Then it is said, "At any rate you cannot deny that the Budget is driving capital out of the country." I should like to point out to you that before the Budget was introduced, we were told that it was Free Trade that was driving capital out of the country. Let that pass. It is said we cannot deny that the Budget is driving capital out of the country. I deny it absolutely. To begin with, it is impossible to drive the greater part of our capital out of this country, for what is the capital of the country? The greatest part of that capital is the land, the state of cultivation which exists, the roads, the railways, the mines, the mills—this is the greatest part of the capital. The owners of that capital might conceivably, if they thought fit, depart from the country, but their possessions would remain behind.

I shall be asked, What about all this foreign investment that is going on? Is not British credit now being diverted abroad to foreign countries, to the detriment of our own country? Is not British capital fleeing from The Socialistic speeches of the Chancellor of the Exchequer, and the President of the Board of Trade, and taking refuge in Germany, where of course there are no Socialists, or in other countries, where there is never any disturbance, like France, or Spain, or Russia, or Turkey? Now let us look into that. There are only two ways in which capital can leave this country for foreign investments. It is no good sending bits of paper to the foreigner and expecting him to pay a dividend in return. There are only two ways—one is by exports made by British labour, and the other by bullion. Now, if the exports were to increase, surely that should be a cause of rejoicing, especially to our Tariff Reformers, who regard the increase in exports as the index of national prosperity. As for the second—the export of bullion—would you believe it, it is only a coincidence, but it is an amusing coincidence, there are actually six million pounds' worth more gold in the country now, than there were at the beginning of the year before the Budget was introduced. The active and profitable investment abroad which has marked the last two or three years, which is bound to swell the exports of the next few years, has not been attended by any starvation of home industry. On the contrary, the amount of money forthcoming for the development of new industries and now enterprises in this country during the last two or three years has compared very favourably with the years which immediately preceded them, when the Conservative Government was in power.

Property in Great Britain is secure. It would be a great mistake to suppose that that security depends upon the House of Lords. If the security of property in a powerful nation like our own were dependent upon the action or inaction of 500 or 600 persons, that security would long ago have been swept away. The security of property depends upon its wide diffusion among great numbers and all classes of the population, and it becomes more secure year by year because it is gradually being more widely distributed. The vital processes of civilisation require, and the combined interests of millions guarantee, the security of property. A society in which property was insecure would speedily degenerate into barbarism; a society in which property was absolutely secure, irrespective of all conceptions of justice in regard to the manner of its acquisition, would degenerate, not to barbarism, but death. No one claims that a Government should from time to time, according to its conceptions of justice, attempt fundamentally to recast the bases on which property is erected. The process must be a gradual one; must be a social and a moral process, working steadily in the mind and in the body of the community; but we contend, when new burdens have to be apportioned, when new revenues have to be procured, when the necessary upkeep of the State requires further taxes to be imposed—we contend that, in distributing the new burdens, a Government should have regard first of all to ability to pay and, secondly, that they should have regard to some extent, and so far as is practicable, to the means and the process by which different forms of wealth have been acquired; and that they should make a sensible difference between wealth which is the fruit of productive enterprise and industry or of individual skill, and wealth which represents the capture by individuals of socially created values. We say that ought to be taken into consideration. We are taking it into consideration now by the difference we have made in the income-tax between earned and unearned incomes, by the difference we make between the taxation which is imposed upon a fortune which a man makes himself and the fortune which he obtains from a relative or a stranger. We are taking it into consideration in our tax on mining royalties, in our licence duties and in our taxes on the unearned increment in land. The State, we contend, has a special claim upon the monopoly value of the liquor licence, which the State itself has created, and which the State itself maintains from year to year by its sole authority. If that claim has not previously been made good, that is only because the liquor interest have had the power, by using one branch of the Legislature, to keep the nation out of its rights. All the more reason to make our claim good now.

Again we say that the unearned increment in land is reaped in proportion to the disservice done to the community, is a mere toll levied upon the community, is an actual burden and imposition upon them, and an appropriation by an individual, under existing law, no doubt, of socially created wealth. For the principle of a special charge being levied on this class of wealth we can cite economic authority as high us Adam Smith, and political authority as respectable as Lord Rosebery; and for its application we need not merely cite authority, but we can point to the successful practice of great civilised neighbouring States.

Is it really the contention of the Conservative Party that the State is bound to view all processes of wealth-getting with an equal eye, provided they do not come under the criminal codes? Is that their contention? Are we really to be bound to impose the same burden upon the hardly won income of the professional man and the extraordinary profits of the land monopolist? Are we really to recognise the liquor licence which the State created, which the law says is for one year only—as if it were as much the brewers' or the publicans' property for ever as the coat on his back? No; it is absurd. Of the waste and sorrow and ruin which are caused by the liquor traffic, of the injury to national health and national wealth which follows from it, which attends its ill-omened footsteps, I say nothing more in my argument this afternoon. The State is entitled to reclaim its own, and they shall at least render unto Caesar the things which are Caesar's.

The money must be found, and we hold that Parliament, in imposing the inevitable taxes, is entitled not only to lay a heavier proportionate burden upon the rich than on the poor, but also to lay a special burden upon certain forms of wealth which are clearly social in their origin, and have not at any point been derived from a useful or productive process on the part of their possessors. But it may be said, "Your plans include other expenditure besides the Navy and Old-age Pensions. What about Insurance, Labour Exchanges, and economic development?" Those objects, at least, it may be urged are not inevitable or indispensable. It is quite true that the taxation which we seek to impose this year, and which is sufficient, and only sufficient for the needs of this year, will yield more abundant revenues in future years, and if at the same time a reduction in the expenditure on armaments becomes possible, we shall have substantial revenues at our disposal. That is perfectly true, but is that a reason for condemning the Budget? When we see on every hand great nations which cannot pay their way, which have to borrow merely to carry on from year to year, when we see how sterile and unproductive all the dodges and devices of their protective tariffs have become, when we remember how often we have ourselves been told that under Free Trade no more revenue could be got, is it not a welcome change for our country, and for our Free Trade policy, to find our opponents complaining of the expansive nature of a Free Trade revenue? I don't wonder that Tory Protectionists have passed a resolution at Birmingham declaring that the Budget will indefinitely postpone—that was the phrase—the scheme of Tariff Reform.

And upon what objects and policies do we propose to spend the extra revenue which this Budget will unquestionably yield in future years? People talk vaguely of the stability of society, of the strength of the Empire, of the permanence of a Christian civilisation. On what foundation do they seek to build? There is only one foundation—a healthy family life for all. If large classes of the population live under conditions which make it difficult if not impossible for them to keep a home together in decent comfort, if the children are habitually underfed, if the housewife is habitually over-strained, if the bread-winner is under-employed or under-paid, if all are unprotected and uninsured against the common hazards of modern industrial life, if sickness, accident, infirmity, or old age, or unchecked intemperance, or any other curse or affliction, break up the home, as they break up thousands of homes, and scatter the family, as they scatter thousands of families in our land, it is not merely the waste of earning-power or the dispersal of a few poor sticks of furniture, it is the stamina, the virtue, safety, and honour of the British race that are being squandered.

Now the object of every single constructive proposal to which the revenues raised by this Budget will be devoted, not less than the object of the distribution of the taxes which make up the Budget, is to buttress and fortify the homes of the people. That is our aim; to that task we have bent our backs; and in that labour we shall not be daunted by the machine-made abuse of partisans or by the nervous clamour of selfish riches. Whatever power may be given to us shall be used for this object. It is for you to say whether power will be given us to prevail.

But they say, "This uncertainty about the Budget is causing unemployment; you are aggravating the evils you seek to remedy." The Budget has not increased unemployment. Unemployment is severe in the country this year, but it is less severe this year than it was last, and it is less severe since the Budget was introduced than before it was introduced. The proportion of trade unionists reported to be unemployed in the Board of Trade returns at the end of September was 7.4 per cent., and that is lower than any month since May 1908, and it compares very favourably with September of last year, when the proportion was not 7.4, but 9.3 per cent.

I can well believe that the uncertainty as to whether the House of Lords will, in a desperate attempt to escape their fair share of public burdens, plunge the country into revolution and its finances into chaos—I can well believe that that uncertainty is bad for trade and employment, and is hampering the revival which is beginning all over the country. I do not doubt that all this talk of the rejection of the Budget is injurious to business, to credit, and to enterprise; but who is to blame for that? When did we ever hear of a Budget being rejected by the Lords before? When did we ever hear of a leader of the House of Lords proposing, like Lord Lansdowne, to decide whether he would tear up the British Constitution after consultation with the leaders of the drink trade? The uncertainty is not due to our action, but to their threats. Our action has been regular, constitutional, and necessary. Their threats are violent, unprecedented, and outrageous. Let them cease their threats. Let one of their leaders—let Mr. Balfour, for instance, say this year what he said last year, in the month of October, at Dumfries. Let him say, "It is the House of Commons and not the House of Lords which settles uncontrolled our financial system." Let him repeat these words, and all uncertainty about the Budget will be over.

I am amazed and I am amused when I read in the newspapers the silly and fantastic rumours which obtain credence, or at any rate currency, from day to day. One day we are told that it is the intention of the Government to seek a dissolution of Parliament before the Budget reaches the House of Lords—in other words, to kill the child to save its life. The next day we are told the Government have decided to have a referendum—that is to say, they will ask everybody in the country to send them a postcard to say whether they would like the Budget to become law or not. Another day we are told that the Government are contemplating a bargain with the House of Lords to alter the Budget to please them, or that we should make a bargain with them that if they pass the Budget we should seek a dissolution in January. Why should we make a bargain with the House of Lords? Every one of those rumours is more silly, more idiotic, than the other. I wish our Conservative friends would face the facts of the situation. "Things are what they are, and their consequences will be what they will be." The House of Lords has no scrap of right to interfere in finance. If they do, they violate the Constitution, they shatter the finances, and they create an administrative breakdown the outcome of which no man can foresee. If such a situation should occur a Liberal Government can look only to the people. We count on you, and we shall come to you. If you sustain us we shall take effectual steps to prevent such a deadlock ever occurring again. That is the whole policy of his Majesty's Government—blunt, sober, obvious, and unflinching.



THE CONSTITUTIONAL MENACE

NATIONAL LIBERAL CLUB, October 9, 1909

(From The Times, by permission.)

I have never been able to rank myself among those who believe that the Budget will be rejected by the House of Lords. It is not that I take an exaggerated view of the respect which that body would bear to the constitutional tradition upon which alone they depend. It is not that I underrate at all the feelings of personal resentment and of class-prejudice with which they regard, naturally, many of the provisions of the Budget. But I have a difficulty in believing that the responsible statesmen by whom they are led, and by whom we think they are controlled, would not hesitate as patriotic men before they plunged the finances of the country into what would be a largely irremediable confusion. And still more I find it difficult to believe that Party leaders, anxious no doubt for office on the most secure terms and at the shortest notice, would voluntarily run unusual risks in order to be able to fight a decisive battle upon exceptionally unfavourable ground. In common with most of us who are here to-night, I hold that the rejection of the Budget by the House of Lords would be a constitutional outrage. I do not think we are entitled at this stage to assume that such an outrage will be committed. We cannot credit such intentions, even though we read them every day brutally and blatantly affirmed by a powerful Party Press. We do not credit such intentions. We are, however, bound to be fully prepared against all contingencies. The necessary precautions must be taken. The fighting machine must undergo all those preliminary processes necessary for a rapid and efficient mobilisation. And the ground on which a great battle might take place, the theatre of war, must be scanned beforehand with military foresight. And that is being done.

But those who lightly estimate the crisis which will follow the rejection of the Budget by the House of Lords must be either strangely unimaginative or else they must be strangely ignorant of British history and of the British Constitution. The control of finance by the representative Assembly is the keystone of all that constitutional fabric upon which and within which all of us here have dwelt safely and peacefully throughout our lives. It is by the application of the power of the purse, and by the application of the power of the purse almost alone, that we have moved forward, slowly and prosaically, no doubt, during the last two hundred years, but without any violent overturn such as has rent the life and history of almost every other considerable country, from a kind of mediaeval oligarchy to a vast modern democratic State based on the suffrages of six million or seven million electors, loyal to the Crown, and clothed with all the stately forms of the venerable English monarchy. Finance has been the keystone. Take finance away from the House of Commons, take the complete control of financial business away from the representative Assembly, and our whole system of government, be it good, bad, or indifferent, will crumble to pieces like a house of cards.

The rejection of the Budget by the House of Lords would not merely be a question of stopping a money Bill or of knocking out a few taxes obnoxious to particular classes; the rejection of the Budget by the House of Lords would mean the claim of the House of Lords—that is, the claim of a non-elective and unrepresentative Chamber—to make and to unmake Governments; and a recognition of that claim by the country would unquestionably mean that the House of Lords would become the main source and origin of all political power under the Crown. Now that is a great quarrel; that is a quarrel on which we had hoped, on which we had been taught, that the sword had been sheathed victoriously for ever. And that is the issue that is before us now. We do not intend to soften it in any way. The responsibility for the consequences must rest with the aggressor who first violates the constitutional tradition of our land.

The Budget is through Committee. We have had not merely an exhaustive but an exhausting discussion. I am told by ingenious calculators in the newspapers that over six hundred hours, from some of which I confess I have been absent, of debate have been accorded to the Committee stage. No guillotine closure has been applied. Full, free, unfettered debate has been accorded—has been accorded with a patience and with a generosity unprecedented in Parliamentary annals, and which in effect has left a minority not merely satisfied in all the conditions of reasonable debate, but unable even on grounds of the most meticulous partisanship to complain that the fullest opportunity has not been accorded to them. In all this long process of six hundred hours and upwards we have shown ourselves willing to make concessions. They are boasting to-day that they, forsooth, are in part the authors of the Budget. Every effort has been made to meet honest and outspoken difference; every effort has been made to gather for this Budget—the people's Budget, as they know full well it is—the greatest measure of support not only among the labouring classes, but among all classes in our vast and complicated community.

It has been a terrible strain. Lord Rosebery the other day at Glasgow paid his tribute to the gallant band who had fought in opposition to the Budget. Had he no word for his old friends? Had he no word for those who were once proud to follow him, and who now use in regard to him only the language of regret? Had he no word for that other gallant band, twice as numerous, often three times as numerous, as the Tory Opposition, who have sat through all these months—fine speakers silent through self-suppression for the cause, wealthy men sitting up to unreasonable hours to pass taxes by which they are mulcted as much as any Tory? Men who have gone on even at the cost of their lives—had he no word for them? We to-night gathered together here in the National Liberal Club have a word and a cheer for the private members of the Liberal Party in the House of Commons who have fought this battle through with unequalled loyalty and firmness, and who have shown a development of Parliamentary power to carry a great measure which I venture to say has no counterpart in the Parliamentary history of this country.

Well, that long process of debate, of argument, of concession, of compromise, of conciliation will very soon come to an end. When the Budget leaves the House of Commons the time of discussion, so far as we are concerned, will have come to an end. It will leave the House of Commons in a final form, and no amendment by the House of Lords will be entertained by us. I have heard it often said, and I have read it more often still, that there are some members of the Cabinet who want to see the Budget rejected, and I have even been shocked to find myself mentioned as one of these Machiavellian intriguers. To those who say we want to see the Budget rejected I reply, That is not true. As Party men we cannot be blind to the great tactical advantages which such an event would confer upon us. We cannot pretend that our feelings in such an event would be feelings of melancholy; but we have our work to do. Politics is not a game. It is an earnest business. We have our work to do. We have large, complex schemes of social organisation and financial reform on which we have consumed our efforts, and which we desire to see, at the shortest possible date, brought to conception and maturity. We do not want to see the finances of the country plunged into inextricable confusion, and hideous loss inflicted on the mass of the people and the taxpayers. For my part, I say without hesitation I do not at all wish to see British politics enter upon a violent, storm-shaken, and revolutionary phase. I am glad, at any rate, if they are to enter upon that phase, it shall be on the responsibility of others.

Our intentions are straightforward. We seek no conflict; we fear no conflict. We shall make no overtures to the House of Lords; we shall accept no compromise. We are not called upon to offer them any dignified means of escape from a situation into which they have been betrayed by the recklessness of some of their supporters. They have no right whatever to interfere in financial business directly or indirectly at any time. That is all we have to say, and for the rest we have a powerful organisation, we have a united Party, we have a resolute Prime Minister, we have a splendid cause.

I do not think we need at this stage speculate upon the result of a battle which has not yet been, and which may never be at this juncture fought. I have seen enough of the ups and downs of real war to know how foolish forecasts of that character often are. But when an army has been brought into the field in the best condition, in the largest possible numbers, in a spirit of the highest enthusiasm, at the most favourable season, and on the best possible ground—then I think, when our army has been brought into that situation, we can afford to await the supreme arbitrament with a cool and serene composure; and this mood of composure and of calmness may ripen into a kind of joyous and warlike heartiness, if we can also feel that the cause for which we are fighting is broadly and grandly a true and righteous cause.

Error, of course, there is always in all human affairs—error of conception, error of statement, error of manner, error of weakness, error of partisanship. We do not deny that, but strip both the great political Parties which to-day present themselves before the people of Britain, strip them of their error, strip them of that admixture of error which cloys and clogs all human action, divest them of the trappings of combat in which they are apparelled, let them be nakedly and faithfully revealed. If that were done, cannot we feel soberly and assuredly convinced that, on the main contested issues of the day, upon the need of social organisation, upon the relations between the two Houses of Parliament, upon the regulation and control of the liquor traffic, upon a national settlement with Ireland as we have made with Africa, upon Free Trade, upon the land—upon all of them separately, still more upon all of them together, if we ask ourselves in our most silent and reflective mood alone—cannot we feel a sober conviction that, on the whole, we hold the larger truth?



Printed by Hazell, Watson & Viney, Ld., London and Aylesbury.

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