We have done some of that work, and we are going to do more. In moving forward to this great struggle which is approaching, we are going to carry our social policy along with us. We are not going to fight alone upon the political and constitutional issue, nor alone upon the defence of free trade. We are going, fearless of the consequences, confident of our faith, to place before the nation a wide, comprehensive, interdependent scheme of social organisation—to place it before the people not merely in the speeches or placards of a Party programme, but by a massive series of legislative proposals and administrative acts. If we are interrupted or impeded in our march, the nation will know how to deal with those who stand in the path of vital and necessary reforms. And I am confident that in the day of battle the victory will be to the earnest and to the persevering; and then again will be heard the doleful wail of Tory rout and ruin, and the loud and resounding acclamations with which the triumphant armies of democracy will march once again into the central place of power.



THE SECOND READING OF THE ANTI-SWEATING BILL[14]

HOUSE OF COMMONS, April 28, 1909



It is a serious national evil that any class of his Majesty's subjects should receive in return for their utmost exertions less than a living wage.

It was formerly supposed that the workings of the laws of supply and demand would in the regular and natural course of events, and by a steady progression, eliminate that evil, and achieve adequate minimum standards. Modern opinion has found it necessary greatly to refine upon these broad generalisations of the truth, and the first clear division that we make to-day in questions of wages, is that between a healthy and unhealthy condition of bargaining.

Where, as in the great staple trades of this country, you have powerful organisations on both sides, with responsible leaders able to bind their constituents to their decisions, conjoined with automatic scales, or arbitration or conciliation in case of a deadlock, there you have a healthy condition of bargaining, which increases the competitive power of the industry, which continually weaves more closely together the fortunes of Capital and Labour, and which enforces a constant progression in the standards of living and of productive power. But where, as in what we call "Sweated trades," you have no organisation at all on either side, no parity of bargaining between employers and employed, where the good employer is continually undercut by the bad, and the bad again by the worse; where the worker whose whole livelihood depends on the trade is undercut by the worker to whom it is only a second string; where the feebleness and ignorance of the workers and their isolation from each other render them an easy prey to the tyranny of bad masters, and middlemen one step above them upon the lowest rungs of the ladder, and themselves held in the grip of the same relentless forces—there you have a condition not of progress but of progressive degeneration. And just as in the former case the upward tendency will be constant if it is not interrupted by external power, so in the latter case the demoralisation will continue in a squalid welter for periods which are quite indefinite so far as our brief lives are concerned.

We have seen from the investigations of the last twenty years, when the phenomena of sweating have been under close and scientific review, that there is no power of self-cure within the area of the evil. We have seen that while the general advance in the standards of work and wages has on the whole been constant, these morbid and diseased patches, which we call the Sweated Trades, have not shared in that improvement, but have remained in a state of chronic depression and degeneration. The same shocking facts, in some cases the same pitiful witnesses, were brought before the Select Committee last year as before Lord Dunraven's Committee in 1888. Indeed I am advised that in some respects wages and conditions are worse than they were twenty years ago. Nor are these melancholy facts confined to any one country. Sweating is not a peculiarity of Great Britain. Practically the same trades experience the same evils in all other industrial countries. France, Germany, Austria, and America reproduce with great exactness under similar economic conditions the same social evils, and in those countries, as in ours, Sweated Industries—by which I mean trades where there is no organisation, where wages are exceptionally low, and conditions subversive of physical health and moral welfare—cast dark shadows in what is, upon the whole, the growing and broadening light of civilisation.

There is a clear reason for this, which is in itself at once a justification for the special treatment which we propose for these trades, and a means of marking them off more or less definitely from the ordinary trades. In the case of any great staple trade in this country, if the rate of wages became unnaturally low compared to other industries, and the workers could not raise it by any pressure on their part, the new generation at any rate would exercise a preference for better pay and more attractive forms of industry. The gradual correction of depressed conditions over large periods of time is thus possible. But in these sweated industries there is no new generation to come to the rescue. They are recruited from a class rather than from a section of the community. The widow, the women folk of the poorest type of labourer, the broken, the weak, the struggling, the diseased—those are the people who largely depend upon these trades, and they have not the same mobility of choice, exerted, tardily though it be, by a new generation, but which is undoubtedly operative upon the great staple trades of the country. That is an explanation which accounts for the same evils being reproduced under similar conditions in different countries, separated widely from one another and marked by great differences of general conditions.

I ask the House to regard these industries as sick and diseased industries. I ask Parliament to deal with them exactly in the same mood and temper as we should deal with sick people. It would be cruel to prescribe the same law for the sick as for the sound. It would be absurd to apply to the healthy the restrictions required for the sick. Further, these sweated trades are not inanimate abstractions. They are living, almost sentient, things. Let the House think of these sweated trades as patients in a hospital ward. Each case must be studied and treated entirely by itself. No general rule can be applied. There is no regulation dose which will cure them all. You cannot effect quicker cures by giving larger doses. Different medicines, different diets, different operations are required for each; and consideration, encouragement, nursing, personal effort are necessary for all. Great flexibility and variety of procedure, and a wide discretionary power, entrusted to earnest and competent people, must characterise any attempt to legislate on this subject.

The central principle of this Bill is the establishment of Trade Boards, which will be charged with the duty of fixing a minimum wage. I am very anxious to give these Trade Boards the utmost possible substance and recognition. They will be formed on the principle of equality of representation for employers and employed, with a skilled official chairman or nucleus. That is the principle I have adopted in the new Arbitration Court recently established. That is the principle which will govern the system of Labour Exchanges, shortly to be introduced, and other measures which may come to be associated with Labour Exchanges, and I think it is an excellent principle.

At the same time, do not let us suppose that these Trade Boards will, in the first instance, be very strong or representative bodies. They are to be formed in trades mainly worked by women, where no organisation has ever yet taken root, where there are as yet no means of finding and focusing an effective trade opinion. Where possible, they will be partly elective; in many cases they will, I expect, have to begin by being almost entirely nominated. In some cases it will be upon the official members alone that the main burden will fall. I could not ask the House to confer upon bodies of this nebulous character, not representative, not elective in any democratic sense, responsible not to constituents, nor to a public department, nor to Parliament itself in any way, the absolute and final power of enforcing by the whole apparatus of the law any decision, whether wise or foolish, upon wage questions to which they may come by the narrowest majority. The work which we entrust to them wholly and finally is sufficiently difficult and important. We direct them by this Bill to prescribe minimum rates of wages. They are to find the minimum rate. For that purpose they are as well qualified as any body that we could devise. In this sphere their jurisdiction will be complete. The Board of Trade will not retry the question of what is the right minimum rate. Another and quite different question will be decided by the Board of Trade. They will decide whether the minimum rate which has been prescribed by the Trade Board commands sufficient support in the trade to make its enforcement by inspection and prosecution likely to be effective.

That is the division between the responsibility which the Trade Boards will have and the responsibility which we shall reserve to ourselves. I shall be quite ready in Committee to express that intention, which is in the Bill, in a simpler and stronger manner, and to make the function of the Board of Trade a positive and not a negative one, so that when the Trade Board has fixed the minimum rate of wages it shall, after an interval of six months, acquire the force of law, and shall be enforced by compulsory powers, unless in the meanwhile the Board of Trade decides or rules otherwise. For my part, I gladly give an assurance that it is our intention to put the compulsory provisions of this Bill into full effect upon at least one of the trades in the schedule, at as early a date as possible, in order to bring about the fulfilment of a much-needed and long-overdue experiment.

Now I come to the probationary period, and I know that there are a great many who have stated that it is mere waste of time. I, on the contrary, have been led to the opinion that it is vital to any practical or effective policy against sweating. It is no use to attempt, in trades as complex and obscure as these with which we are dealing, to substitute outside authority for trade opinion. The only hope lies in the judicious combination of the two, each acting and reacting upon the other. A mere increase of the penal provisions and inspection would be a poor compensation for the active support of a powerful section within the trade itself. It is upon the probationary period that we rely to enable us to rally to the Trade Board and to its minimum wage the best employers in the trade. In most instances the best employers in the trade are already paying wages equal or superior to the probable minimum which the Trade Board will establish. The inquiries which I have set on foot in the various trades scheduled have brought to me most satisfactory assurances from nearly all the employers to whom my investigators have addressed themselves.

For the enforcement of this Act, and for the prevention of evasion and collusion, I rely upon the factory inspectors, who will report anything that has come to their notice on their rounds and who will make themselves a channel for complaints. I rely still more upon the special peripatetic inspectors and investigators who will be appointed under the Act by the Board of Trade, who will have to conduct prosecutions under the Act, and who will devote all their time to the purposes of the Act. These officers will incidentally clothe the Trade Boards with real authority, once the rate has been enforced, in that they will be responsible to the Trade Board, and not to some powerful Department of Government external to the Trade Board itself. I rely further upon the support of the members of the Trade Boards themselves, who will act as watch-dogs and propagandists. I rely upon the driving power of publicity and of public opinion. But most of all I put my faith in the practical effect of a powerful band of employers, perhaps a majority, who, whether from high motives or self-interest, or from a combination of the two—they are not necessarily incompatible ideas—will form a vigilant and instructed police, knowing every turn and twist of the trade, and who will labour constantly to protect themselves from being undercut by the illegal competition of unscrupulous rivals.

An investigator in the East End of London writes:

"The people who can check evasion are the large firms. Their travellers form a magnificent body of inspectors, who ought to see that the Act is enforced. The checking of evasion will have to be carried out, not so much by visiting workshops and home-workers as by hearing where cheap, low-class goods are coming into the market, and tracing the goods back to the contractors who made them."

There are solid reasons on which we on this side of the House who are Free Traders rely with confidence, when we associate ourselves with this class of legislation. First of all, we must not imagine that this is the only European country which has taken steps to deal with sweating. The first exhibition of sweated products was held in Berlin, and it was from that exhibition that the idea was obtained of holding that most valuable series of exhibitions throughout this country which created the driving power which renders this Bill possible. I am advised that German legislation on some of these questions has even anticipated us. In other countries legislation is pending on principles not dissimilar from those which we advocate. In Bavaria and Baden the latest reports are to the effect that the official Government Reports of Inquiries recommend almost the same and in some cases stronger provisions than those to which we now ask the assent of the House of Commons. This may be said in a different form of Austria. All this movement which is going on throughout Europe, and which is so pregnant with good, will be powerfully stimulated by our action in this country, and that stimulus will not only facilitate our work by removing the argument which causes hon. gentlemen opposite anxiety, but it will also, I think, redound to the credit of this country that it took a leading and prominent position in what is a noble and benignant work.

I was delighted to hear the Leader of the Opposition say, in a concise and cogent sentence, that he could easily conceive many sweated trades in which the wages of the workers could be substantially raised without any other change except a diminution of price. Sir, the wages of a sweated worker bear no accurate relation to the ultimate price. Sometimes they vary in the same places for the same work done at the same time. And sometimes the worst sweating forms a part of the production of articles of luxury sold at the very highest price. We believe further, however, that decent conditions make for industrial efficiency and increase rather than diminish competitive power. "General low wages," said Mill, "never caused any country to undersell its rivals; nor did general high wages ever hinder it." The employers who now pay the best wages in these sweated trades maintain themselves not only against the comparatively small element of foreign competition in these trades, but against what is a far more formidable competition for this purpose—the competition of those employers who habitually undercut them by the worst processes of sweating. I cannot believe that the process of raising the degenerate and parasitical portion of these trades up to the level of the most efficient branches of the trade, if it is conducted by those conversant with the conditions of the trade and interested in it, will necessarily result in an increase of the price of the ultimate product. It may, even as the right hon. gentleman has said, sensibly diminish it through better methods.

Sir, it is on these grounds, and within these limits, that I ask for a Second Reading for this Bill.

The principles and objects are scarcely disputed here. Let us go into Committee and set to work upon the details, actuated by a single-minded desire to produce a practical result. It is by the evidences of successful experiment that, more than any other way, we shall forward and extend the area of our operations; and in passing this Bill the House will not only deal manfully with a grave and piteous social evil, but it will also take another step along that path of social organisation into which we have boldly entered, and upon which the Parliaments of this generation, whatever their complexion, will have to march.

FOOTNOTES:

[14] Otherwise called "The Trade Boards Bill."



LABOUR EXCHANGES AND UNEMPLOYMENT INSURANCE

HOUSE OF COMMONS, May 19, 1909

The functions of Government in relation to industrial life may be divided into three categories—discipline, organisation, and relief. The control and regulation of industrial conditions by penal and disciplinary powers belong to the Home Office, the relieving and curative processes are entrusted to the Local Government Board, and the organisation of industry falls to the province of the Board of Trade. The proposals which I now submit to the House are concerned only with organisation; they can be judged only in relation to that section of the subject; they do not pretend to stretch beyond it, or to include other not less important aspects; and I ask that they shall not be impugned, because, in dealing with the evils which properly fall within that sphere, they do not extend to other evils that lie without it.

I ask permission to introduce a Bill for the establishment of a national system of Labour Exchanges. There is high authority for this proposal. The Majority and Minority representatives of the Poor Law Commission, differing in so much else, are agreed unanimously in its support. "In the forefront of our proposals," says the Majority Report, "we place Labour Exchanges." "This National Labour Exchange," says the Minority Report, "though in itself no adequate remedy, is the foundation of all our proposals. It is, in our view, an indispensable condition of any real reform." The National Conference of Trade Union Delegates, convened by the Parliamentary Committee of the Trade Union Congress, of March 19, 1909, resolved unanimously: "That this Conference of Trade Union delegates, representing 1,400,000 members, approves of the establishment of Labour Exchanges on a national basis, under the control of the Board of Trade, provided that the managing board contains at least an equal proportion of employers and representatives of Trade Unions." The Central Unemployed Body for London, by a Resolution in June 1908, declared in favour of a national system of Labour Exchanges. Economists as divergent in opinion as Professor Ashley, of Birmingham, and Professor Chapman, of Manchester, have all approved and urged the project publicly in the strongest terms. Several of the principal members of the late Government have, either in evidence before the Poor Law Commission or in public speeches, expressed themselves in favour of Labour Exchanges, and the Report of the delegates of the Labour Party to Germany strongly approves of the system which they found there, namely: "the co-ordination and systematic management of Public Labour Exchanges."

The British authorities which I have mentioned are reinforced by the example of many foreign countries; and as early as 1904 the Board of Trade, in its reports on agencies and methods of dealing with unemployed in foreign countries, drew attention to the very considerable extension of Labour Exchanges in the last three years in Germany, Austria, Switzerland, France, and Belgium. Since then Norway has been added to the list. Mr. W. Bliss, in the Bulletin of the Washington Bureau of Labour for May, 1908, in the course of a survey of the whole field of unemployment and of possible remedies, says, "The most important agencies for providing work for the unemployed who are employable, but have no prospect of returning to their former positions, are the public employment bureaux. These are largely developed in a number of European countries, and especially in Germany, where they have grown rapidly in the last twenty years, both in numbers and in efficiency." So that the House will see that we have behind us this afternoon not only a practical consensus of opinion among authorities at home in favour of the policy, but the spectacle of its successful practice on an extensive scale, and over a period of years, in the greatest industrial community of the Continent, and its extension in various degrees to many other countries.

I do not, therefore, propose to occupy the time of the House with any elaborate justification of the merits of the Bill. Those we may discuss at our leisure later. I confine myself only to a few general observations. Two main defects in modern industrial conditions which were emphasised by the Royal Commission were the lack of mobility of labour and lack of information. With both of these defects the National System of Labour Exchanges is calculated to deal. Modern industry has become national. Fresh means of transport knit the country into one, as it was never knit before. Labour alone in its search for markets has not profited; the antiquated, wasteful, and demoralising method of personal application—that is to say, the hawking of labour—persists. Labour Exchanges will give labour for the first time a modernised market. Labour Exchanges, in the second place, will increase and will organise the mobility of labour. But let me point out that to increase the mobility of labour is not necessarily to increase the movement of labour. Labour Exchanges will not increase the movement of labour; they will only render that movement, when it has become necessary, more easy, more smooth, more painless, and less wasteful.

Labour Exchanges do not pretend to any large extent to create new employment. Their main function will be to organise the existing employment, and by organising the existing employment to reduce the friction and wastage, resulting from changes in employment and the movement of workers, to a minimum. By so doing they will necessarily raise the general economic standard of our industrial life.

So far as the second defect, "lack of information," is concerned, a system of Labour Exchanges promises to be of the highest value. In proportion as they are used, they will give absolutely contemporary information upon the tendencies of the demand for labour, both in quality and in quantity, as between one trade and another, as between one season and another, as between one cycle and another, and as between one part of the country and another. They will tell the worker where to go for employment. They will tell him, what is scarcely less important, where it is useless to go in search of employment. Properly co-ordinated and connected with the employment bureaux of the various education authorities, which are now coming into existence in Scotland and in England, they will afford an increasing means of guiding the new generation into suitable, promising, and permanent employment, and will divert them from overstocked or declining industries. They will put an end to that portion of unemployment that is merely local or accidental in character. They are the only means of grappling with the evils of casual employment, with all its demoralising consequences. They are capable of aiding the process of dovetailing one seasonal trade into another. A system of Labour Exchanges, dispensing with the need for wandering in search of work, will make it possible, for the first time, to deal stringently with vagrancy. And, lastly, Labour Exchanges are indispensable to any system of Unemployment Insurance, as indeed to any other type of honourable assistance to the unemployed, since they alone can provide an adequate test of the desire for work and of the reality of unemployment. The authority of both Reports of the Poor Law Commission may be cited upon these points; and I shall present this Bill to the House as an important piece of social and industrial machinery, the need for which has long been apparent, and the want of which has been widely and painfully felt.

I said that in the creation of such a system we may profit by the example of Germany; we may do more, we may improve upon the example of Germany. The German Exchanges, though co-ordinated and encouraged to some extent by State and Imperial Governments, are mainly municipal in their scope. Starting here with practically a clear field and with the advantage of the experiment and the experience of other lands to guide us, we may begin upon a higher level and upon a larger scale. There is reason to believe that the utility of a system like Labour Exchanges, like utility of any other market, increases in proportion to its range and scope. We therefore propose, as a first principle, that our system shall be uniform and national in its character; and here, again, we are supported both by the Minority and by the Majority Reports of the Royal Commission.

A Departmental Committee at the Board of Trade has, during the last six months, been working out the scheme in close detail. The whole country will be divided into ten or twelve principal divisions, each with a Divisional Clearing House, and each under a Divisional Chief, all co-ordinated with the National Clearing House in London. Distributed among these 10 Divisions in towns of, let us say, 100,000 or upwards will be between 30 and 40 First-class Labour Exchanges; in towns of 50,000 to 100,000 between 40 and 50 Second-class Exchanges; and about 150 minor offices, consisting of Third-class Exchanges, Sub-Offices, and Waiting-rooms, which last will be specially used in connection with Dock decasualisation.

The control and direction of the whole system will be under the Board of Trade. But in order to secure absolute impartiality as between the interests of capital and labour, Joint Advisory Committees, to contain in equal numbers representatives of employers and work-people, will be established in the principal centres. Thus we shall apply to the local management of Labour Exchanges the same principle of parity of representation between workmen and employers under impartial guidance and chairmanship, that we have adopted in the administration of the Trade Boards Bill, and that, mutatis mutandis, is the governing feature of the Courts of Arbitration which have recently been set up. If this Bill should obtain the assent of Parliament without undue delay, I should hope to bring the system into simultaneous operation over the whole country, so far as practicable, in the early months of next year. Temporary premises will be procured in all cases in the first instance; but a programme of building has been prepared, which in ten years will by a gradual process enable in all the principal centres these temporary premises to be replaced by permanent buildings.

The expense of this system will no doubt be considerable. Its ordinary working will not need a sum less than about L170,000 per year, and during the period when the building is going on the expenditure will rise to about L200,000 per year.

We hope that the Labour Exchanges will become industrial centres in each town. We hope they will become the labour market. They may, where necessary, provide an office where the Trade Board, if there is one, will hold its meetings. We desire to co-operate with trade unions on cordial terms, while preserving strict impartiality between capital and labour in disputed matters. It may, for instance, be possible for trade unions to keep their vacant-book in some cases at the exchanges. The structure of those Exchanges may in some cases be such as to enable us to have rooms which can be let to trade unions at a rent, for benefit and other meetings, so as to avoid the necessity under which all but the strongest unions lie at the present time of conducting their meetings in licensed premises. The Exchanges may, as they develop, afford facilities for washing, clothes-mending, and for non-alcoholic refreshments to persons who are attending them. Separate provision will be made for men and for women, and for skilled and for unskilled labour. Boy labour will be dealt with in conjunction with the local Education Authorities; and travelling expenses may be advanced on loan, if the management of the Exchange think fit, to persons for whom situations have been found.

So much for the policy of Labour Exchanges. That is a policy complete in itself. It would be considerable if it stood alone; but it does not stand alone. As my right hon. friend the Chancellor of the Exchequer has announced in his Budget speech, the Government propose to associate with the policy of Labour Exchanges a system of Unemployment Insurance.

The House knows that the Minority Report advocates a system of compulsory labour exchanges, that no person shall engage any man for less than a month except through a Labour Exchange. That is not the proposal we are making. We are making a proposal of voluntary Labour Exchanges. I am quite ready to admit that no system of voluntary Labour Exchanges can deal adequately with the evils and difficulties of casual labour; but there is one conclusive reason against compulsory Labour Exchanges at the present time. To establish a system of compulsory Labour Exchanges in order to eliminate casual labour, and so to divide among a certain proportion of workers all available employment, would be absolutely and totally to cast out at the other end a surplus of unemployed: and to do this before preparations have been made for dealing with that surplus, would be to court an administrative breakdown which could not fail to be attended with the gravest possible disaster. Until poor law reform has made further progress, to establish a compulsory system of Labour Exchanges would only increase and not diminish the miseries with which we are seeking to cope.

We have, therefore, decided that our system of labour exchanges shall be voluntary in its character. For that very reason there is a great danger, to which I have never shut my eyes, that the highest ranks of labour, skilled workers, members of strong trade unions, would not think it necessary to use the Exchanges, but would use the very excellent apparatus which they have established themselves; that therefore this expensive system of Exchanges which we are calling into being would come to be used only by the poorest of the workers in the labour market, and, consequently, would gradually relapse and fall back into the purely distress machinery and non-economic machinery from which we are labouring to extricate and separate it. It is for that reason, quite apart from the merits of the scheme of unemployment insurance, that the Government are very anxious to associate with their system of Labour Exchanges a system of unemployed insurance. If Labour Exchanges depend for their effective initiation and establishment upon unemployment insurance being associated with them, it is equally true to say that no scheme of unemployment insurance can be worked except in conjunction with some apparatus for finding work and testing willingness to work, like Labour Exchanges. The two systems are complementary; they are man and wife; they mutually support and sustain each other.

So I come to Unemployment Insurance. It is not practicable at the present time to establish a universal system of unemployment insurance. We, therefore, have to choose at the very outset of this subject between insuring some workmen in all trades or all workmen in some. In the first case we should have a voluntary, and in the second a compulsory system. The risk of unemployment varies so much between one man and another owing to relative skill, character, demeanour, and other qualities, that any system of State-aided voluntary insurance is utilised mainly by those most liable to be unemployed, and, consequently, a preponderance of bad risks is established against the Insurance Office fatal to its financial stability. On the other hand, a compulsory system of insurance, which did not add to the contribution of the worker a substantial contribution from outside, would almost certainly break down, because of the refusal of the higher class of worker to assume, unsupported, a share of the burden of the weaker members of the community.

We have decided to adopt the second alternative, and our insurance system will, in consequence, be based upon four main principles. It will involve contributions from workmen and employers; it will receive a substantial subvention from the State; it will be organised by trades; it will be compulsory upon all—employers and employed, skilled and unskilled, unionists and non-unionists alike—within those trades. The hon. Member for Leicester[15] with great force showed that to confine a scheme of unemployment insurance merely to trade unionists would be trifling with the subject. It would only be aiding those who have, thank God, been most able to aid themselves, without at the same time assisting those who hitherto, under existing conditions, have not been able to make any effective provision.

To what trades ought we, as a beginning, to apply this system of compulsory contributory unemployment insurance? There is a group of trades specially marked out for the operation of such a policy. They are trades in which unemployment is not only high, but chronic, for even in the best of times it persists; in which it is not only high and chronic, but marked by seasonal and cyclical fluctuations, and in which, wherever and howsoever it occurs, it takes the form not of short time or of any of those devices for spreading wages and equalising or averaging risks, but of a total, absolute, periodical discharge of a certain proportion of the workers. The group of trades which we contemplate to be the subject of our scheme are these: house-building, and works of construction, engineering, machine-and tool-making, ship-building and boat-building, making of vehicles, and mill-sawing.

That is a very considerable group of industries. They comprise, probably at the present time, 21/4 millions of adult males. Two and a quarter millions of adult males are, roughly speaking, one-third of the population of these three kingdoms engaged in purely industrial work; that is to say, excluding commercial, professional, agricultural, and domestic occupations. Of the remaining two-thirds of the industrial population, nearly one-half are employed in the textile trades, in mining, on the railways, in the merchant marine, and in other trades, which either do not present the same features of unemployment which we see in these precarious trades, or which, by the adoption of short time or other arrangements, avoid the total discharge of a proportion of workmen from time to time. So that this group of trades to which we propose to apply the system of unemployment insurance, roughly speaking, covers very nearly half of the whole field of unemployment; and that half is, on the whole, perhaps the worse half.

The financial and actuarial basis of the scheme has been very carefully studied by the light of all available information. The report of the actuarial authorities whom I have consulted leaves me in no doubt that, even after all allowance has been made for the fact that unemployment may be more rife in the less organised and less highly skilled trades than in the trade unions who pay unemployment benefits—which is by no means certain—there is no doubt whatever that a financially sound scheme can be evolved which, in return for moderate contributions, will yield adequate benefits. I do not at this stage propose to offer any figures of contributions or benefits to the House. I confine myself to stating that we propose to aim at a scale of benefits which would be somewhat lower both in amount and in duration of payments, than that which the best-organised trade unions provide for their own members, but which, at the same time, should afford a substantial weekly payment extending over by far the greater part of the average period of unemployment of all unemployed persons in these trades.

In order to enable such a scale of benefits to be paid, we should have to raise a total sum of something between 5d. and 6d. per week per head, and this sum will be met by contributions, not necessarily equal, from the State, the workman, and the employer. For such sacrifices, which are certainly not extortionate, and which, fairly adjusted, will not hamper industry nor burden labour, nor cause an undue strain on public finance, we believe it possible to relieve a vast portion of our industrial population from a haunting and constant peril which gnaws the very heart of their prosperity and contentment.

The House will see the connection of this to the Labour Exchanges. The machinery of the insurance scheme has been closely studied, and, as at present advised, we should propose to follow the example of Germany in respect of Insurance Cards or Books, to which stamps will be affixed week by week. When a worker in an insured trade loses his employment, all he will have to do is to take his card to the Labour Exchange, which, working in conjunction with the Insurance Office, will find him a job or pay him his benefit.

The relation of the whole scheme of insurance to the present voluntary efforts of trade unions requires, and will receive, the most anxious consideration, and I am in hopes that we shall be able to make proposals which would absolutely safeguard trade unions from the unfair competition of a national insurance fund, and will indeed act as a powerful encouragement to voluntary organisations which are providing unemployed benefit.

I have thought it right to submit these not inconsiderable proposals in general outline to the House of Commons at this early stage, in order that the proposals for Labour Exchanges which we are now putting forward may be properly understood, and may not be underrated or misjudged. We cannot bring the system of unemployment insurance before Parliament in a legislative form this year for five reasons: We have not now got the time; we have not yet got the money; the finance of such a system has to be adjusted and co-ordinated with the finance of the other insurance schemes upon which the Chancellor of the Exchequer is engaged; the establishment of a system of Labour Exchanges is the necessary forerunner and foundation of a system of insurance; and, lastly, no such novel departure as unemployment insurance could possibly be taken without much further consultation and negotiation with the trade unions and employers specially concerned than the conditions of secrecy under which we have been working have yet allowed. This business of conference and consultation of the fullest character will occupy the winter, when the Board of Trade will confer with all parties affected, so that the greatest measure of agreement may be secured for our proposals when they are next year presented in their final form.

It is only necessary for me to add that the pressure and prospect of these heavy duties have required me to make a re-arrangement of the Labour Department of the Board of Trade. I propose to divide it into three sections. The first will be concerned with Wages questions and Trade disputes, with Arbitration, Conciliation, and with the working of the Trade Boards Bill, should it become law; the second, with Statistics, the Census of Production, Special Inquiries, and The Labour Gazette; and the third, with Labour Exchanges and Unemployment Insurance.

One of the functions of the last section will be to act as a kind of intelligence bureau, watching the continual changes of the labour market here and abroad, and suggesting any measure which may be practicable, such as co-ordination and distribution of Government contracts and municipal work, so as to act as a counterpoise to the movement of the ordinary labour market, and it will also, we trust, be able to conduct examinations of schemes of public utility, so that such schemes can, if decided upon by the Government and the Treasury, be set on foot at any time with knowledge and forethought, instead of the haphazard, hand-to-mouth manner with which we try to deal with these emergencies at the present time.

Such are the proposals which we submit in regard to the organisation section of this problem. I have carefully confined myself to that section. I have not trespassed at all upon the other no less important or scarcely less important branches, and I am quite certain this Parliament will gladly devote whatever strength it possesses to attempting to grapple with these hideous problems of social chaos, which are marring the contentment and honour of our country, and which, neglected, may fatally affect its life and its strength.

FOOTNOTES:

[15] Mr. Ramsay MacDonald.



III

THE BUDGET

THE BUDGET RESOLUTIONS (May 4, 1909) 277

THE BUDGET AND NATIONAL INSURANCE (May 23, 1909) 297

THE LAND AND INCOME TAXES (July 17, 1909) 318

THE BUDGET AND THE LORDS (July 26, 1909) 344

THE SPIRIT OF THE BUDGET (Sept. 5, 1909) 357

THE BUDGET AND PROPERTY (Oct. 7, 1909) 384

THE CONSTITUTIONAL MENACE (Oct. 9, 1909) 405



THE BUDGET RESOLUTIONS

HOUSE OF COMMONS, May 4, 1903

The Leader of the Opposition this afternoon told us that we were at the beginning of what would be a very complex and a very protracted discussion. If that discussion continues as it has begun, the Government will have no reason to complain of it. We have made extensive and even daring proposals. Those proposals have been accepted and, on the whole, even acclaimed by the public at large, and they have not been substantially challenged in this House. The Leader of the Opposition, it is true, devoted his reasoned and temperate speech to making a careful inquiry into the foundations and the character of certain of the taxes by which my right hon. friend proposes to raise the revenue for the year; and I gathered he accepted, with such reservations as are proper to all engaged in a large discussion, and as are particularly appropriate to a Party leader, the general principle of differentiation of taxation in regard to the amount of property, but that he demurred to and condemned differentiation in regard to the character of property. The right hon. gentleman singled out for special censure and animadversion the two sets of taxes in relation to land and to the licensed trade. He used an expression about some of the forms of taxation proposed by the Chancellor of the Exchequer which was a striking one. He said that they diverged from the principles which have hitherto dominated civilised society.

Even at the risk of that accusation we on this side of the House have always taken and will always assert an entirely different position in regard to the taxation of land and of liquor licences from that of the taxation of other classes of property. The immemorial custom of nearly every modern State, the mature conclusions of many of the greatest thinkers, have placed the tenure, transfer, and obligations of land in a wholly different category from other classes of property. The mere obvious physical distinction between land, which is a vital necessity of every human being and which at the same time is strictly limited in extent, and other property is in itself sufficient to justify a clear differentiation in its treatment, and in the view taken by the State of the conditions which should govern the tenure of land from that which should regulate traffic in other forms of property. When the right hon. gentleman seeks by comparisons to show that the same reasoning which has been applied to land ought also in logic and by every argument of symmetry to be applied to the unearned increment derived from other processes which are at work in our modern civilisation, he only shows by each example he takes how different are the conditions which attach to the possession of land and speculation in the value of land from those which attach to other forms of business speculation.

"If," he inquires, "you tax the unearned increment on land, why don't you tax the unearned increment from a large block of stocks? I buy a piece of land; the value rises; I buy stocks; their value rises." But the operations are entirely dissimilar. In the first speculation the unearned increment derived from land arises from a wholly sterile process, from the mere withholding of a commodity which is needed by the community. In the second case, the investor in a block of shares does not withhold from the community what the community needs. The one operation is in restraint of trade and in conflict with the general interest, and the other is part of a natural and healthy process, by which the economic plant of the world is nourished and from year to year successfully and notably increased.

Then the right hon. gentleman instanced the case of a new railway and a country district enriched by that railway. The railway, he explained, is built to open up a new district; and the farmers and landowners in that district are endowed with unearned increment in consequence of the building of the railway. But if after a while their business aptitude and industry creates a large carrying trade, then the railway, he contends, gets its unearned increment in its turn. But the right hon. gentleman cannot call the increment unearned which the railway acquires through the regular service of carrying goods, rendering a service on each occasion in proportion to the tonnage of goods it carries, making a profit by an active extension of the scale of its useful business—he cannot surely compare that process with the process of getting rich merely by sitting still. It is clear that the analogy is not true.

We are further told that the Budget proposals proceed on the assumption that there is a corner in land, and that communities are denied the opportunity of getting the land required, whereas, it is asserted, there is in fact nothing approaching a corner in land. I do not think the Leader of the Opposition could have chosen a more unfortunate example than Glasgow. He said that the demand of that great community for land was for not more than forty acres a year. Is that the only demand of the people of Glasgow for land? Does that really represent the complete economic and natural demand for the amount of land a population of that size requires to live on? I will admit that at present prices it may be all that they can afford to purchase in the course of a year. But there are one hundred and twenty thousand persons in Glasgow who are living in one-room tenements; and we are told that the utmost land those people can absorb economically and naturally is forty acres a year. What is the explanation? Because the population is congested in the city the price of land is high upon the suburbs, and because the price of land is high upon the suburbs the population must remain congested within the city. That is the position which we are complacently assured is in accordance with the principles which have hitherto dominated civilised society.

But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement. Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener—the market-gardener liable to be disturbed on the outskirts of great cities, if the population of those cities expands, if the area which they require for their health and daily life should become larger than it is at present.

I should like to point out to the Committee that the right hon. gentleman, in using this argument about the market-gardener, recognises very clearly—and I think beyond the possibility of a withdrawal—the possibility of these cities expanding and taking up a larger area of ground in consequence of the kind of taxation which my right hon. friend in his land taxes seeks to impose. But let that pass. What is the position disclosed by the argument? On the one hand we have one hundred and twenty thousand persons in Glasgow occupying one-room tenements; on the other, the land of Scotland. Between the two stands the market-gardener, and we are solemnly invited, for the sake of the market-gardener, to keep that great population congested within limits that are unnatural and restricted to an annual supply of land which can bear no relation whatever to their physical, social, and economic needs—and all for the sake of the market-gardener, who can perfectly well move farther out as the city spreads, and who would not really be in the least injured.

We take the view that land cannot be regarded as an ordinary commodity, nor are we prepared to place publicans' licences in the same position as ordinary property. A licence is a gift from the State, and the licensed trade is subject to special restrictions and special taxation; this has been recognised by all parties and by all Governments. The position in regard to licences, as we know perfectly well, has been sensibly and, indeed, entirely altered in the course of the last few years. We have seen the assertion on the part of the licensed trade of their right to convert their annual tenancy of a licence from what it has been understood to be, to a freehold, and in that position they must face the logical consequences of the arguments they have used and of their action. If there are any hardships to them in the taxation proposed, let the hardships be exposed to Parliament and they will be considered in no spirit of prejudice or malice. Do not, however, let us have attempts to represent that the tax which involves an increase in the cost of production extinguishes the profits of the industry. It does not necessarily affect the profits of the industry; it is not a deduction from resultant profits; it is an incident in the turnover. If there are hard cases and special instances, we are prepared to meet them with the closest attention and with a desire to avoid severity or anything like the appearance of harsh treatment of individuals. But we decline to regard licences or land on the same footing as ordinary property. Licences are not to be regarded as ordinary private property, but as public property which ought never to have been alienated from the State.

No one will deny that we are making very considerable proposals to Parliament for the finance of the year; but the Conservative Party have gravely compromised their power of resistance. Those who desire to see armaments restricted to the minimum consistent with national security, those who labour to combat the scares of war, and to show how many alarms have no foundation,—those are not ill-situated, if they choose to make criticisms on the scale and scope of the finance required for the year's expenditure. But an Opposition that day after day exposes the First Lord of the Admiralty and the Prime Minister to a rain of questions and cross-questions, the only object of which, or an important object of which, is to promote a feeling of insecurity, involving demands for new expenditure of an almost indefinite character, those who, like the right hon. Member for Dover,[16] hurry to and fro in the land saying—or was it singing?—"We want eight, and we won't wait"—they, at least, are not in the best position to tell the taxpayer to call on some one else. Surely a reputation for patriotism would be cheaply gained by clamouring for ships that are not needed, to be paid for with money that is to come from other people.

There is another set of arguments to which I should like to refer. We have been long told that this Budget would reveal the bankruptcy of free-trade finance, and the Leader of the Opposition, seeking from time to time for a sound economic foothold in the fiscal quicksands in which he is being engulfed, has endeavoured to rest the sole of his foot on tariff for revenue. The adoption of a policy of tariff reform, we have been told, had become absolutely necessary if the revenue of the country was to be obtained and if a natural expansion were to be imparted to it. But now, if we may judge from the newspapers, one of the complaints made against the free-trade system and the free-trade Budget of my right hon. friend is not that the revenue will expand too little, but that there is the possibility that it will expand too much. It is not that we have reached the limits of practicable free-trade taxation, but that the taxation we now ask Parliament to assent to, will yield in the second year a much more abundant return than in the first year, and that in subsequent years the yield will increase still further. In the words of The Times newspaper: "The Chancellor of the Exchequer has laid broad and deep the basis of further revenue for future years."

Those who lately taunted us with being arrested by a dead wall of Cobdenite principles are now bewailing that we have opened up broad avenues of financial advance. They came to bewail the deficit of this year: they remained to censure the surplus of next. We may, no doubt, in the future hear arguments of how protection will revive industry and increase employment, as we have heard them in the past; but there is one argument which I should think it unlikely would be effectively used against us in the future, and that is that a free-trade system cannot produce revenue, because one of the criticisms which is emphatically directed against this Budget is on account of that very expansiveness of revenue which it was lately declared a free-trade system never could produce.

But that is not the only vindication of free-trade finance which is at hand. How have foreign countries stood the late depression in trade? The shortfall of the revenue from the estimates in this country was last year less than two millions, in Germany it was eight millions, and in the United States over nineteen millions. Let the House see what fair-weather friends these protectionist duties are. In times of depression they shrink. In times of war they may fail utterly. When they are wanted, they dwindle, when they are wanted most urgently, they fade and die away altogether.

And what is true of the taxation of manufactured articles as a foundation for any fiscal policy is true still more of the taxation of food, and of no country is it so true as of this island. For if you were ever engaged in a war which rendered the highways of the ocean insecure the rise in prices would be such that all food taxes would have to be swept away at once by any Government which desired to use the whole vigour of its people in prosecuting the war. This year, with its trade depression and its excellent maintenance of the revenue, has seen the vindication of free trade as a revenue-producing instrument; next year will see its triumph.

I have no apprehensions about the Budget which is now before the Committee. As Mr. Gladstone said, in introducing the Reform Bill of 1884, what is wanted to carry this measure is concentration and concentration only, and what will lose this measure is division and division only. And I venture to think that it will not only be a demonstration of the soundness of the economic fiscal policy we have long followed, but it will also be a demonstration of the fiscal and financial strength of Great Britain which will not be without its use and value upon the diplomatic and perhaps even upon the naval situation in Europe.

The right honourable Member for East Worcestershire[17] said this Budget was the work of several sessions, if not indeed of several Parliaments. The statement is exaggerated. The proposals outlined do not in any degree transcend the limits of the practical. A social policy may be very large, but at the same time it may be very simple. All these projects of economic development, of labour exchanges, of insurance for invalidity, and unemployment, which depend on money grants, may require very careful and elaborate administrative adjustment; but so far as Parliament is concerned they do not impose difficulties or make demands upon the time of the House in any way comparable to those which are excited by the passage of an Education or a Licensing Bill, and I see no reason whatever why we should not anticipate that in the course of this session and next session we should be able to establish a wide and general system of national insurance, which, more than any other device within the reach of this generation of the workers of our country, will help to hold off from them some of the most fatal and most cruel perils which smash their households and ruin the lives of families and of workmen.

On many grounds we may commend this Budget to the House. It makes provision for the present. It makes greater provision for the future. Indirect taxation reaches the minimum. Food taxation reaches the minimum since the South African war. Certainly the working classes have no reason to complain. Nothing in the Budget touches the physical efficiency and energy of labour. Nothing in it touches the economy of the cottage home. Middle-class people with between L300 and L2,000 a year are not affected in any considerable degree, except by the estate duties, and in that not to a large extent, while in some cases they are distinctly benefited in the general way of taxation. The very rich are not singled out for peculiar, special, or invidious forms of imposition.

The chief burden of the increase of taxation is placed upon the main body of the wealthy classes in this country, a class which in number and in wealth is much greater than in any other equal community, if not, indeed, in any other modern State in the whole world; and that is a class which, in opportunities of pleasure, in all the amenities of life, and in freedom from penalties, obligations, and dangers, is more fortunate than any other equally numerous class of citizens in any age or in any country. That class has more to gain than any other class of his Majesty's subjects from dwelling amid a healthy and contented people, and in a safely guarded land.

I do not agree with the Leader of the Opposition, that they will meet the charges which are placed upon them for the needs of this year by evasion and fraud, and by cutting down the charities which their good feelings have prompted them to dispense. The man who proposes to meet taxation by cutting down his charities, is not the sort of man who is likely to find any very extensive source of economy in the charities which he has hitherto given. As for evasion, I hope the right hon. gentleman and his supporters underrate the public spirit which animates a proportion at any rate of the class which would be most notably affected by the present taxation. And there is for their consolation one great assurance which is worth much more to them than a few millions, more or less, of taxation. It is this—that we are this year taking all that we are likely to need for the policy which is now placed before the country, and which will absorb the energies of this Parliament. And, so far as this Parliament is concerned, it is extremely unlikely, in the absence of a national calamity, that any further demand will be made upon them, or that the shifting and vague shadows of another impending Budget will darken the prospects of improving trade.

When all that may be said on these grounds has been said, we do not attempt to deny that the Budget raises some of the fundamental issues which divide the historic Parties in British politics. We do not want to embitter those issues, but neither do we wish to conceal them. We know that hon. gentlemen opposite believe that the revenue of the country could be better raised by a protective tariff. We are confident that a free-trade system alone would stand the strain of modern needs and yield the expansive power which is necessary at the present time in the revenue. And our proof shall be the swift accomplishment of the fact. The right hon. gentleman opposite and his friends seek to arrest the tendency to decrease the proportion of indirect to direct taxation which has marked, in unbroken continuity, the course of the last sixty years. We, on the other hand, regard that tendency as of deep-seated social significance, and we are resolved that it shall not be arrested. So far as we are concerned, we are resolved that it shall continue until in the end the entire charge shall be defrayed from the profits of accumulated wealth and by the taxation of those popular indulgences which cannot be said in any way to affect the physical efficiency of labour. The policy of the Conservative Party is to multiply and extend the volume and variety of taxes upon food and necessaries. They will repose themselves, not only, as we are still forced to do, on tea and sugar, but upon bread and meat—not merely upon luxuries and comforts, but also on articles of prime necessity. Our policy is not to increase, but whenever possible to decrease, and ultimately to abolish altogether, taxes on articles of food and the necessaries of life.

If there is divergence between us in regard to the methods by which we are to raise our revenue, there is also divergence in regard to the objects on which we are to spend them. We are, on both sides, inclined to agree that we are approaching, if we have not actually entered on, one of the climacterics of our national life. We see new forces at work in the world, and they are not all friendly forces. We see new conditions abroad and around us, and they are not all favourable conditions; and I think there is a great deal to be said for those who on both sides of politics are urging that we should strive for a more earnest, more strenuous, more consciously national life. But there we part, because the Conservative Party are inclined too much to repose their faith for the future security and pre-eminence of this country upon naval and military preparations, and would sometimes have us believe that you can make this country secure and respected by the mere multiplication of ironclad ships. We shall not exclude that provision, and now indeed ask the Committee to enable us to take the steps to secure us that expansion of revenue which will place our financial resources beyond the capacity of any Power that we need to take into consideration. But we take a broader view. We are not going to measure the strength of great countries only by their material resources. We think that the supremacy and predominance of our country depend upon the maintenance of the vigour and health of its population, just as its true glory must always be found in the happiness of its cottage homes. We believe that if Great Britain is to remain great and famous in the world, we cannot allow the present social and industrial disorders, with their profound physical and moral reactions, to continue unchecked. We propose to you a financial scheme, but we also advance a policy of social organisation. It will demand sacrifices from all classes; it will give security to all classes. By its means we shall be able definitely to control some of the most wasteful processes in our social life, and without it our country will remain exposed to vital dangers, against which fleets and armies are of no avail.

FOOTNOTES:

[16] Mr. Wyndham.

[17] Mr. Austen Chamberlain.



THE BUDGET AND NATIONAL INSURANCE

THE FREE TRADE HALL, MANCHESTER, May 23, 1909

(From The Manchester Guardian, by permission.)

Considering that you have all been ruined by the Budget, I think it very kind of you to receive me so well. When I remember all the injuries you have suffered—how South Africa has been lost; how the gold mines have been thrown away; how all the splendid army which Mr. Brodrick got together has been reduced to a sham; and how, of course, we have got no navy of any kind whatever, not even a fishing smack, for the thirty-five millions a year we give the Admiralty; and when I remember that in spite of all these evils the taxes are so oppressive and so cruel that any self-respecting Conservative will tell you he cannot afford either to live or die, I think it remarkable that you should be willing to give me such a hearty welcome back to Manchester. Yes, sir, when I think of the colonies we have lost, of the Empire we have alienated, of the food we have left untaxed, and the foreigners we have left unmolested, and the ladies we have left outside, I confess I am astonished to find you so glad to see me here again.

It is commonly said that our people are becoming hysterical, and that Britain is losing her old deep-seated sagacity for judging men and events. That is not my view. I have been taught that the dock always grows near the nettle. I am inclined to think that in a free community every evil carries with it its own corrective, and so I believe that sensationalism of all kinds is playing itself out, and, overdoing, is itself undone. And the more our scaremongers cry havoc, and panic, and airships, and sea-serpents, and all the other things they see floating around, the greater is the composure and the greater is the contempt with which the mass of the nation receives these revelations, and the more ready they are to devote their mind to the large and serious problems of national and social organisation which press for solution and for action at the present time, and upon which his Majesty's Government have notable proposals to make.

I come to you this afternoon to speak about the political situation and the Budget, or rather I come to speak to you about the Budget, because the Budget is the political situation; and I ask you, as if it were at an election, whether you will support the policy of the Budget or not. Let us look into it.

What is the position in which we find ourselves? After reducing the taxes on coal, on tea, on sugar, and on the smaller class of incomes by nearly L7,000,000 a year, and after paying back L40,000,000 of debt in three years, we find that new circumstances and new needs make it necessary that we should obtain fresh revenue for the service of the State.

What are the reasons for this demand? There are three reasons—and only three. Old-age pensions, the navy, and the decrease in the revenue derived from alcoholic liquor. From those three causes we require sixteen millions more money this year than we did last year. Now who has a right—this is my first question—to reproach us for that? Certainly the Conservative Party have no right.

Take first the case of old-age pensions. I do not think their record is a very good one on that. They promised old-age pensions to win the general election of 1895. They were in power for ten years and they made no effort to redeem their pledge. Again, Mr. Chamberlain, in 1903, promised old-age pensions as a part of his Tariff Reform proposal, but the Conservative Party refused to agree to the inclusion of old-age pensions in that programme and forced that great man in the height of his power and his career to throw out old-age pensions from the Tariff Reform programme and to write a letter to the newspapers to say that he had done so.

We, the Liberal Party, did not promise old-age pensions at the election of 1906. The subject was scarcely mentioned by any of the candidates who are now your Members. Certainly it did not occupy at all a prominent position. We did not promise old-age pensions; we gave old-age pensions. When the Old-Age Pensions Bill was before the House of Commons, what was the attitude of the Conservative Party? Did they do anything to try to reduce or control the expenditure of that great departure? On the contrary. As my right honourable friend the Chancellor of the Exchequer has told the House of Commons, amendments to the Old-Age Pensions Bill were moved or received the official support of the Whips of the Conservative Party which would have raised the cost of that scheme to fourteen millions a year. And the Liberal Government, which was making this great effort, which was doing the work, which was keeping the Tory promise, was reproached and was derided for not accepting the proposals which these irresponsible philanthropists, these social reformers on the cheap, these limited-liability politicians, were so ready to move. And Lord Halsbury, the late Lord Chancellor, one of the leaders of the Conservative Party, a man with a powerful influence in their councils, said in a public speech that the old-age pensions as proposed by the Government were so paltry as to be almost a mockery.

I do not think any fair-minded or impartial man, or any average British jury, surveying the record of the Conservative Party upon old-age pensions, could come to any other conclusion than that they had used this question for popularity alone; that they never meant to give old-age pensions; that they only meant to get votes by promising to give them; that they would have stopped them being given if they could; that while the Bill was on its way they tried to embarrass the Government, and to push things to unpractical extremes; and now, even when the pensions have been given, they would not pay for them if they could help it. Let me say that I think the conclusion, which I believe any jury would come to, would perhaps be rather harsh upon the Conservative Party. I believe they meant better than their record; I am willing to admit that. But their record is before us, and it is a bad one, and upon the facts I have no hesitation in saying that it is not open to them to protest—they have not even an inch of foothold to protest—against any expenditure which we may now have to incur in order to defray the consequences of the policy of old-age pensions. So much for the first cause of the increased expenditure.

I pass to the navy. The Naval Estimates have risen by three millions this year. I regret it; but I am prepared to justify it. There will be a further increase next year. I regret it; but within proper limits necessary to secure national safety I shall be prepared to justify it; but I hope you will not expect me to advocate a braggart and sensational policy of expenditure upon armaments. I have always been against that, as my father was before me.

In my judgment, a Liberal is a man who ought to stand as a restraining force against an extravagant policy. He is a man who ought to keep cool in the presence of Jingo clamour. He is a man who believes that confidence between nations begets confidence, and that the spirit of peace and goodwill makes the safety it seeks. And, above all, I think a Liberal is a man who should keep a sour look for scaremongers of every kind and of every size, however distinguished, however ridiculous—and sometimes the most distinguished are the most ridiculous—a cold, chilling, sour look for all of them, whether their panic comes from the sea or from the air or from the earth or from the waters under the earth.

His Majesty's Government are resolved that the defensive measures of this country shall be prescribed by the policy of Ministers responsible to Parliament, and by the calculations, subject to that policy, of the experts on whom those Ministers rely, and not by the folly and the clamour of Party politicians or sensational journalists. In that determination we as a Government are united, and we shall remain united. Yet it is clear that the increase in the Naval Estimates of this year must be followed by another increase in those of next year. That is deplorable. It will impose upon our finances a strain which some other nations would not find it very easy to bear, but which, if the necessity be proved, this country will not be unwilling, and will certainly not be unable to support.

Well, but what have the Conservative Party got to say about it? Have they any right to complain of the taxes which are necessary for the maintenance of our naval power? Do we not see that they are ever exerting themselves to urge still greater expenditure upon the nation? He is a poor sort of fellow, a penny-plain-twopence-coloured kind of patriot who goes about shouting for ships, and then grudges the money necessary to build them. And when Mr. Balfour tells us that "gigantic sacrifices" are required, and that those gigantic sacrifices "must begin now," and then at the same time objects to the taxes by which the Government proposes to raise the money, he puts himself in a very queer position.

I have dealt with two of the causes which have led to our demand for further revenue—old-age pensions and the navy. Upon neither of them have the Conservative Party any ground for attacking us. What is the third? Ah, gentlemen, I agree that there is one cause of the prospective deficit for which we are budgeting for which the Conservative Party is in no way responsible. I mean the decline in the consumption of alcoholic liquors. Nothing that they have said and nothing that they have done has, in intention or in fact, contributed to the drying up of that source of revenue. On the contrary, by their legislation, by the views they have taken of the rights of the licensed trade, by their resistance to every measure of temperance reform, by their refusal even to discuss in the House of Lords the great Licensing Bill of last year, by their association with the brewers and with the liquor traffic generally, they have done all they could—I do them the justice to admit it—to maintain the Customs and Excise from alcoholic liquors at the highest level. If the habits of the people, under the influences of a wider culture, of variety, of comfort, of brighter lives, and of new conceptions, have steadily undergone a beneficent elevation and amelioration, it has been in spite of every obstacle that wealth and rank and vested interest could interpose.

The money has to be found. There is no Party in the State who can censure us because of that. Our proposals for enlarging the public revenue are just and fair to all classes. They will not, in spite of all these outcries you hear nowadays, sensibly alter the comfort or status, or even the elegance of any class in our great and varied community. No man, rich or poor, will eat a worse dinner for our taxes.

Of course, from a narrow, electioneering point of view, there are a great many people—I believe they are wrong—who think we should have done much better if we had put another penny on the income tax instead of increasing the tax upon tobacco. Well, I have come here this afternoon to tell you that we think it right that the working classes should be asked to pay a share towards the conduct of a democratic State. And we think that taxes on luxuries, however widely consumed, are a proper channel for such payment to be made. We believe that the working classes are able to pay by that channel, and we believe, further, that they are ready to pay. We do not think that in this old, wise country they would have respected any Government which at a time like this had feared to go to them for their share.

I have a good confidence that this Budget is going to go through. If there are hardships and anomalies in particular cases or particular quarters, we are ready to consider them. They will emerge in the discussions of the House of Commons, and we have every desire to consider them and to mitigate them. But we believe in the situation in which we find ourselves in this country, and in the general situation of the world at the present time—that the taxes on incomes over L3,000 a year, upon estates at death, on motor-cars before they cause death, upon tobacco, upon spirits, upon liquor licences, which really belong to the State, and ought never to have been filched away; and, above all, taxes upon the unearned increment in land are necessary, legitimate, and fair; and that without any evil consequences to the refinement or the richness of our national life, still less any injury to the sources of its economic productivity, they will yield revenue sufficient in this year and in the years to come to meet the growing needs of Imperial defence and of social reform.

This Budget will go through. It will vindicate the power of the House of Commons. It will show, what some people were inclined to forget, that in our Constitution a Government, supported by a House of Commons and the elected representatives of the people, has in fact a full control of national affairs, and has the means of giving effect to its intentions, to its policy, and to its pledges in every sphere of public affairs.

That is one thing which the passage of this Budget will show. Let not that be overlooked. But that is not the only thing; the Budget will do more than that. It will reveal the financial strength of Britain. At a time when every European country is borrowing merely for the needs of ordinary annual expenditure, when all these disturbing naval programmes, which are injuring the peace of the world and the security and progress of civilisation, are being supported by borrowed money; and when the credit of Germany has fallen below that of Italy, this country, which has necessarily to make the biggest expenditure for naval defence of any country, will be found, under a Free Trade system and by our proposals, able not only to pay its way, but to pay off the debts of the past—to pay off the debts of our predecessors—even in the worst of times at the rate of something like L7,000,000 a year.

I have spoken to you of the causes which in the past have led up to this Budget. I have spoken to you of its present justification. What of the future? If I had to sum up the immediate future of democratic politics in a single word I should say "Insurance." That is the future—Insurance against dangers from abroad. Insurance against dangers scarcely less grave and much more near and constant which threaten us here at home in our own island. I had the honour and opportunity a few days ago of explaining to the House of Commons our proposals for unemployment insurance. That is a considerable matter. It stands by itself. It is a much simpler question than invalidity insurance; but it is a great matter by itself. Indeed, I thought while I was explaining it to the House of Commons that I had not made such an important speech since I had the honour of explaining the details of the Transvaal Constitution.

Well, what is the proposal? The proposal is that you should make a beginning. We have stood still too long. We should begin forthwith, taking some of the greatest trades of the country in which unemployment is most serious, in which fluctuations are most severe, in which there are no short-time arrangements to mitigate the severity to the individual; and that a system of compulsory contributory insurance, with a large subvention from the State, should be introduced into those great industries.

But our proposals go farther than that. The State assistance to unemployment insurance will not be limited to those trades in which it is compulsory. Side by side with the compulsory system we shall offer facilities to voluntary insurance schemes in other trades, managed by trade unions or by societies or groups of workmen. Moreover, we contemplate that the State insurance office should undertake, if desired, the insurance against unemployment of any individual workman in any trade outside of those for which compulsory powers are required, and should afford to these individuals an equivalent support to that which is given in the trades which are subject to the compulsory system.

Of course you will understand that the terms, that can be offered under a voluntary or partial system, are not so good as those which can be obtained in the compulsory system of a great trade. Where all stand together, it is much better for each. But still it is certain that individuals who take advantage of the insurance policy which will be introduced, and I trust carried through Parliament next year, will be able to secure terms which will be much more favourable than any which are open to them by their unaided contributions at the present time, because their contributions will be reinforced by the contributions of the State. Further, if our beginning proves a success the attempt and the system will not stop there. It will be extended, and in proportion as experience and experiment justify its extension, in proportion as the people of this country desire its extension, it must eventually cover, in course of years, the whole of our great industrial community.

Well now, it is said that in adopting the policy of contributory insurance the Government have admitted that they were wrong in establishing old-age pensions upon the non-contributory basis. Now I do not think that is true. There is no inconsistency or contradiction between a non-contributory system of old-age pensions and a contributory system of insurance against unemployment, sickness, invalidity, and widowhood. The circumstances and conditions are entirely different. The prospect of attaining extreme old age, of living beyond threescore years and ten, which is the allotted span of human life, seems so doubtful and remote to the ordinary man, when in the full strength of manhood, that it has been found in practice almost impossible to secure from any very great number of people the regular sacrifices which are necessary to guard against old age.

But unemployment, accident, sickness, and the death of the bread-winner are catastrophes which may reach any household at any moment. Those vultures are always hovering around us, and I do not believe there is any sensible, honest man who would not wish to guard himself against them, if it were in his power to make the necessary contribution, and if he were sure—this is a very important point—that he would not by any accident or fraud or muddle be done out of the security he had paid for. And if we choose to adopt one system of State-aid for dealing with one class of need, and quite a different system for dealing with quite a different class of need, it does not lie with any one, least of all does it lie with those who have impartially neglected every problem and every solution, to reproach us with inconsistency.

But I go farther. The Old-Age Pensions Act, so far from being in conflict with a scheme of contributory insurance, is really its most helpful and potent ally. The fact that at seventy the State pension is assured to all those who need it, makes a tremendous difference to every form of insurance confined to the years before seventy, whether for old age or for invalidity. I asked an eminent actuary the other day to make me some calculations. They are rough, general calculations, and no doubt they might be more exact. But roughly, I believe it to be no exaggeration to say that the rates to cover a man till seventy are in many cases scarcely half what they would be, if they had to cover him till death. Do you see what that means? It is a prodigious fact. It is the sort of fact by the discovery of which people make gigantic fortunes; and I suggest to you that we should make this gigantic fortune for John Bull. It means that the whole field of insurance has become much more fruitful than it ever was before, that there is a new class of insurance business possible which never was possible before. It means that the whole field of insurance is far more open to the poorest class of people than it was before, and that with a proper system the benefits of the Old-Age Pensions Act would not be confined to the actual pensioners who are drawing their money, but would extend forwards in anticipation to all other classes and to all other people, and that so far as five shillings a week is concerned—that is not much unless you have not got it—the actuarial position of every man and woman in this country has been enormously improved by the Old-Age Pensions Act.

It is of that improvement that we mean to take advantage next year. Next year, when Free Trade will have yielded the necessary funds to the revenue, we mean to move forward into this great new field. But let me say one thing which is of the utmost importance. We must remember that the field of insurance is already largely covered by a great mass of benevolent and friendly societies, just as the field of unemployment insurance is already occupied to some extent by trade unions, and the Government would not approve of any development or extension of the policy of insurance which did not do full justice to existing institutions, or which did not safeguard those institutions, to whom we owe so inestimable and incommensurable a debt, or caused any sudden disturbance or any curtailment of their general methods of business. On the contrary, we believe that when our proposals are put in their full detail before the country, they will be found to benefit and encourage and not to injure those agencies which have so long been voluntarily and prosperously at work.

The decisive question is this—will the British working classes embrace the opportunities which will shortly be offered to them? They are a new departure; they involve an element of compulsion and of regulation which is unusual in our happy-go-lucky English life. The opportunity may never return. For my own part, I confess to you, my friends in Manchester, that I would work for such a policy and would try to carry it through even if it were a little unpopular at first, and would be willing to pay the forfeit of a period of exclusion from power, in order to have carried such a policy through; because I know that there is no other way within the reach of this generation of men and women by which the stream of preventable misery can be cut off.

If I had my way I would write the word "Insure" over the door of every cottage, and upon the blotting-book of every public man, because I am convinced that by sacrifices which are inconceivably small, which are all within the power of the very poorest man in regular work, families can be secured against catastrophes which otherwise would smash them up for ever. I think it is our duty to use the strength and the resources of the State to arrest the ghastly waste not merely of human happiness but of national health and strength which follows when a working man's home which has taken him years to get together is broken up and scattered through a long spell of unemployment, or when, through the death, the sickness, or the invalidity of the bread-winner, the frail boat in which the fortunes of the family are embarked founders, and the women and children are left to struggle helplessly on the dark waters of a friendless world. I believe it is well within our power now, before this Parliament is over, to establish vast and broad throughout the land a mighty system of national insurance which will nourish in its bosom all worthy existing agencies and will embrace in its scope all sorts and conditions of men.

I think it is not untrue to say that in these years we are passing through a decisive period in the history of our country. The wonderful century which followed the Battle of Waterloo and the downfall of the Napoleonic domination, which secured to this small island so long and so resplendent a reign, has come to an end. We have arrived at a new time. Let us realise it. And with that new time strange methods, huge forces, larger combinations—a Titanic world—have sprung up around us. The foundations of our power are changing. To stand still would be to fall; to fall would be to perish. We must go forward. We will go forward. We will go forward into a way of life more earnestly viewed, more scientifically organised, more consciously national than any we have known. Thus alone shall we be able to sustain and to renew through the generations which are to come, the fame and the power of the British race.



LAND AND INCOME TAXES IN THE BUDGET

EDINBURGH, July 17, 1909

(From The Times, by permission.)

We are often assured by sagacious persons that the civilisation of modern States is largely based upon respect for the rights of private property. If that be true, it is also true that such respect cannot be secured, and ought not, indeed, to be expected, unless property is associated in the minds of the great mass of the people with ideas of justice and of reason.

It is, therefore, of the first importance to the country—to any country—that there should be vigilant and persistent efforts to prevent abuses, to distribute the public burdens fairly among all classes, and to establish good laws governing the methods by which wealth may be acquired. The best way to make private property secure and respected is to bring the processes by which it is gained into harmony with the general interests of the public. When and where property is associated with the idea of reward for services rendered, with the idea of recompense for high gifts and special aptitudes displayed or for faithful labour done, then property will be honoured. When it is associated with processes which are beneficial, or which at the worst are not actually injurious to the commonwealth, then property will be unmolested; but when it is associated with ideas of wrong and of unfairness, with processes of restriction and monopoly, and other forms of injury to the community, then I think that you will find that property will be assailed and will be endangered.