the full amounts of the duties collected in Ireland, as was done by Mr. Gladstone in 1886, and as is now proposed in some quarters, would, in effect, amount to a gift from the British Exchequer of L1,750,000 a year. And there is obviously no security that the Irish Exchequer could rely on this boon being continued for more than a short time. There would be nothing to prevent the British spirit merchant from removing his spirits to this country in bond and paying the duty here after arrival. It is obvious that the Treasury would be compelled to grant facilities for this course. The present system is merely one of book-keeping and administrative convenience, but as the withdrawal of this sum from the British Exchequer to which it properly belongs would have to be made good from other British sources, there would be every inducement for the British merchant to effect such slight changes of method as would transfer the whole of this sum from the Irish to the British Exchequer. Having regard to the fact that on the other sources of revenue the collections in Ireland are estimated to fall short of the actual contributions by nearly L200,000, and that these are in the main direct taxes paid by the individuals concerned, it is not unlikely that a scheme which gave to Ireland the full benefit of her revenues as collected would in a short time be converted from a gain of some L1,700,000 to a loss of L100,000 to L200,000 to the Irish taxpayer. Stability in the tax system and reliability upon the realisation of the estimated revenue could not be assumed if "collections" instead of "contributions" were to be made the basis of any financial arrangements.

Turning next to the contributed revenue upon which alone an Irish Parliament could rely, we note first the large proportion of the revenue represented by Customs and Excise. Contrasted with the figures for Great Britain, it is seen by the following table that whereas in Ireland the revenue from Customs and Excise amounts to 60 per cent. of the total, in Great Britain the proportion was not more than 36 per cent.

PERCENTAGE OF REVENUE FROM DIFFERENT SOURCES CONTRIBUTED BY IRELAND AND GREAT BRITAIN RESPECTIVELY IN TWO YEARS ENDING MARCH 31, 1911.[51]

Ireland. Great Britain. Per cent. Per cent.

Customs 29 18-1/2 Excise (ex. licences) 30 17-1/2 Estate, etc., duties 9 14-1/2 Income tax 13 23-1/2 Postal, etc. 11 15 Other sources 8 11 —- —- 100 100

Exclusive of the licence duties the average yield (contribution) of Customs and Excise in Great Britain amounted in the last two years to L55,900,000, or at the rate of L1 7s. 5d. per head; in Ireland the average yield was L5,800,000, or at the rate of L1 7s. 10d. per head. The incidence of our consumption taxes is thus seen to be at the present time practically the same in Ireland as in Great Britain; and the much larger proportion of the Irish revenue obtained from them is due to the smaller relative yield of direct taxes. Ireland being mainly an agricultural country, income tax, death duties, and stamps yield much less per head of the population there than in Great Britain. Such conditions are highly suggestive of inelasticity. An Irish Chancellor of the Exchequer will find no such fiscal reserves in direct taxes as does his more fortunate British colleague. This conclusion should give pause to those who think that if the Customs and Excise continued to be controlled from Westminster, it would be still possible to extract the larger revenue needed for the growing expenditure of Ireland by higher rates of income tax and death duties. Such a course would increase the burdens of the direct taxpayers of Ireland, but it would not fill the Irish Treasury. On the other hand, it is clear that there is no chance of relief being afforded to the Irish indirect taxpayer under Home Rule, supposing Customs and Excise were handed over to the Irish Parliament. Yet whenever a British Chancellor of the Exchequer has found it necessary to increase any of the taxes on consumption, the protests from the Irish benches have been invariably both loud and vehement. Irish members have pointed to the low wages earned in Ireland, the greater addiction of the people to tea and spirits, and the higher toll of their earnings consequently extracted by the Exchequer. The yield of existing taxes, therefore, whether direct or indirect, is not elastic in Ireland. Neither of them afford sufficient resources to meet the necessities of an Irish Parliament.

There are, of course, other reasons why there should be no delegation of the power to impose Customs and Excise. The constitutional objections to such a course are overwhelming. It would involve the abandonment of the plea that Home Rule for Ireland was the prelude to Home Rule all round; in other words, that separation was the condition precedent to federalism. In every federal system in the world the control of Customs and Excise has been retained by the central authority. This is true not only of the quasi-federations within the British Empire; it is equally true of the United States, Germany, and Switzerland. One can scarcely be surprised at the emphatic repudiation which such a proposal received at the hands of the Parliamentary Secretary to the Board of Trade (Mr. J.M. Robertson) when, on February 7, 1912, in a speech at Lincoln, he said—

"There was, however, just one thing that must remain one for three kingdoms, and that was the fiscal system, Customs and Excise. It was a federal union we want, a federal state. If they were to do as some of his unreflecting Home Rule friends, Irish and English, have done, and demand that Ireland should not only have power to lay taxes but to fix Customs and Excise then they had no State left at all."

Another obvious objection to such a course is that it necessitates the erection of a Customs barrier between Ireland and Great Britain. Tariff Reformers are ready to admit that the present fiscal system is at least as injurious to Ireland as to other portions of the United Kingdom. The power to impose Customs duties on British goods—and the proportion of British total imports is so large that if this power were limited to foreign goods it would be financially valueless—would no doubt provide the Irish Exchequer with considerable funds and might be used to develop her prosperity. But the separation of the Customs systems for the purpose of enabling Ireland to impose tariffs in her own interests would necessarily be followed by a demand for treaty-making powers such as have been successfully claimed and are now enjoyed by British Dominions overseas. Under a general tariff for the United Kingdom the same advantages would accrue to Ireland without any corresponding damage to British or Imperial interests.

Thus, whether Customs and Excise are handed over to the Irish Parliament or retained by the Imperial Parliament, the consequences are equally embarrassing. In the one case Ireland would be deprived of the control of some 60 per cent. of her present revenue, and of all power of expansion; in the other, British trade with Ireland might be gravely injured by hostile legislation, and the union of the three kingdoms in financial and commercial policy would be destroyed. But this is not federation, nor is it a step towards it. It is separation pure and simple. Unless we are prepared to accept separation as the end of our policy the control of Customs and therefore of Excise, must remain an Imperial affair.

There can, therefore, be no justification for taking the control of the Customs and Excise from the Imperial Parliament. The Irish Parliament would thus be left with some 40 per cent. of present revenue under her own control. But the power to raise further revenue within the limits legally reserved to the Irish Parliament would be even less than this figure would imply. For of the L4,100,000 of revenue other than Customs and Excise, nearly L1,200,000 comes from the Postal Services; and even if these services were controlled by Ireland, it may be taken that the rates charged will be the same as in Great Britain. Of the remaining L2,900,000 nearly one-half comes from income tax. It has already been pointed out that its yield cannot be materially increased. There are only two ways by which an Irish Chancellor might attempt such a task. He might raise the rate of income tax or he might lower the exemption limit. The former course would almost certainly be followed by two equally undesirable results. So far as the tax continued to be paid in Ireland it would fall with crushing force on the already heavily-burdened agricultural industry. Still, from the point of view of the Exchequer, there might be some additional revenue on this account. On the other hand, there would be a check to the investment of capital in Ireland—and no country needs capital more—and a powerful temptation to transfer it where the tax would be lower. It may be seriously questioned, therefore, whether any increase in the income tax above the British rate is practicable. The other alternative, namely, the lowering of the exemption limit, would be so unpopular that no Irish Chancellor is ever likely to consider it seriously.

Passing from the consideration of revenue it is necessary to examine the relation of present revenue to present expenditure. The first table in the present article shows that the ascertainable expenditure for Irish purposes in 1910-11 was about L1,400,000 more than the revenue. To this expenditure must be added about L300,000 for the State Share of the benefits under Part I. of the National Insurance Act, about L50,000 in respect of Part II., and about L100,000 for cost of administration of both parts, increasing the immediate deficit to about L1,550,000. This calculation, moreover, includes no charge against Irish revenue on account of Imperial Services—navy and army; National Debt, interest and management; the diplomatic services, and so forth. The equity of such payments has been consistently recognised in the two Bills and the three financial schemes submitted by Mr. Gladstone. However moderate the scale of contribution it would in the present case double or treble the margin between Irish revenue and Irish expenditure for local purposes. If, for example, the precedent of the 1886 Bill were followed, and Ireland charged with a contribution for Imperial services in proportion to the estimated relative taxable capacities, the additional charges on the Irish Exchequer would amount to not less than about L4,000,000 on the 1910-11 figures if the taxable capacity of Ireland be taken at one-twenty-fifth, and to nearly L3,500,000 if it be taken at one-thirtieth.

It may be worth while here to refer to the amazing statement that Great Britain has made a large "profit out of the Union." At the last meeting of the British Association, Prof. Oldham affected to prove that Ireland "in the course of one hundred years ... had sent across the Channel as her contribution to the British Exchequer a clear net payment of about 330 millions sterling." The same contention has been urged by Lord MacDonnell. This calculation ignores the fact that even the Irish Parliament between 1782 and 1800 acknowledged its obligation to contribute to Imperial services, and voted contributions for Imperial purposes, besides raising and maintaining in Ireland a force of 12,000 to 15,000 men, some of whom were available for foreign service. It makes no allowance also for the debt which Ireland brought into the Union when the Exchequers were amalgamated in 1817. The importance of the last item may be judged from the fact that if the whole of the so-called contribution to Imperial services, i.e. the excess of true revenue over local expenditure, had been employed since 1817 in paying interest at 3 per cent. on the old Irish debt and the whole of any balance remaining after payment of interest had been used for redemption of the capital, this debt would only have been extinguished in 1886. If a contribution of only 1 per cent. to the cost of Imperial services had been previously charged against this excess, there would be a large balance of the Irish debt still outstanding. As a matter of fact, in the same period that Ireland is said to have contributed L330,000,000, Great Britain may be shown by a precisely similar calculation to have contributed no less than L5,800,000,000 for Imperial purposes. The measure of "injustice to Ireland" meted out by unsympathetic Britons in respect to the Imperial contribution extracted from Ireland may be seen from the following comparison for different dates in the last century.

RATIOS OF POPULATIONS AND CONTRIBUTIONS TO IMPERIAL SERVICES OF IRELAND AND GREAT BRITAIN AT DECENNIAL INTERVALS.

Ratio of British to Ratio of British to Irish Populations. Irish Contributions.

1819-20 2.1 12.7 1829-30 2.1 10.9 1839-40 2.3 11.5 1849-50 3.2 17.6 1859-60 4.0 9.8 1869-70 4.8 12.3 1879-80 5.7 16.3 1889-90 7.0 22.6 1899-00 8.9 46.5 1909-10 9.3 [52]

The truth is that from a financial point of view Ireland has no valid complaint to make on the score of her contributions for Imperial purposes. Between 1820 and 1840 the Irish population was a little less than one-half of the population of Great Britain; her contribution for Imperial Services varied from one-eleventh to one-thirteenth. In 1899-1900 the British contribution was 46-1/2 times the Irish, though the population was less than nine times as large. If any contribution for Imperial Services from Ireland is justified, and Mr. Gladstone at least acknowledged it, no one can say that the contribution actually taken from Ireland has been excessive.

As already stated we are still without any information as to the financial proposals to be included in the Home Rule Bill of 1912. The Government have appointed a Committee to advise them upon this subject. Though the cost of the Committee has been met out of public funds, and sources of information were laid open to them which are not readily available to the public, the Prime Minister has steadily refused to supply to Parliament any information as to the results of their labours.[53] The terms of reference to the Commission; the witnesses examined by them; the information placed at their disposal; the character of the conclusions and recommendations; these have, all alike, been refused to the House of Commons. But while Parliament has been denied this information, there is every reason to believe that the leaders of the Nationalist Party have been taken fully into the confidence of the Government. We do not know whether, for example, the Customs or Excise or both will be imposed and collected by the future Irish Parliament. We do not know whether any contribution will be required for the Irish share of Imperial services. We are equally uncertain whether any and what purely Irish services will be retained by the Imperial Parliament, and charged on the Imperial Exchequer. And lastly, the intentions of the Government in regard to the payment of a subsidy from the Imperial Exchequer to the Irish Parliament, with which rumour is busy, are as yet unrevealed.

In spite of this lamentable paucity of information as to the Government plan, I think it can be safely said that no scheme even remotely resembling any of those presented in connection with the two previous Bills can be put forward now. Each of those schemes would involve the Irish Parliament in a huge deficit from the very outset. Even if the schemes were adapted to the changed modern conditions the same impassable gap between available revenue and certain expenditure remains. Those schemes presumably embodied principles which the Governments of 1886 and 1893, and the Nationalist parties of those dates regarded as adequate. It would be strange if it were otherwise, seeing that an examination and comparison of the separate schemes can discover no other consistent principles except the solitary one of juggling with the revenues, expenditures, and contributions in such manner as would start the Irish Parliament with a small surplus. In view of the importance of these earlier attempts to secure an approximation to financial equilibrium, it appears desirable to examine how Ireland would fare in modern conditions under each of them.

The essential features of the 1886 scheme were as follows:—

1. Customs and Excise to be under the complete control of the Imperial Parliament.

2. Irish Parliament to have power to levy any other taxes.

3. Ireland to contribute annually to the Consolidated Fund of the United Kingdom.

(a) L1,466,000 for interest and management of Irish share of National Debt.

(b) L1,466,000 for contribution to Imperial Defence.

(c) L110,000 for contribution to Imperial Civil Services.

(d) L1,000,000 for Irish Constabulary.

4. Contributions 3 (a) to 3 (d) were not to be increased for thirty years, but might be diminished.

5. Irish share of National Debt to be reckoned at L48,000,000, and Irish Sinking Fund to begin at L360,000, increasing by amount of interest released on redeemed portion of debt.

6. Contribution to Imperial Defence and Civil Services not to exceed one-fifteenth of the total cost in any year.

7. Irish contribution to be credited with receipts on account of Crown Revenues in Ireland.

8. If expenditure on Constabulary fell below L1,000,000, contribution 3 (d) to be correspondingly reduced.

9. Customs and Excise collected in Ireland were to be subject to following charges:—

(a) Cost of collection, not more than 4 per cent.

(b) Contributions to Consolidated Fund of the United Kingdom.

(c) Payments to National Debt Commissioners.

(d) Any sums required under the Land Act of that Session the balance being paid over to the Irish Government.

10. The Lord Lieutenant's salary not to fall on the Irish Exchequer.

Broadly the scheme gave to the Irish Government credit for the Customs and Excise collected in Ireland and charged it with annual payments of L4,502,000 in addition to the cost of collection. It is clear that Mr. Gladstone, at the time when the Irish population was about one-eighth of the United Kingdom, assumed Ireland to have a taxable capacity of one-fifteenth. If such a scheme were introduced at the present moment it is obvious that, owing to the further decline in the population of Ireland, a smaller figure for taxable capacity must be taken. What that figure should be it is difficult, if not impossible, to decide satisfactorily. It is generally assumed that on the basis of the calculations made by the Financial Relations Commission in 1896, the present relative taxable capacity for Ireland would be about one-twenty-fifth that of the United Kingdom. In the last two financial years the Irish contribution to Income Tax has been one-twenty-eighth, and the contribution to Estate Duties one-twenty-sixth of the total collection in the United Kingdom. These proportions, taken as measures of taxable capacity must be exceptionally favourable to Ireland, where the proportion of Income Tax payers and of persons possessing property paying Death Duties is relatively to the total population smaller than in the United Kingdom as a whole. If, therefore, for the sake of the present calculations the mean of two proportions—i.e. one-twenty-seventh deducible from the Income Tax and Death Duty contributions is assumed, we employ a figure exceptionally favourable to Ireland. The financial statement on the next page showing the 1886 scheme applied to present conditions has been drawn up on this basis. The revenue is here assumed to come in at the average rate of the last two years (1909-10 and 1910-11) and the expenditure is taken as that of 1910-11.

The state of the Irish Exchequer under the foregoing scheme would be indeed a parlous one. It would start with a deficit of L3,200,000, and with a prospective immediate increase by about L450,000 on account of the Insurance Act. The actual budget deficit would thus be about L3,650,000. The Imperial Parliament would collect about L7,794,000, and after deducting L5,346,000 would hand back to the Irish Exchequer the difference of L2,458,000. The revenues upon which the Chancellor in the Irish Parliament could rely would be, therefore, L6,366,000. Out of this an expenditure of L9,562,000 would have to be met. The postal services would probably not stand any increased charges; there is left, therefore, only L5,211,000 of free revenue, and only L2,753,000 under the unrestricted control of the Irish Parliament. With such resources it would be obviously impossible to make good a deficit of L3,206,000 by any increase of taxation. It must not be overlooked, also, that the effect of crediting Ireland with Customs and Excise as "collected" instead of as "contributed" is practically to make the Irish Parliament a further free gift of nearly L2,000,000.

A totally different scheme accompanied the Home Rule Bill of 1893 as introduced. The principal features of the new scheme were as follows:—

1. Customs, excise, and postage to be imposed by the Imperial Parliament.

2. Excise and postage to be collected and managed by the Irish Parliament.

3. Customs to be collected and retained by the Imperial Parliament in view of contribution to Imperial services.

4. Excise duties collected in Ireland on articles consumed in Great Britain to be handed over to Imperial Exchequer.

5. If Excise duties be increased the yield of the excess duties to be handed over to the Imperial Exchequer.

6. If Excise duties be reduced and Irish revenue diminished, the deficiency to be made good to Irish revenue.

7. Two-thirds of the cost of the Constabulary to be repaid to the Imperial Exchequer.

Some of the provisions of this scheme are of exceptional interest. If it had ever been in operation the plan, for example, of adjusting the payments from one exchequer to the other in the event of changes being enacted by the Imperial Parliament in the Excise duties must have been fruitful of difficulties and created much friction. If the duties had been reduced there might have been an increased consumption. Who can say how much of the revenue lost to the Irish Exchequer in the event of a reduction of duties would have been due to the reduced rates of duty, and how much had been regained by increased consumption. Again, if the Excise duties had been increased, as in the Budget of 1909, to such a degree that the total revenue at the higher duty was less than the total revenue from the lower duty, who could have determined whether this was a case requiring a payment from the Irish to the British Exchequer, or from the British to the Irish Exchequer.

Perhaps the most striking novelty of the first scheme of 1893 was the retention of the Customs duties in lieu of Ireland's contribution to Imperial Services. At that time the estimated value of the Customs contributed by Ireland was L2,400,000, and seeing that in 1886 her reasonable share of liability on account of Imperial Services was put at L4,600,000, the very large gift to Ireland represented by this scheme may be readily imagined. Even with the full advantage of this gift the estimated Irish surplus was put at L500,000. During the discussions of the Bill an error in the Excise contributions, reducing the revenue available to the Irish Exchequer by L356,000 was discovered. The reduced surplus of L144,000 was regarded by Mr. Gladstone as "cutting it too fine," and the financial scheme was completely recast. Before explaining the third scheme it might be well to examine as before how the original scheme of 1893 would work out at the present time. This is shown in the following balance sheet.

SCHEME B (BASED ON BILL OF 1893, AS INTRODUCED).

REVENUE. L EXPENDITURE. L

1. Excise (true revenue 1. Civil Government ex. licences) 2,952,000 charges (ex. Constabulary 2. Local Taxes— and Lord (a) Stamps 333,000 Lieutenant's salary) 6,952,000 (b) Death Duties 914,000 2. Collection of Ireland (c) Income Tax 1,307,000 Revenues, etc. 298,000 (d) Excise licences 284,000 3. Postal Services 1,404,000 3. Postal Revenue 1,155,000 4. Contribution to Constabulary 4. Miscellaneous 150,000 (2/3rds of ————- L1,464,500) 976,000 7,095,000 Deficit 2,535,000 ————- ————- 9,630,000 9,630,000

The narrow surplus of L144,000 has disappeared, and instead there is on present-day figures the substantial deficit of L2,535,000. Here again it may be observed that the Excise duties are fixed by the Imperial Parliament, and the Postal charges are presumably also invariable. The first Budget deficit would, as before, be not less than L3,000,000. The taxes within the absolute control of the Irish Parliament would have been producing a revenue of L2,838,000. It is within this range of taxation, or by the imposition of new direct taxes, that the Irish Chancellor of the Exchequer would have been compelled to raise an additional L3,000,000 in order to make the two sides of his account balance.

Owing to the mistake already referred to, Mr. Gladstone prepared and presented a third scheme, whose principal features were as follows:—

1. Ireland's contribution to Imperial expenditure to be one-third of the true revenue of taxes levied in Ireland.

2. Ireland to be credited with miscellaneous receipts and surplus (if any) arising from postal services.

3. Ireland to pay out of revenues credited to her, two-thirds of the cost of the Constabulary, all Civil Government charges and any deficit on postal services.

4. The Customs and Inland Revenue duties and the rates for Postal charges to be fixed and collected by Imperial Parliament.

5. After six years (1) Irish contribution to Imperial Services to be revised; (2) the collection of Inland Revenue duties to be undertaken by Irish Government; (3) Irish legislation to impose the stamp duties, income tax, and excise licences. The financial clauses as thus remodelled and simplified were expected to produce a surplus of L512,000. The characteristic feature of this arrangement was the provision for handing over to the Imperial Exchequer one-third of the Irish true tax revenue as Ireland's payment on account of Imperial Services. How matters would stand if this arrangement were applied to the present financial situation in Ireland may be seen from the following table.

SCHEME C (BASED ON BILL OF 1893, AS AMENDED).

REVENUE. L EXPENDITURE L

1. Customs 2,866,000 1. Civil Government 2. Excise (ex. licence Charges 6,952,000 duties) 2,952,000 2. Constabulary (2/3rds 3. Stamps 333,000 of L1,464,000) 976,000 4. Death duties 914,000 3. Estimated deficit on 5. Licence duties 284,000 Postal Services 249,000 6. Income Tax 1,307,000 7. Crown Lands, etc. 25,000 ————- 8,681,000 ————- 8. 2/3rds of L8,965,000 5,757,000 9. Miscellaneous Receipts 115,000 ————- 5,902,000 Deficit 2,275,000 ————- ————- Total 8,177,000 Total 8,177,000 ————- ————-

The main Irish objection to a scheme of this description is that, whatever tax be imposed, the amount taken from the Irish taxpayer would be 50 per cent. greater than the amount going into the Irish Exchequer. It is easy to foresee that such an arrangement would have led to much friction and difficulty, and that it could not have lasted even the six years for which it was provisionally fixed. If applied to the present situation Ireland would have been contributing less than L3,000,000 for Imperial services, although a very moderate estimate of what her contribution should be would require her to pay at least L5,000,000. In spite of this modest payment, however, this scheme would have confronted the Irish Chancellor of the Exchequer with a deficit of more than L2,250,000 rising at once to L2,700,000 in consequence of the Insurance Act.

In reviewing the three financial schemes which have previously seen the light, the following facts stand out clearly:—

1. Some contribution was expected from Ireland for Imperial services in each scheme.

2. The rates of customs, excise, and postage were in all cases to be controlled by the Imperial Parliament.

3. The customs were in every case to be collected by officers of the Imperial Exchequer.

4. In the two schemes of 1893 "true" revenue and not "collected" revenue was the basis of the financial arrangement.

5. Each of these schemes would involve the Irish Parliament from the outset in a huge deficit.

In view of these facts it is certain that any arrangement which pretended to give a Budget surplus to the Irish Parliament would involve, overtly or covertly, the payment of a large subsidy to Ireland out of the Imperial Exchequer. Such a contingency is not likely to make Home Rule more acceptable, or the path of any Bill through Parliament more easy.

FOOTNOTES:

[Footnote 50: See Parliamentary Debates.]

[Footnote 51: Based on White Papers 233 (1910) and 220 (1911).]

[Footnote 52: No contribution from Ireland in this year; local expenditure is estimated to have been in excess of revenue contributed.]

[Footnote 53: Since the above was written, Mr. Birrell has promised (March 27, 1912) to publish the report "some time" after the introduction of the Home Rule Bill.]



V

HOME RULE AND THE COLONIAL ANALOGY.

BY L.S. AMERY, M.P.

There is no argument in favour of Home Rule for Ireland which is more frequently used to-day than that which is based on the analogy of our Colonial experience. In the history of every one of our Colonies—so runs one variant of the argument—from Lord Durham's report on Canada down to the grant of responsible government to the Transvaal, "Home Rule" has turned disaffection into loyalty, and has inaugurated a career of prosperity. Why should we then hesitate to apply to Irish discontent the "freedom" which has proved so sovereign a remedy elsewhere? Again, if our Dominions have been able to combine local Home Rule with national unity—so runs another variant—why should a policy which works successfully in Canada or Australia not work in the United Kingdom? Another suggestion freely thrown out is that Home Rule is only the beginning of a process of federalisation which is to bring us to the goal of Imperial Federation. In one form or another the Colonial Analogy occupies the foreground of almost every speech or article in favour of Irish Home Rule. The ablest, as well as the most courageous, piece of Home Rule advocacy which has so far appeared, Mr. Erskine Childers's "Framework of Home Rule," is based from first to last on this analogy and on little else.

That the argument is effective cannot be gainsaid. It is the argument which appeals most strongly to the great body of thoughtful Liberals who from every other point of view look upon the project with unconcealed misgiving. It is the argument which has appealed to public opinion in the Dominions, and has there secured public resolutions and private subscriptions for the Nationalist cause. In one of its forms it appealed to the imagination of an Imperialist like Cecil Rhodes. In another it has, undoubtedly, in recent years attracted not a few Unionists who have been prepared to approach with, at any rate, an open mind the consideration of a federal constitution for the United Kingdom. And, indeed, if the analogy really applied, it would be difficult to resist the conclusion. If Ireland has really been denied something which has proved the secret of Colonial loyalty and prosperity, what Englishman would be so short-sighted as to wish to deprive her of it for the mere sake of domination? If Home Rule were really a stepping-stone towards Imperial Federation, how insincere our professions of "thinking Imperially," if we are not prepared to sacrifice a merely local sentiment of union for a great all-embracing ideal!

But, as a matter of fact, there is no such analogy bearing on the question which, here and now, is at issue. On the contrary the whole trend of Colonial experience confirms, in the most striking fashion, the essential soundness of the position which Unionists have maintained throughout, that the material, social and moral interests, alike of Ireland and of Great Britain, demand that they should remain members of one effective, undivided legislative and administrative organisation.

The whole argument, indeed, plausible as it is, is based on a series of confusions, due, in part, to deliberate obscuring of the issue, in part to the vagueness of the phrase "Home Rule," and to the general ignorance of the origin and real nature of the British Colonial system. There are, indeed, three main confusions of thought. There is, first of all, the confusion between "free" or "self-governing" institutions, as contrasted with unrepresentative or autocratic rule, and separate government, whether for all or for specified purposes, as contrasted with a common government. In the next place there is the confusion between the status of a self-governing Dominion, in its relations to the Imperial Government, and the status of a Colonial state or provincial government towards the Dominion of which it forms a part. A truly inimitable instance of this confusion has been provided by Mr. Redmond in a declaration made on more than one occasion that all that Ireland asks for, is, "What has already been given to twenty-eight different portions of the Empire."[54] Considering that the "portions" thus enumerated include practically sovereign nation states like Canada, provinces like those of the South African Union, with little more than county council powers, and stray survivals, like the Isle of Man, of an earlier system of government, based on the same principle of ascendency and interference as the government of Ireland under Poynings's Act, it is difficult to know which to admire most, Mr. Redmond's assurance, or his cynical appreciation of the ignorance or capacity for deliberate self-deception of those with whom he has to deal. The third confusion is that between Imperial functions and national or Dominion functions, due to the fact that the two are combined in the United Kingdom Parliament, which is also, under present conditions, the Imperial Parliament, and to the consequent habitual use of the word "Imperial" in two quite different senses. It is this last confusion which makes such a declaration as Mr. Asquith's about safeguarding "the indefeasible authority of the Imperial Parliament" a mere equivocation, for it affords no indication as to whether the supremacy retained is the effective and direct control maintained by Canada over Ontario, or the much slighter and vaguer supremacy exercised by the United Kingdom over the Dominions. It is this same confusion, too, which is responsible for the notion that the problem of creating a true Imperial Parliament or Council by a federation of the Dominions would be assisted, either by creating an additional Dominion in the shape of Ireland, or by arranging the internal constitution of the United Kingdom, as one of the federating Dominions, on a federal rather than on a unitary basis.

The confusion of ideas between self-government and separate government pervades the whole argument that the granting of "Home Rule" to Ireland would be analogous to the grant of responsible institutions to the Colonies. The essence of Home Rule is the creation of a separate government for Ireland. The essence of our Colonial policy has been the establishment of popular self-government in the Colonies. That this self-government has been effected through local parliaments and local executives, and not by representation in a common parliament, is a consequence of the immense distances and the profound differences in local conditions separating the Dominions from the Mother Country. It is an adaptation of the policy to peculiar conditions, and not an essential principle of the policy itself.

This is obvious from any consideration of the circumstances under which the policy of Colonial self-government originated. Under the old Colonial system which preceded it, the Governor not only controlled the executive government, whose members were simply his official subordinates, but also controlled legislation through a nominated Upper Chamber or Legislative Council. The object of this restrictive policy was not interference with local affairs, but the supposed necessity of safeguarding general Imperial interests. Local affairs were, in the main, left to the local government. But the peculiar constitution of that government rendered it almost inevitable that the practical control of those affairs should fall into the hands of a narrowly limited class, clustering round the Governor and his circle, and by its privileges and prejudices creating in those excluded from that class a spirit of opposition, which extended from its members to the whole Imperial system which they were supposed to personify. In each of the North American Colonies a small oligarchy, generally known as the "Family Compact," was able to "monopolise the Executive Council, the Legislative Council, the Bench, the Bar, and all offices of profit." It was against this system, and not against the Imperial connection or even against undue interference from England, that the Canadian rebellion of 1837 was directed. In 1838 Lord Durham made his famous report in which he attributed the troubles to their true cause, the disregard of public opinion, and proposed that the Governor should in future govern, in local affairs, in accordance with the advice given by Colonial Ministers enjoying the confidence of the popular Assembly. A few years later his policy was put into execution by Lord Elgin in Canada, and rapidly extended to other Colonies. Five years ago the same system of government was applied to the Transvaal and to the Orange River Colony.[55]

From the foregoing brief summary, it is sufficiently clear that the really vital feature of the policy inaugurated by Lord Durham was the acceptance of responsible popular government in local affairs, and not the separation of Colonial government from Imperial control. The policy did not involve the setting up of new legislative machinery or a new definition of Imperial relations. For an existing system of separate government in local affairs, which created friction and discontent, it simply substituted a new system which has, in the main, worked smoothly up to the present. From the success of this policy, what possible direct inference can be drawn as to the effect of setting up in Ireland, not a similar system of government, for Ireland already enjoys political institutions as fully representative as those of any Colony, or of any other portion of the United Kingdom, but a separate centre of government?

At the same time the success of responsible government in the Colonies is, on closer examination, by no means without bearing on the problem of Ireland. That system of Colonial responsible government which seems to us so simple and obvious is, on the contrary, one of the most artificial systems the world has ever known, based as it is upon conditions which have never been present before in the world's history, and which are now rapidly disappearing, never, perhaps, to recur. That a popular assembly in complete control of the executive, should respect an unwritten convention limiting its powers and rights to purely local affairs, and submit to a purely external control of its wider interests and destinies, seemed to most of Lord Durham's contemporaries almost unthinkable. Not only those who opposed the policy, but many of those who advocated it, were convinced that it would lead to complete separation. Nor were their fears or hopes by any means ill-grounded. That they were not justified by the event was due to an altogether exceptional combination of factors. The first of these was the overwhelming supremacy of the United Kingdom in commerce and naval power, and its practical monopoly of political influence in the outer world. Sheltered by an invincible navy, far removed from the sound of international conflict, the Colonies had no practical motive for concerning themselves with foreign affairs, or with any but purely local measures of defence. Even when, as in 1854, they were technically involved by the United Kingdom in war with a great Power, they were not so much as inconvenienced. The United Kingdom, on the other hand, incurred no serious expenditure for their defence beyond what was in any case required for the defence of its sea-borne commerce, nor was its foreign policy at any time seriously deflected by regard for Colonial considerations. Even when the Colonies encroached on the original limits set them, and began to establish protectionist tariffs against the Mother Country, British manufacturers could afford to disregard a handicap of which they were at first scarcely sensible, while British statesmen smiled condescendingly at the harmless aberrations of Colonial inexperience. Another factor was the very fact that it was colonies that the United Kingdom was dealing with, new countries where every other interest was secondary to that of opening up and developing the untamed wilderness, to creating the material framework which, in fulness of time, might support a complete national life. There was consequently little real interest in external policy in the Colonial assemblies, little leisure for criticism of the Imperial authorities, little desire to assert any particular point of view. Last, but not least, was the factor of distance, interposing a veil of obscurity between the different communities in the Empire; mitigating minor causes of friction, keeping Colonial politics free from being entangled in the British Party system.

The British system of Colonial self-government has so far proved workable because of the exceptional circumstances in which it originated. But its success cannot be regarded as wholly unqualified. The failure to provide any direct representation of Colonial interests and aspirations in the Imperial Parliament may not have mattered as far as foreign policy and defence were concerned. But it did affect the colonies most seriously from the economic point of view, for it precluded them from pressing with any effect for the development of inter-Imperial communications, or from resisting the abolition of the system of preferential trade which meant so much to their prosperity. Under the influence of a narrowly selfish and short-sighted policy, inspired by English manufacturing interests, Canada saw the stream of commerce and population pass by her shores on its way to the United States. The relative progress of the British Colonies and of the United States since the abolition of preference is some measure of the economic weakness of a political system which has no common trade policy. In any case the British Colonial system, as we have known it is inevitably moving towards its crisis. The conditions under which it originated are fast disappearing. The commercial and political expansion of Europe, of America, of Asia, are bringing the Dominions more and more into the arena of international conflict. The growth of foreign navies is forcing them to realise the necessity of taking a larger part in their own defence. Their growing national self-consciousness demands not only that they should cease to be dependent on the Mother Country for their safety, but also that they should exercise control over the foreign policy of which defence is merely the instrument. There are only two possible solutions to the problem which is now developing: the one is complete separation, the other is partnership in an Imperial Union in which British subjects in the Dominions shall stand on exactly the same footing, and enjoy the same powers and privileges in Imperial affairs, as British subjects in the United Kingdom.

The conditions—geographical, economic, political—which, in the Colonies, made the grant of free institutions, unaccompanied by some form of political federation or union, even a temporary success, were, indeed, exceptional. None of them were present in the circumstances of Ireland before the Union. They are not present to-day. Geographically the United Kingdom is a single compact island group, of which Ireland is by no means the most outlying portion. No part of Ireland is to-day, or ever was, as inaccessible from the political centre of British power as the remoter parts of the Highlands, not to speak of the Shetlands or Hebrides. Racially, no less than physically, Ireland is an integral part of the United Kingdom, peopled as it is with the same mixture of racial elements as the main island of the group. The blend of Celt with Dane, with Normans and English of the Pale, with English citizens of the seaports and Cromwellian settlers, which constitutes Celtic Ireland, so-called, is less Celtic both in speech and in blood than either Wales or the Highlands. Religion alone has maintained a difference between a predominantly Celtic and a predominantly Teutonic Ireland which would otherwise have disappeared far more completely than the difference between Celtic and Teutonic Scotland. Economically, the connection between Ireland and Great Britain, always close, has become such that to-day Ireland subsists almost wholly upon the English market. In these respects, at least, there is no resemblance between the conditions of Ireland and that of any of the Colonies.

On the other hand, politically, Ireland was for centuries treated as a colony—"the first and nearest of the Colonies," as Mr. Childers puts it. The difficulties and defects of early Colonial government were intensified by the great conflict of the Reformation, which made Ireland a centre of foreign intrigue, and by the long religious and constitutional struggle of the seventeenth century, which fell with terrible severity upon a population which had throughout espoused the losing cause. Cromwell; realising that "if there is to be a prosperous, strong and United Kingdom there must be one Parliament and one Parliament only," freed Ireland from the Colonial status. Unfortunately, his policy was reversed in 1660, and for over a century Ireland endured the position of "least favoured Colony"—least favoured, partly because, with the possible exception of linen, all her industries were competitive with, and not complementary to English industries, and so were deliberately crushed in accordance with the common economic policy of the time, partly because the memories of past struggles kept England suspicious and jealous of Irish prosperity. Every evil under which the old colonial system laboured in Canada before the rebellion was intensified in Ireland by the religious and racial feud between the mass of the people and the ascendant caste. The same solvent of free government that Durham recommended was needed by Ireland. In view of the geographical and economic position of Ireland, and in the political circumstances of the time, it could only be applied through union with Great Britain. Union had been vainly prayed for by the Irish Parliament at the time of the Scottish Union. Most thoughtful students, not least among them Adam Smith,[56] had seen in it the only cure for the evils which afflicted the hapless island.

Meanwhile, in 1782, the dominant caste utilised the Ulster volunteer movement to wrest from Great Britain, then in the last throes of the war against France, Spain, and America, the independence of the Irish Parliament. Theoretically co-equal with the British Parliament, Grattan's Parliament was, in practice, kept by bribery in a position differing very little from that of Canada before the rebellion. Still the new system in Ireland might, under conditions resembling those of Canada in 1840, have gradually evolved into a workable scheme of self-government. But the conditions were too different. A temporary economic revival, indeed, followed the removal of the crippling restrictions upon Irish trade. But, politically, the new system began to break down almost from the start. Its entanglement in English party politics, which geography made inevitable, lead to deadlocks over trade and over the regency question, the latter practically involving the right to choose a separate sovereign. The same geographical conditions made it impossible for Ireland to escape the influence of the French Revolution. The factious spirit and the oppression of the ruling caste did the rest. There is no need to dwell here on the horrors of the rising of 1798, and of its repression, or on the political and financial chaos that marked the collapse of an ill-starred experiment. England, struggling for her existence, had had enough of French invasion, civil war, and general anarchy on her flank. The Irish Parliament died, as it had lived, by corruption, and Castlereagh and Pitt conferred upon Ireland the too long delayed boon of equal partnership in the United Kingdom.

The mistakes which, for a century, deprived the Union of much of its effect—the delay in granting Catholic emancipation, the folly of Free Trade, acquiesced in by Irish members, by which agrarian strife was intensified, and through which Ireland again lost the increase of population which she had gained in the first half century of Union—need not be discussed here. The fact remains that to-day Ireland is prosperous, and on the eve of far greater prosperity under a sane system of national economic policy. What is more, Ireland is in the enjoyment of practically every liberty and every privilege that is enjoyed by any other part of the United Kingdom, of greater liberty and privilege than is enjoyed by Dominions which have no control of Imperial affairs. The principle which in the case of the Colonies was applied through separate governments has, in her case, been applied through Union. It could only have been applied through Union in 1800. It can only be applied through Union to-day. Railways and steamships have strengthened the geographical and economic reasons for union; train-ferries and aircraft will intensify them still further. Meanwhile the political and strategical conditions of these islands in the near future are far more likely to resemble those of the great Napoleonic struggle than those of the Colonial Empire in its halcyon period.

In one aspect, then, the Union was the only feasible way of carrying out the principle which underlay the successful establishment of Colonial self-government. In another aspect it was the last step of a natural and, indeed, inevitable process for which the history of the British Colonies since the grant of self-government has furnished analogies in abundance. It has furnished none for the reversal of that process. It is only necessary to consider the reasons which, in various degrees, influenced the several groups of independent Colonies in North America, Australia, and South Africa to unite under a single government, whether federal or unitary, thus wholly or partially surrendering the "Home Rule" previously enjoyed by them, in order to see how close is the parallel. The weak and scattered North American Colonies were at a serious disadvantage in all political and commercial negotiations with their powerful neighbour, the United States, a fact very clearly emphasised by the termination of Lord Elgin's reciprocity treaty in 1864. None of them was in a position to deal with the vast territories of the North-West, undeveloped by the Hudson's Bay Company, and in imminent danger of American occupation. A common trade policy, a common railway policy, and a common banking system were essential to a rapid development of their great resources, and only a common government could provide them. In Australia the chief factor in bringing about federation was the weakness and want of influence of the separate Colonies in dealing with problems of defence and external policy, impressed upon them by German and French colonial expansion in the Pacific, and by the growth of Japan. In South Africa, on the other hand, the factors were mainly internal. The constant friction over railway and customs agreements, continually on the verge of breaking down, embittered the relations of the different Colonies and maintained an atmosphere of uncertainty discouraging to commercial enterprise. Four different governments dealt with a labour supply mainly required in one colony. Four agricultural departments dealt with locusts and cattle plagues, which knew no political boundaries, and which could only be stamped out by the most prompt and determined action. Four systems of law and four organisations for defence secured, as Lord Selborne pointed out in a striking Memorandum (Blue Book Cd. 3564) a minimum of return for a maximum of expense. A native rising in Natal warned South Africans that the mistake of a single Colony might at any moment set the whole of South Africa ablaze with rebellion. In the absence of larger issues local politics in each Colony turned almost exclusively on the racial feud. A comprehensive union alone could bring commercial stability and progressive development, mitigate race hatred, and pave the way to a true South African nationality.

All the weakness in external relations, all the internal friction and impediment to progress, all the bitterness and pettiness of local politics, which marked the absence of union among neighbouring colonies, also characterised the relations of Great Britain and Ireland in the eighteenth century. But there was this difference: the immense disproportion in wealth and power, and the political control exercised by the greater state, caused all the evils of disunion to concentrate with intensified force upon the smaller state. To undo the mischief of eighteenth century disunion required at least a generation. A series of political mistakes and mischances, and a disastrous economic policy, have left the healing task of union incomplete after a century. But renewed disunion to-day would only mean a renewal of old local feuds to the point of civil war, a renewal of old economic friction, in which most of the injury would be suffered by the weaker combatant, the indefinite postponing for Ireland of the prospect, now so hopeful, of national development and social amelioration, a weakening of the whole United Kingdom for diplomacy or for defence. It is a policy which no Dominion in the Empire would dream of adopting—a policy which every Dominion would most certainly resist by force, just as the United States resisted it when attempted, with more than a mere pretext of constitutional justification, by the Southern States.

Now for the "exception which proves the rule": there is one Colonial analogy for what would be the position of Ireland under Home Rule, namely, the position of Newfoundland outside the confederation of the other North American Colonies.[57] The analogy is only partial, for this reason, that whereas Ireland is almost wholly dependent economically on Great Britain, Newfoundland has little direct trade with Canada, and moreover enjoys a virtual monopoly of one particular commodity, namely codfish, by which it manages to support its small population. Nevertheless, no one can doubt that with its favoured geographical position, and with its great natural resources, Newfoundland would have been developed in a very different fashion if for the last forty years it had been an integral part of the Dominion. Nor is the loss all on the side of Newfoundland, as the history of even the last few years has shown. In 1902, Newfoundland negotiated a commercial Convention with the United States which, in return for a free entry for Newfoundland fish into the United States, practically gave the Newfoundland market to American manufacturers, and explicitly forbade the granting of any trade preference to the United Kingdom or to Canada. When, fortunately, the American Senate rejected the Convention, Newfoundland embarked on a course of legislative reprisal against American fishing. But this involved the Imperial Government in a diplomatic conflict which, but for the excellent relations subsisting with the United States, might easily have led to a grave crisis. The inconveniences and dangers which Irish trade policy might lead to under Home Rule can easily be inferred from this single example, all the more if Irish policy should be influenced, as Newfoundland's policy certainly was not, by a bias of hostility to the Empire.

So much for the first confusion, that which would base the case for a separate government in Ireland on the success of free institutions in the Colonies, entirely ignoring the whole movement for union, which has made every geographical group of Colonies follow the example of the Mother Country. We must now deal with the second confusion, that which is based on a hazy notion that Home Rule is only a preliminary step to endowing the United Kingdom as a whole with a working federal constitution like that of Canada or Australia. Ireland, in fact, so runs the pleasing delusion, is to be set up as an experimental Quebec, and the other provinces will follow suit shortly. Not all Home Rulers, indeed, are obsessed by this confusion. Mr. Childers, for instance, makes short work of what he calls the "federal chimera," dismissing the idea as "wholly impracticable," and pointing out that Home Rule must be "not merely non-federal, but anti-federal." But the great majority of Liberals to-day are busy deluding themselves or each other, and the Nationalists are, naturally, not unwilling to help them in that task, with the idea of Home Rule for Ireland followed by "Home Rule all round."

The new Home Rule Bill has not yet appeared, but certain main features of it can be taken for granted. It will be a Bill which, save possibly for a pious expression of hope in the preamble, will deal with Ireland only. It will set up in Ireland an Irish legislature and executive responsible for the "peace, order, and good government" of Ireland, subject to certain restrictions and limitations. It will assign to Ireland the whole of the Irish revenues, though probably retaining the control of customs and excise, and in that case retaining some Irish representatives at Westminster. So far from fixing any contribution to Imperial expenditure from Ireland, it will, apparently, include the provision of an Imperial grant in aid towards Land Purchase and Old Age Pensions. Any such measure is wholly incompatible with even the loosest federal system. A federal scheme postulates the existence over the whole confederation of two concurrent systems of government, each exercising direct control over the citizens within its own sphere, each having its legislative and executive functions, and its sources of revenue, clearly defined. The Home Rule Bill will certainly not set up any such division of government and its functions in Great Britain. Nor will it, in reality, set up any such effective double system of government in Ireland. What it will set up will be a national or Dominion government in Ireland, separate and exclusive, but subject to certain restrictions and interferences which it will be the first business of the Irish representatives, in Dublin or Westminster, to get rid of. Long before Scotland or Wales, let alone England, get any consideration of their demand for Home Rule, if demand there be, the last traces of any quasi-federal element the Bill may contain will have been got rid of.

In a federation every citizen, in whatever state or province he resides, is as fully a citizen of the federation as every other citizen. He not only has the same federal vote, and pays the same federal taxes, but he has the same access to the federal courts, and the same right to the direct protection of the federal executive. In what sense are any of these conditions likely to be true of, let us say, an Irish landlord under this Home Rule Bill? Again, federalism implies that all the subordinate units are in an equal position relatively to the federal authority. Is this Bill likely to be so framed that its provisions can be adapted unchanged to Scotland, Wales, or England? And if they could, what sort of a residuum of a United Kingdom government would be left over? Take finance alone: if every unit under "Home Rule all round" is to receive the whole product of its taxation, what becomes of the revenue on which the general government of the United Kingdom will have to subsist? The fact is that the creation of a federal state, whether by confederation or by devolution of powers, must be, in the main, a simultaneous act. Additional subordinate units may subsequently join the confederation under the conditions of the federal constitution. Backward areas which are unable to provide for an efficient provincial expenditure, over and above their contribution to federal expenditure, may be held back as territories directly controlled by the federal authorities till they are financially and in other respects ripe for the grant of provincial powers. If a federal scheme were really seriously contemplated by the present Government they would have to adopt one of two courses. They would either have to establish it simultaneously for the whole United Kingdom, and in that case limit the powers and functions of the provinces so narrowly as to make it possible for Ireland to raise its provincial revenue without undue difficulty, the rest of Ireland's needs being met by a substantial federal expenditure carried out by federal officials. Or else they might begin by the creation of a federal constitution with considerable provincial powers for England, Scotland, and Wales, keeping back Ireland as a federal territory till its economic and social conditions justified the establishment of provincial institutions. The converse policy of treating the case of Ireland as "prior in point of time and urgency,"[58] of giving the poorest and most backward portion of the United Kingdom the whole of its revenue and a practically unfettered control of its territory, is, indeed, "not merely non-federal, but anti-federal."

The truth is that the federal element in this Home Rule Bill, as in that of 1893, will be merely a pretence, designed to keep timid and hesitating Home Rulers in line—a tactical manoeuvre of much the same character as the talk about a reformed Second Chamber which preceded the Parliament Act, and found due burial in the preamble to that Act. In essence the Bill will set up Ireland as an entirely separate state subject to certain restrictions which the Government have no serious intention of enforcing, and the Irish every intention of disregarding, or abolishing as the outcome of further agitation. For this policy of pretence there is one admirable parallel in our Colonial history—the policy by which "Home Rule" was "given" to the Transvaal after Majuba. It was the same policy of avoiding expense and trouble, political or military—the policy, in fact, of "cutting the loss"—tricked out with the same humbug about "magnanimity" and "conciliation," about trust in Boer (or Nationalist) moderation when in power, the same contemptuous passing over of the loyalists as persons of "too pronounced" views, or as "interested contractors and stock-jobbers."[59] It was embodied in a Convention by which the "inhabitants of the Transvaal territory" were "accorded complete self-government, subject to the suzerainty of Her Majesty" under a series of limitations which, if enforced, would have implied a measure of British control in many respects greater than that exercised over a self-governing Colony, and with a number of guarantees to protect the loyalists. The Government was able to "save its face," while its hesitating followers were able to quiet their consciences, by the reassuring phrases of the Convention. The Boer Volksraad frankly declared itself still dissatisfied, but ratified the Convention, "maintaining all objections to the Convention ... and for the purpose of showing to everybody that the love of peace and unity inspires it, for the time being, and provisionally submitting the articles of the Convention to a practical test." If any Nationalist Convention in Dublin should accept the new Home Rule Bill, we can take it for granted that it will be in exactly the same spirit, and possibly in almost the same phraseology.[60]

From the first the limitations of the Convention were disregarded. Short of armed intervention there was no machinery for enforcing them, and the Boers knew perfectly well that there was no real desire on the part of an embarrassed Government to raise a hornet's nest by making the attempt. The British resident, with his nominally autocratic powers, was a mere impotent laughing stock. The ruined loyalists left the country, or remained to become the most embittered enemies of the British Government. In three years a new Convention was drafted—an even greater masterpiece of make-believe than the first—which could be expounded to Parliament as a mere modification of certain unworkable provisions, but which the Boers took as a definite surrender of all claims to suzerainty, and as a definite recognition of their position as an "independent sovereign state," bound temporarily by the provisions of a treaty, which could have no permanent force in "fixing the boundary to the march of a nation." So far from being reconciled they were only emboldened to embark on a policy of aggression, which in 1885 involved the British Government in military measures costing nearly as much as would have been required to suppress the whole rising in 1881. For the time being the stagnation and chronic bankruptcy which followed the removal of British rule and the exodus of the loyalists limited Transvaal ambitions. The gold discoveries both increased that ambition by furnishing it with revenue, and at the same time brought about a close economic intercourse with the neighbouring colonies which, under the political conditions of disunion, was bound to create friction. In the end the policy of make-believe and "cutting the loss" had to be redeemed at the cost of 20,000 lives and of L200,000,000. Reconciliation, in large measure, has come since. But it has only come because British statesmen showed, firstly, in the war, their inflexible resolution to stamp out the policy of separation, and secondly, after the war, their devotion to the real welfare of South Africa in a policy of economic reconstruction, and in the establishment of those free and equal British institutions under which—by the final dying out of a spurious nationalism based on racial prejudice and garbled history—South Africa may become a real, living nation.

The reservations and guarantees which this Home Rule Bill may contain cannot possibly constitute the framework of a federal constitution. All they can guarantee is a period of friction and agitation which will continue till Ireland has secured a position of complete separation from the United Kingdom. At the best the Home Rule experiment would then reduce Ireland to the position of another Newfoundland; at the worst it might repeat all the most disastrous features of the history of "Home Rule" in the Transvaal. At the same time it may be worth inquiring how far there would really be any valid Colonial analogy for the introduction of a federal system of "Home Rule all round" if such a scheme had been honestly contemplated. The first thing to keep in mind is that the internal constitution of the Dominions presents a whole gradation of constitutional types. There is the loose federal system of Australia, in which the Commonwealth powers are strictly limited and defined, and all residuary powers left to the States. There is the close confederation of Canada in which all residuary powers are vested in the Dominion. There is the non-federal unitary government of South Africa with a system of provincial local governments with somewhat wide county council powers. There is, lastly, the purely unitary government of the two islands of New Zealand. Each of these types is the outcome of peculiar geographical, economic, and historical conditions. To understand the federal system of Australia it is essential to remember that till comparatively recent times Australia consisted, to all intents, of four or five seaport towns, each with its own tributary agricultural and mining area, strung out, at distances varying from 500 to 1300 miles, along the southern and eastern third of a coast line of nearly 9000 miles looped round an unexplored and reputedly uninhabitable interior. Each of these seaports traded directly with the United Kingdom and Europe in competition with the others. With economic motives for union practically non-existent, with external factors awakening a general apprehension rather than confronting Australia with any immediate danger, it was impossible to find the driving power to overcome local jealousies sufficiently to secure more than a minimum of union. The Commonwealth Constitution is a makeshift which, as the internal trade of Australia grows and as railway communications are developed, will inevitably be amended in the direction of increasing the power of the Commonwealth and diminishing that of the States. In Canada the economic link between Canada proper and the Maritime Provinces was, before Confederation, almost as weak as that of Australia. British Columbia, which it was hoped to include in the Confederation, was then separated by a journey of months from Eastern Canada, and was, indeed, much nearer to Australia or New Zealand. Quebec, with its racial and religious peculiarities, added another problem. That the Confederation was nevertheless such a close and strong one was due both to the menace of American power in the south, and to the terrible example of the weakness of the American constitution as made manifest by the Civil War. Yet even so, Sir John Macdonald, the father of Confederation, frankly declared the federal constitution a necessary evil—

"As regards the comparative advantages of a Legislative and a Federal Union I have never hesitated to state my own opinions.... I have always contended that if we could agree to have one government and one Parliament ... it would be the best, the cheapest, the most vigorous, the strongest system of government we could adopt."

This also was the view of the framers of the South African Union. The circumstances of South Africa enabled them to carry it into effect. For all its extent, South Africa is geographically a single, homogeneous country with no marked internal boundaries. It is peopled by two white races everywhere intermixed in varying proportions and nowhere separated into large compact blocks. The immense preponderance and central position of the Rand mining industry makes South Africa practically a single economic system. The very bitterness of the long political and racial struggle which had preceded intensified the argument for really effective union.

If we compare the conditions in the United Kingdom with those of the Dominions it is obvious at once that there is no possible analogy with the conditions of Canada or Australia, but a considerable analogy with South Africa and New Zealand. The British Isles are but little larger than the New Zealand group, and much more compact and homogeneous. Their close economic intercourse, the presence of two races with a history of strife behind them, but compelled by their inextricable geographical blending to confront the necessity of union, are reproduced in the conditions of South Africa. In so far then as the Colonial analogy bears upon the question at all, it cannot be said to be in favour of Federal Home Rule any more than of Separatist Home Rule. The most it can fairly be said to warrant is the establishment of provincial councils with powers akin to those of the South African Councils. For such councils, built up by the federation of adjoining counties and county boroughs, carrying out more effectively some of the existing powers of those bodies, and adding to them such other powers, legislative or administrative, as it may be convenient to bestow on them, a very strong case may be made on the grounds of the congestion of Parliamentary business. But that has nothing to do with Home Rule, either Separatist or Federal.

But if the congestion of Parliamentary business might be appreciably relieved by some such provincial bodies—larger "national" bodies would only duplicate work, not relieve it—the true remedy for the confusion of principles and objectives which, rather than the mere waste of time, is the chief defect of our Parliamentary system, lies in a proper separation of the local affairs of the United Kingdom from the general work of the Empire, in other words, in some form of Imperial federation. What is needed is not the creation of separate parliaments within the United Kingdom, but the creation of a separate Parliament for the United Kingdom, a Parliament which should deal with the affairs of the United Kingdom considered as one of the Dominions, leaving the general problems of Imperial policy to a common Imperial Parliament or Council equally representative of the citizens of every Dominion. No form of Home Rule can in any sense advance that desirable solution of our Imperial problems. The creation of an additional Dominion in the shape of Ireland would merely add one to the number of units to be considered, and would be contrary to the spirit of the resolution passed at the 1897 Conference, that it was desirable "wherever and whenever practicable, to group together under a federal union those Colonies which are geographically united." The problem would be no more affected by the setting up of a federal constitution for the United Kingdom, than it would be if South Africa decided, after all, to give her provinces federal powers, or Australia carried unification by a referendum. The notion that the Dominions could simply come inside the United Kingdom federation, though it sometimes figures in Home Rule speeches, is merely a product of the third form of confusion of ideas previously referred to, and is a sheer absurdity. The terms and conditions of a United Kingdom federation would necessarily differ in almost every respect from those of an Imperial Federation, and a constitution framed for the one object would be unworkable for the other. Nor would it ever be acceptable to the Dominions, which regard themselves as potentially, if not actually, the equals of the United Kingdom as a whole. From their point of view the United Kingdom might almost as well be asked to step inside the Australian Commonwealth on the footing of Tasmania, as that they should be asked to join in, in the capacity of an additional Ireland, Scotland, or Wales, under any scheme of "Home Rule all round."

It should be sufficiently clear from the foregoing analysis that the vague and confused claim that the success of British Colonial policy is an argument for the Home Rule Bill has no shadow of justification. It has been shown, first of all, that the factor of success in our Colonial policy was not the factor of separatism implied in Home Rule, but the factor of responsible government already secured for Ireland by the Union. It has been shown, secondly, that the experience of the Colonies since the establishment of responsible government has in every case forced union upon them, and union in the closest form which the facts of trade and geography permitted of. Colonial experience is thus no argument even for a federal scheme of "Home Rule all round," if such a scheme could possibly result from an Irish Home Rule Bill, which it cannot. The disadvantages and dangers of the contrary policy of disunion have been shown, in their least noxious form in the case of Newfoundland, which has simply remained outside the adjoining Dominion, and in their deadliest form in the case of the Transvaal, where "Home Rule" was given in 1881, as it would be given to Ireland to-day, if the Government succeeded, not from conviction and whole-heartedly, but as a mean-spirited concession, made to save trouble, and under the most disingenuous and least workable provisions. Lastly, it has been made clear that Home Rule cannot possibly assist, but can only obscure and confuse, the movement for the establishment of a true Imperial Union. Unionists and Imperialists can choose no better ground for their resistance to Home Rule than the wide and varied field of Colonial experience.

But Colonial experience can give us more than that. It can provide us not only with an immense mass of arguments and instances against disruption, but with invaluable instances of what can be done to strengthen and build up the Union against all possible future danger of disruptive tendencies. The confederation of Canada was accomplished in the teeth of all the geographical and economic conditions of the time. Canadian statesmanship thereupon set itself to transform geography, and to divert the course of trade in order to make the Union a reality. The Intercolonial Railway, the Canadian Pacific, the Grand Trunk Pacific, the proposed Hudson Bay Railway, and the Georgian Bay Canal schemes, all these have been deliberate instruments of policy, aiming, first of all, at bridging the wilderness between practically isolated settlements scattered across a continent, and creating a continuous Canada, east and west; and, secondly, at giving that continuous strip depth as well as extension. Hand in hand with the policy of constructing the internal framework of transportation, which is the skeleton of the economic and social life of a nation, went the policy of maintaining a national tariff to clothe that skeleton with the flesh and blood of production and exchange, and, as far as possible, to clothe it evenly. Australia, too, is waking, though somewhat hesitatingly, to the need of transcontinental railways, for the protection of new industries and for the even development and filling up of all her territories. In South Africa the economic process preceded the political. It was the dread of the breakdown of a temporary customs union already in existence that precipitated the discussion of union. And it was the development of the Rand as the great internal market of South Africa, and the competitive construction of railway lines from the coast, that really decided the question of legislative union against federation. All three instances lead to the same conclusion that union to be really effective and stable needs three things: firstly, a developed system of internal communications reducing all natural barriers to social, political, and commercial intercourse to the very minimum; secondly, a national tariff, protective or otherwise, sufficient at least to encourage the fullest flow of trade along those communications rather than outside of them; thirdly, a deliberate use of the tariff and of the national expenditure to secure, as far as possible, the even development of every portion of the national territory.

In the United Kingdom all these instruments for making the Union real are still unutilised. The system of laisser faire in the matter of internal communications has allowed St. George's Channel still to remain a real barrier. A dozen train-ferries, carrying not only the railway traffic between Great Britain and Ireland, but enabling the true west coast of the United Kingdom to be used for transatlantic traffic, would obliterate that strip of sea which a British minister recently urged as an insuperable objection to a democratic union.[61] To construct them would not be doing as much, relatively, as little Denmark has long since done, by the same means, to unite her sea-divided territory. The creation of a tariff which shall assist not only manufactures, but agriculture and rural industries, is another essential step. In view of Ireland's undeveloped industrial condition the giving of bounties to the establishment in Ireland of new industries, such as the silk industry, would be a thoroughly justifiable extension of the Unionist policy carried out through the Congested Districts Board and the Department of Agriculture. The diversion to Ireland of a larger part of the general national and Imperial expenditure, whether by the establishment of a naval base, or the giving out of battleship contracts, or even only of contracts for Army uniforms, would also be of appreciable assistance to Ireland and to the Union. Ireland suffers to-day economically and politically, from the legacy of political separation in the eighteenth century, and of economic disunion in the nineteenth. It is the business of Unionists not only to maintain the legal framework of the Union, but to give it a vitality and fulness of content which it has never possessed.