[75] This arrangement, which is peculiar to the Canadian Federation, is regarded by some authorities as a somewhat serious infraction of the Federal principle, since it seems to imply executive control of the Province by the central Government. The Governors of the States in the Australian Federation are appointed by the Home Government.

[76] The Judicial Committee has ruled "that the relation between the Crown and the Provinces is the same as that between the Crown and Dominion in respect of such powers, executive and legislative, as are vested in them respectively." (Maritime Bank of Canada v. Receiver-General of New Brunswick, 1892).

[77] They are governed by Executive Committees, the members of which need not be members of the Councils.

[78] In writing upon this subject, I am indebted to an able paper by Mr. Basil Williams, which is to be found in "Home Rule Problems."

[79] "Life of Parnell," R. Barry O'Brien, pp. 149 and 139-141.

[80] E.g., in 1893, on Clause I. of the Home Rule Bill (Hansard, p. 490): "The Irish minority were willing to be treated on the footing of a Colony, but they protested against a supremacy which would enable the honourable gentleman who formed the Irish Government to appeal to the Imperial Parliament for the assistance of the Army and Navy to compel the Irish minority to obey their behests."

[81] Cd. 5741, 1911. Some of the subjects discussed were Commercial Relations and Shipping, Navigation Law, Labour Exchanges, Uniformity in Copyright, etc., Emigration, Naturalization, Compensation for Accidents, etc.

[82] I am summarizing facts fully narrated in Chapters XI. and XII.

[83] In the Federal Constitutions of Australia and Canada the central Federal Parliament is responsible for the colonial defences, but the Provinces or States are, of course, represented in the Federal Parliament.

[84] Commonwealth of Australia Constitution Act, 1900, Sec. 58, and British North America Act, 1867, Sec. 15. Until quite recently it was the custom always to give the command of the Canadian Militia to a British officer lent to Canada. The present Commander, however, is a Canadian.

[85] See Appendix.

[86] A Colony may make local regulations to carry out an Imperial Law about extradition and neutrality, but may not touch the law.

[87] For the constitutional position of self-governing Colonies, the author owes much to Mr. Moore's "Commonwealth of Australia."

[88] The Commonwealth of Australia Constitution Act, 1900, and the British North America Act, 1867, in order to delimit the respective powers of the Federal and Provincial Legislatures, set out a list of subjects on which the Federal Parliament has exclusive or collateral power to legislate. There is implied, of course, a pre-existing right on the part of the Colony, as a whole, qua Colony, to legislate on the matters referred to in the list. But the pre-existing right is subject to any pre-existing constitutional or statutory limitations. E.g., "Naturalization and Aliens" is in the list of Commonwealth powers (Sec. 51, xix.), and of the Canadian powers (Sec. 91, xxv.), but the power of any Colony is limited by Acts of 1847 and 1879 to giving naturalization within its own borders. (At the Imperial Conference of 1911 a scheme was foreshadowed for standardizing naturalization throughout the Empire.)

"Copyright" is also in both lists, but the colonial power is limited by the International Copyright Act of 1886, which, by Sec. 8, implies that a "British possession" may only make laws "respecting the Copyright within the limits of such possession of works produced in that possession." This Copyright Act is an example of implied limitation and sanction together. The Coinage Act of 1853 is an example of implied sanction only, in empowering a Colony to legislate as if the Act had not been passed. Another class of Imperial Acts confers direct powers to legislate on certain subjects—e.g., the Australian Colonies Custom Duties Act of 1873 (removing the restrictions imposed upon intercolonial duties in 1850). The Naturalization Acts are partly of this character, and other examples are the Colonial Naval Defence Act of 1865, and certain provisions of the Army Act of 1881, and the Colonial Courts of Admiralty Act of 1890.

[89] E.g., Colonial Attorneys Belief Act, 1857; Colonial Probates Act, 1892; parts of the Finance Act, 1894; and Wills Act, 1861.

[90] E.g., Colonial Laws made under sanction of the following Imperial Acts: Colonial Prisoners Removal, 1869; Merchant Shipping, 1894; Sections 478 and 736, Colonial Marriages, 1866.

[91] E.g., 18 Vict. Ch. 55, Sections 42 and 43.

[92] See Appendix, under the head of restrictions on "Irish Matters." For convenience, land legislation is included in the list, though it clearly belongs to a different category, and I have so dealt with it above.

[93] In the Bill of 1886 (Clause 11, Subsec. 7) and in the Bill of 1893 (Clause 8, Subsec. 3) power was given to alter the qualifications of the franchise, etc., for the Lower House—in the former Bill after the first dissolution, in the latter after six years.

[94] In 1910, of the total Federal revenue of 675,511,715 dollars, 623,616,963 dollars were raised in this way, or twelve-thirteenths. (Postal revenue, which balances Postal receipts, is excluded.)

[95] In 1909-10 Dominion revenue from Customs and Excise was 75,409,487 dollars. Total ordinary expenditure (excluding capital accounts), 79,411,747 dollars.

[96] Estimate for 1910-11. Total Federal revenue, L16,841,629; revenue from Customs and Excise, L111,700,000. Total Federal expenditure L11,122,297. L5,267,500 will be available for return to the State exchequers (see pp. 245-246).



CHAPTER XI

UNION FINANCE

I ask the reader to follow with particular care the following historical summary of Anglo-Irish finance. None of it is irrelevant, I venture to say. It is not possible to construct a financial scheme, or to criticize it when framed, without a fairly accurate knowledge of the historical facts.

I.

BEFORE THE UNION.[97]

Before the Union Ireland had a fiscal system distinct from that of Great Britain, a separate Exchequer, a separate Debt, a separate system of taxation, a separate Budget. Yet she can never truly be said to have had financial independence, because she was never a truly self-governing country. Until 1779, when the Protestant Volunteers protested with arms in their hands against the annihilation of Irish industries in the interest of British merchants and growers, her external trade and, consequently, her internal production, were absolutely at the mercy of Great Britain. As I showed in Chapter I., Ireland was treated considerably worse than the most oppressed Colony, with permanently ruinous results. On the other hand, her internal taxation, never above a million a year, and her Debt, never above two millions in amount, were not heavy. But from 1779, through Grattan's Parliament to the Union, a short period of twenty-one years, Ireland, though still governed on the ascendancy system by an unrepresentative and corrupt Parliament of exactly the same composition as before, nevertheless had financial independence in the sense that her Parliament had complete control of Irish taxation, revenue, and trade. It was, moreover, in these financial matters that the Parliament showed most genuine national patriotism, together with a greatly enhanced measure of the Imperial patriotism traditional with it. Internal taxation, except in time of war, was still comparatively light; depressed home industries were judiciously encouraged by bounties; no attempt was made at vindictive retaliation upon British imports, though Irish exports to Great Britain were still unmercifully penalized; and sums, growing to a relatively enormous size during the French War, which began in 1793, were annually voted for the Imperial forces. This voluntary contribution, which had averaged L585,000 in the eleven years of peace, from 1783 to 1793, rose to L3,401,760 in 1797,[98] and in 1799, when Ireland was paying the bill for British troops called in to suppress her own Rebellion, to L4,596,762, out of a total Irish expenditure for the year on all purposes, military and civil, of L6,854,804. Not more than half, on the average, of these war expenses were met out of the annual taxes. Debt was created to meet the balance; but neither the debt, heavy as it was, nor the taxes, were intolerably burdensome—that is, if we regard Ireland as financially responsible for Imperial wars and for the suppression of a Rebellion which was provoked by scandalous misgovernment. Tax revenue rose from L1,106,504 in 1783, when the free Parliament first prepared a Budget, to L3,017,758 in 1800, and averaged a million and a half. In the same period the total amount of the funded and unfunded Irish Debt rose from L1,917,784 to L28,541,157, almost the whole of this increase having taken place in the seven years of war immediately preceding the Union. In Great Britain both Debt and taxation had risen in a larger ratio, and were relatively far greater. For example, in the six years, 1793-1798 inclusive, L186,000,000 had been added to the British Debt, only L14,000,000 to the Irish Debt. In 1801 the British Debt stood at L489,127,057; the Irish Debt at L32,215,223.

II.

FROM THE UNION TO THE FINANCIAL RELATIONS COMMISSION OF 1894-1896.

The Union of 1800, therefore, could not be justified on the ground that a poor country would profit by fiscal amalgamation with a rich country, and Pitt and Castlereagh, when framing the Union Act, recognized that truth by leaving Ireland with a separate fiscal system, as before; though the administration of this system was, of course, now to be wholly in British hands. There were to be separate Exchequers, Debts,[99] taxes, and balance-sheets, with the following restrictions: That prohibitions against imports and bounties on exports (corn excepted), should cease reciprocally in both countries; that, with the exception of 10 per cent. ad valorem duties on a variety of articles named, there should be mutual free trade; and that no tax on any article of consumption should be higher in Ireland than in Great Britain.

But although Pitt and Castlereagh ostensibly carried out the principle of separate fiscal systems, they laid the foundations for a fiscal amalgamation which was disastrous to Ireland. Since his Commercial Propositions of 1785, Pitt had never abandoned the idea of obtaining from Ireland an obligatory annual contribution to Imperial services based on some fixed principle. By Clause 7 of the Act of Union he achieved his aim. It was settled that for twenty years Ireland should contribute in the proportion of 1 to 71/2 (or 2 to 15)—that is, that Great Britain should pay 15/17, or 88.24 per cent., of common Imperial expenses, including the charge for debt contracted for Imperial services, and Ireland 2/17, or 11.76 per cent. Nobody now denies that this ratio was grossly unjust to Ireland. It took no account of the relative pre-Union Debts; it took no account of the tribute of nearly four millions paid in rents to absentee English proprietors; it was based on superficial deductions from inadequate and misleading data, and the Act was hardly passed before its absurdity became manifest. Fifteen years of almost incessant war followed the Union. Ireland, even by raising taxation to the highest possible point, was unable to pay her contribution without contracting a Debt colossal in proportion to her resources. While Great Britain only doubled her Debt, and paid 71 per cent. of her expenses out of current taxation, the Irish Debt quadrupled, and in 1817 reached the portentous total of L112,634,773; while only 49 per cent. of Irish expenditure was paid for out of revenue. Here is a little table which shows the effect upon Ireland of Clause 7 of the Act of Union:

Five Years. Average Average Revenue. Expenditure. L L { 1785-1790 1,246,000 1,247,000 Before Union —-{ 1790-1795 1,340,000 1,646,000 { 1795-1800 2,100,000 4,601,000

{ 1801-1806 3,643,000 7,270,000 After Union —-{ 1806-1811 4,885,000 9,061,000 { 1811-1816 5,927,424 13,188,000

The scandal could no longer be overlooked. It was impossible to raise the Irish taxes. Their yield was already showing signs of diminishing. But the Act of Union had provided for the situation which had arisen. One of the sections of the famous Clause 7 enacted that if and when the separate Debts of the two countries should reach the proportion of their respective Imperial contributions, Parliament might, if it thought fit, declare that all future expenses of the United Kingdom should be defrayed indiscriminately by equal taxes imposed on the same articles in both countries, "subject only to such exemptions and abatements in favour of Ireland as circumstances may appear from time to time to demand." The framers of this section had anticipated that the English Debt would sink to the level of the Irish Debt. Anglo-Irish finance teems with grim jokes of this sort; but the section was useful in either event. With its terms before them, a Committee sat to consider the state of Ireland, with the result that, by an Act which came into operation on January 5, 1817, the Exchequers, Debts, revenues, and expenditures, but not as yet the taxes, of the two countries were amalgamated. In Professor Oldham's words,[100] "the corpse of Ireland's insolvency was huddled into the grave, and no questions were to be asked." The whole expenditure, Imperial and local, of the United Kingdom, Ireland included, was to be defrayed out of a Consolidated Fund, and the arrangements, therefore, for a separate Irish contribution on a fixed basis to Imperial services were cancelled. Henceforth her Imperial contribution, for anyone who troubled to calculate it, was represented by the excess of revenue raised within Ireland over the expenditure in Ireland. A mutual free trade was also established, not instantaneously, but in the course of a few years. By 1824 all duties, as between Ireland and England, had ceased, and in 1826 the custom-houses ceased to record the transit of goods between England and Ireland, except in articles such as spirits, on which a different excise duty was charged. No statistics were compiled, therefore, of Anglo-Irish trade until ninety years later, when the Irish Department of Agriculture began to prepare returns. Such was the origin of our Customs Union against the world (for, needless to say, those were still the days of high Protection), and it is instructive to compare it with the voluntary pacts of the German States and South African Colonies, and with their political results.

In one important point unification was left incomplete. It was impossible in 1817 to equalize internal taxation in the two countries, though it was held desirable to do so, because Ireland could not have borne the higher British scale, and suffered enough under her own. Regard, too, was had at first to those important words in the Act of Union which guaranteed to Ireland such "exemptions and abatements" as might appear fair. But they were soon forgotten. Without any inquiry into the taxable capacity of Ireland, the stamp, tea, and tobacco duties were equalized early in the period, the enhancement in Ireland of the last duty from 1s. to 3s. on raw tobacco, and from 1s. to 16s. on manufactured tobacco, laying an exceptionally heavy burden on the Irish poor. Meanwhile the abolition, after the close of the war, of taxes representing about sixteen millions a year, and purely affecting Great Britain, gave a relief to her which Ireland did not feel. But it was not until 1853, when Mr. Gladstone extended the income-tax to Ireland, and raised the Irish spirit duty, that the principle of "exemptions and abatements" was most seriously infringed. Mr. Disraeli followed in 1855 with a further elevation of the spirit duty, which was finally equalized with the British duty in 1858, at 8s. a gallon; while in 1860 both duties were raised to 10s. In the seven years 1853-1860 the taxation of Ireland was raised by no less than two and a half millions per annum. It will be recalled that the great famine had taken place in 1846-47, and that between the Census of 1841 and that of 1861 the population sank from eight to six millions, while the British population rose from eighteen and a half to twenty-three millions. The statistical result of the increased taxes, therefore, was to show a rise in taxation per head of the Irish people from 13s. 11d. in 1849 to L1 5s. 4d. in 1859, while in Great Britain it rose only from L2 7s. 8d. to L2 10s. during the same period. Equality of taxation has never been wholly established, for to this day a few quite unimportant taxes are not levied, or are levied on a lower scale in Ireland;[101] but from 1858 onward we may regard the taxation of the two countries as almost identically the same.

In the meantime a great revolution, also beginning at the time of the famine, had taken place in the fiscal system of the United Kingdom. Free Trade with the outside world had been established, and whatever we may conclude about its effect, it had been established, as we know, with a special view to British industrial interests, and without the smallest concern for Irish interests, which were predominantly agricultural. It was certainly followed by an immense industrial expansion and prosperity in Great Britain; it was certainly initiated at the lowest point of Ireland's moral and physical wretchedness. Opinions differ as to the precise economic effect upon Ireland. Miss Murray, in her thoughtful and exhaustive study of the commercial relations between England and Ireland, holds that, as agricultural producers, the Irish lost far more than they have gained as consumers of foodstuffs, while a number of small and struggling rural industries, whose powerful counterparts in Great Britain could easily withstand foreign competition, did undeniably succumb in Ireland.

My own opinion is that the past influence upon Ireland of free trade, in the first instance with Great Britain, and later with the outside world, though a highly interesting and important topic in itself, is commonly exaggerated, to the neglect of the vastly more important question of the tenure of land. Free trade did not cause the famine. On the contrary, the presage of the famine was one of the minor causes which induced Peel to take up Cobden's policy for the free importation of foodstuffs. The effect of that policy upon Ireland sinks into insignificance beside an agrarian system which had reduced the mass of the Irish peasants to serfs, kept them near the borders of destitution, and in a state of sporadic crime for a century and a half before, and for forty years after the repeal of the Corn Laws, and, at the climax of a period of high protection for agricultural products, rendered it possible for a mere failure of the potato-crop to cause death to three-quarters of a million persons. These things do not happen in properly governed, in other words in self-governed, countries, whatever their fiscal system, and they have never happened to Irishmen in any other part of the world but in their own fertile island. Manufacturing industries stand on a different footing. Most of the staple industries of Ireland, notably the woollen industry, and the aptitudes which brought them into being, were deliberately destroyed long ago by fiscal measures imposed by England, and their destruction aggravated the misery and exhaustion produced by a bad land system. How far their partial revival under the fiscal Home Rule of Grattan's Parliament was genuine, and might, with a continuance of fiscal Home Rule, have been permanent, it is impossible to say. The retarding effect of the Rebellion, and the long start already obtained by Great Britain in the industrial race, are factors beyond accurate calculation. But one thing is certain, that the revival of industries was, at that stage, of trivial importance beside the rural regeneration of Ireland, and that Grattan's Parliament had not the remotest influence for good upon the land question, which it neglected as heartlessly as its predecessors for a century before and its successors for seventy years afterwards.[102]

Industries are valuable assets for any country; but countries almost wholly agricultural, like Denmark, can prosper remarkably, and without Protection, provided that they possess or evolve a sound system of agrarian tenure, in other words, a sound relation between tenant and landlord, or, in default of that, peasant ownership. In every country in the world that has been a sine qua non of prosperity. Suppose that English labourers had built out of their own money and by their own hands the factories, docks, and railways in which they worked, and that the resulting profits, wages deducted, went solely to ground landlords. That gives us some idea of the old Irish land system, whose overthrowal began only in 1870; a system under which the landlord put no capital into the land, though his rent represented the full profits of the tenant's capital and labour, less an amount equivalent to a bare subsistence wage, governed by competition.

The present influence upon Ireland of the Imperial fiscal system, now that peasant proprietorship has been half accomplished, is another matter upon which I shall have to say more presently, when we have completed our review of Anglo-Irish finance. Let us return to the point we had reached: that free trade with the outside world and the equalization of taxation between Great Britain and Ireland approximately coincided in point of time, and were also contemporaneous with rapid and continuous growth in the wealth and population of Great Britain, and a steady and continuous decline in the Irish population. We know now, moreover, though nobody knew it then, because the calculation was not yet made, that Ireland was paying a large contribution to Imperial services, over and above her local expenditure. In the half-century between 1810 and 1860 she had paid an average yearly sum of nearly four millions, and a total sum of nearly two hundred millions. In the year 1859-60, when the now equalized spirit duties were raised to 10s., she paid L5,396,000; a sum considerably more than double the expenditure on Irish services, and equivalent to no less than five-sevenths of the revenue raised in Ireland.

Parliament gave no serious attention to any of these phenomena from the time of the fiscal union in 1817 until after the introduction of Mr. Gladstone's second Home Rule Bill in 1893. No settled conclusions were arrived at as to the relative wealth of the two countries, as to the capacity of Ireland to bear the British scale of taxation, or even as to the amount of revenue derived from and expended in the countries respectively, with the consequent contributions made to common Imperial services. A Committee sat in 1864-65, which compiled some interesting information and heard some important witnesses, but ignored the main questions at issue and produced what Sir Edward Hamilton described later as an "impotent" Report. Sir Joseph MacKenna, an able Irish banker, again and again, between 1867 and 1876, pleaded for an inquiry into Anglo-Irish finance, alleging gross injustice in the incidence of Irish taxation, and obtained nothing more than a rough return showing that between 1841 and 1871 the gross tax revenue per head of the population had risen in Ireland from 9s. 6.7d. to L1 6s. 2.2d. and had fallen in Great Britain from L2 9s. 9.5d. to L2 4s. 1.6d. For the first time also it was shown that the national beverages of England and Ireland, beer and whisky, respectively, were taxed in a ratio unfair to Ireland. In 1886 Mr. Gladstone, in preparing his first Home Rule Bill, had to re-open the question of the relative resources of Ireland and Great Britain for the first time since the Union, because he proposed a fixed annual contribution, unchangeable for thirty years, from Ireland towards the Imperial services. He fixed the contribution at one-fifteenth or approximately half that of two-seventeenths fixed by Pitt in 1800, and the new figure was certainly not too low. In 1888 the question was again incidentally raised by Mr. Goschen, who apportioned certain equivalent grants towards local taxation in England, Scotland, and Ireland, in the proportion of 80, 11, 9, apparently on the principle that those were the proportions in which each country respectively contributed to Imperial expenditure. Mr. Gladstone, in preparing the Home Rule Bill of 1893, made investigations which threw additional light on the true amount of revenue derived from Ireland, with allowance made for revenue from dutiable goods taxed in Ireland but consumed in Great Britain, and vice versa, but his financial scheme, as revised in the course of the Session and passed by the House of Commons, evaded the crucial issue by making Ireland's contribution to Imperial services a quota, one-third, of her true annual revenue. This quota, moreover, was indirectly reduced by temporary subsidies in aid of Irish charges (e.g., for Police) and was estimated, with these deductions, not to exceed at the outset one-fortieth.

III.

THE FINANCIAL RELATIONS COMMISSION OF 1894-1896.

It was now apparent that, with or without Home Rule, the whole subject needed serious investigation, and in 1894, after the defeat of Mr. Gladstone's Bill, a Royal Commission under the Presidency of Mr. Hugh Childers was appointed to consider the "Financial Relations between Great Britain and Ireland." Their Report deserves careful study, because it contains within it all the essential materials for forming a judgment upon the financial problem of to-day. All that it lacks are the complementary figures of the subsequent seventeen years, and these figures, which I shall presently add, do not affect the conflict of principles, though they throw into more vivid relief than ever the outcome of conflicting principles.

In composition it was a very strong Commission; it consulted the highest financial authorities in the Kingdom; it made for two years an exhaustive examination, historical and practical, of the questions submitted to it, and although the members disagreed on some important points, the conclusions upon which they were unanimous cannot be impugned. The terms of reference were:

"1. Upon what principles of comparison, and by the application of what specific standards, the relative capacity of Great Britain and Ireland to bear taxation may be most equitably determined.

"2. What, so far as can be ascertained, is the true proportion, under the principles and specific standards so determined, between the taxable capacity of Great Britain and Ireland.

"3. The history of the financial relations between Great Britain and Ireland at and after the Legislative Union, the charge for Irish purposes on the Imperial Exchequer during that period, and the amount of Irish taxation remaining available for contribution to Imperial expenditure; also the Imperial expenditure to which it is considered equitable that Ireland should contribute."

It will be observed that Questions 1 and 2 deal with abstract points, No. 3 (except the last clause) with concrete facts.[103]

In their short unanimous Report the Commissioners began by stating that "Great Britain and Ireland must, for the purposes of this inquiry, be considered as separate entities."

To Question 1 they made no unanimous answer. This was immaterial, because, as a result of numerous tests (assessment to estate duties and income-tax, consumption of commodities, population, etc.) all arrived unanimously at an answer to the next question.

Answer to Question 2 (and incidentally, as will be seen, to part of Question 3): "That whilst the tax revenue of Ireland is about one-eleventh of that of Great Britain, the relative taxable capacity of Ireland is very much smaller, and is not estimated by any of us as exceeding one-twentieth."

The wording of the answer needs to be explained by reference to the text of the Report.

(a) In saying "tax revenue" the Commissioners meant to exclude non-tax revenue—e.g., Post Office receipts, etc.—but the Commissioners in their various separate Reports generally employed the figures of total revenue. Taking these as our basis, the Irish revenue then raised would have been nearly one-twelfth instead of one-eleventh of the British revenue. In other words, of the total revenue of the United Kingdom, Ireland paid nearly one-thirteenth. (b) As to the true Irish taxable capacity of "one-twentieth," some confusion arises owing to the use of the phrase by different Commissioners in different senses. Mr. Childers and Sir David Barbour appear to have meant one-twentieth of the United Kingdom's taxable capacity, the others one-twentieth of Great Britain's. In order to be on the conservative side, I shall adopt the former estimate. The discrepancy is not material to the conclusions of the Commissioners, as, for reasons which I need not go into, they agreed that the minimum amount of over-taxation was two millions and three-quarters.

This was the main outstanding conclusion of the Royal Commission. Translated into figures, it showed the following facts: In 1893-94 the total revenue of the United Kingdom from all sources was L96,855,627. Of this sum the revenue contributed by Great Britain from all sources was L89,286,978; by Ireland, L7,568,649—that is, between one-eleventh and one-twelfth of the British revenue.

If Ireland in 1893-94 had paid in proportion to her true taxable capacity of one-twentieth, the maximum arrived at by any member of the Commission, the revenue derived from her would have been L4,842,781.

In other words, there was held to be an excess payment from Ireland of L2,725,868.

It was not suggested by any member of the Commission that Ireland, since the Union, had grown richer at a more rapid rate than England, and was therefore more capable of bearing taxation. On the contrary, it was admitted that she had grown, relatively, much poorer. On the most moderate estimate, therefore, the over-taxation of Ireland since the Union, computed strictly on the principle laid down, could be represented as amounting in 1894 to something like two hundred and fifty millions, or, if we date from the fiscal union of 1817, two hundred millions.

The answer given by the Commissioners to Question 3, so far as it goes, is explanatory of the previous answer.

"That the Act of Union imposed upon Ireland a burden which, as events showed, she was unable to bear.

"That the increase of taxation laid upon Ireland between 1853 and 1860 was not justified by the then existing circumstances."

And they added the opinion "that identity of rates of taxation does not necessarily involve equality of burden."

Their answers, so far as they were complete, to the other inquiries contained in Question No. 3 about the tax revenue of Ireland and the net contribution of Ireland in the past to Imperial services, are to be found in figures included in the body of the Report, and these figures formed, of course, the basis of their unanimous conclusion as to the over-taxation of Ireland.

These figures, to which I have often alluded in this volume, necessitate a short digression, because they and subsequent Returns of the same sort form the only official data upon which to estimate the present financial position of Ireland.

They were extracted partly from annual Returns originally issued by the Treasury for the Home Rule Bill of 1893, and entitled "Financial Relations (England, Scotland, and Ireland)," and partly from a new document known as the "Pease" Return, No. 313 of 1894. These Returns, taken together, represented the first serious attempt by the Treasury to construct an account covering a period from 1819-20 to 1890-91, and showing (a) the exact revenue derived from Ireland and Great Britain respectively; (b) the local expenditure in Ireland and Great Britain respectively, as distinguished from Imperial expenditure incurred for the benefit of the whole United Kingdom; (c) the net contribution of Ireland and Great Britain respectively to this latter expenditure for Imperial services only.

Since 1894 two regular annual Returns have been compiled, the one showing the revenue, local expenditure, and net Imperial contribution of Scotland, Ireland, and England (including Wales), the other giving an historical summary of similar figures for Great Britain and Ireland only, from 1819-20 to the current date.

Two insoluble problems have had to be grappled with by the Treasury in preparing these Returns: first, to differentiate Imperial expenditure from local expenditure; second, to arrive at the "true" net revenue of the partners as distinguished from the revenue collected within their respective limits. Both these problems arise whenever an attempt is made to look behind a system of unitary finance into the burdens and contributions of different portions of a united realm, and the latter, though not the former, of the two may arise in just as acute a form if the realm consists of federated States with a common system of Customs and Excise.

With regard to the first problem, it is, of course, easy, in the case of a Federation, to distinguish between central, or Federal, expenditure and local, or State, expenditure, because the functions of the Federal Government and State Governments are delimited in the Constitution, and the separate expenditures form the subject of separate balance-sheets. But in a Union, and above all in a Union to which one part of the realm is an unwilling party, like that of the British Isles, it is clear that no absolutely accurate line can be drawn between Imperial and local expenditure. The Army, the Navy, and a number of other things are clearly enough Imperial, but there are many debatable items. For example, Is the upkeep of the Lord-Lieutenant an Irish or an Imperial charge? Is a loss on Post Office business in Ireland to be charged against Ireland, or should Ireland be credited with a proportion of the profits of the whole postal business of the United Kingdom? More searching questions still: Is the enormous charge for the Irish Police, which is under Imperial control, and exists avowedly for the purpose of forcibly maintaining, in the Imperial interest, an unpopular form of government in Ireland, to be charged against Ireland? Or, again, should Ireland be debited with the cost of the machinery for carrying out Land Purchase, a policy admittedly rendered necessary by the enforced maintenance in the past of bad land laws? Obviously such questions can never be answered so as to satisfy both Irishmen and Englishmen, because they go to the root of the political relations between Ireland and Great Britain. The Royal Commission, therefore, was naturally unable to give a unanimous answer to the last clause of Question No. 3 of their Terms of Reference—namely, "What is the Imperial expenditure to which Ireland should equitably contribute?" Some members held that under the Union even a theoretical classification was unjustifiable, while it was obvious that under the Union no effect could be given to it. Still, the classification had to be made, in order to arrive at a theoretical estimate of the financial situations of Great Britain and Ireland respectively, and the Treasury, charged with the preparation of this estimate, took the only course open to it in reckoning as Irish expenditure all expenditure which would not have to be incurred if Ireland did not exist. It was the perfectly correct course for the Treasury to take in dealing with the task set before them, and, as we shall see, it provides the only basis on which to construct the balance-sheet of a financially independent Ireland.

The insolubility of the second problem—that of discovering the "true" revenue of Ireland and Great Britain respectively—arises from the difficulty of tracing the passage of dutiable articles from one part of the kingdom to the other, and of tracing the incidence of direct imposts such as income-tax and stamps. The great bulk of Irish revenue is derived from indirect taxes on commodities, liquor, tobacco, tea, sugar, etc. Since the consumer pays the tax, revenue is rightly credited to the country of consumption. The tax, for example, on tobacco manufactured in Ireland may be collected in Ireland, but the revenue from Irish-made tobacco exported to and consumed in Great Britain is rightly credited to Great Britain. The converse holds true. Half the tea consumed in Ireland has paid duty in London, but the whole of the revenue from tea consumed in Ireland must be credited to Ireland. Now, since 1826, no official records had been kept by the Customs-houses of the transit of goods between Ireland and England, except in the solitary case of spirits. The data, therefore, did not exist, and do not exist now, except in the case of spirits, for an accurate computation. This is frankly confessed by the Treasury officials. They base their published figures on certain arbitrary methods of calculation which have never been submitted to any public inquiry, and which, as they admit, contain an element of guesswork. The matter is an exceedingly important one to Ireland, because ever since 1870 an increasingly heavy deduction has been made by the Treasury from her "collected" revenue, and her "true" revenue has proportionately diminished. Part of this deduction is no doubt due to the fact that her exports of tobacco and liquor have, in recent times, much exceeded her imports, but the margin for error is nevertheless large. Mr. Gladstone, in framing his Home Rule Bill of 1886, was so sensible of the inherent difficulties of the calculation that, while retaining Customs and Excise under Imperial control, he credited to the Irish Exchequer the whole of the revenue collected within Ireland. On the balance of Anglo-Irish exchange in dutiable articles, as roughly estimated at that time, this provision meant an annual allowance to Ireland of nearly a million and a half pounds, the principal reason being that Ireland, which is a larger manufacturer of spirits and tobacco, was exporting more than she consumed of these commodities. In the Bill of 1893, as part of a wholly different financial scheme, Mr. Gladstone abandoned the plan just described, and provided for the annual calculation of "true" Irish revenue, as distinguished from "collected" revenue; but it is a proof of the obscurity and intricacy of the whole business that the Treasury officials made a mistake of L400,000 in the initial calculation, with the result that Mr. Gladstone had to recast his financial scheme from top to bottom.

In the Return of 1894, as presented to the Royal Commission, this error was eliminated, but the method of calculation remained imperfect. Nobody knows now what the true figures are, and there is good reason to think that Irish revenue has always been, and still is, substantially underestimated.

The same obscurity shrouded, and still shrouds, the "true" Irish revenue from income-tax and stamps, whose proceeds it is exceedingly difficult to trace under a system of unitary finance, and which are traced by the Treasury in a fashion again admittedly unreliable.[104]

In regard to taxes on consumption the same difficulty has been met with in Australia since the federation of the Colonies and the delegation to the Commonwealth Government of exclusive control over Customs and Excise. The product of these duties makes up the bulk of Australian revenue, and is far too large for the needs of the Commonwealth Government. The Constitution of 1900 provided that the surplus should be returned to the individual States in proportion to their "true" contributions to the revenue, and for the calculation of these "true" contributions an elaborate system of book-keeping was instituted, in order to trace the ultimate place of consumption of dutiable articles. Each State was then credited with its "true" revenue, and debited, among other things, with a proportionate share of the expense of any Department transferred by the Constitution from the State to the Commonwealth. The system caused general dissatisfaction, owing, as the Australian Official Year Book puts it, "to the practical impossibility of ensuring that in every case a consuming State will be duly credited with revenue collected on its behalf in a distributing State." That is the well-founded complaint of Ireland in regard to the Treasury returns. Hitherto in Australia efforts to change the system for another allocating the surplus on a basis of population have not been successful.[105] The Canadian Federal Constitution uses the basis of population for the distribution of small subsidies to the Provinces, but complaints have arisen as to its fairness. British Columbia, for example, for a long time complained that her subsidy was too small, one of the grounds being that her consumption of dutiable goods was unusually large. No means existed of verifying this complaint by figures.[106]

With this explanatory digression about a very important feature of Anglo-Irish finance, I return to the findings of the Royal Commission of 1894-1896. The figures supplied to them were as shown on the opposite page.

It will be noticed that the average "true" revenue of Ireland was stationary at a little over five millions from 1820 to 1850, rose with a bound to seven and a half millions with the equalization of taxes in the decade 1850-1860, and remained stationary at that figure for the remaining thirty-four years. Expenditure in Ireland quadrupled in the whole sixty-four years; and the net contribution to Imperial services, after rising from three and a half millions (in round numbers) in 1820 to five and a half millions in 1860, fell automatically, as the expenditure rose, and had stood at two millions from 1890 afterwards. Population had fallen by two millions, but the "true" revenue raised per head of population rose from 15s. 5d. in 1819 to L1 13s. 5d. in 1894, while the local expenditure rose from 4s. 7d. per head in 1820 to L1 5s. in 1894.

STATEMENT SHOWING THE ESTIMATED LOCAL EXPENDITURE INCURRED IN IRELAND, AND THE BALANCE OF TRUE REVENUE WHICH IS AVAILABLE FOR IMPERIAL SERVICES AFTER SUCH EXPENDITURE HAS BEEN MET:

Revenue as Adjustment Estimated Estimated Balance Population Collected (+) or (-) True Local available Revenue Expenditures for Imperial Services Decadal figures. L L L L L ———————————————————————————————————————— 1819-20 5,253,909 + 2,655 5,256,564 1,564,880 3,691,684 6,801,000 1829-30 4,161,217 +1,040,908 5,502,125 1,345,579 4,156,576 7,767,401 1839-40 4,571,150 + 841,739 5,412,889 1,789,567 3,626,322 8,175,124 1849-50 4,338,091 + 523,374 4,861,465 2,247,687 2,613,778 6,574,278 1859-60 7,097,994 + 602,430 7,700,334 2,304,334 5,396,000 5,798,967 1869-70 7,331,058 + 95,274 7,426,332 2,938,122 4,488,210 5,412,377 1879-80 7,831,316 - 550,520 7,280,856 4,054,549 3,226,307 5,174,836 1889-90 9,005,932 -1,271,254 7,734,678 5,057,708 2,676,970 4,704,750

Annual figures. L L L L L ———————————————————————————————————————— 1890-91 9,301,463 -1,506,988 7,734,475 5,723,399 2,071,076 — 1891-92 9,639,344 -1,671,226 7,968,105 6,021,810 1,946,295 — 1892-93 9,425,177 -1,986,780 7,438,397 5,540,508 1,897,880 — 1893-94 9,650,649 -2,082,000 7,568,649 5,602,555 1,966,094 1,638,000

In 1893-94, the last year under review, Ireland, in round figures, was producing a net revenue of seven and a half millions, was costing five and a half millions, and was, therefore, contributing to Imperial services a surplus of two millions. In the same year, while contributing her two millions, she was overtaxed, according to the lowest estimate of the Commissioners, by two and three-quarter millions.

But the significance of these figures cannot be discerned without an examination of their counterparts on the British side of the account. In the whole period Great Britain's "true" revenue had risen from L51,445,764 to L89,286,978; her local expenditure from L4,439,333 to L30,618,586, and her net contribution to Imperial services from L47,006,431 to L58,668,392. Her population had increased from 13,765,000 in 1820 to 33,469,000 (estimated) in 1893, but her "true" revenue had fallen per head of the population from L3 13s. to L2 13s. 4d. (approximately), although her local expenditure had risen from 4s. 7d. to L1 2s. (approximately). In other words, a great increase of wealth had enabled the British taxpayer to pay far more while feeling the burden far less. The converse was true of Ireland.

The current state of the account in 1893-94 was as follows:

Great Britain Ireland 1893-94 (Population, (Population, Totals. 33,469,000). 4,638,000).

L L L "True" Revenue 89,286,978 7,568,649 96,855,627 Local Expenditure 30,618,586 5,602,555 36,221,141 Net contribution to Imperial Services 58,668,392 1,966,094 60,634,486

Great Britain, though raising in "true" revenue between eleven and twelve times as much as Ireland, was costing only between five and six times as much to administer as Ireland, and was therefore contributing to Imperial services twenty-eight times as much as Ireland.

Now the Commissioners had stated that the taxable capacity of Ireland was not one-eleventh, but, at the utmost, one-twentieth —in other words, that she ought to contribute not more than one-twentieth of the United Kingdom revenue. On that basis she should as we have seen, have been showing a revenue in 1893-94 not of L7,568,649, but of L4,842,781.

But, if her local expenditure had also been proportionate to her true taxable capacity of one-twentieth, instead of standing at L5,602,555, it would have stood at L1,811,057, or two-thirds less, while if her net contribution to Imperial services had likewise been a twentieth, instead of paying L1,966,094, she would have had to pay L3,031,724, or a million more.

The conclusion, therefore, might be extracted from the figures that, although by hypothesis overtaxed, Ireland was drawing a balance of profit, because, by having more spent on her—or, to put it in another way, by costing more to govern, she paid a million less to the common purse than if she had been taxed according to her capacity.

This was precisely the conclusion drawn by one member of the Commission, Sir David Barbour, and implicitly acquiesced in by one other member, Sir Thomas Sutherland. All the other Commissioners agreed that there was something seriously amiss, and declined to regard the disproportionately high expenditure on Ireland as compensation for the over-high taxation. The O'Conor Don, as successor in the chairmanship to Mr. Childers, and four others contented themselves with setting forth the facts, but made no recommendations, on the ground that the Commission had not been asked to make any. Mr. Childers, who died before the completion of the inquiry, left a Draft Report recommending that a special grant, amounting to two millions a year, should for the future be allocated to Ireland. The other six members, dividing into two groups of three, under Lord Farrer and Mr. Sexton respectively, and stating their views in two different Reports, all agreed that a form of Home Rule giving financial independence to Ireland was the only solution of the difficulty.

The questions at issue were not at all obscure. Any apparent obscurity was caused by the terms of reference to the Commission, which assumed the permanence of the Union, while it was absolutely impossible for the Commission, divided though its members were in politics, to start work at all without, as they said, considering Great Britain and Ireland as "separate entities." The reader must be on his guard against exaggerating the "over-taxation of Ireland" in its purely cash aspect. The really important points were: (1) The suitability of the Irish taxes and the responsibility for levying them; (2) the amount and suitability of the expenditure in Ireland and the responsibility for its distribution. In order to see conflicting principles stated in their clearest form the reader should compare the terse and vigorous reports of Sir David Barbour on the one hand, and of Lord Farrer, Lord Welby, and Mr. Currie on the other.

It was Sir David Barbour's great merit that he was not afraid of his own conclusions. He frankly stated, like all the other Commissioners, that Ireland's taxation, considered by itself, without regard to Irish expenditure, was unsuitable and unjust. He recognized that a system of taxation which was suitable for a rich, industrial, and expanding country like Great Britain was unsuitable for a poor, agricultural, and economically stagnant country like Ireland. He had before him the figures showing that two-thirds of the Irish population was rural, and that between three and four-fifths of the English population was urban.[107] He laid special stress on the fact that five-sevenths of Irish revenue, as compared with less than half the British revenue, was derived from taxes on commodities of general consumption, pressing heavily on the poor, and set forth the figures showing that the product of these taxes represented a charge of L1 2s. 0.95d. per head of the population in Ireland, and L1 1s. 0.05d. in Great Britain, although the wealth per head of Great Britain, as he admitted, "was much greater than the wealth of Ireland per head."[108] His conclusion was that this state of affairs, though regrettable, could not be helped, because, under the Union, whose permanence he took for granted, a change of general taxation to suit Ireland was simply impracticable. He did, it is true, point out incidentally that the same hardship might be said to affect poor localities in Great Britain and poor individuals in Great Britain, but he recoiled from the absurd fallacy involved in saying that on that account Ireland was not unjustly taxed. If he had gone to that length he could never have signed the unanimous Report.

I only mention this latter point because some outside critics have been bold enough to assert the fallacy in its completeness, proving, as they easily can, that the purchase of a pound of tea or a pint of beer is as great an expense to a man with 10s. a week in Whitechapel as to a man with 10s. a week in Connemara. Such reasoning nullifies the whole science of taxation. It would be as sensible to say that our whole fiscal system might wisely be transplanted in its entirety to any foreign country or to any self-governing Colony absolutely irrespective of their social and economic conditions and of their habits. Yet Ireland in these respects has always differed from Great Britain at least as much as any self-governing Colony and many European countries. The tea-tax produces scarcely anything in France; it produces an enormous amount relatively in Ireland, and is a greater burden there than in Great Britain. The wine-tax is not felt by Ireland; it is felt more by England; it would cause a revolution in France. Beer is taxed lightly in the United Kingdom, but the Irishman drinks only half as much beer as the Englishman. Meat is untaxed, but the Irish poor eat no meat. Spirits and tobacco are highly taxed, and they are consumed more largely in Ireland than in England. And so on. The whole Commission recognized that the circumstances of the two countries were different, and stated "that identity of rates of taxation does not necessarily involve equality of burden."

Nor could Sir David Barbour have dissociated himself from these conclusions without destroying the rest of his argument. He pointed out with truth that merely to reduce Irish taxation to its correct level, and to leave Irish expenditure where it was, would be to wipe out Ireland's contribution to Imperial purposes and leave her with a subsidy from Great Britain of three-quarters of a million. On the other hand, he held, as I have already indicated, that unduly heavy taxation in Ireland was already compensated for by an excess of local expenditure in Ireland as compared with Great Britain. But how, on its merits, and apart from the question of taxation, could such an excess be justified? The Act of Union had provided for indiscriminate expenditure in the event of a fiscal union. Most of the other Commissioners, indeed, had objected to the idea of distinguishing between "Imperial" expenditure and "local" expenditure, and striking a balance called an "Imperial contribution," without, at the same time, distinguishing politically between Ireland and Great Britain. In other words, they took up the not very logical position that Ireland must be considered as a separate entity for purposes of finance owing to the phrase about "abatements and exemptions," but not for purposes of expenditure. Whether this was a correct interpretation of the Act of Union has always been a matter of dispute, but the practical problem is little affected thereby. Sir David Barbour thought it an incorrect interpretation, and reached the more logical position that Ireland, both for revenue and expenditure, could be regarded as a separate entity. This view enabled him to put forward an argument which, while ostensibly palliating the over-taxation of Ireland, in reality condemned the whole of the political system established by the Union. We can, he said, in effect, rightly distinguish between Imperial and local expenditure, and it is permissible to spend more on Ireland than on Great Britain. By so spending more we not only cancel our debt to Ireland, but make her a present of a million which would otherwise go to swell her contribution to Imperial purposes. Now, to get at the pith of this argument, the reader must bear in mind what Sir David Barbour thought it needless to remark upon, that Ireland had, and has, a separate quasi-colonial system of administration of her own, but outside her own control, a system of which he approved. In other words, besides having to be considered in finance as a "separate entity," she was to a large extent in actual fact, politically, a "separate entity," though not a self-governing entity, to which through the channel of the Irish Government Departments a special large quota for local expenditure could be easily allocated. As an economist, therefore, and as an upholder of the strangely paradoxical system set up by the so-called "Union," Sir David Barbour was absolutely consistent.

So were Lord Farrer, Lord Welby, and Mr. Currie in coming to diametrically opposite conclusions. The crux of the discussion, stripped of academical reasoning, was simple. Everything turned, obviously, on the nature, amount, and origin of Irish expenditure. Sir David Barbour had passed lightly over these vital points, recommending only that any future saving of expenditure in Ireland ought to be used for Irish purposes—a further admission of Ireland's separate political existence—and shutting his eyes to future increases of expenditure. Lord Farrer and his colleagues, while agreeing that it was impossible to alter the taxation of Ireland so long as the Union lasted, agreed that additional local expenditure in Ireland could not be regarded as a set-off to undue taxation, not only because such a doctrine was inherently fallacious on economic grounds, and would hardly be listened to in the case of any other country than Ireland, but because Irish expenditure was subjected to no proper means of control. Both Irish revenue and Irish services, the former being only theoretically, the latter actually, distinct and separate, were outside the control of Irishmen, who had therefore no motive for economy. Nor was there any proper measure of determining what expenditure was good for Ireland and what was bad, though they held that there was reason to believe that much of Irish administration was both bad and costly. With regard to the extensive system of Imperial loans, whose charge swelled the Irish expenditure, they quoted the unchallenged evidence of Mr. Murrough O'Brien[109] to the effect that the system of Imperial loans for temporary emergencies and charity loans—"made to keep the people quiet or to keep them alive"—tends to increase the poverty of Ireland, "does not prevent the recurrence of famine, distress, and discontent," and that "a great deal of the money nominally meant to be spent on productive works has been misspent and wasted." They also dwelt, with emphasis, on official figures showing the extravagance of Civil Government in Ireland, the cost having risen from 1s. 10d. per head of the population in 1820 to 19s. 7d. per head in 1893, whereas the cost of Civil Government in Great Britain had only risen from 1s. 7d. to 11s. 5d. The charge for legal salaries and five principal Departments in Ireland was double the right figure according to population, and represented an excess cost of nearly L200,000. In wealthy and progressive Belgium, Civil Government cost 10s. per head, or little more than half as much per head as in Ireland.[110] The absurdity of representing such excess charges and the wasteful expenditure of a blundering philanthropy, as a recompense for over-taxation, was manifest.

Meanwhile, the rise in the cost of Irish Government, coupled with a stagnant revenue, had decreased the annual contribution of Ireland to Imperial services, which had fallen from five and a half millions in 1860 to two millions in 1894; unless, indeed, half the cost of Irish police, virtually a branch of the Imperial Army, and costing double the amount of Scottish and English police, were to be reckoned, not as an Irish expense, on the principle adopted by the Treasury, but as a part of Imperial expenditure. In any case both partners suffered from excessive and unwise expenditure in Ireland.

The gist of their conclusions was as follows:[111]

1. It is impossible, under the Union, to vary taxation for the benefit of Ireland.

2. Additional benevolent expenditure in Ireland is not a remedy for over-taxation.[112]

"We entertain a profound distrust of benevolences, doles, grants-in-aid, by whatever name they are called, ... or by whatever machinery it is proposed to distribute them, convinced, as we are, that in some form or other political influence or personal interest will creep in so as to defeat, in part at any rate, the attainment of the objects for which the expenditure is made."

3. "We believe that the expenditure of public funds cannot be wisely and economically controlled unless those who have the disposal of public money are made responsible for raising it as well as spending it." Grants of money "tend to weaken the spirit of independence and self-reliance," the absence of which qualities "has been the main cause of the backward condition" of Ireland.

4. "One sure method of redressing the inequality which has been shown to exist between Great Britain and Ireland will be to put upon the Irish people the duty of levying their own taxes and of providing for their own expenditure."

5. "If it is objected that the course we suggest may lead to the imposition of new Customs duties in Ireland, we might reply that in this case, as in that of the Colonies, freedom is a greater good than free trade. We doubt, however, whether Irishmen, if entrusted with their own finance, would attempt to raise fiscal barriers between the two countries; for we are satisfied that Ireland, and not Great Britain, would be the loser by such a policy. The market of Great Britain is of infinitely greater importance to Ireland than that of Ireland to Great Britain." The only point on which the three Commissioners differed concerned Ireland's contribution to Imperial services. Lord Farrer and Mr. Currie, taking Home Rule as the foundation of their argument, and prophesying, quite correctly, that under the Union, in a few years, Ireland's contribution would disappear altogether, recommended that no such contribution should be exacted by law until Ireland's taxable capacity approximately reached that of Great Britain. Lord Welby, regarding Home Rule as an essential but a distant ideal, was for an immediate reorganization of Anglo-Irish finances which should provide for a large reduction of Irish Civil expenditure, the saving to be devoted, on Sir David Barbour's principle, to Irish purposes, and for a fixed contribution from Ireland to the Army, Navy, National Debt, etc. How Lord Welby, consistently with his previous argument, could count upon any reduction of expenditure in Ireland under the existing political system it is difficult to see. At any rate, subsequent events proved both him and Sir David Barbour signally wrong on this important point.[113]

In every other point the wisdom of the three Commissioners has been abundantly proved by lapse of time. Do not the conclusions set forth above bear upon them the stamp of common sense? If it were not for the inveterate prejudice against Home Rule on other than financial grounds, no one would dream of disputing them; for they are based on principles universally accepted in every part of the British Empire but Ireland, and in most parts of the civilized world. They constitute, in fact, financially, one of the strongest arguments possible for political Home Rule.

There, at any rate, lies a clear issue. Seventeen years have not altered the essential principles involved. On the contrary, it will be seen that every year of the seventeen has strengthened the argument of Lord Farrer and his colleagues, and weakened the argument of Sir David Barbour. But, before proceeding to this final demonstration, let me in general terms describe what befell the Royal Commission's Report, which was published in 1896. For a moment all Ireland, irrespective of class or creed, was alight with patriotic excitement. Few listened to Sir David Barbour's view, namely, that so long as Irish expenditure came near Irish revenue there could be no Irish grievance. Home Rulers and Unionists met on friendly platforms to denounce the over-taxation of Ireland and to display figures showing the hundreds of millions of profit made by Great Britain out of an unconscionable fiscal bargain. This criticism missed the real point and the unanimity was short-lived. No change could be made in the system without Home Rule, and the dissension about Home Rule was strong enough to prevent Irishmen from uniting against a fiscal system which was not only unjust but demoralizing to Ireland. A Unionist Government was in power for nine more years after 1896, and a Liberal Government, pledged temporarily not to give Home Rule, for four further years. The natural result was that, in default of Home Rule, all parties in Ireland embraced Sir David Barbour's insidiously attractive reservation, and have ever since fallen into the habit of regarding additional expenditure on Ireland, not only on its merits, but as a set-off to excessive taxation and as something having no relation whatever to the taxable resources of the country. Nobody took seriously Sir David Barbour's counsel of perfection about the reduction of the cost of Irish Civil Government and the allocation of the saving to Ireland, because such a process was, humanly speaking, impossible. Expenditure is never reduced except by those who raise the money for it. On the other hand, in the face of the findings of the Royal Commission, and in the face of Ireland's economic condition, no Government which refused Home Rule could have refused large additional Irish expenditure. Much of it, indeed, was merely an automatic reflection of the immense growth of national expenditure in the wealthy and expanding partner-country over the water, and took the form of "equivalent grants," whether for the corresponding British head of expense or for something totally different. No doubt some of the money was well spent, but all of it came in a wrong form, through wrong channels, and was regarded in Ireland in a false light. Lastly came Old Age Pensions applied on the British scale to a far poorer population.

Every word of Lord Welby's and Lord Farrer's condemnation was justified by events; every prophecy they made has been fulfilled. And the worst of it is that the delay has damaged the prospects of Home Rule. The habit of dissociating income from revenue becomes inveterate. The habit of nursing an old grievance and of expecting "restitution" for funds unwarrantably levied in the past is hard to shake off. Restitution has gone too far already. Perpetuated, it would ruin Ireland. Home Rulers worth their salt must leave this cry to those Unionists who descend to use it; but it is surely amazing that any Irishman, least of all those who claim to represent the wealth and intelligence of the country, should tolerate a political system which inexorably involves a fiscal system so humiliating to Ireland. Until three years ago it could easily have been put an end to without affecting the independent solvency of Ireland, even on the basis of an enormously swollen civil expenditure, and with the inclusion of services strictly Imperial in origin and character. Now it is a different matter, and we are faced with the opposition of British statesmen who, by sustaining the Union, drove Ireland to the verge of insolvency, and now use insolvency as an argument against Home Rule.

One respects the clean and honest side of Unionism, but there can be nothing but reprobation for the meanness of this latter-day argument. For generations Ireland herself has asked to be free both from coercion and bribes, sanely conscious in her soul that both are equally demoralizing. The aim—though in the past not generally the conscious aim—of Unionism was to sap the moral fibre of Ireland now by one means, now by the other. At last the aim is avowed, so that men who applauded Mr. Chamberlain in 1893 for sneering at Irish patriotism as a "sickly plant which needed to be watered by British gold" merely because her contribution under the Home Rule Bill was to be small are now urging Ireland to maintain the Union—in Mr. Walter Long's words—for its "eleemosynary benefits."[114] Ireland herself must and will rise to a higher moral level than that, when she is fully awake to the gravity of the situation. Those who love her most will not lose a minute in explaining that situation. Too much time already has been lost.

FOOTNOTES:

[97] The Treasury Returns of 1869, "Public Income and Expenditure," in two volumes, are the basis of all information up to that date.

[98] Mr. Secretary Pelham in this year estimated that Ireland, though contributing nothing in money to the Navy, had furnished no less than 38,000 men to the Navy since the beginning of the war.

[99] Pre-Union Debts were to be separate. Post-Union Debt contracted for Imperial services was to be regarded as joint, and its charge was to be borne by the two countries in the proportions of their respective contributions (see below); but post-Union Debt contracted by Ireland for domestic services was to be kept separate.

[100] Eight lectures delivered in the National University, Dublin, in 1911.

[101] Inhabited house duty, railway passenger tax, carriages, armorial bearings, etc. The license for dogs is half the English scale.

[102] On Foster's Corn Law of 1784, see p. 51.

[103] The text of the unanimous conclusions was as follows:

1. That Great Britain and Ireland must, for the purpose of this inquiry, be considered as separate entities.

2. That the Act of Union imposed upon Ireland a burden which, as events showed, she was unable to bear.

3. That the increase of taxation laid upon Ireland between 1853 and 1860 was not justified by the then existing circumstances.

4. That identity of rates of taxation does not necessarily involve equality of burden.

5. That, whilst the actual tax revenue of Ireland is about one-eleventh of that of Great Britain, the relative taxable capacity of Ireland is very much smaller, and is not estimated by any of us as exceeding one-twentieth.

[104] Detailed criticism of the current Treasury accounts under this head will be found on pp. 276-278.

[105] A referendum taken on April 13, 1910, defeated the new proposals. See "Report of Premiers' Conference held at Brisbane, May, 1907" (Commonwealth Parliamentary Sessional Paper, No. 13, 1907), and for a clear statement of the whole subject, the "Year-Book (1911) of the Commonwealth of Australia." (The relevant clauses of the Constitutional Act are Nos. 88 to 93.) The reasons for the failure of the system were summarized as follows:

"1. The trouble and expense which the necessary record entails.

"2. The practical impossibility of ensuring that in every case a consuming State will be duly credited with revenue collected on its behalf in a distributing State.

"3. The difficulty involved in equitably determining the amount to be debited to the several States in respect of general Commonwealth expenses.

"4. The uncertainty on the part of the State Governments as to the amount which will become available.

"5. The impossibility of securing independent State and Commonwealth finance."

See also pp. 295-299.

[106] See Proceedings of the Conference of Provincial Premiers, 1906, at Ottawa (Canadian Sessional Papers, vol. xl.), especially McBride's Memorandum for British Columbia. Numerous other grounds for special treatment were alleged—e.g., abnormal cost of civil government, due to vast extent of Province.

[107] Final Report, p. 24 (Census figures of 1891).

[108] Final Report, p. 122.

[109] Final Report, p. 50.

[110] Ibid., pp. 48, 49.

[111] Ibid., pp. 51-54.

[112] They were at issue here with Mr. Childers, who, in his Draft Report, proposed halving the rates on Irish railways and further endowing the Congested Districts Board. But Mr. Childers, though a Home Ruler, felt himself bound by the Terms of Reference not to suggest a Home Rule solution.

[113] Lord Welby (Final Report, p. 54) compared his proposal for Ireland with the system in the Isle of Man, where the proceeds of a tariff distinct from that of Great Britain were devoted in the first instance to the payment of a fixed Imperial contribution and the surplus to local needs. But in the Isle of Man the whole point was that the tariff was a local tariff, chosen by Manxmen to suit themselves, while the administration was under Manx control.

[114] Letter to the Belfast Telegraph, October 7, 1911.



CHAPTER XII

THE PRESENT FINANCIAL SITUATION

I.

ANGLO-IRISH FINANCE TO-DAY.

The finances of Ireland since the Union, when reviewed by the Royal Commission in 1894-1896, exhibited five principal features:

1. A declining population.

2. An estimated true taxable capacity falling as compared with that of Great Britain, and standing in 1893-94 at a maximum of 1 to 19.

3. A revenue stationary for thirty-four years, and showing in 1893-94 a ratio of 1 to 12 with that of Great Britain.

4. A growing local expenditure (though stationary for the last four years).

5. A dwindling net contribution to Imperial services (though stationary for the last four years).

If we review the subsequent seventeen years, we find:

1. A population still declining, though at a slower rate.

2. An estimated true taxable capacity still falling as compared with that of Great Britain, and now standing at a maximum of 1 to 24.[115] That is, Ireland ought strictly to be paying no more than one-twenty-fifth of the United Kingdom revenue.

3. A revenue rising, but very slowly and inelastically as compared with that of Great Britain, and now showing a ratio of 1 to 15; so that the "over-taxation" of Ireland, as reckoned on the Royal Commission's principles, is still at least three millions.[116]

4. A local expenditure growing rapidly and disproportionately to Irish revenue; now just double the expenditure of 1893-94.

5. A net contribution to Imperial services automatically diminishing with the growth of Irish expenditure, disappearing altogether in 1909-10, and now converted into an adverse balance against Ireland of L1,312,500.

In Great Britain during the same seventeen years, population, taxable capacity, revenue, expenditure, and net contribution to Imperial services have all grown steadily, and, what is more important, in healthy proportions to one another.

On the next page will be found the comparative figures for Ireland and Great Britain of revenue, expenditure, and contribution for 1893-94 and 1910-11.

Let me remark at the outset (a) that they and other official figures given in this chapter are taken from the annual Treasury returns alluded to at p. 242, "Revenue and Expenditure (England, Scotland, and Ireland)" and "Imperial Revenue (Collection and Expenditure) (Great Britain and Ireland)." For the current year 1910-11 the official numbers of these Returns are 220 and 221, and the latter of the two is virtually a continuation of the original return, No. 313 of 1894; (b) that the non-collection of a large part of the revenue of 1909-10, owing to the delay in passing the Budget, makes the revenue figures of the last two years, regarded in isolation, misleading; those of the first year being abnormally low, those of the last abnormally high. I therefore give the mean figures of the two years. Expenditure is, of course, unaffected, (c) That the Irish revenue shown as "true" is reduced by heavy deductions from the revenue as actually collected in Ireland. At p. 244 I explained that this adjustment can be regarded only as approximately correct, owing to the admittedly unreliable methods adopted by the Treasury, (d) That the revenue shown includes non-tax as well as tax revenue.

Ireland. Great Britain.

1893-94. 1910-11. 1893-94. 1910-11.

Population 4,638,000 4,381,951 33,469,000 40,834,790 (estimated)

"Collected" revenue L9,650,649 L11,704,500 L88,728,428 L156,574,250 (including non-tax (mean of two (mean of two revenue) years, 1910- years, 1910- 11, 1909-10) 11, 1909-10)

"True" revenue L7,568,649 L10,032,000 L89,286,978 L155,137,250 (including (mean of two (mean of two non-tax revenue) years, 1910- years, 1910- 11, 1909-10) 11, 1909-10)

Local Expenditure L5,602,555 L11,344,500 L30,618,586 L60,544,000

Contribution to L1,966,094 Nil[A] L58,668,392 L94,593,250 Imperial Services

[A] Local Expenditure in excess of "true" revenue (as averaged for years, 1910-11, 1909-10): L1,312,500.

Irish expenditure has been rapidly overtaking Irish revenue during the last three years. In 1907-08 there was a balance available for Imperial services of L1,811,000; in 1908-09, of only L583,000; and in 1910-11, on the basis of a mean of that and the previous year, the deficit shown above of L1,312,500. The principal cause is the Old Age Pensions Vote, which began in 1908.

If all the elements of the problem be considered together, it will be seen that the fiscal partnership is as ill-matched as ever, and has produced results increasingly anomalous. Each of the partners and their united interests suffer. Ireland is still more heavily taxed relatively to Great Britain, yet Ireland's contribution to Imperial services has been converted into a minus quantity. Why? Because Irish expenditure, paid out of the common purse, has doubled, while Irish revenue has increased by less than a third.

Let me give the final survey of Anglo-Irish finance since the Union, in the tabular form shown by Professor Oldham at the meeting of the British Association in September, 1911:

NET BALANCES PAID BY IRELAND TO GREAT BRITAIN.

Single Irish "True" Expenditure Balance Decadal Year. Revenue. in Ireland. One Year. Balance. L L L L 1819-20 5,256,564 1,564,880 3,691,684 36,916,840 1829-30 5,502,125 1,345,549 4,156,576 41,565,760 1839-40 5,415,889 1,789,567 3,626,322 36,263,220 1849-50 4,861,465 2,247,687 2,613,778 26,137,780 1859-60 7,700,334 2,304,334 5,396,000 53,960,000 1869-70 7,426,332 2,938,122 4,488,210 44,882,100 1879-80 7,280,856 4,054,549 3,226,307 32,263,070 1889-90 7,734,678 5,057,708 2,676,970 26,769,700 1899-1900 8,664,500 6,980,000 1,684,500 16,845,000

Averaged Balances for 90 years 315,603,470 Add, Actual Balances, 1900-09 16,214,000

Net Payments, in 99 years 331,817,470 Deduct Drawings, deficit of 1909-10 2,357,500

Net Payments, in 100 years 329,459,970 Add, Actual Balance, 1910-11 321,000

Net Balances paid by Ireland to Great Britain, 1809-1911 329,780,970

What has become of Sir David Barbour's argument in favour of the existing fiscal system? He admitted that Ireland was overtaxed by two millions and three-quarters. But he showed, it will be remembered, that if not only the revenue, but the expenditure and contribution to Imperial services had all been in proportion to Ireland's real taxable capacity of one-twentieth, she would have been a loser by a million.[117] Ireland, therefore, he argued, had certainly no grievance, while Great Britain received the substantial, though not strictly sufficient, sum of two millions as Ireland's contribution to Imperial expenses.

Let us apply the same reasoning to the present situation. Ireland, by hypothesis, is "overtaxed" by three millions,[118] but if not only the revenue, but the expenditure and contribution to Imperial services of Ireland were all in proportion to her real taxable capacity, which we may estimate now at one-twenty-fifth, we find that she would be a loser by five millions. Her "true" revenue from all sources ought on this supposition to be L6,605,900; it is L10,032,000. Her local expenditure ought to be L2,875,540; it is L11,344,500. Her contribution to Imperial services ought to be L3,730,360; it is a minus quantity of L1,312,500. Sir David Barbour's reasoning, then, leads us to this astounding paradox, that Ireland, while overtaxed by three millions, gains five millions by the arrangement. Moreover, whether we accept Sir David Barbour's reasoning or not, it is a fact that to-day Ireland, which contributed to Imperial services five and a half millions in 1860, and two millions in 1894, now, so far from contributing anything, costs a million and a quarter more than she brings in. This, certainly, was not a result he either anticipated or would have approved of. On the contrary, he anticipated a reduction in Irish civil expenditure, to be saved for Irish purposes, without prejudice to the Imperial contribution. It makes the brain dizzy to compare his anticipation with the reality.

How, on the other hand, stands the argument of Lord Farrer and Mr. Currie? They prophesied a great increase in Irish expenditure and the disappearance of the contribution to Imperial services. That has come true. Lord Welby (and indeed the majority of the Commission) was with them in declining to regard excessive local expenditure as a set-off to excessive and unsuitable taxation, and in condemning root and branch the system of grants, aids, and doles as wasteful in itself and as sapping the self-reliance of Irishmen. There again they were right. They were at one with all their colleagues in holding that under the Union it was impossible to differentiate between the taxation of Ireland and Great Britain, and they prescribed, as the only sound remedy, Home Rule. Once more they were right.

The figures of to-day constitute the reductio ad absurdum of the Union. For over a century in Ireland we have defied the laws of political economy, but they have conquered us at last. Sound finance demands that revenue and expenditure should be co-related. Ireland's economic circumstances are widely different from those of Great Britain, but she has been included, without any regard to her needs and without any reference to Irish expenditure, in a system of taxation designed exclusively for the capacities and needs of Great Britain. Hence Irish revenue is both excessive and inadequate.

"Excessive"? "Inadequate"? What do these terms really mean? Let us once and for all clear our minds of all obscurity and look the facts in the face. No one knows what Irish revenue and expenditure ought to be, or would be, if Irishmen had controlled their own destinies. It is useless to parade immense sums as the cash equivalent of over-taxation; it is idle to array against them rival figures of over-expenditure. Normal Irish revenue and normal Irish expenditure are matters of speculation. For all we know, Ireland, had she been permitted normal political development, would be raising a larger revenue, and feeling it less; while it is absolutely certain that she would be paying her own way and contributing to Imperial services more, in proportion to her resources, than she did before the Union. The political and therefore the economic development of Ireland have been deliberately and forcibly arrested. I do not say malignantly, because there was no malignant intention. But the action, if mistaken, was deliberately and consistently sustained. Much of Irish industrial talent was lost irrevocably before the old industrial restrictions were removed. There remained the land, an immense source of potential wealth, if properly developed under a rational system of agrarian tenure. For the best part of a century after the Union, the agrarian tenure, dating from the first genuine colonization of Ireland, when the land was confiscated wholesale and the peasantry enslaved, was maintained by force of arms. Thirty years ago (if we date from the Land Act of 1881) we began to change this tenure into another equally defective, though far more favourable to the tenant. A little later, but only eight years ago, on a thorough and systematic scale, we began the parallel policy of Land Purchase. Even now, having transferred half the land to peasant ownership, and placed the other half under judicial rents, many of our statesmen are unwilling to give Ireland the control of its own affairs. On the contrary, step by step with the economic enfranchisement of the farmers, has gone the policy of destroying their personal and political independence, and forcing them to look outside their own country for financial aid, by spending money upon Ireland which Irishmen have no direct responsibility for raising. What a travesty of statesmanship! First, having assisted the farmer to buy his own land, to clap him on the back with "Now, my fine fellow, you are a free man." In the same breath to tell him that he is not fit to have a direct voice in the management of his own country's affairs, and to try and reconcile him to this insult by sapping that very independence of character which the acquirement of a freehold has begun to instil in him.

I described in Chapter IX. how a number of patriotic Irishmen, working both at industrial and agricultural development, have striven to counteract this fatal tendency, and to persuade their countrymen to rely on themselves alone. But I venture to repeat what I said then, that without the bracing discipline of Home Rule, and, above all, of the financial Home Rule, these efforts are doomed to comparative failure.

It is absolutely necessary to produce an equilibrium between revenue and expenditure in Ireland, as in every other country in the world. Whatever the temporary strain upon Ireland, whatever the sacrifices involved, the thing must be done, and done now or never. Great Britain's interest is something, but it is trivial beside that of Ireland. The situation is growing worse, not better, and Irishmen should unite to insist that the whole system should stop.

II.

IRISH EXPENDITURE.

Let us look a little more closely at Irish expenditure, as disclosed in the Treasury returns.

For purposes of comparison, I set out first the main heads of Civil Expenditure for England, Scotland, and Ireland in the year 1910-11:[119]

Population. England, Scotland, Ireland, 36,075,269. 4,759,521. 4,381,951.

L L L Civil Government Charges, 1910-11: (a) On Consolidated Fund: (1) Civil List, Salaries, Pensions, and Miscellaneous Charges 340,500 148,000 138,500 (2) Development and Road Improvement Funds (3) Payments to Local Taxation Accounts, etc. 7,199,500 1,204,500 1,477,500 (b) Voted 26,121,500 4,180,500 8,026,000

Total Civil Government Charges 33,661,500 5,533,000 9,642,000

Customs and Excise and Inland Revenue 3,157,000 464,000 298,000 Post Office Services 15,798,500 1,930,000 1,404,500

Total Expenditure 52,617,000 7,927,000 11,344,500

L s. d. L s. d. L s. d. Per head of population 1 9 2 1 13 31/2 2 11 9

The totals, if we consider relative populations, appear startling.

Look at the third, or Irish, column, and set aside the two last items, "Customs, Excise, and Inland Revenue," and "Post-Office Services," which represent the cost of collecting Irish Revenue and maintaining the Irish postal, telegraph, and telephone services. We may note in passing, however, that the Post-Office receipts in Ireland in 1910-11, according to the Treasury estimate, were less than the outgoings by L249,000 (receipts, L1,155,500; outgoings, L1,404,500).

The Civil Government Charges are the most important heads of expense, and these are divided into two main classes: (a) charged on Consolidated Fund; (b) Voted.

Class (a) consists of (1) Salaries, Pensions, etc.; (2) Development and Road Improvement Funds; (3) Payments to Local Taxation Accounts.

In other parts of Return No. 220 will be found the details of expenditure in these various classes:

(1) The Salaries and Pensions need not detain us long. The principal item is judicial salaries, L102,000, as compared with L282,000 for England, which has more than eight times the population of Ireland. Another item, L20,000 for the Lord-Lieutenant, is double the sum allotted to any Colonial Governor, even of the Dominion of Canada, which has nearly twice the population of Ireland. But the extravagance lies, not in the cash amount, but in the fact that the Irish Lord-Lieutenancy is, under present conditions, an anomalous institution. No Irishman would grudge a penny of the sum if the Lord-Lieutenant, like a Colonial Governor, presided over a responsibly governed Ireland.

(2) Road Improvement and Development Funds. This category is blank for the year 1910-11. There will be payments for the current year which will swell the Irish expenditure.

(3) Payments to Local Taxation Accounts, L1,477,500. This raises an intricate subject, into which I cannot enter in great detail. It is well known that the whole system of relieving local taxation out of Imperial taxation needs thorough revision. Meanwhile Ireland, like other parts of Great Britain, has been allotted at various times a multitude of different grants under various Acts, but principally under the Local Government (Ireland) Act, 1898, and the Finance Acts of recent years.

Local Government on the British pattern was, as I have already described, extended to Ireland only in 1898. The money now raised in Ireland by Local Taxation is about L4,800,000, exclusive of the Grants in Aid which we are now considering, and which appear, rightly, on the national balance-sheet because they come from the common purse.[120] They are based on different principles, and originated in many different ways. Some are fixed annual sums, determined either by some arbitrary standard or (as in the case of the Licence Duty grants and the Customs and Excise grants[121]) on the Irish proceeds of certain duties in a year taken as standard. The Estate Duty grants still vary with the total product of duties in the United Kingdom, and are still allocated on the proportion settled by Mr. Goschen in 1888—namely, 9 parts to Ireland, 11 to Scotland, and 80 to England.[122] If the proportion were to be revised now, and, on Mr. Goschen's method, made to correspond to the respective estimated contributions to Imperial Services, Ireland, instead of getting L418,000, would get nothing at all. The largest item in the list—namely, the "Agricultural Grant," a fixed annual sum of L728,000, dating from the Local Government Act of 1898—was designed partly to reconcile Irish landlords to the passage of that Act. Nearly half of it represented the remission of the landlord's half-share of the poor-rate on agricultural land, as estimated in the standard year 1896-97. The English precedent for this was the Agricultural Rates Act of 1896, which relieved the English owner of agricultural land in a similar way. Irish conditions were so different, however, that it was felt necessary in this case to balance the landlord's boon with an equivalent boon to the tenant; so that half the tenant's share of the county cess was also remitted. The result was a disproportionately large grant as compared with those received by England and Scotland.[123] We must remark, as one of the minor intricacies of Irish finance, that all these grants do not actually go in relief of Local Taxation. Some of them are diverted to public Departments, such as the Board of Intermediate Education, the Congested Districts Board, and the Department of Agriculture.

All these grants will cease, as such, after Home Rule, while their amount must be reckoned as part of the cost of Irish Government. The Irish Parliament will have to revise the whole system of relief to Local Taxation and establish it on some simple and rational basis. Meanwhile, it is important to remember that the Irish grants form the major part of the Guarantee Fund set up by the Land Purchase Acts, and, until the last amending Land Act of 1909, were chargeable—the Estate Duties Grant, hi the first instance, the Agricultural Grant in the second instance—with the increasingly heavy losses incurred in floating Land Stock below par. In 1908-09 the sums so withdrawn amounted to L90,000. That liability was removed by Mr. Birrell's Act, and they now remain chargeable only with any arrears in the annuities paid by the purchasing tenants. This is a negligible liability, and should properly be placed upon the Irish Government as a whole, which, if it pleased, could recover the money from localities.[124]

We now reach the category (b) "Voted," and find in the Irish column the truly enormous sum of L8,026,000—nearly double that of Scotland (L4,180,500), which has a population slightly greater, and more than a third of that of England (L26,121,500), which has a population eight times as great.

When we search the various tables of detailed expenditure, three prominent items arrest our attention:

Constabulary and Dublin Metropolitan Police[125] L1,464,500 Old Age Pensions L2,408,000 Public (i.e., Primary) Education L1,632,000

L5,504,500

Those three items may be said to epitomize the history of Ireland under the Union—coercion, pauperization, deficient education. The first two are, of course, intimately connected. The existing cost of police, surviving needlessly at the monstrous figure shown, represents the past cost of enforcing laws economically hurtful to Ireland. The economic hurt is reflected in the cost of Old Age Pensions paid to a disproportionately large number of old people, below the official standard of wealth, in a country drained by emigration for seventy years past of its strongest sons and daughters. Police in Ireland costs twice as much as in England and Scotland, where (with the exception of the London Metropolitan Police) it is a local, not a national charge, while Irish Old Age Pensions cost in 1910-11 more than twice as much as Scottish Pensions, and amounted to two-fifths of English Pensions.[126] With full allowance for excess payments owing to the lack of all birth records prior to a certain date, the Irish figure is relatively enormous. It is L100,000 greater than the whole cost of Irish Government in 1860, and, with the addition made in the estimates of the present year, it is just a million more than what, according to Sir David Barbour's reasoning, would have been the whole cost of Irish Government in 1893-94, had Irish expenditure, like Irish revenue, been in proportion to the taxable capacity of Ireland.

I touched upon the Irish aspect of the policy of Old Age Pensions at p. 181. Whatever the pecuniary charge, I suggest that it is absolutely necessary for Ireland in the future to control both payment and policy, and she might find it in her best interest, with due notice and due regard to present interests, to halve the scale of pensions. It is not a question of the general policy of Old Age Pensions, but of the applicability of a certain scale to Ireland, where agricultural wages (for example) average only 11s. 3d. as compared with 18s. 4d. for England, and 19s. 7d. for Scotland.[127] Of all ways of remedying a backward economic condition, that of excessive pensions is the worst.