Title: Liberalism and the Social Problem
Author: Churchill, Winston S., Sir, 1874-1965
Language: English
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LIBERALISM AND THE
SOCIAL PROBLEM

BY

THE RIGHT HONOURABLE
WINSTON SPENCER CHURCHILL
M.P.


SECOND EDITION


HODDER AND STOUGHTON
LONDON MCMIX



PREFACE


These are the principal speeches I have made within the last four
years. They have been chosen and collected with the idea of presenting
a consistent and simultaneous view of the general field of British
politics in an hour of fateful decision. I have exercised full freedom
in compression and in verbal correction necessary to make them easier
to read. Facts and figures have been, where necessary, revised,
ephemeral matter eliminated, and epithets here and there reconsidered.
But opinions and arguments are unaltered; they are hereby confirmed,
and I press them earnestly and insistently upon the public.

We approach what is not merely a party crisis but a national
climacteric. Never did a great people enter upon a period of trial
and choice with more sincere and disinterested desire to know the
truth and to do justice in their generation. I believe they will
succeed.

  WINSTON S. CHURCHILL.

  33 ECCLESTON SQUARE.
  _October 26, 1909._



CONTENTS


                                                        PAGE

PREFACE                                                  vii

INTRODUCTION                                            xiii


I

THE RECORD OF THE GOVERNMENT

THE CONCILIATION OF SOUTH AFRICA                           3

THE TRANSVAAL CONSTITUTION                                16

THE ORANGE FREE STATE CONSTITUTION                        45

LIBERALISM AND SOCIALISM                                  67

IMPERIAL PREFERENCE--I.                                   85

IMPERIAL PREFERENCE--II.                                 106

THE HOUSE OF LORDS                                       124

THE DUNDEE ELECTION                                      147


II

SOCIAL ORGANISATION


THE MINES [EIGHT HOURS] BILL                             173

UNEMPLOYMENT                                             189

THE SOCIAL FIELD                                         211

THE APPROACHING CONFLICT                                 225

THE ANTI-SWEATING BILL                                   239

LABOUR EXCHANGES AND UNEMPLOYMENT INSURANCE              253


III

THE BUDGET


THE BUDGET RESOLUTIONS                                   277

THE BUDGET AND NATIONAL INSURANCE                        297

LAND AND INCOME TAXES IN THE BUDGET                      318

THE BUDGET AND THE LORDS                                 344

THE SPIRIT OF THE BUDGET                                 357

THE BUDGET AND PROPERTY                                  384

THE CONSTITUTIONAL MENACE                                405



INTRODUCTION


The series of speeches included in this volume ranges, in point of
time, from the earlier months of Sir Henry Campbell-Bannerman's
Government to the latest phase in the fortunes of Mr. Asquith's
succeeding Ministry, and forms an argumentative defence of the basis
of policy common to both Administrations. The addresses it contains
deal with nearly all the great political topics of the last four
years--with Free Trade, Colonial Preferences, the South African
settlement, the latest and probably the final charter of trade
unionism, the Miners' Bill, the measures for establishing Trade Boards
and Labour Exchanges, the schemes of compulsory and voluntary
assurance, and the Budget. They possess the further characteristic of
describing and commending these proposals as "interdependent" parts of
a large and fruitful plan of Liberal statesmanship. Of this scheme the
Budget is at once the foundation and the most powerful and attractive
feature. If it prospers, the social policy for which it provides
prospers too. If it fails, the policy falls to the ground.

The material of these speeches is therefore of great importance to the
future of democracy in this country. Let me say a word as to their
authorship. To a friendly critic they appear to present not only rare
and highly trained qualities of statement and persuasion, but a unity
and sincerity of thought which give them a place above mere party
dialectics. Mr. Churchill's distinguished service to Liberalism has
not been long in point of years, but it opened with the first speeches
he ever delivered in the House of Commons. No competent observers of
political activities, and of the characters and temperaments which
direct them, can have doubted from the first moment of Mr. Churchill's
appearance on the stage where his moral and intellectual sympathies
lay and whither they would lead him. It is a true and, indeed, an
obvious comment on his career to say that he began where his father
left off--as a Democrat and a Free Trader, and that on these inherited
instincts and tendencies he has built what both his friends and his
enemies expected him to build. Mr. Churchill came to Liberalism from
the same fold as Gladstone, and for the same reason--that it presented
the one field of work open to a political talent of a high stamp, and
to a wide and eager outlook on the future of our social order.
Liberalism and Mr. Churchill have both had good reason to congratulate
themselves on that choice, and the party which failed to draw him into
a disastrous and reactionary change of view has no reason to resent
it. Before he became a Liberal Mr. Churchill had taken the broad views
of the South African problem that his father's later opinions
commended to him, and he was properly chosen to expound to the House
of Commons the plan of self-government that embodied them.

If, therefore, the political groundwork of these speeches is sound
Liberal principle, their meaning and purpose, taken in connection with
the Budget, and the industrial reforms for which it provides, signify
a notable advance into places where the thinkers, the pioneers, the
men in the advanced trenches, are accustomed to dwell. Let us
acknowledge, with a sense of pleasure and relief, that this is new
territory. New, that is to say, for this country; not new to the best
organisations of industrial society that we know of. New as a clearly
seen vision and a connected plan of British, statesmanship; not new as
actual experiment in legislation, and as theory held by progressive
thinkers of many schools, including some of the fathers of modern
Liberal doctrine, and most of our economists. What is there in these
pages repugnant to writers of the type of John Mill, Jevons, and
Marshall? How much of them would even be repelled by Cobden? In the
main they preach a gospel--that of national "efficiency"--common to
all reformers, and accepted by Bismarck, the modern archetype of
"Empire-makers," as necessary to the consolidation of the great German
nation. An average Australian or Canadian statesman would read them
through with almost complete approval of every passage, save only
their defence of Free Trade. Nay more; the apology for property which
they put forward--that it must be "associated in the minds of the mass
of the people with ideas of justice and reason"--is that on which the
friends of true conservatism build when they think of the evils of
modern civilisation and the great and continuous efforts necessary to
repair them. Who does not conclude, with Mr. Churchill, that "a more
scientific, a more elaborate, a more comprehensive social
organisation" is indispensable to our country if it is to continue its
march to greatness? Back or forward we must go.

Mr. Churchill, indeed, has thought it wise to raise the specific point
at which, in the process of seeking a finer use and adaptation of the
human material which forms society, the progressive and reforming
statesman parts company with the dogmatic Socialist. There is no need
to labour a distinction which arises from the nature and the
activities of the two forces. British Liberalism is both a mental
habit and a method of politics. Through both these characteristics it
is bound to criticise a State so long as in any degree it rests on the
principles of "Penguin Island"--"respect for the rich and contempt for
the poor," and to modify or repeal the rights of property where they
clearly conflict with human rights. But its idealism and its practical
responsibilities forbid it to accept the elimination of private
enterprise and the assumption by the State of all the instruments of
production and distribution. Socialism has great power of emotional
and even religious appeal, of which it would be wise for Liberalism
to take account, and it is, on the whole, a beneficent force in
society. But as pure dogma it fits the spirit of man no more exactly
than the Shorter Catechism. As Mr. Churchill well says, both the
collectivist and the individualist principles have deep roots in human
life, and the statesman can ignore neither.

In the main, therefore, these speeches, with all their fresh
brilliancy of colouring and treatment, hold up the good old banner of
social progress, which we erect against reactionist and revolutionist
alike. The "old Liberal" will find the case for Free Trade, for peace,
for representative government, stated as powerfully and convincingly
as he could wish. Their actual newness consists in the fact that not
only do they open up to Liberalism what it always wants--a wide domain
of congenial thought and energy, but they offer it two propositions
which it can reject only at its peril. The first is that there can and
must be a deep, sharp abridgment of the sphere of industrial life
which has been marked out as hopeless, or as an inevitable part of the
social system.

Here the new Liberalism parts with _laissez-faire_, and those who
defend it. It assumes that the State must take in hand the problems
of industrial insecurity and unemployment, and must solve them. The
issue is vital. Protection has already made its bid. It will assure
the workman what is in his mind more than cheap food--namely, secure
wages; it affects to give him all his life, or nearly all his life, a
market for his labour so wide and so steady that the fear of forced
idleness will almost be banished from it. The promise is false.
Protection by itself has in no country annulled or seriously qualified
unemployment. But the need to which it appeals is absolutely real; for
the modern State it is a problem of the Sphinx, neither to be shirked
nor wrongly answered. And the alternative remedy offered in these
pages has already, as their author abundantly shows, succeeded even in
the very partial forms in which it has been applied. The labour market
can be steadied and equalised over a great industrial field. Part of
its surplus can be provided for. What Mr. Churchill calls "diseased
industries" can be cut off from the main body, or restored to some
measure of health. The State can set up a minimum standard of health
and wage, below which it will not allow its citizens to sink; it can
step in and dispense employment and restorative force under strictly
specified conditions, to a small body of more or less "sick" workers;
it can supply security for a far greater, less dependent, and more
efficient mass of labourers, in recurring crises of accident,
sickness, invalidity, and unemployment, and can do so with every hope
of enlisting in its service voluntary forces and individual virtues of
great value.

This is not a problem of "relief," it is a method of humanity, and its
aim is not merely to increase the mechanical force of the State, but
to raise the average of character, of _morale_, in its citizens. Nor
do these speeches represent only a batch of platform promises. The
great scheme of social betterment preached in these pages is already
embodied in half a dozen Acts of Parliament, with corresponding
organisations in the Board of Trade and elsewhere; and if the Budget
passes, the crown can be put upon them next year or the year after by
measures of insurance against invalidity and unemployment.

Mr. Churchill's second proposition is the correlative of the first.
How shall this imposing fabric of industrial security be reared and
made safe? The answer is, by modifying, without vitally changing, the
basis of taxation. The workman cannot be asked to pay for everything,
as under Protection he must pay. In any case, he must pay for
something. But if he is asked for too much, the sources of physical
efficiency are drained, and the main purpose of the new
Liberalism--the ideal of an educated, hopeful, and vigorous people--is
destroyed. Now Liberalism, in ceasing to rely on indirect taxation as
its main source of revenue, has opened up for contribution not merely
the superfluities of society, the "accumulations of profit," as Mr.
Churchill calls them, but those special forms of wealth which are
"social" in origin, which depend on some monopoly of material agents,
on means not of helping the community but of hindering it, not of
enriching its powers and resources, but of depleting them for private
advantage. In other words, the State in future will increasingly ask
the taxpayer not only "What have you got?" but "How did you get it?"
No one contends that such an analysis can be perfect; but, on the
other hand, can a community desirous of realising what Goethe calls
"practical Christianity," ignore it? And if in this process it enters
the sphere of morals, as Ruskin long ago urged it to do, as well as
the path of economic justice, is the step a wrong one? Has it not
already been taken not only in this Budget, but in its predecessor, in
which the Prime Minister made the memorable distinction between earned
and unearned income? Those who answer these questions in the Liberal
sense will find in these speeches a body of vigorous and persuasive
reasoning on their side.

It is therefore the main purpose of these speeches to show that
Liberalism has a message of the utmost consequence to our times. They
link it afresh with the movement of life, which when it overtakes
parties condemns and destroys them. They give it an immediate mission
and an outlook on the wider moral domain, which belongs to no single
generation. This double character is vital to a Party which must not
desert the larger ways in which the spirit of man walks, while it
quits at its peril the work of practical, everyday service to existing
society.

A word as to the literary quality of these addresses, widely varied as
they are in subject. The summit of a man's powers--his full capacity
of reason, comparison, expression--are not usually reached at so
early a point in his career as that which Mr. Churchill has attained.
But in directness and clearness of thought, in the power to build up a
political theory, and present it as an impressive and convincing
argument, in the force of rhetoric and the power of sympathy, readers
of these addresses will find few examples of modern English
speech-making to compare with them. They revive the almost forgotten
art of oratory, and they connect it with ideas born of our age, and
springing from its conscience and its practical needs, and, above all,
essential to its happiness.

  H.W. MASSINGHAM.



I

THE RECORD OF THE GOVERNMENT


                                                        PAGE

THE CONCILIATION OF SOUTH AFRICA (April 5, 1906)           3

THE TRANSVAAL CONSTITUTION (July 31, 1906)                16

THE ORANGE FREE STATE CONSTITUTION (December 17, 1906)    45

LIBERALISM AND SOCIALISM (October 11, 1906)               67

IMPERIAL PREFERENCE--I. (May 7, 1907)                     85

IMPERIAL PREFERENCE--II. (July 16, 1907)                 106

THE HOUSE OF LORDS (June 29, 1907)                       124

THE DUNDEE ELECTION (May 14, 1908)                       147



THE CONCILIATION OF SOUTH AFRICA

HOUSE OF COMMONS, _April 5, 1906_


We have travelled a long way since this Parliament assembled, in the
discussion of the Transvaal and Orange River Colony Constitutions.
When the change of Government took place Mr. Lyttelton's Constitution
was before us. That instrument provided for representative and not
responsible government. Under that Constitution the election would
have been held in March of this year, and the Assembly would have met
in June, if the home Government had not changed. But just at the time
that the Government changed in December two questions arose--the
question of whether or not soldiers of the British Army in garrison
should be allowed to vote; and the question whether it would not be
better to have sixty constituencies instead of thirty; and, as both
questions involved necessary alterations in the Letters Patent, the
time was ripe, quite apart from any difference which the change of the
men at the helm might make, for a reconsideration and review of the
whole form of the government which was to be given to the two
Colonies.

The objection that must most readily occur in considering Mr.
Lyttelton's Constitution is that it was unworkable. It proposed that
there should be from six to nine nominated Ministers in an Assembly of
thirty-five, afterwards to be increased to sixty elective members. The
position of a Minister is one of considerable difficulty. He often has
to defend rather an awkward case. When favourable facts are wanting he
has to depend upon the nimbleness of his wits, and, when these fail
him, he has to fall back upon the loyalty of his supporters. But no
Minister can move very far upon his road with satisfaction or success
if he has not behind him either a nominated majority or an organised
Party majority. Mr. Lyttelton's Ministers had neither. They would have
been alone, hopelessly outnumbered in an Assembly, the greater part of
which was avowedly in favour of responsible and not of representative
government. These Ministers, with one exception, had no previous
Parliamentary experience and no ascertained Parliamentary ability.
They would have been forced to carry their Bills and their Estimates
through an Assembly in the main opposed to them. All this time, while
we should have given to these Ministers this serious duty, we should
ourselves have had to bear the whole responsibility in this country
for everything that was done under their authority; and their
authority could only be exerted through an Assembly which, as things
stood, they could not control.

The Committee can easily imagine the telegrams and the questions which
would have been addressed from Downing Street and the House of Commons
to these Ministers on native matters, on the question of the
administration of the Chinese Ordinance, on all the numerous intricate
questions with which we are at the present moment involved in South
Africa. And what would have been the position of these Ministers,
faced with these embarrassments in a hostile Assembly in which they
had few friends--what possibility would they have had of maintaining
themselves in such an Assembly? Is it not certain that they would have
broken down under the strain to which they would have been exposed,
that the Assembly would have been infuriated, that Parties differing
from each other on every conceivable question, divided from each other
by race and religion and language, would have united in common hatred
of the interference of the outside Power and the government of
bureaucrats. Then we should very speedily have got to the bottom of
the hill. There would have been a swift transition. The Legislative
Assembly would have converted itself into a constituent Assembly, and
it would have taken by force all that the Government now have it in
their power to concede with grace, distinction, and authority. On
these grounds his Majesty's Government came to the conclusion that it
would be right to omit the stage of representative government
altogether and to go directly to the stage of responsible government.

It is the same in politics as it is in war. When one crest line has
been left, it is necessary to go to the next. To halt half-way in the
valley between is to court swift and certain destruction, and the
moment you have abandoned the safe position of a Crown Colony
government, or government with an adequate nominated majority, there
is no stopping-place whatever on which you may rest the sole of your
foot, until you come to a responsible Legislative Assembly with an
executive obeying that Assembly. These arguments convinced his
Majesty's Government that it would be necessary to annul the Letters
Patent issued on March 31, 1905, and make an end of the Lyttelton
Constitution. That Constitution now passes away into the never-never
land, into a sort of chilly limbo that is reserved for the disowned or
abortive political progeny of many distinguished men.

The Government, and those who support them, may rejoice that we have
been able to take this first most important step in our South African
policy with such a very general measure of agreement, with, indeed, a
consensus of opinion which almost amounts to unanimity. Both races,
every Party, every class, every section in South Africa have agreed in
the course which his Majesty's Government have adopted in abandoning
representative government and going at once to responsible government.
That is already a very great thing, but it was not always so. Those
who sat in the last Parliament will remember that it was not always
so. We remember that Lord Milner was entirely opposed to granting
responsible government. We know that Mr. Lyttelton wrote pages and
pages in the Blue Book of last year proving how futile and dangerous
responsible government would be; and the right hon. Member for West
Birmingham, who took the Government decision as a matter of course on
the first day of the present session, made a speech last session in
which he indicated in terms of great gravity and force, that he
thought it was wholly premature to grant responsible government to the
Transvaal. But all that is abandoned now. I heard the right hon.
Member for West Birmingham, in the name of the Party opposite, accept
the policy of his Majesty's Government. I heard the hon. Member for
Blackpool this afternoon say that he hoped that responsible government
would be given to the Transvaal at the earliest possible moment. In
regard to the Orange River Colony, it is quite true that the official
Opposition, so far as I gather their view, think that it should be
delayed, and should not be given at the same time as to the Transvaal;
but that is not the view of the right hon. Member for West Birmingham.
Speaking in the House of Commons on July 27, 1905, the right hon.
gentleman said:

"Objection has also been taken that the same government which is now
being given to the Transvaal has not been given to the Orange River
Colony. I think that the experiment might have been far better tried
in the Orange River Colony. It is quite true that in that Colony there
is an enormous majority of the Dutch or Boer population. But they have
shown by long experience that they are most capable and moderate
administrators--under the admirable rule of President Brand they set
an example to the whole of South Africa; and although I think there is
some danger in this experiment, it is in the Orange River Colony that
I myself would have been inclined, in the first instance, to take the
risk."

It is true the right hon. gentleman was speaking of representative
government; but it cannot be disputed that if an advance were to be
made in associating the people of the conquered Colonies with the
government of those Colonies, the right hon. gentleman thought that it
had better be in the Orange River Colony first. But at any rate now it
is incontestable that there is no Party in this country or in the
Transvaal that opposes the grant of responsible government to the
Transvaal. That is a great advance, and shows that we have been able
to take our first step with the approbation of all concerned.

But the Opposition, having abandoned their resistance to the grant of
responsible government, now contend that on no account must the basis
of the Lyttelton Constitution be departed from. I am not convinced by
that argument. The Government are to pursue a new purpose, but to
adhere to the old framework. We are to cut off the head of the
Lyttelton Constitution, but are to preserve the old trunk and graft a
new head on it. I do not believe that any Government, approaching this
question from a new point of view, uncompromised and unfettered, would
be bound by the framework and details of the Lyttelton Constitution.
It may be that that Constitution contains many excellent principles,
but the Government have a right to consider things from the beginning,
freshly and freely, to make their own plans in accordance with their
own ideas, and to present those plans for the acceptance of the House.

The noble lord the Member for South Birmingham spoke of the principle
of "one vote, one value," which was embodied in the Lyttelton
Constitution. The principle of "one vote, one value" is in itself an
orthodox and unimpeachable principle of democracy. It is a logical,
numerical principle. If the attempt be made to discriminate between
man and man because one has more children and lives in the country, it
would be arguable that we should discriminate because another man has
more brains or more money, or lives in the town, or for any other of
the many reasons that differentiate one human being from another. The
only safe principle, I think, is that for electoral purposes all men
are equal, and that voting power, as far as possible, should be evenly
distributed among them.

In the Transvaal the principle of "one vote, one value" can be made
operative only upon a basis of voters. In nearly every other country
in the world, population is the usual basis of distribution, for
population is the same as electorate and electorate the same as
population. On both bases the distribution of the constituencies would
be the same. There is, for instance, no part of this country which is
more married, or more celibate, or more prolific than any other part.
It is only in the Transvaal, this country of afflicting dualities and
of curious contradictions, where everything is twisted, disturbed, and
abnormal, that there is a great disparity between the distribution of
seats on the basis of voters and on the basis of population. The high
price of provisions in the towns restricts the growth of urban
population, and the dullness of the country districts appears to be
favourable to the growth of large families. It is a scientific and
unimpeachable fact that, if you desire to apply the principle of "one
vote, one value" to the Constitution of the Transvaal, that principle
can best be attained--I am not sure that it cannot only be
attained--on the basis of voters, and that is the basis Mr. Lyttelton
took in the Constitution he formed.

But Mr. Lyttelton's plan did not stop there. Side by side with this
basis of voters, he had an artificial franchise of £100 annual value.
That is a very much lower qualification in South Africa, than it would
be in this country, and I do not think that the franchise which Mr.
Lyttelton proposed could be called an undemocratic franchise, albeit
that it was an artificial franchise, because it yielded 89,000 voters
out of a population of 300,000, and that is a much more fertile
franchise, even after making allowance for the abnormal conditions of
a new country, than we have in this country or than is the case in
some American and European States. So that I do not accuse Mr.
Lyttelton of having formulated an undemocratic franchise, but taking
these two points together--the unusual basis of distribution with the
apparently artificial franchise--acting and reacting, as they must
have done, one upon the other--there was sufficient ground to favour
the suspicion, at any rate, that something was intended in the nature
of a dodge, in the nature of a trick, artificially to depress the
balance in one direction and to tilt it in the other.

In dealing with nationalities, nothing is more fatal than a dodge.
Wrongs will be forgiven, sufferings and losses will be forgiven or
forgotten, battles will be remembered only as they recall the martial
virtues of the combatants; but anything like chicane, anything like a
trick, will always rankle. The Government are concerned in South
Africa not only to do what is fair, but to do what South Africa will
accept as fair. They are concerned not merely to choose a balance
which will deal evenly between the races, but one which will secure
the acceptance of both races.

       *       *       *       *       *

We meet unjust charges in good heart. The permanence and security of
British sovereignty in South Africa is not a matter of indifference to
his Majesty's Ministers. Surely no honourable Member believes that we
could wish to cheat the British race in the Transvaal of any numerical
preponderance which may properly belong to them. Equally with our
political opponents we desire to see the maintenance of British
supremacy in South Africa. But we seek to secure it by a different
method. There is a profound difference between the schools of thought
which exist upon South African politics in this House. We think that
British authority in South Africa has got to stand on two legs. You
have laboured for ten years to make it stand on one. We on this side
know that if British dominion is to endure in South Africa it must
endure with the assent of the Dutch, as well as of the British. We
think that the position of the Crown in South Africa, and let me add
the position of Agents and Ministers of the Crown in South Africa,
should be just as much above and remote from racial feuds, as the
position of the Crown in this country is above our Party politics. We
do not seek to pit one race against the other in the hope of profiting
from the quarrel. We hope to build upon the reconciliation and not
upon the rivalry of races. We hope that it may be our fortune so to
dispose of affairs that these two valiant, strong races may dwell
together side by side in peace and amity under the shelter of an equal
flag.



THE TRANSVAAL CONSTITUTION

HOUSE OF COMMONS, _July 31, 1906_


It is my duty this afternoon, on behalf of the Government, to lay
before the Committee the outline and character of the constitutional
settlement which we have in contemplation in regard to the lately
annexed Colonies in South Africa. This is, I suppose, upon the whole,
the most considerable business with which this new Parliament has had
to deal. But although no one will deny its importance, or undervalue
the keen emotions and anxieties which it excites on both sides of the
House, and the solemn memories which it revives, yet I am persuaded
that there is no reason why we should be hotly, sharply, or bitterly
divided on the subject; on the contrary, I think its very importance
makes it incumbent on all who participate in the discussion--and I
will certainly be bound by my own precept--to cultivate and observe a
studious avoidance of anything likely to excite the ordinary
recriminations and rejoinders of Party politics and partisanship.

After all, there is no real difference of principle between the two
great historic Parties on this question. The late Government have
repeatedly declared that it was their intention at the earliest
possible moment--laying great stress upon that phrase--to extend
representative and responsible institutions to the new Colonies; and
before his Majesty's present advisers took office the only question in
dispute was, When? On the debate on the Address, the right hon. Member
for West Birmingham--whose absence to-day and its cause I am quite
sure are equally regretted in all parts of the House--spoke on this
question with his customary breadth of view and courage of thought. He
said: "The responsibility for this decision lies with the Government
now in power. They have more knowledge than we have; and if they
consider it safe to give this large grant, and if they turn out to be
right, no one will be better pleased than we. I do not think that,
although important, this change should be described as a change in
colonial policy, but as continuity of colonial policy."

If, then, we are agreed upon the principle, I do not think that
serious or vital differences can arise upon the method. Because, after
all, no one can contend that it is right to extend responsible
government, but not right to extend it fairly. No one can contend that
it is right to grant the forms of free institutions, and yet to
preserve by some device the means of control. And so I should hope
that we may proceed in this debate without any acute divergences
becoming revealed.

I am in a position to-day only to announce the decision to which the
Government have come with respect to the Transvaal. The case of the
Transvaal is urgent. It is the nerve-centre of South Africa. It is the
arena in which all questions of South African politics--social, moral,
racial, and economic--are fought out; and this new country, so lately
reclaimed from the wilderness, with a white population of less than
300,000 souls, already reproduces in perfect miniature all those dark,
tangled, and conflicting problems usually to be found in populous and
old-established European States. The case of the Transvaal differs
fundamentally from the case of the Orange River Colony. The latter
has been in the past, and will be again in the future, a tranquil
agricultural State, pursuing under a wise and tolerant Government a
happy destiny of its own. All I have to say about the Orange River
Colony this afternoon is this--that there will be no unnecessary delay
in the granting of a Constitution; and that in the granting of that
Constitution we shall be animated only by a desire to secure a fair
representation of all classes of inhabitants in the country, and to
give effective expression to the will of the majority.

When we came into office, we found a Constitution already prepared for
the Transvaal by the right hon. Member for St. George's, Hanover
Square.[1] That Constitution is no more. I hope the right hon.
gentleman will not suspect me of any malevolence towards his
offspring. I would have nourished and fostered it with a tender care;
but life was already extinct. It had ceased to breathe even before it
was born; but I trust the right hon. gentleman will console himself by
remembering that there are many possibilities of constitutional
settlements lying before him in the future. After all, the Abbé
Sieyès, when the Constitution of 1791 was broken into pieces, was very
little younger than the right hon. gentleman, and he had time to make
and survive two new Constitutions.

Frankly, what I may, for brevity's sake, call the Lyttelton
Constitution was utterly unworkable. It surrendered the machinery of
power; it preserved the whole burden of responsibility and
administration. Nine official gentlemen, nearly all without
Parliamentary experience, and I daresay without Parliamentary
aptitudes, without the support of that nominated majority which I am
quite convinced that the right hon. Member for West Birmingham had
always contemplated in any scheme of representative government, and
without the support of an organised party, were to be placed in a
Chamber of thirty-five elected members who possessed the power of the
purse. The Boers would either have abstained altogether from
participating in that Constitution, or they would have gone in only
for the purpose of wrecking it. The British party was split into two
sections, and one section, the Responsibles, made public declarations
of their intention to bring about a constitutional deadlock by
obstruction and refusing supplies, and all the other apparatus of
Parliamentary discontent. In fact, the Constitution of the right hon.
gentleman seemed bound inevitably to conjure up that nightmare of all
modern politicians, government resting on consent, and consent not
forthcoming.

As I told the House in May, his Majesty's Government thought it their
duty to review the whole question. We thought it our duty and our
right to start fair, free, and untrammelled, and we have treated the
Lyttelton Constitution as if it had never been. One guiding principle
has animated his Majesty's Government in their policy--to make no
difference in this grant of responsible government between Boer and
Briton in South Africa. We propose to extend to both races the fullest
privileges and rights of British citizenship; and we intend to make no
discrimination in the grant of that great boon, between the men who
have fought most loyally for us and those who have resisted the
British arms with the most desperate courage. By the Treaty of
Vereeniging, in which the peace between the Dutch and British races
was declared for ever, by Article 1 of that treaty the flower of the
Boer nation and its most renowned leaders recognised the lawful
authority of his Majesty King Edward VII, and henceforth, from that
moment, British supremacy in South Africa stood on the sure
foundations of military honour and warlike achievement.

This decision in favour of even-handed dealing arises from no
ingratitude on our part towards those who have nobly sustained the
British cause in years gone by. It involves no injustice to the
British population of the Transvaal. We have been careful at each
point of this constitutional settlement to secure for the British
every advantage that they may justly claim. But the future of South
Africa, and, I will add, its permanent inclusion in the British
Empire, demand that the King should be equally Sovereign of both
races, and that both races should learn to look upon this country as
their friend.

       *       *       *       *       *

When I last spoke in this House on the question of the South African
Constitution, I took occasion to affirm the excellence of the general
principle, one vote one value. I pointed out that it was a logical and
unimpeachable principle to act upon; that the only safe rule for
doing justice electorally between man and man was to assume--a large
assumption in some cases--that all men are equal and that all
discriminations between them are unhealthy and undemocratic. Now the
principle of one vote one value can be applied and realised in this
country, either upon the basis of population, or upon the basis of
voters. It makes no difference which is selected; for there is no part
of this country which is more married, or more prolific than another,
and exactly the same distribution and exactly the same number of
members would result whether the voters or the population basis were
taken in a Redistribution Bill. But in South Africa the disparity of
conditions between the new population and the old makes a very great
difference between the urban and the rural populations, and it is
undoubtedly true that if it be desired to preserve the principle of
one vote one value, it is the voters' basis and not the population
basis that must be taken in the Transvaal--and that is the basis which
his Majesty's Government have determined to adopt.

The right hon. gentleman the Member for St. George's, Hanover Square,
had proposed to establish a franchise qualification of £100 annual
value. That is not nearly such a high property-qualification as it would
be in this country. I do not quarrel with the right hon. gentleman's
Constitution on the ground that his franchise was not perfectly fair, or
not a perfectly _bonâ fide_ and generous measure of representation. But
it is undoubtedly true that a property-qualification of £100 annual
value told more severely against the Boers than against the British,
because living in the towns is so expensive that almost everybody who
lives in the towns, and who is not utterly destitute, has a
property-qualification of £100 annual value. But in the country
districts there are numbers of men, very poor but perfectly respectable
and worthy citizens--day labourers, farmers' sons, and others--who would
not have that qualification, and who consequently would have been
excluded by the property-qualification, low as it is having regard to
the conditions in South Africa. Quite apart from South African questions
and affairs, his Majesty's Government profess a strong preference for
the principle of manhood suffrage as against any property-qualification,
and we have therefore determined that manhood suffrage shall be the
basis on which votes are distributed.

It is true that in the prolonged negotiations and discussions which
have taken place upon this question manhood suffrage has been demanded
by one party and the voters' basis by the other, and there has been a
tacit, though quite informal agreement that the one principle should
balance the other. But that is not the position of his Majesty's
Government in regard to either of these propositions. We defend both
on their merits. We defend "one vote, one value," and we defend
manhood suffrage, strictly on their merits as just and equitable
principles between man and man throughout the Transvaal. We have
therefore decided that all adult males of twenty-one years of age, who
have resided in the Transvaal for six months, who do not belong to the
British garrison--should be permitted to vote under the secrecy of the
ballot for the election of Members of Parliament.

Now there is one subject to which I must refer incidentally. The
question of female suffrage has been brought to the notice of various
members of the Government on various occasions and in various ways.
We have very carefully considered that matter, and we have come to the
conclusion that it would not be right for us to subject a young
Colony, unable to speak for itself, to the hazards of an experiment
which we have not had the gallantry to undergo ourselves; and we shall
leave that question to the new Legislature to determine.

I come now to the question of electoral divisions. There are two
alternatives before us on this branch of the subject--equal electoral
areas or the old magisterial districts. When I say "old," I mean old
in the sense that they are existing magisterial districts. There are
arguments for both of these courses. Equal electoral areas have the
advantage of being symmetrical and are capable of more strict and
mathematical distribution. But the Boers have expressed a very strong
desire to have the old magisterial districts preserved. I think it is
rather a sentimental view on their part, because upon the whole I
think the wastage of Boer votes will, owing to excessive plurality in
certain divisions, be slightly greater in the old magisterial
districts than in equal electoral areas. The Boers have, however, been
very anxious that the old areas of their former Constitution, of
their local life, should be interfered with as little as possible, and
that is a matter of serious concern to his Majesty's Government.
Further, there is a great saving of precious time and expense in
avoiding the extra work of new delimitation which would be necessary
if the country were to be cut up into equal mathematical electoral
areas.

The decision to adopt the old magisterial areas, which divide the
Transvaal into sixteen electoral divisions, of which the Witwatersrand
is only one, involves another question. How are you to subdivide these
magisterial districts for the purpose of allocating members? Some will
have two, some three, some a number of members; and on what system
will you allocate the members to these divisions? We have considered
the question of proportional representation. It is the only perfect
way in which minorities of every shade and view and interest can
receive effective representation. And Lord Elgin was careful to
instruct the Committee as a special point to inquire into the
possibility of adopting the system of proportional representation. The
Committee examined many witnesses, and went most thoroughly into this
question. They, however, advise us that there is absolutely no support
for such a proposal in the Transvaal, and that its adoption--I will
not say its imposition--would be unpopular and incomprehensible
throughout the country. If a scientific or proportional representation
cannot be adopted, then I say unhesitatingly that the next best way of
protecting minorities is to go straight for single-member seats. Some
of us have experience of double-barrelled seats in this country; there
used to be several three-barrelled seats. But I am convinced that if
either of those two systems had been applied to the electoral
divisions of the Transvaal, it would only have led to the swamping of
one or two local minorities which with single-member divisions would
have returned just that very class of moderate, independent, Dutch or
British Members whom we particularly desire to see represented in the
new Assembly. Therefore, with the desire of not extinguishing these
local minorities, his Majesty's Government have decided that
single-member constituencies, or man against man, shall be the rule in
the Transvaal. But I should add that the subdivision of these
electoral districts into their respective constituencies will not
proceed upon hard mathematical lines, but that they will be grouped
together in accordance with the existing field cornetcies of which
they are composed, as that will involve as little change as possible
in the ideas of the rural population and in the existing boundaries.

The Committee will realise that this is a question with an elusive
climax. It is like going up a mountain. Each successive peak appears
in turn the summit, and yet there is always another pinnacle beyond.
We have now settled that the Members are to be allotted to
single-member constituencies based on the old magisterial districts
according to the adult male residents there. But how are we to apply
that principle? How are we to find out how many adult males there are
in each of the districts of the country, and so to find the quota of
electors or proper number of Members for each division? The proverbial
three alternatives present themselves. We might take the Lyttelton
voters' list revised and supplemented. We might make a new voters'
list, or we might take the census of 1904.

       *       *       *       *       *

Lord Selborne has pointed out to us that it might take just as long a
time to revise the Lyttelton voters' list as to make a new voters'
list, which would occupy seven months. So that, with the necessary
interval for the arrangements for election, ten months would elapse
before the Transvaal would be able to possess responsible
institutions. I think we shall have the assent of all South African
parties in our desire to avoid that delay. I am sorry that so much
delay has already taken place. It was necessary that the Cabinet
should secure complete information. But to keep a country seething on
the verge of an exciting general election is very prejudicial to
trade. It increases agitation and impedes the healthy process of
development. We are bound to terminate the uncertainty at the earliest
possible moment; and we have therefore determined to adopt the census
of 1904.

Let me ask the Committee now to examine the sixteen magisterial
districts. I think it is necessary to do so before allocating the
Members amongst them. In all the discussions in South Africa these
have been divided into three areas--the Witwatersrand, Pretoria, and
the "Rest of the Transvaal." Pretoria is the metropolis of the
Transvaal. It has a very independent public opinion of its own; it is
strongly British, and it is rapidly increasing. It is believed that
Pretoria will return three, four, or five Members of the Responsible
Party, which is the moderate British Party, and is independent of and
detached from the Progressive Association. The "Rest of the Transvaal"
consists of the old constituencies who sent Boer Members to the old
Legislature. There will, however, be one or two seats which may be won
by Progressive or Responsible British candidates, but in general "The
rest of the country" will return a compact body of members of Het
Volk.

Having said that, I now come to the Rand. We must consider the Rand
without any bias or prejudice whatever. The Rand is not a town or
city, but a mining district covering 1,600 square miles, whose
population of adult males practically balances the whole of the rest
of the country. The Rand population is not, as some people imagine, a
foreign population. The great majority of it is British, and a very
large portion of it consists of as good, honest, hard-working men as
are to be found in any constituency in this country. But there are
also on the Rand a considerable proportion of Dutch. Krugersdorp Rural
is Dutch, and has always been excluded from the Rand in the
discussions that have taken place in South Africa, and included in the
"Rest of the Transvaal." But in addition to that there are the towns
of Fordsburgh, which is half Dutch, and two other suburbs which also
have a Dutch population; and it is believed that these will afford
seats for members of the Responsible British Party with the support of
Het Volk. I must say further that the British community upon the Rand
is divided into four main political parties. There is the Transvaal
Progressive Association, a great and powerful association which arises
out of the mining interest. There is the Responsible Government
Association; there is the Transvaal Political Association--a moderate
body standing between the Responsibles and the Progressives--and there
are the labour associations, which are numerous. There are three main
labour associations, or really four--the Independent Labour Party, the
Transvaal Labour League, the Trade and Labour Council of the
Witwatersrand, and the Trade and Labour Council of Pretoria. Why do I
bring these facts before the Committee? I do so because I feel it
necessary to show how impossible it is to try to dismiss the problems
of this complicated community with a gesture or to solve their
difficulties with a phrase, and how unfair it would be to deprive such
a community, in which there are at work all the counter-checks and
rival forces that we see here in our own political life, of its proper
share of representation.

Applying the adult male list in the census of 1904 to the three areas
I have spoken of, I should allot thirty-two Members to the Rand, six
to Pretoria, and thirty to the rest of the country; or, if you include
Krugersdorp Rural in the Rand, it would read thirty-three to the Rand,
six to Pretoria, and twenty-nine to the rest of the country. Arrived
at that point, the Committee in South Africa had good hopes, not
merely of arriving at a just settlement, but of arriving at an
agreement between all the parties. I am not going to afflict the House
with a chronicle of the negotiations which took place. They were
fruitless. It is enough to say that there were good hopes that if the
Progressive complaint, that the adoption of the census of 1904 did not
allow for the increase in the population which has taken place since
the census was taken, could be met, a general agreement could be
reached. The Boers, whose belief that we were going to treat them
fairly and justly has been a pleasant feature in the whole of these
negotiations, and will, believe me, be an inestimable factor of value
in the future history of South Africa--the Boers with reluctance and
under pressure, but guided by the Committee, with whom they were on
friendly terms, were willing to agree to a distribution which allotted
one more seat to meet this increase of the population in the
Witwatersrand area, and the proposal then became 33, 6, and 30, or,
including Krugersdorp Rural, 34, 6, 29. The Responsible Party agreed
to that. The Progressives hesitated. The great majority of them
certainly wished to come in and come to a general agreement on those
terms. Certain leaders, however, stood out for one or two or three
seats more, and, although Lord Selborne expressed the opinion that the
arrangement proposed, namely, 33, 6, 30, excluding Krugersdorp Rural,
was a perfectly fair one to the British vote in the Transvaal, those
leaders still remained unconvinced and obdurate, and all hopes of a
definite agreement fell through.

The Committee returned to this country, bringing with them the
recommendation that the Government on their own responsibility should
fix the allocation of seats at that very point where the agreement of
one Party was still preserved and where the agreement of the other was
so very nearly won. And that is what we have decided to do. We have
decided to allocate thirty-four seats, including Krugersdorp Rural, to
the Rand, six to Pretoria, and twenty-nine to the rest of the country.
Lord Selborne wishes it to be known that he concurs in this
arrangement. Now I am quite ready to admit that every Constitution
ought to rest either upon symmetry or upon acceptance. Our Transvaal
Constitution does not rest upon either symmetry or acceptance, but it
is very near symmetry and very near acceptance, and in so far as it
has departed from symmetry it has moved towards acceptance, and is
furthermore sustained throughout by fair dealing, for I am honestly
convinced that the addition of an extra member to the Witwatersrand
areas which has been made is justified by the increase of the
population which has taken place since the census.

On such a basis as this the Transvaal Assembly will be created. It
will consist of sixty-nine members, who will receive for their
services adequate payment. They will be elected for five years. The
Speaker will vacate his seat after being elected. The reason for that
provision is that the majority in this Parliament, as in the Cape
Parliament, with which the government is carried on, is likely to be
very small, and it would be a great hardship if the Party in power
were to deprive itself of one of the two or three votes which, when
Parties are evenly balanced, are necessary for carrying on the
government. It would be a great disaster if we had in the Transvaal a
succession of weak Ministries going out upon a single vote, one way or
the other. And it is found that when Parties have a very small
majority and are forced to part with one of their Members for the
purpose of filling the chair, they do not always select the Member who
is best suited to that high office, but the Member who can best be
spared.

Now let me come to the question of language. Under the Constitution of
the right hon. gentleman the Member for St. George's, Hanover Square,
the Members of the Assembly would have been permitted to speak Dutch
if they asked permission and obtained permission from the Speaker. We
are not able to lend ourselves to that condition. We are of opinion
that such a discrimination would be invidious. The recognition of
their language is precious to a small people. I have never been able
to work myself into a passion because there are in parts of South
Africa Dutch people who wish to have Dutch teachers to teach Dutch
children Dutch. I have not so poor an opinion of the English language,
with its priceless literary treasures and its world-wide business
connections, as not to believe that it can safely be exposed to the
open competition of a dialect like the _taal_. We believe that the
only sure way to preserve in the years that are to come such a
language as the _taal_ would be to make it a proscribed language,
which would be spoken by the people with deliberation and with malice,
as a protest against what they regarded, and would rightly regard, as
an act of intolerance. Therefore we have decided to follow the Cape
practice and allow the members of the Transvaal Parliament to address
that Assembly indifferently in Dutch or English.

I shall be asked what will be the result of the arrangement that we
have made. I decline to speculate or prophesy on that point. It would
be indecent and improper. I cannot even tell in this country at the
next election how large the Liberal majority will be. Still less would
I recommend hon. gentlemen here to forecast the results of contests in
which they will not be candidates. I cannot tell how the British in
the Transvaal will vote. There are a great many new questions, social
and economic, which are beginning to apply a salutary counter-irritant
to old racial sores. The division between the two races, thank God, is
not quite so clear-cut as it used to be. But this I know--that as
there are undoubtedly more British voters in the Transvaal than there
are Dutch, and as these British voters have not at any point in the
Constitutional Settlement been treated unfairly, it will be easily
within their power to obtain a British majority, if they all combine
to obtain it. I nourish the hope that the Government that will be
called into life by these elections will be a coalition Government
with some moderate leader acceptable to both parties, and a Government
which embraces in its Party members of both races. Such a solution
would be a godsend to South Africa. But whatever may be the outcome,
his Majesty's Government are confident that the Ministers who may be
summoned, from whatever Party they may be drawn, to whatever race they
may belong, will in no circumstances fail in their duty to the Crown.

I should like to say also that this Parliament will be of a high
representative authority, and it will be the duty of whoever may be
called upon to represent Colonial business in this House to stand
between that Parliament and all unjustifiable interference from
whatever quarters of the House it may come.

I now approach the question of the Second Chamber. That is not a very
attractive subject. We on this side of the House are not particularly
enamoured of Second Chambers, and I do not know that our love for
these institutions will grow sweeter as the years pass by. But we have
to be governed by colonial practice; and there is no colony in the
Empire that has not a Second Chamber. The greater number of these
Second Chambers are nominated; and I think that the quality of
nominated Second Chambers, and their use in practice, have not been
found to be inferior to those of the elective bodies. His Majesty's
Government desire to secure, if they can, some special protection for
native interests which is not likely to be afforded by any electoral
arrangement, I am sorry to say. We are unable however to countenance
the creation in a permanent form of a nominated Second Chamber. But in
view of the position of native affairs, in view of the disadvantage of
complicating the elections, to which all classes in the Transvaal have
been so long looking forward, and most particularly because of the
extra delays that would be involved in the creation of a new elective
body, the Cabinet have resolved for this Parliament only, and as a
purely provisional arrangement, to institute a nominated Legislative
Council of fifteen members. They will be nominated by the Crown, that
is to say at home, and vacancies, if any, by death or resignation,
will be filled by the High Commissioner, on the advice of the
responsible Ministers. During the course of the first Parliament in
the Transvaal arrangements will be completed for the establishment of
an elective Second Chamber, and if necessary further Letters Patent
will be issued to constitute it.

Under the Treaty of Vereeniging we undertook that no franchise should
be extended to natives before the grant of self-government. I am not
going to plunge into the argument as to what word the "native" means,
in its legal or technical character, because in regard to such a
treaty, upon which we are relying for such grave issues, we must be
bound very largely by the interpretation which the other party places
upon it; and it is undoubted that the Boers would regard it as a
breach of that treaty, if the franchise were in the first instance
extended to any persons who are not white men. We may regret that
decision. We may regret that there is no willingness in the Transvaal
and Orange River Colony to make arrangements which have been found not
altogether harmful in Cape Colony. But we are bound by this treaty.
Meanwhile we make certain reservations. Any legislation which imposes
disabilities on natives which are not imposed on Europeans will be
reserved to the Secretary of State, and the Governor will not give his
assent before receiving the Secretary of State's decision. Legislation
that will effect the alienation of native lands will also be reserved.
It is customary to make some provision in money for native interests,
such as education, by reserving a certain sum for administration by
the High Commissioner or some other political or Imperial official. We
propose to reserve Swaziland to the direct administration of the High
Commissioner, with the limiting provision that no settlement he may
make is to be less advantageous to the natives than the existing
arrangement.

On November 30, 1906, the arrangement for recruiting Chinese in China
will cease and determine. Our consuls will withdraw the powers they
have delegated to the mining agents, and I earnestly trust that no
British Government will ever renew them. A clause in the Constitution
will provide for the abrogation of the existing Chinese Labour
Ordinance after a reasonable interval. I am not yet in a position to
say what will be a reasonable interval, but time must be given to the
new Assembly to take stock of the position and to consider the labour
question as a whole. I said just now there would be a clause with
regard to differential legislation as between white persons and
others, and to this clause will be added the words: "No law will be
assented to which sanctions any condition of service or residence of a
servile character." We have been invited to use the word "slavery" or
the words "semblance of slavery," but such expressions would be
needlessly wounding, and the words we have chosen are much more
effective, because much more precise and much more restrained, and
they point an accurate forefinger at the very evil we desire to
prevent.

I have now finished laying before the House the constitutional
settlement, and I should like to say that our proposals are
interdependent. They must be considered as a whole; they must be
accepted or rejected as a whole. I say this in no spirit of disrespect
to the Committee, because evidently it is a matter which the Executive
Government should decide on its own responsibility; and if the policy
which we declare were changed, new men would have to be found to carry
out another plan. We are prepared to make this settlement in the name
of the Liberal Party. That is sufficient authority for us; but there
is a higher authority which we should earnestly desire to obtain. I
make no appeal, but I address myself particularly to the right hon.
gentlemen who sit opposite, who are long versed in public affairs, and
who will not be able all their lives to escape from a heavy South
African responsibility. They are the accepted guides of a Party
which, though in a minority in this House, nevertheless embodies
nearly half the nation. I will ask them seriously whether they will
not pause before they commit themselves to violent or rash
denunciations of this great arrangement. I will ask them, further,
whether they cannot join with us to invest the grant of a free
Constitution to the Transvaal with something of a national sanction.
With all our majority we can only make it the gift of a Party; they
can make it the gift of England. And if that were so, I am quite sure
that all those inestimable blessings which we confidently hope will
flow from this decision, will be gained more surely and much more
speedily; and the first real step will have been taken to withdraw
South African affairs from the arena of British party politics, in
which they have inflicted injury on both political parties and in
which they have suffered grievous injury themselves. I ask that that
may be considered; but in any case we are prepared to go forward
alone, and Letters Patent will be issued in strict conformity with the
settlement I have explained this afternoon if we should continue to
enjoy the support of a Parliamentary majority.

FOOTNOTES:

[1] Mr. Lyttelton had meanwhile been elected for that Constituency.



THE ORANGE FREE STATE CONSTITUTION

HOUSE OF COMMONS, _December 17, 1906_


Letters Patent have been issued during the last week conferring a
Constitution upon the Transvaal Colony. These instruments have now
been for some days at the disposal of the House, and this afternoon
affords an occasion for their discussion. Other Letters Patent
conferring a Constitution upon the Orange River Colony are in an
advanced state of preparation, and I think it would be generally
convenient if I were to make a statement as to the character and scope
of that Constitution. With that view I have, by the direction of the
Prime Minister, placed upon the Paper a Resolution which I now move,
permitting a general discussion upon the constitutional arrangements
which we are making both in the Transvaal and in the Orange River
Colony. Now, Sir, by the Treaty of Vereeniging, Great Britain
promised full self-government to the peoples of the two Boer Republics
which had been conquered and annexed as the result of the war. This
intention of giving responsible government did not arise out of the
terms of peace, although it is, of course, solemnly expressed in them.
It has always been the settled and successful colonial policy of this
country during the last fifty years to allow great liberties of
self-government to distant communities under the Crown, and no
responsible statesman, and no British Cabinet, so far as I know, ever
contemplated any other solution of the South African problem but that
of full self-government. The idea which I have seen put forward in
some quarters, that, in order to get full satisfaction for the expense
and the exertions to which we were put in the war, we are bound to
continue governing those peoples according to our pleasure and against
their will, and that that is, as it were, an agreeable exercise which
is to be some compensation for our labours, is an idea which no doubt
finds expression in the columns of certain newspapers, but to which I
do not think any serious person ever gave any countenance. No, Sir,
the ultimate object, namely, the bestowal of full self-government,
was not lost sight of even in the height of the war; and as all
parties were agreed that some interval for reconstruction must
necessarily intervene, the only questions at issue between us have
been questions of manner and questions of time.

How much difference is there between Parties in this House as to time?
It is now more than three years since Lord Milner, speaking in the
Inter-colonial Council, bore emphatic testimony to the faithfulness
with which the Boers--those who had been fighting against us--had
observed their side of the terms of peace. Lord Milner said:

"It is perfectly true that the Boer population, the men who signed the
terms of peace at Vereeniging, have loyally observed those terms and
have carried them out faithfully. They profess to-day, and I
absolutely believe them, that no idea of an armed rising or unlawful
action is in their minds. I may say I am in constant, perhaps I should
say frequent communication with the men who in the war fought us so
manfully and then made manful terms. We differ on many points, no
doubt, and I do not expect them to rejoice with us in what has
happened, or to feel affection for a man who, like myself, has been
instrumental in bringing about the great change which has come over
the Constitution of the country. But I firmly believe their word when
they come forward and meet us, and, without professing to agree in all
respects with the policy of the Government, declare that they desire
to co-operate in all questions affecting the prosperity of the country
and the maintenance of public order. I accept the assurance they give
in that respect, and I think it is practically impossible to put your
hands on anything done by myself or any member of the Government which
can be regarded as a manifestation of distrust of the men who have
shown themselves, and do show themselves, men of honour. Let me say,
then, I am perfectly satisfied that so great is the influence of their
leaders over the minds of the main section of the Boer population that
so long as those leaders maintain that attitude a general rising is
out of the question."

Those are the words which Lord Milner used three years ago, and I think
they are words which do justice to the subject and to the speaker. But
more than two years have passed since the representations were made to
the right hon. gentleman the Member for St. George's, Hanover Square,
which induced him to confer a measure of self-government on the
Transvaal. Those representations laid stress on the fact that the
desire for self-government was not put forward only by the Boers, but
that both sections of the community in the Transvaal desired to take
the control of affairs into their own hands. The right hon. gentleman
published a Constitution. That Constitution conferred very great and
wide powers. It conferred upon an overwhelming elected majority the
absolute power of the purse and control over legislation. But it has
always been my submission to the House that that Constitution had about
it no element of permanence, that it could not possibly have been
maintained as an enduring, or even a workable settlement; and I am
bound to say--I do not wish to be controversial this afternoon if I can
avoid it--that, when I read the statement that this representative
government stage would have been a convenient educative stage in the
transition to full self-government, the whole experience of British
colonial policy does not justify such an assumption. The system of
representative government without responsible Ministers, without
responsible powers, has led to endless friction and inconvenience
wherever and whenever it has been employed. It has failed in Canada, it
has failed in Natal and Cape Colony. It has been condemned by almost
every high colonial authority who has studied this question. I do not
think I need quote any more conclusive authority upon that subject than
that of Lord Durham. Lord Durham, in his celebrated Report, says of
this particular system:

"It is difficult to understand how any English statesmen could have
imagined that representative and irresponsible government could be
successfully combined. There seems, indeed, to be an idea that the
character of representative institutions ought to be thus modified in
Colonies; that it is an incident of colonial dependence that the
officers of government should be nominated by the Crown without any
reference to the wishes of the community whose interests are entrusted
to their keeping. It has never been very clearly explained what are
the Imperial interests which require this complete nullification of
representative government. But if there is such a necessity it is
quite clear that a representative Government in a Colony must be a
mockery and a source of confusion, for those who support this system
have never yet been able to devise or exhibit in the practical working
of colonial government any means for making so complete an abrogation
of political influence palatable to the representative body."

I contend that the right hon. gentleman's Constitution would have
broken down in its first session, and that we should have then been
forced to concede grudgingly and in a hurry the full measure of
responsible government which, with all due formality, and without any
precipitancy, the Letters Patent issued last week have now conferred.
But even the right hon. gentleman himself did not intend his
Constitution to be a permanent settlement. He intended it to be a
transition, and a brief transition; and in the correspondence which
passed on this subject two or three years is sometimes named as the
period for which such a Constitution might conveniently have
endured--two or three years, of which, let me point out to the House,
nearly two years have already gone. Seeing how little difference there
is between us upon that question, I dispense with further argument as
to the grant of a Transvaal Constitution, as I see the course we have
adopted does commend itself to the good sense of all Parties in this
country and is sustained at almost every point by almost every person
conversant with South African affairs.

It is said, however, we have heard it often said, "It may be wise to
grant responsible government to the Transvaal, but it is not wise to
give it to the Orange River Colony. Why should you give it to the
Orange River Colony too?" I say, "Why not?" Let us make it quite clear
that the burden of proof always rests with those who deny or restrict
the issue of full Parliamentary liberties. They have to make their case
good from month to month, and from day to day. What are the reasons
which have been advanced against the issue of a Constitution to the
Orange River Colony? Various reasons have been put forward. We have
been told, first, that the Colony is not ripe for self-government. When
you have very small communities of white men in distant and immense
territories, and when those communities are emerging from a wild into a
more settled condition, then it is very necessary and very desirable
that the growth of self-governing institutions should be gradual. But
that is not the situation in the Orange River Colony. The Orange Free
State was the model small republic of the world. The honourable
traditions of the Free State are not challenged by any who take the
trouble to study its history, either in the distant past, or in the
years immediately preceding the South African war. The right hon.
gentleman the Member for West Birmingham himself, speaking in this
House on December 7, 1900, used language which, I think, should go far
to dissipate the idle fears which we hear expressed in various quarters
upon the grant of self-government to the Orange River Colony:

"We do not propose," said the right hon. gentleman, "that the
Constitution of the Orange River Colony should necessarily be the same
as the Constitution of the Transvaal Colony, either at starting or in
the immediate future. It will be dealt with upon its own merits, dealt
with separately, and we think it possible"--I ask the House to mark
this--"from the circumstances with which every one is familiar, that
an earlier beginning to greater political liberty may be made in the
Orange River Colony than in the Transvaal. That is due to the fact
that the Government of the Orange River Colony previous to the war was
by common consent a very good Government, and consequently, speaking
generally, of course, and not of individuals, we shall find there
probably the means to creating a satisfactory administration more
quickly than we can do in the case of the Transvaal Colony."

Then we have been told that responsible government presupposes Party
government, and that in the Orange River Colony there are not the
elements of political parties, that there is not that diversity of
interests which we see in the Transvaal, that there are not the same
sharp differences between town and country, or the same astonishing
contrasts between wealth and poverty which prevail in the Transvaal.
And we are told that, in order that responsible government should work
properly, and Party government should be a success, there must be the
essential elements of Party conflict. I suppose we are, as a majority
in this House, admirers of the Party system of government; but I do
not think that we should any of us carry our admiration of that system
so far as to say that the nation is unfit to enjoy the privilege of
managing its own affairs unless it can find some one to quarrel with
and plenty of things to quarrel about.

Then we are told that--"The country is prospering as it is. Why change
now? The land is tranquil, people are regaining the prosperity which
was lost in the war. It is a pity to make a change now; now is not the
moment." I admit the premise, but I draw exactly the opposite
conclusion. It is just for that reason that we should now step forward
and, taking occasion by the hand, make an advance in the system of
government. How often in the history of nations has the golden
opportunity been allowed to slip away! How often have rulers and
Governments been forced to make in foul weather the very journey which
they have refused to make prosperously in fair weather!

Then we are told that Imperial interests will be endangered by this
grant. I do not believe that that is so. The Boer mind moves by
definite steps from one political conception to another. I believe
they have definitely abandoned their old ambition of creating in South
Africa a United States independent of the British Crown, and have
accepted that other political ideal which is represented by the
Dominion of Canada and the Commonwealth of Australia. At any rate, no
people have a greater right to claim respect on the ground of their
loyal adherence to treaty engagements than the people of the Orange
River Colony; for every one knows that it was with a most faithful
adherence to their engagements, with almost Quixotic loyalty, that
they followed--many of them knowing where their fortune was going to
lead them, knowing full well what would be the result of their
action--their sister State into the disastrous struggle of the South
African war.

It is quite true that there is in existence at the present time--and I
think Lord Milner has pointed it out--no bond of love between the men
who fought us in that war and this country. I was reading the other
day a speech by Mr. Steyn. Mr. Steyn is, of course, one of the most
clearly avowed opponents of the British power. But Mr. Steyn is quite
clear upon this point. He says there is no bond of love, and it would
be untruthful and dishonest on their part to say that such a bond
existed. But, he says, there is another bond; there is such a thing as
a man's word of honour. "We gave our word of honour at Vereeniging,
and it is our intention to abide strictly by that." I state my opinion
as to the safety of the step we propose to take, but I cannot expect
the Members opposite to set much store by that, although it is an
honest and sincere opinion. But I will quote them an authority which I
am sure they will not dismiss without respect. As soon as the right
hon. Member for West Birmingham returned from South Africa, while his
experiences in that country were fresh in his mind, while he had but
newly been conversing with men of all parties there on the spot, the
scene of the struggle, he made a speech in this House which really
ought not to be overlooked by persons dealing with this question.

"Great importance," said the right hon. gentleman, "seems to be
attached to the view that in the interests of the two Colonies it is
desirable that a certain time, not a long time in the history of a
nation, but still a certain time should elapse before full
self-government is accorded. Whether a long time will elapse I really
cannot say. One thing is clear: if the population of the Transvaal and
Orange River Colony, both Boer and Briton, by a large majority,
desire this self-government, even although it might seem to us to be
premature, I should think it unwise to refuse it. I do not myself
believe there is any such danger connected with Imperial interests
that we should hesitate to accord it on that ground. The ground on
which I should desire that it might be delayed is really the interest
of the two Colonies themselves, and not any Imperial interest."

The peace and order of the Orange River Colony establish this case on
its merits. It is a State bound to moderation by the circumstance of
its geographical position. In all its history in South Africa it has
been largely dependent on the goodwill of its neighbours--goodwill and
friendly relations maintained with Natal and the Transvaal, on the one
hand, and with the Cape Colony on the other. It is inconceivable that
a State so situated in regard to its railways and its economic
position generally should be a disturbing influence from the point of
view of the different States of South Africa. But there is another
fact which justifies this grant, and that is the extraordinary
crimelessness in a political sense of the whole of that country. Let
the House remember that there had been three years' war, of which two
years were fierce guerilla fighting, and that on all sides there were
to be found desperate men who had been for a long period holding their
lives in their hands and engaged on every wild and adventurous foray.
Peace is agreed on, and what happens? Absolute order exists and
prevails throughout the whole country from that moment. There has not
been a single case of violent crime except, I believe, one murder
committed by a lunatic--hardly a case of sedition--and not a single
case of prosecution for treason of any kind. I say without hesitation
that in order to find a similar instance of swift transition from
violent warfare to law-abiding peace you have got to look back to the
days when the army of the Parliament was reviewed and disbanded at the
Restoration.

I submit to the House that a case for conferring responsible
government on the Orange River Colony is established on its merits.
But that is not the whole question before us this afternoon. We have
not merely to decide whether we will give a Constitution to the Orange
River Colony, but whether, having given a Constitution to the
Transvaal, we will deliberately withhold one from the Orange River
Colony; and that is an argument which multiplies the others which I
have used. On what ground could we refuse that equal treatment of the
Orange River Colony? There is only one ground which we could assign
for such a refusal, and that is that in the Orange River Colony there
is sure to be a Dutch majority. I cannot conceive any more fatal
assertion that could be made on the part of the Imperial Government
than that on this specific racial ground they were forced to refuse
liberties which otherwise they would concede. I say such a refusal
would be an insult to the hundreds and thousands of loyal Dutch
subjects the King has in all parts of South Africa, I say that this
invidious treatment of the Orange River Colony would be the greatest
blunder, a fitting pendant to all that long concatenation of fatal
mistakes which has marked our policy in South Africa for so many
years; and I say it would be a breach of the spirit of the terms of
peace, because we could not say, "We promised you self-government by
the terms of peace, but what we meant by that was that before you were
to have self-government, enough persons of British origin should have
arrived in the country to make quite sure you would be out-voted."

If we were to adopt such a course we should be false to that
agreement, which is the great foundation of our policy in South
Africa. I hope the House will earnestly sustain the importance of that
Vereeniging agreement. For the first time in many years the two white
races dwelling together in South Africa have found a common foundation
on which they can both build, a foundation much better than
Boomplaats, or the Sand River Convention, or the Conventions of 1880
and 1884, far better than Majuba Hill or the Jameson Raid. They have
found a foundation which they can both look to without any feeling of
shame--on the contrary, with feelings of equal honour, and I trust
also with feelings of mutual forgiveness.

On those grounds, therefore, we have decided to give to the Orange
River Colony full responsible government. We eschew altogether the
idea of treating them differently from the Transvaal, or interposing
any state of limited self-government between them and the full
enjoyment of their right. There is to be a Legislature which will
consist of two Chambers, as in the Transvaal. The First Chamber will
be elected upon a voters' basis and by manhood suffrage. The
residential qualification will be the same as in the Transvaal, six
months. The distribution of seats has been settled by general consent.
The Committee which we sent to South Africa, and which was so very
successful in arriving at an adjustment between the parties in the
Transvaal, has made similar investigations in the Orange River Colony,
and I think we may accept with confidence their recommendation. They
recommend that the number of members should be thirty-eight. The old
Volksraad had sixty members, but it was found to be much too large for
the needs of the country, and on several occasions efforts were made
to reduce the representation. Those efforts were not successful, from
the fact, which we can all appreciate, that it is very difficult
indeed to get a representative body to pass a self-denying ordinance
of that character which involves the extinction of its own members.
There will be separate representation of towns in the Orange River
Colony. In the Volksraad there was such a representation: there were
forty-two rural members and eighteen urban members. Out of the
thirty-eight we propose that there shall be twenty-seven rural
members and eleven urban members; rather less than a third of the
representation will be that of the small towns. That is a proportion
which is justified by the precedent of the old Constitution, and also
by the latest census.

There will be a Second Chamber, and, as in the Transvaal, it will be
nominated, for the first Parliament only, by the Governor, under
instructions from the Secretary of State. It is not an hereditary
Chamber; and it may be, therefore, assumed that the distribution of
Parties in that Chamber will be attended by some measure of
impartiality, and that there will be some general attempt to select
only those persons who are really fit to exercise the important
functions entrusted to them. But even so protected, the Government
feel that in the ultimate issue in a conflict between the two
Chambers, the first and representative Chamber must prevail. The other
body may review and may suspend, but for the case of measures sent up
in successive sessions from the representative Chamber on which no
agreement can be reached, we have introduced the machinery which
appears in the Constitution of the Australian Commonwealth, that both
Chambers shall sit together, debate together, vote together, and the
majority shall decide. The whole success of that operation depends
upon the numerical proportion observed between the two Chambers. In
the Australian Commonwealth the proportion of the First Chamber is
rather more than two to one; in the Transvaal the proportion will be
more than four to one, namely, sixty-five to fifteen; and in the
Orange River Colony it will be thirty-eight to eleven.

The other provisions of the Constitution will mainly follow the lines
of the Transvaal Constitution. The Constitution of the Orange River
Colony will become effective as soon as possible; and I should think
that the new Parliament might assemble in Bloemfontein some time
during the autumn of next year. When that work has been completed, and
the new Parliament has assembled, the main direction of South African
affairs in these Colonies will have passed from our hands.

Sir, it is the earnest desire of the Government to steer colonial
affairs out of English Party politics, not only in the interest of the
proper conduct of those affairs, but in order to clear the arena at
home for the introduction of measures which affect the masses of the
people. We have tried in South Africa to deal fairly between man and
man, to adjust conflicting interests and overlapping claims. We have
tried so far as possible to effect a broad-bottomed settlement of the
question which should command the assent of people even beyond the
great party groupings which support us.

Other liberties besides their own will be enshrined in these new
Parliaments. The people of South Africa, and, in a special measure,
the Boers, will become the trustees of freedom all over the world. We
have tried to act with fairness and good feeling. If by any chance our
counsels of reconciliation should come to nothing, if our policy
should end in mocking disaster, then the resulting evil would not be
confined to South Africa. Our unfortunate experience would be
trumpeted forth all over the world wherever despotism wanted a good
argument for bayonets, whenever an arbitrary Government wished to deny
or curtail the liberties of imprisoned nationalities. But if, on the
other hand, as we hope and profoundly believe, better days are in
store for South Africa, if the words of President Brand, "All shall
come right," are at length to be fulfilled, and if the near future
should unfold to our eves a tranquil, prosperous, consolidated
Afrikander nation under the protecting ægis of the British Crown,
then, the good also will not be confined to South Africa; then the
cause of the poor and the weak all over the world will have been
sustained; and everywhere small peoples will get more room to breathe,
and everywhere great empires will be encouraged by our example to step
forward--and it only needs a step--into the sunshine of a more gentle
and a more generous age.



LIBERALISM AND SOCIALISM

ST. ANDREW'S HALL, GLASGOW, _October 11, 1906_

(From _The Dundee Advertiser_, by permission.)


The first indispensable condition of democratic progress must be the
maintenance of European peace. War is fatal to Liberalism. Liberalism
is the world-wide antagonist of war. We have every reason to
congratulate ourselves upon the general aspect of the European
situation. The friendship which has grown up between Great Britain and
France is a source of profound satisfaction to every serious and
thinking man. The first duty of a nation is to make friends with its
nearest neighbour. Six years ago France was agitated in the throes of
the Dreyfus case, and Great Britain was plunged in the worst and most
painful period of the South African war; and both nations--conscious
as we are of one another's infirmities--were inclined to express their
opinion about the conduct of the other in unmeasured terms, and keen
antagonism resulted. What a contrast to-day! Ever since the King,
whose services in the cause of international peace are regarded with
affection in every quarter of his dominions, ever since by an act of
prescience and of courage his Majesty went to Paris, the relations
between Great Britain and France have steadily and progressively
improved, and to-day we witness the inspiring spectacle of these two
great peoples, the two most genuinely Liberal nations in the whole
world, locked together in a league of friendship under standards of
dispassionate justice and international goodwill. But it is absurd to
suppose that the friendship which we have established with France
should be in any degree a menace to any other European Power, or to
the great Power of Germany.

If the prospects on the European continent are bright and tranquil, I
think we have reason to feel also contentment at the course of
Colonial affairs. We have had unusual difficulties in the Colonies;
but in spite of every effort to excite Colonial apprehension for Party
purposes against a Liberal Ministry through the instrumentality of a
powerful press, the great States of the Empire have felt, and with
more assurance every day, that a Liberal Administration in Downing
Street will respect their rights and cherish their interests.

But I am drawn to South Africa by the memory that to-night, the 11th
of October, is the anniversary of the declaration of war; and I think
it is in South Africa that we have especial reason to be satisfied
with the course which events have taken, since we have been in any
degree responsible for their direction. One great advantage we have
had--a good foundation to build on. We have had the Treaty of
Vereeniging, by which peace was established between the Dutch and
British races in South Africa upon terms honourable to both. We have
had that treaty as our foundation--and what a mercy it is, looking
back on the past, to think that the nation followed Lord Rosebery's
advice at Chesterfield to terminate the war by a regular peace and a
regular settlement, and were not lured away, as Lord Milner would have
advised them, when he said that the war in a certain sense would never
be over, into a harsh policy of unconditional surrender and pitiless
subjugation.

The work of giving these free Constitutions to the two Colonies in
South Africa, so lately independent Republics, is in harmony with the
most sagacious instincts, and the most honoured traditions of the
Liberal Party. But I notice that Lord Milner, who, as we remember, was
once a Liberal candidate,--and who now appears before us sometimes in
the guise of a silent and suffering public servant, sometimes in the
aspect of an active, and even an acrid, political partisan, haranguing
his supporters and attacking his Majesty's Ministers,--Lord Milner
describes all this improving outlook as "the dreary days of reaction."
Progress and reaction are no doubt relative terms. What one man calls
progress another will call reaction. If you have been rapidly
descending the road to ruin and you suddenly check yourself, stop,
turn back, and retrace your steps, that is reaction, and no doubt your
former guide will have every reason to reproach you with
inconsistency. And it seems to me not at all unnatural that to one who
regards three years' desolating civil war as a period of healthy and
inspiring progress, a good deal of what his Majesty's Government have
lately done in South Africa must appear very dreary and reactionary
indeed.

But I would recommend you to leave this disconsolate proconsul alone.
I do not agree with him when he says that South Africa is passing
through a time of trial. South Africa is emerging from her time of
trial. The darkest period is behind her. Brighter prospects lie before
her. The improvement upon which we are counting is not the hectic
flush of a market boom, but the steady revival and accumulation of
agricultural and industrial productiveness. Soberly and solemnly men
of all parties and of both races in South Africa are joining together
to revive and to develop the prosperity of their own country. Grave
difficulties, many dangers, long exertions lie before them; but the
star of South Africa is already in the ascendant, and I look
confidently forward to the time when it will take its place, united,
federated, free, beside Canada and Australia, in the shining
constellation of the British Empire.

When we have dealt with subjects which lie outside our own island, let
us concentrate our attention on what lies within it, because the
gravest problems lie at home. I shall venture to-night to make a few
general observations upon those larger trendings of events which
govern the incidents and the accidents of the hour. The fortunes and
the interests of Liberalism and Labour are inseparably interwoven;
they rise by the same forces, and in spite of similar obstacles, they
face the same enemies, they are affected by the same dangers, and the
history of the last thirty years shows quite clearly that their power
of influencing public affairs and of commanding national attention
fluctuate together. Together they are elevated, together they are
depressed, and any Tory reaction which swept the Liberal Party out of
power would assuredly work at least proportionate havoc in the ranks
of Labour. That may not be a very palatable truth, but it is a truth
none the less.

Labour! It is a great word. It moves the world, it comprises the
millions, it combines many men in many lands in the sympathy of a
common burden. Who has the right to speak for Labour? A good many
people arrogate to themselves the right to speak for Labour. How many
political Flibbertigibbets are there not running up and down the land
calling themselves the people of Great Britain, and the social
democracy, and the masses of the nation! But I am inclined to think,
so far as any body of organised opinion can claim the right to speak
for this immense portion of the human race, it is the trade unions
that more than any other organisation must be considered the
responsible and deputed representatives of Labour. They are the most
highly organised part of Labour; they are the most responsible part;
they are from day to day in contact with reality. They are not mere
visionaries or dreamers weaving airy Utopias out of tobacco smoke.
They are not political adventurers who are eager to remodel the world
by rule-of-thumb, who are proposing to make the infinite complexities
of scientific civilisation and the multitudinous phenomena of great
cities conform to a few barbarous formulas which any moderately
intelligent parrot could repeat in a fortnight.

The fortunes of the trade unions are interwoven with the industries
they serve. The more highly organised trade unions are, the more
clearly they recognise their responsibilities; the larger their
membership, the greater their knowledge, the wider their outlook. Of
course, trade unions will make mistakes, like everybody else, will do
foolish things, and wrong things, and want more than they are likely
to get, just like everybody else. But the fact remains that for thirty
years trade unions have had a charter from Parliament which up to
within a few years ago protected their funds, and gave them effective
power to conduct a strike; and no one can say that these thirty years
were bad years of British industry, that during these thirty years it
was impossible to develop great businesses and carry on large
manufacturing operations, because, as everybody knows perfectly well,
those were good and expanding years of British trade and national
enrichment.

A few years ago a series of judicial decisions utterly changed the
whole character of the law regarding trade unions. It became difficult
and obscure. The most skilful lawyers were unable to define it. No
counsel knew what advice to tender to those who sought his guidance.
Meanwhile if, in the conduct of a strike, any act of an agent, however
unauthorised, transgressed the shadowy and uncertain border-line
between what was legal and what was not, an action for damages might
be instituted against the trade union, and if the action was
successful, trade union funds, accumulated penny by penny, year by
year, with which were inseparably intermingled friendly and benefit
moneys, might in a moment have been swept away. That was the state of
the law when his Majesty's present advisers were returned to power.
We have determined to give back that charter to the trade unions. The
Bill is even now passing through the House of Commons.

We are often told that there can be no progress for democracy until
the Liberal Party has been destroyed. Let us examine that. Labour in
this country exercises a great influence upon the Government. That is
not so everywhere. It is not so, for instance, in Germany, and yet in
Germany there is no Liberal Party worth speaking of. Labour there is
very highly organised, and the Liberal Party there has been destroyed.
In Germany there exists exactly the condition of affairs, in a Party
sense, that Mr. Keir Hardie and his friends are so anxious to
introduce here. A great social democratic party on the one hand, are
bluntly and squarely face to face with a capitalist and military
confederation on the other. That is the issue, as it presents itself
in Germany; that is the issue, as I devoutly hope it may never present
itself here. And what is the result? In spite of the great numbers of
the Socialist Party in Germany, in spite of the high ability of its
leaders, it has hardly any influence whatever upon the course of
public affairs. It has to submit to food taxes and to conscription;
and I observe that Herr Bebel, the distinguished leader of that Party,
at Mannheim the other day was forced to admit, and admitted with great
candour, that there was no other country in Europe so effectively
organised as Germany to put down anything in the nature of a violent
Socialist movement. That is rather a disquieting result to working men
of having destroyed the Liberal Party.

But we are told to wait a bit; the Socialist Party in Germany is only
three millions. How many will there be in ten years' time? That is a
fair argument. I should like to say this. A great many men can jump
four feet, but very few can jump six feet. After a certain distance
the difficulty increases progressively. It is so with the horse-power
required to drive great ships across the ocean; it is so with the
lifting power required to raise balloons in the air. A balloon goes up
quite easily for a certain distance, but after a certain distance it
refuses to go up any farther, because the air is too rarefied to float
it and sustain it. And, therefore, I would say let us examine the
concrete facts.

In France, before the Revolution, property was divided among a very
few people. A few thousand nobles and priests and merchants had all
the wealth in the country; twenty-five million peasants had nothing.
But in modern States, such as we see around us in the world to-day,
property is very widely divided. I do not say it is evenly divided. I
do not say it is fairly divided, but it is very widely divided.
Especially is that true in Great Britain. Nowhere else in the world,
except, perhaps, in France and the United States, are there such vast
numbers of persons who are holders of interest-bearing,
profit-bearing, rent-earning property, and the whole tendency of
civilisation and of free institutions is to an ever-increasing volume
of production and an increasingly wide diffusion of profit. And
therein lies the essential stability of modern States. There are
millions of persons who would certainly lose by anything like a
general overturn, and they are everywhere the strongest and best
organised millions. And I have no hesitation in saying that any
violent movement would infallibly encounter an overwhelming
resistance, and that any movement which was inspired by mere class
prejudice, or by a desire to gain a selfish advantage, would encounter
from the selfish power of the "haves" an effective resistance which
would bring it to sterility and to destruction.

And here is the conclusion to which I lead you. Something more is
needed if we are to get forward. There lies the function of the
Liberal Party. Liberalism supplies at once the higher impulse and the
practicable path; it appeals to persons by sentiments of generosity
and humanity; it proceeds by courses of moderation. By gradual steps,
by steady effort from day to day, from year to year, Liberalism
enlists hundreds of thousands upon the side of progress and popular
democratic reform whom militant Socialism would drive into violent
Tory reaction. That is why the Tory Party hate us. That is why they,
too, direct their attacks upon the great organisation of the Liberal
Party, because they know it is through the agency of Liberalism that
society will be able in the course of time to slide forward, almost
painlessly--for the world is changing very fast--on to a more even and
a more equal foundation. That is the mission that lies before
Liberalism. The cause of the Liberal Party is the cause of the
left-out millions; and because we believe that there is in all the
world no other instrument of equal potency and efficacy available at
the present time for the purposes of social amelioration, we are bound
in duty and in honour to guard it from all attacks, whether they arise
from violence or from reaction.

There is no necessity to-night to plunge into a discussion of the
philosophical divergencies between Socialism and Liberalism. It is not
possible to draw a hard-and-fast line between individualism and
collectivism. You cannot draw it either in theory or in practice. That
is where the Socialist makes a mistake. Let us not imitate that
mistake. No man can be a collectivist alone or an individualist alone.
He must be both an individualist and a collectivist. The nature of man
is a dual nature. The character of the organisation of human society
is dual. Man is at once a unique being and a gregarious animal. For
some purposes he must be collectivist, for others he is, and he will
for all time remain, an individualist. Collectively we have an Army
and a Navy and a Civil Service; collectively we have a Post Office,
and a police, and a Government; collectively we light our streets and
supply ourselves with water; collectively we indulge increasingly in
all the necessities of communication. But we do not make love
collectively, and the ladies do not marry us collectively, and we do
not eat collectively, and we do not die collectively, and it is not
collectively that we face the sorrows and the hopes, the winnings and
the losings of this world of accident and storm.

No view of society can possibly be complete which does not comprise
within its scope both collective organisation and individual
incentive. The whole tendency of civilisation is, however, towards the
multiplication of the collective functions of society. The
ever-growing complications of civilisation create for us new services
which have to be undertaken by the State, and create for us an
expansion of the existing services. There is a growing feeling, which
I entirely share, against allowing those services which are in the
nature of monopolies to pass into private hands. There is a pretty
steady determination, which I am convinced will become effective in
the present Parliament, to intercept all future unearned increment
which may arise from the increase in the speculative value of the
land. There will be an ever-widening area of municipal enterprise. I
go farther; I should like to see the State embark on various novel
and adventurous experiments, I am delighted to see that Mr. Burns is
now interesting himself in afforestation. I am of opinion that the
State should increasingly assume the position of the reserve employer
of labour. I am very sorry we have not got the railways of this
country in our hands. We may do something better with the canals, and
we are all agreed, every one in this hall who belongs to the
Progressive Party, that the State must increasingly and earnestly
concern itself with the care of the sick and the aged, and, above all,
of the children.

I look forward to the universal establishment of minimum standards of
life and labour, and their progressive elevation as the increasing
energies of production may permit. I do not think that Liberalism in
any circumstances can cut itself off from this fertile field of social
effort, and I would recommend you not to be scared in discussing any
of these proposals, just because some old woman comes along and tells
you they are Socialistic. If you take my advice, you will judge each
case on its merits. Where you find that State enterprise is likely to
be ineffective, then utilise private enterprises, and do not grudge
them their profits.

The existing organisation of society is driven by one
mainspring--competitive selection. It may be a very imperfect
organisation of society, but it is all we have got between us and
barbarism. It is all we have been able to create through unnumbered
centuries of effort and sacrifice. It is the whole treasure which past
generations have been able to secure, and which they have been able to
bequeath; and great and numerous as are the evils of the existing
condition of society in this country, the advantages and achievements
of the social system are greater still. Moreover, that system is one
which offers an almost indefinite capacity for improvement. We may
progressively eliminate the evils; we may progressively augment the
goods which it contains. I do not want to see impaired the vigour of
competition, but we can do much to mitigate the consequences of
failure. We want to draw a line below which we will not allow persons
to live and labour, yet above which they may compete with all the
strength of their manhood. We want to have free competition upwards;
we decline to allow free competition to run downwards. We do not want
to pull down the structures of science and civilisation: but to
spread a net over the abyss; and I am sure that if the vision of a
fair Utopia which cheers the hearts and lights the imagination of the
toiling multitudes, should ever break into reality, it will be by
developments through, and modifications in, and by improvements out
of, the existing competitive organisation of society; and I believe
that Liberalism mobilised, and active as it is to-day, will be a
principal and indispensable factor in that noble evolution.

I have been for nearly six years, in rather a short life, trained as a
soldier, and I will use a military metaphor. There is no operation in
war more dangerous or more important than the conduct of a rear-guard
action and the extrication of a rear-guard from difficult and broken
ground. In the long war which humanity wages with the elements of
nature the main body of the army has won its victory. It has moved out
into the open plain, into a pleasant camping ground by the water
springs and in the sunshine, amid fair cities and fertile fields. But
the rear-guard is entangled in the defiles, the rear-guard is still
struggling in mountainous country, attacked and assailed on every side
by the onslaughts of a pitiless enemy. The rear-guard is encumbered
with wounded, obstructed by all the broken vehicles that have fallen
back from the main line of the march, with all the stragglers and
weaklings that have fallen by the way and can struggle forward no
farther. It is to the rear-guard of the army that attention should be
directed. There is the place for the bravest soldiers and the most
trusted generals. It is there that all the resources of military
science and its heaviest artillery should be employed to extricate the
rear-guard--not to bring the main army back from good positions which
it occupies, not to throw away the victory which it has won over the
brute forces of nature--but to bring the rear-guard in, to bring them
into the level plain, so that they too may dwell in a land of peace
and plenty.

That is the aim of the Liberal Party, and if we work together we will
do something for its definite accomplishment.



IMPERIAL PREFERENCE


I

IMPERIAL CONFERENCE,[2] DOWNING STREET, _May 7, 1907_


The economic aspect of Imperial Preference, both from the point of
view of trade and of finance, has already been dealt with very fully
by the Chancellor of the Exchequer and the President of the Board of
Trade, and I desire in the few observations with which I shall venture
to trespass upon the indulgence of the Conference to refer very
little to the economic aspect, and rather to examine one or two points
about this question of a political, of a Parliamentary, and almost of
a diplomatic character. I want to consider for a moment what would be
the effect of a system of preferences upon the course of Parliamentary
business. The course of Colonial affairs in the House of Commons is
not always very smooth or very simple, and I am bound to say that,
having for eighteen months been responsible for the statements on
behalf of this Department which are made to the House of Commons, I
feel that enormous difficulties would be added to the discharge of
Colonial business in the House of Commons, if we were to involve
ourselves in a system of reciprocal preferences. Every one will agree,
from whatever part of the King's dominions he comes, or to whatever
Party he belongs, that Colonial affairs suffer very much when brought
into the arena of British Party politics. Sometimes it is one Party
and sometimes it is another which is constrained to interfere in the
course of purely Colonial affairs, and such interferences are nearly
always fraught with vexation and inconvenience to the Dominions
affected.

Now, the system of Imperial preference inevitably brings Colonial
affairs into the Parliamentary and the Party arena; and, if I may say
so, it brings them into the most unpleasant part of Parliamentary and
political work--that part which is concerned with raising the taxation
for each year. It is very easy to talk about preference in the
abstract and in general terms, and very many pleasant things can be
said about mutual profits and the good feeling which accrues from
commercial intercourse. But in regard to preference, as in regard to
all other tariff questions, the discussion cannot possibly be
practical, unless the propositions are formulated in precise, exact,
and substantial detail. Many people will avow themselves in favour of
the principle of preference who would recoil when the schedule of
taxes was presented to their inspection.

I, therefore, leave generalities about preference on one side. I leave
also proposals which have been discussed that we should give a
preference on existing duties. It is quite clear that no preference
given upon existing duties could possibly be complete or satisfactory.
It could at the very best only be a beginning, and Dr. Jameson and Dr.
Smartt, when they urged us with so much force to make a beginning by
giving a preference on South African tobacco, have clearly recognised
and frankly stated, that that preference would in itself be of small
value, but that it would be welcomed by them as conceding "the larger
principle." Therefore, we are entitled to say, that before us at this
Conference is not any question of making a small or tentative
beginning on this or that particular duty, but we have to make up our
minds upon the general principle of the application of a reciprocal
preference to the trade relations of the British Empire.

If that be so, surely the representatives of the self-governing
Dominions who ask us to embark on such a system, ought to state
squarely and abruptly the duties which in their opinion would be
necessary to give effect to such a proposal. The question whether raw
material is to be taxed is absolutely vital to any consideration of
Imperial preference. Although it is no doubt a very good answer, when
the direct question is raised,--What are your notions? to say that the
Colonies would leave that to the Mother Country, those who urge upon
us a system of reciprocal preference are bound to face the conclusions
of their own policy, and are bound to recognise that that request, if
it is to be given effect to in any symmetrical, logical, complete,
satisfactory, or even fair and just manner, must involve new taxes to
us on seven or eight staple articles of consumption in this country. I
lay it down, without hesitation, that no fair system of Imperial
preference can be established which does not include taxes on bread,
on meat, on that group of food-stuffs classified under the head of
dairy produce, on wool and leather, and on other necessaries of
industry.

If that be so, seven or eight new taxes would have to be imposed to
give effect to this principle you have brought before us. Those taxes
would have to figure every year in our annual Budget. They would have
to figure in the Budget resolutions of every successive year in the
House of Commons. There will be two opinions about each of these
taxes; there will be those who like them and favour the principle, and
who will applaud the policy, and there will be those who dislike them.
There will be the powerful interests which will be favoured and the
interests which will be hurt by their adoption. So you will have, as
each of those taxes comes up for the year, a steady volume of
Parliamentary criticism directed at it.

Now that criticism will, I imagine, flow through every channel by
which those taxes may be assailed. It will seek to examine the value,
necessarily in a canvassing spirit, of the Colonial Preferences as a
return for which these taxes are imposed. It will seek to dwell upon
the hardship to the consumers in this country of the taxes themselves.
It will stray farther, I think, and it will examine the contributions
which the self-governing Dominions make to the general cost of
Imperial defence; and will contrast those contributions with a severe
and an almost harsh exactitude with the great charges borne by the
Mother Country.

There has just been a debate upon that subject in the House of
Commons; but the manner in which that question when raised was
received by the whole House, ought, I think, to give great
satisfaction to the representatives of the self-governing Dominions.
We then refused to embark upon a policy of casting-up balances as
between the Colonies and the Mother Country, and, speaking on behalf
of the Colonial Office, I said that the British Empire existed on the
principles of a family and not on those of a syndicate. But the
introduction of those seven or eight taxes into the Budget of every
year will force a casting-up of balances every year from a severe
financial point of view. It has been said, and will be generally
admitted, that there is no such thing in this country as an
anti-Colonial party. It does not exist. Even parties, like the Irish
Party, not reconciled to the British Government, who take no part in
our public ceremonial, are glad to take opportunities of showing the
representatives of the self-governing Dominions that they welcome them
here, and desire to receive them with warmth and with cordiality. But
I cannot conceive any process better calculated to manufacture an
anti-Colonial party, than this process of subjecting to the scrutiny
of the House of Commons year by year, through the agency of taxation,
the profit and loss account, in its narrow, financial aspect, of the
relations of Great Britain and her Dominions and dependencies.

Then this system of reciprocal preference, at its very outset, must
involve conflict with the principle of self-government, which is the
root of all our Colonial and Imperial policy. The whole procedure of
our Parliament arises primarily from the consideration of finance,
and finance is the peg on which nearly all our discussions are hung,
and from which many of them arise. That is the historic origin of a
great portion of the House of Commons procedure, and there is no more
deeply rooted maxim than the maxim of "grievances before supply." Now,
let me suppose a system of preference in operation. When the taxes
came up to be voted each year, members would use those occasions for
debating Colonial questions. I can imagine that they would say: We
refuse to vote the preference tax to this or that self-governing
Dominion, unless or until our views, say, on native policy or some
other question of internal importance to the Dominion affected have
been met and have been accepted. At present, it is open to the Colony
affected to reply: These matters are matters which concern us; they
are within the scope of responsible, self-governing functions, and you
are not called upon to interfere. It is open for the Dominion
concerned to say that. It is also open for the representative of the
Colonial Office in the House of Commons to say that, too, on their
behalf.

But it will no longer be open, I think, for any such defence to be
offered when sums of money, or what would be regarded as equivalent
to sums of money, have actually to be voted in the House of Commons
through the agency of these taxes for the purpose of according
preference to the different Dominions of the Crown, and I think
members will say, "If you complain of our interference, why do you
force us to interfere? You have forced us to consider now whether we
will or will not grant a preference to this or that particular
Dominion for this year. We say we are not prepared to do so unless or
until our views upon this or that particular internal question in that
Dominion have been met and agreed to." I see a fertile, frequent, and
almost inexhaustible source of friction and vexation arising from such
causes alone.

There is a more serious infringement, as it seems to me, upon the
principle of self-government. The preferences which have hitherto been
accorded to the Mother Country by the self-governing States of the
British Empire are free preferences. They are preferences which have
been conceded by those States, in their own interests and also in our
interests. They are freely given, and, if they gall them, can as
freely be withdrawn; but the moment reciprocity is established and an
agreement has been entered into to which both sides are parties, the
moment the preferences become reciprocal, and there is a British
preference against the Australian or Canadian preferences, they become
not free preferences, but what I venture to call locked preferences,
and they cannot be removed except by agreement, which is not likely to
be swiftly or easily attained.

Now I must trench for one moment upon the economic aspect. What does
preference mean? It can only mean one thing. It can only mean better
prices. It can only mean better prices for Colonial goods. I assert,
without reserve, that preference can only operate through the agency
of price. All that we are told about improving and developing the
cultivation of tobacco in South Africa, and calling great new areas
for wheat cultivation into existence in Australia, depends upon the
stimulation of the production of those commodities, through securing
to the producers larger opportunities for profit. I say that unless
preference means better prices it will be ineffective in achieving the
objects for the sake of which it is urged. But the operation of
preference consists, so far as we are concerned, in putting a penal
tax upon foreign goods, and the object of putting that penal tax on
foreign goods is to enable the Colonial supply to rise to the level of
the foreign goods plus the tax, and by so conferring upon the Colonial
producer a greater reward, to stimulate him more abundantly to cater
for the supply of this particular market. I say, therefore, without
hesitation, that the only manner in which a trade preference can
operate is through the agency of price. If preference does not mean
better prices it seems to me a great fraud on those who are asked to
make sacrifices to obtain it; and by "better" prices I mean higher
prices--that is to say, higher prices than the goods are worth, if
sold freely in the markets of the world.

I am quite ready to admit that the fact that you make a particular
branch of trade more profitable, induces more people to engage in that
branch of trade. That is what I call stimulating Colonial production
through the agency of price. I am quite prepared to admit that a very
small tax on staple articles would affect prices in a very small
manner. Reference has been made to the imposition of a shilling duty
on corn, and I think it was Mr. Moor[3] who said, yesterday, that
when the shilling duty was imposed prices fell, and when it was taken
off prices rose. That may be quite true. I do not know that it is
true, but it may be. The imposition of such a small duty as a shilling
on a commodity produced in such vast abundance as wheat, might quite
easily be swamped or concealed by the operation of other more powerful
factors. A week of unusual sunshine, or a night of late frost, or a
ring in the freights, or violent speculation, might easily swamp and
cover the operation of such a small duty; but it is the opinion of
those whose economic views I share--I cannot put it higher than
that--that whatever circumstances may apparently conceal the effect of
the duty on prices, the effect is there all the same, and that any
duty that is imposed upon a commodity becomes a factor in the price of
that commodity. I should have thought that was an almost incontestable
proposition.

Here you have the two different sides of the bargain, the sellers and
the buyers, the sellers trying to get all they can, and the buyers
trying to give as little as they can. An elaborate process of what is
called "the higgling of the market" goes on all over the world between
exchanges linked up by telegraph, whose prices vary to a sixteenth
and a thirty-second. We are invited to believe that with all that
subtle process of calculation made from almost minute to minute
throughout the year, the imposition of a duty or demand for £1,000,000
or £2,000,000 for this or that Government, placed suddenly upon the
commodity in question as a tax, makes no difference whatever to the
cost to the consumer; that it is borne either by the buyer or by the
seller, or provided in some magical manner. As a matter of fact, the
seller endeavours to transmit the burden to the purchaser, and the
purchaser places it upon the consumer as opportunity may occur in
relation to the general market situation all over the world.

That is by way of digression, only to show that we believe that a tax
on a commodity is a factor in its price, which I thought was a
tolerably simple proposition. What a dangerous thing it will be, year
after year, to associate the idea of Empire, of our kith and kin
beyond the seas, of these great, young, self-governing Dominions in
which our people at present take so much pride, with an enhancement,
however small, in the price of the necessary commodities of the life
and the industry of Britain! It seems to me that, quite apart from
the Parliamentary difficulty to which I have referred, which I think
would tend to organise and create anti-Colonial sentiment, you would,
by the imposition of duties upon the necessaries of life and of
industry, breed steadily year by year, and accumulate at the end of a
decade a deep feeling of sullen hatred of the Colonies, and of
Colonial affairs among those poorer people in this country to whom Mr.
Lloyd George referred so eloquently yesterday, and whose case, when
stated, appeals to the sympathy of every one round this table. That
would be a great disaster.

But there is another point which occurs to me, and which I would
submit respectfully to the Conference in this connection. Great
fluctuations occur in the price of all commodities which are subject
to climatic influences. We have seen enormous fluctuations in meat and
cereals and in food-stuffs generally from time to time in the world's
markets. Although we buy in the markets of the whole world we observe
how much the price of one year varies from that of another year. These
fluctuations are due to causes beyond our control. We cannot control
the causes which make the earth refuse her fruits at a certain
season, nor can we, unfortunately, at present, control the speculation
which always arises when an unusual stringency is discovered. Compared
to these forces, the taxes which you suggest should be imposed upon
food and raw materials might, I admit, be small, but they would be the
only factor in price which would be absolutely in our control.

If, from circumstances which we may easily imagine, any of the great
staple articles which were the subject of preference should be driven
up in price to an unusual height, there would be a demand--and I think
an irresistible demand--in this country that the tax should be
removed. The tax would bear all the unpopularity. People would say:
"This, at any rate, we can take off, and relieve the burden which is
pressing so heavily upon us." But now see the difficulty in which we
should then be involved. At present all our taxes are under our own
control. An unpopular tax can be removed; if the Government will not
remove it they can be turned out and another Government to remove the
tax can be got from the people by election. It can be done at once.
The Chancellor of the Exchequer can come down to the House and the
tax can be repealed if there is a sufficiently fierce demand for it.

But these food taxes by which you seek to bind the Empire
together--these curious links of Empire which you are asking us to
forge laboriously now--would be irremovable, and upon them would
descend the whole weight and burden of popular anger in time of
suffering. They would be irremovable, because fixed by treaty with
self-governing Dominions scattered about all over the world, and in
return for those duties we should have received concessions in
Colonial tariffs on the basis of which their industries would have
grown up tier upon tier through a long period of time.

Although, no doubt, another Conference hastily assembled might be able
to break the shackle which would fasten us--to break that fiscal bond
which would join us together and release us from the obligation--that
might take a great deal of time. Many Parliaments and Governments
would have to be consulted, and all the difficulties of distance would
intervene to prevent a speedy relief from that deadlock. If the day
comes in this country when you have a stern demand--and an
overwhelming demand of a Parliament, backed by a vast population
suffering acutely from high food-prices--that the taxes should be
removed, and on the other hand the Minister in charge has to get up
and say that he will bring the matter before the next Colonial
Conference two years hence, or that he will address the
representatives of the Australian or Canadian Governments through the
agency of the Colonial Office, and that in the meanwhile nothing can
be done--when you have produced that situation, then, indeed, you will
have exposed the fabric of the British Empire to a wrench and a shock
which it has never before received, and which any one who cares about
it, cannot fail to hope that it may never sustain.

Such a deadlock could not be relieved merely by goodwill on either
side. When you begin to deflect the course of trade, you deflect it in
all directions and for all time in both countries which are parties to
the bargain. Your industries in your respective Colonies would have
exposed themselves to a more severe competition from British goods in
their markets, and would have adjusted themselves on a different
basis, in consequence. Some Colonial producers would have made
sacrifices in that respect for the sake of certain advantages which
were to be gained by other producers in their country through a
favoured entry into our market. That one side of the bargain could be
suddenly removed, without inflicting injustice on the other party to
the bargain, appears to me an impossibility.

I submit that preferences, even if economically desirable, would prove
an element of strain and discord in the structure and system of the
British Empire. Why, even in this Conference, what has been the one
subject on which we have differed sharply? It has been this question
of preference. It has been the one apple of discord which has been
thrown into the arena of our discussions. It is quite true we meet
here with a great fund of goodwill on everybody's part, on the part of
the Mother Country and on the part of the representatives of the
self-governing Dominions--a great fund of goodwill which has been
accumulated over a long period of time when each party to this great
confederation has been free to pursue its own line of development
unchecked and untrammelled by interference from the other.

We have that to start upon, and consequently have been able to discuss
in a very frank and friendly manner all sorts of questions. We have
witnessed the spectacle of the British Minister in charge of the trade
of this country defending at length and in detail the fiscal
system--the purely domestic, internal fiscal system of this
country--from very severe, though perfectly friendly and courteous
criticism on the part of the other self-governing communities. If that
fund of goodwill to which I have referred had been lacking, if ever a
Conference had been called together when there was an actual
anti-colonial party in existence, when there was really a deep hatred
in the minds of a large portion of the people of this country against
the Colonies and against taxation which was imposed at the request or
desire of the Colonies, then I think it is quite possible that a
Conference such as this would not pass off in the smooth and friendly
manner in which this has passed off.

You would hear recrimination and reproaches exchanged across the
table; you would hear assertions made that the representatives of the
different States who were parties to the Conference were not really
representatives of the true opinion of their respective populations,
that the trend of opinion in the country which they professed to
represent was opposed to their policy and would shortly effect a
change in the views which they put forward. You would find all these
undemocratic assertions that representatives duly elected do not
really speak in the name of their people, and you would, of course,
find appeals made over the heads of the respective Governments to the
party organisations which supported them or opposed them in the
respective countries from which they came. That appears to me to open
up possibilities of very grave and serious dangers in the structure
and fabric of the British Empire, from which I think we ought to
labour to shield it.

My right honourable friend the Chancellor of the Exchequer has told
the Conference with perfect truth--in fact it may have been even an
under-estimate--that if he were to propose the principle of preference
in the present House of Commons, it would be rejected by a majority of
three to one. But even if the present Government could command a
majority for the system, they would have no intention whatever of
proposing it. It is not because we are not ready to run electoral
risks that we decline to be parties to a system of preference; still
less is it because the present Government is unwilling to make
sacrifices, in money or otherwise, in order to weave the Empire more
closely together. I think a very hopeful deflection has been given to
our discussion when it is suggested that we may find a more convenient
line of advance by improving communications, rather than by erecting
tariffs--by making roads, as it were, across the Empire, rather than
by building walls. It is because we believe the principle of
preference is positively injurious to the British Empire, and would
create, not union, but discord, that we have resisted the proposal.

It has been a source of regret to all of us that on this subject we
cannot come to an agreement. A fundamental difference of opinion on
economics, no doubt, makes agreement impossible; but although we
regret that, I do not doubt that in the future, when Imperial
unification has been carried to a stage which it has not now reached,
and will not, perhaps, in our time attain, people in that more
fortunate age will look back to the Conference of 1907 as a date in
the history of the British Empire when one grand wrong turn was
successfully avoided.

FOOTNOTES:

[2] The following, among others, were present at the Conference:

The Earl of Elgin, Secretary of State for the Colonies; Sir Wilfrid
Laurier, Prime Minister of Canada; Sir F.W. Borden, Minister of Militia
and Defence (Canada); Mr. L.P. Brodeur, Minister of Marine and
Fisheries (Canada); Mr. Deakin, Prime Minister of the Commonwealth of
Australia; Sir W. Lyne, Minister of Trade and Customs (Australia); Sir
Joseph Ward, Prime Minister of New Zealand; Dr. L.S. Jameson, Prime
Minister of Cape Colony; Dr. Smartt, Commissioner of Public Works (Cape
Colony); Sir Robert Bond, Prime Minister of Newfoundland; Mr. F.R.
Moor, Prime Minister of Natal; General Botha, Prime Minister of the
Transvaal; Sir J.L. Mackay, on behalf of the India Office.

[3] The Prime Minister of Natal.



IMPERIAL PREFERENCE

II

HOUSE OF COMMONS, _July 15, 1907_

    Mr. Lyttelton had moved the following vote of censure:

      "That this House regrets that his Majesty's Government
      have declined the invitation unanimously preferred by the
      Prime Ministers of the self-governing Colonies, to
      consider favourably any form of Colonial Preference or
      any measures for closer commercial union of the Empire on
      a preferential basis." (Mr. Lyttelton.)

    This was met on behalf of the Government by the following
    Amendment:

      "To leave out all after the word 'that' and add the words
      'In the opinion of this House, the permanent unity of the
      British Empire will not be secured through a system of
      preferential duties based upon the protective taxation of
      food.'" (Mr. Soares)

    The vote of censure was rejected, and the Amendment carried
    by 404 to 111.


A vote of censure is a very serious thing. When it is moved with great
formality on behalf of the official Opposition, it is intended always
to raise a plain and decisive issue. I must, however, observe that of
all the votes of censure which have been proposed in recent times in
this House, the one we are now discussing is surely the most curious.
The last Government was broken up three years ago on this very
question of Imperial preference. After the Government had been broken
up, a continuous debate proceeded in the country for two years and a
half, and it was terminated by the general election. This Parliament
is the result of that election, and there is not a single gentleman on
this Ministerial Bench who is not pledged, in the most specific terms,
not to grant a preferential tariff to the Colonies. Now, because we
have kept that promise, because we are opposed to preferential
tariffs, because we have declined to grant preferential tariffs, and
because we have done what all along we declared we were going to do,
and were returned to do, we are made the object of this vote of
censure.

It may be said, "We do not blame you for keeping your promise, but for
making the pledge." But what did the Leader of the Opposition promise?
He promised most emphatically before the election that if he were in
power as Prime Minister when this Colonial Conference took place, he
would not grant preference to the Colonies. On many occasions the
right hon. gentleman said that not one, but two elections would be
necessary before he would be entitled to take that tremendous step. I
have the right hon. gentleman's words here. Speaking at Manchester in
January 1905, the right hon. gentleman said: "If that scheme were
carried out, I do not see that we could be called on to decide the
colonial aspect of this question until not only one, but two elections
have passed." Yet the right hon. gentleman is prepared, I presume, to
join in a vote of censure on his Majesty's Government for not granting
that preference which he himself was prohibited from granting by the
most precise and particular engagement.

Is it a vote of censure on the Government at all? Is it not really a
vote of censure on the general election? Is it not a cry of petulant
vexation at the natural, ordinary, long-expected sequence of events?

The right hon. gentleman[4] who moved the Resolution made a very mild
and conciliatory speech. But he confined himself to generalities. He
avoided anything like a statement of concrete proposals which he
thinks the Government ought to adopt. Those who take part in this
controversy nowadays avoid any statement of the concrete proposals
that would follow if their view were adopted. We are told what a
splendid thing preference is, what noble results it would achieve,
what inexpressible happiness and joy it would bring to all parts of
the Empire and to all parts of the earth, what wealth would be
created, how the Exchequer would gain, and how the food of the people
would cheapen in price. But, though the Government is blamed for not
acting on these suggestions, we are never told what is the schedule of
taxes which it is proposed to introduce to give effect to these
splendid and glittering aspirations.

It is perfectly impossible to discuss colonial preference apart from
the schedule of duties on which it is to be based. It is idle to
attempt to discuss it without a definite proposal as to the subjects
of taxation and as to the degree to which those different subjects are
to be taxed. And the right hon. gentleman the Member for West
Birmingham, when he dealt with this question, felt that in common
fairness he must be precise and definite. We know what he proposed in
the way of taxation on corn, meat, fruit, and dairy produce. What we
want to know is this. Is that tariff before us now? Do the Opposition
stand by the right hon. Member for West Birmingham, or do they abandon
him? That is what the House and the Government want to know--and that
is what the Colonies want to know. It is indispensable to the
discussion of this question that there should be a clear statement
from the Leader of the Opposition whether or not we are to regard the
Glasgow preferential tariff of the right hon. Member for West
Birmingham as still current as a practical policy.

Then the House has been told that the Government might have given a
preference on dutiable articles. Such a preference would introduce
into our fiscal system an entirely new, and, as the Government think,
the wholly vicious feature of discriminating between one class of
producers and another. The whole basis of our financial and fiscal
policy is, that it draws no distinction whatever between different
classes of producers, whether they reside here or abroad, whether they
live in foreign countries or in our Colonies. I am quite prepared to
state that proposition in its simplest form. That is the fundamental
principle of our fiscal system, and there is no discrimination. We
have but one measure to give to those who trade with us--the just
measure of equality, and there can be no better measure than that.

We are charged with pedantry in dealing with the Colonial Conference,
through not making some concession upon existing dutiable articles.
The Colonial representatives, when they asked for a preference on wine
and tobacco, did not ask for it because it was of value to them by
itself. They knew well that the operation of such a preference must be
unfair and unequal. They knew well that Canada, which has the most
solid claims upon us for a preferential recognition, would receive no
benefit from such a preference. But the Colonial representatives of
South Africa asked for a preference on wine and tobacco in order that,
as they avowed with candour, we should "concede the principle." That
is a perfectly proper proceeding on their part; it is the natural way
of advancing the views which they hold, because it would lead up to
the larger principle and the larger policy.

But the Government are opposed in this case to "the larger policy."
The Government sit now on these Benches because they are opposed to it
as a Government and as a Party. It is one of the fundamental
conditions of our existence that we are opposed to such a policy. How,
then, by any process of argument, can the Government be censured for
not making an exception which must inevitably have led to and would
avowedly have been used for the breaking of the great rule to which
they have committed themselves?

It is a dangerous thing in this controversy, with the ugly rush of
vested interests always lying in the wake of the Protectionist
movement to be considered, to make even verbal concessions. Some time
ago I made a speech in which I said that there was no objection to the
extension of inter-colonial preference. By this I meant the reduction
of duties between Colonies which have already a discriminating tariff;
and it seemed to me in such a case that there is a net reduction of
duty to the good. I do not see any objection to that, because under
the most-favoured-nation principle we gain any advantage which is
gained by either party to the transaction. In any case, the sums
involved in inter-colonial preference at the present time are
extremely small, and, however that might be, the matter is one which
is wholly outside our control, because we have no authority over the
Colonies in this respect, and we may just as well look pleasant about
it and accord a sympathetic attitude to such a process.

Yes; but let those who reproach us with pedantry and with not showing
a sympathetic desire to meet the Colonies listen to this: When such a
statement is made by a Minister, is it accepted as a desire on the
part of the Government to extend sympathetic treatment to the
Colonies? Not at all. It is taken as an admission, and used for the
purpose of trying to pretend that the Government have abandoned the
principle of their opposition to the larger question of Imperial
preference. If, although we think them unsatisfactory, we were, out of
complaisance, to accord the small preferences suggested upon dutiable
articles, we should be told in a minute that we had given up every
logical foothold against preference, and that nothing prevented us
imposing a tax on bread and meat except our inability to follow the
drift of our own arguments.

I have referred to preference, but there is another proposal. The
right hon. gentleman the Member for St. George's, Hanover Square, put
forward a proposal earlier in the year, and it was renewed in a
slightly different form by Mr. Deakin[5] at the Conference. The
proposal was to impose a 1 per cent. _ad valorem_ surtax on all
foreign merchandise coming into the ports of the British Empire. That
is the proposal which has been put forward as the least objectionable
form of the preferential proposals, and it has been said of it that it
was the least objectionable because it gave no loophole for the
corruption which may spring up in the wake of the other proposals.

Let me ask the House to examine this proposal for a moment. Has any
serious, civilised Government--I ask for information--ever been to the
pains and trouble of erecting round their coasts a tariff, with all
its complications, with the need of exacting certificates of origin on
every class of goods, with the need of demanding strict assessment of
all commodities brought to their shores--has any nation ever erected
the vast and complicated network which would be involved in such a
duty, simply for the paltry purpose of imposing a duty of 1 per cent.?
I say there is no argument and no reason for such a course, and the
only argument which could justify it is the argument used by Dr.
Smartt at the Colonial Conference when he said (page 514 of the Blue
Book), "The foreigner pays, and we do not." Mr. Deakin felt the force
of the objection which would be entertained in this country to
introducing such a tariff as the right hon. gentleman has proposed,
simply for fiscal purposes, and he proceeded to say that Great
Britain, if she was a party to such a bargain, should be permitted to
raise the money in her own way, and to contribute her proportion to
the common fund. That was a great concession to the self-government of
the Mother Country.

There is no doubt a great difference between subventions and
preferences. A subvention may be raised by a perfectly orthodox fiscal
process. No more money is taken from the taxpayer than is required.
The whole yield of the tax by which the subvention may be raised
certainly goes to the Exchequer, and when the subvention is paid to
the foreign or Colonial Government, it does not go, as a preference
would go, to benefit particular interests in the Colony, but it goes
to the Government of the Colony for the general purposes of State, and
not for private advantage on either side. Therefore it seems to me
that the method of subvention is on all grounds to be preferred to the
method of preference.

It is of course necessary, however, in examining a question of
subvention to look at it on its merits. This proposal of 1 per cent.
put forward by Mr. Deakin carried the support of the official
spokesman of the Opposition. Let us look at it on its merits. Look
first at the proportions on which this new fund was to be subscribed.
Canada was "to dedicate"--that was the expression used by Mr.
Deakin--£400,000, New Zealand £20,000, Newfoundland £6,000, Cape
Colony £40,000, Natal £26,000, Great Britain £4,500,000, and
Australia--the proposing body--what was she to "dedicate" to this
fund? No more than £100,000 a year, or one forty-fifth part of the
contribution which was to be made by this country. And for what object
was this fund to be accumulated? It is hard enough for the Chancellor
of the Exchequer to raise the money to carry on so great an
establishment as this country is forced necessarily to maintain. But
here is a proposal to raise no less than £4,500,000 of extra taxation.
For what objects? For objects not specified, for objects not yet
discovered, for objects which could not be stated by those who made
the proposal. The right hon. gentleman said that there was to be a
meeting of the representatives of the different Colonies in the
different great cities of the Empire--one different great city each
year for seven years, excluding London, where there was to be no
meeting, and they were to search for a method of spending this money.
Such plans have only to be stated to fall to pieces.

The House will see that the real essential fallacy of the
protectionist proposal is the idea that taxation is a good thing in
itself, that it should be imposed for the fun of the thing, and then,
having done it for amusement, we should go round afterwards and look
for attractive methods of expenditure in order to give support to the
project. These are the actual proposals made to us at the Colonial
Conference. These are the sort of proposals in respect of which we
are, forsooth, to be censured because we have not found it possible in
the name of the Government of this country to give our assent to
them.

I will submit a proposition to the House as a broad, general rule. I
daresay the Leader of the Opposition may rake up some ingenious, hard
case in conflict with it; but as a broad, general rule I believe it
will be found true to say that there is no power in a Government to
impose indirect taxation outside the limits of its territorial
sovereignty. Although I am quite ready to admit that, by sudden and
unexpected alterations of the tariff, temporary advantage might be
gained, and some share of the wealth of other people and other
countries might be netted for this or that set of traders within your
own border, in the long run the whole yield of any tax, export or
import, will come home to the people of that country by whom it is
imposed. It will come home plus the whole cost of collecting the tax,
and plus, further, the inconvenience and burden of the network of
taxation which is needed. It will come home to them, if they be
consumers, in the quantity, quality, or price of the articles they
consume, and, if exporters, in the profit, convenience, or reserve
power of the business which they conduct.

There is no parity between the sacrifices demanded of the Mother
Country and the proposals of preference made by the various Colonies.
To them it is merely a fresh application of their existing fiscal
system. To us it is a fiscal revolution. To them it is a mere
rewriting of their schedules to give an increased measure of
protection to their home producers. To us it is a tax on food, and, as
I assert again and again, upon raw material, and thus upon all the
industries of these islands. If the Conference has established one
thing clearly it is this, that none of the great self-governing
Colonies of the British Empire are prepared to give us effective
access to their own markets in competition with their home producers.
That was established with absolute clearness; and even if they were
prepared to give us effective access to their home markets, I submit
to the House that, having regard to the great preponderance of our
foreign trade as against our Colonial trade, it would not be worth our
while to purchase the concession which they would then offer at the
cost of disturbing and dislocating the whole area of our trade.
Therefore, we propose to adhere, and are prepared if necessary to be
censured for adhering to our general financial system, which is
governed by the rule that there should be no taxation except for
revenue, and based on the commercial principle of the equal treatment
of all nations, and the most-favoured-nation treatment from those
nations in return.

Important as are the economical arguments against a preferential
policy, they are in my opinion less grave than the political
disadvantages. On other occasions I have addressed the House on the
grave danger and detriment to the working of our Colonial system which
must follow the intermingling of the affairs of the British Empire in
the party politics and financial politics of this country. To
establish a preferential system with the Colonies involving
differential duties upon food is to make the bond of Imperial unity
dependent year after year upon the weather and the crops.

And there is even a more unstable foundation for Imperial unity. Does
it never occur to right hon. gentlemen opposite that this solution
which they offer of the problem of Imperial unity places the Empire
not on a national, but on a purely party basis, and upon a basis
repudiated by at least half the nation? Some day it may be that they
will return triumphant from a general election. As party politicians
they may rejoice, yet I think a wise statesman would try to win for
the British Empire, our Colonial relations, the same sort of position,
high above the struggle of Parties, which is now so happily occupied
by the Crown and the Courts of Justice, which in less degree, though
in an increasing degree, is coming to be occupied by the fighting
Services. Whatever advantages from a Party point of view, or from the
point of view of gratifying Colonial opinion, may be gained by food
preferences, they would be very small compared with the enormous boon
of keeping the field of Colonial politics separate from the social and
economic issues on which Parties in this country are so fiercely
divided.

It is possible to take a still wider view of this question. If I quote
the right hon. gentleman the Member for West Birmingham, let me assure
the House that I do not do so for the purpose of making any petty
charge of inconsistency, but because the words which I am going to
read are wise and true words, and stand the test of time. When the
right hon. gentleman spoke at Manchester in 1897, not in the distant
days before the great Home Rule split, but when he was already a
Minister in the Unionist Government, and had been Secretary of State
for the Colonies for nearly two years, he used these words, of the
highest wisdom: "Anything in the direction of an Imperial Commercial
League would weaken the Empire internally and excite the permanent
hostility of the whole world. It would check the free imports of the
food of the people. It is impracticable; but if it were practicable,
and done in the name of the Empire, it would make the Empire odious to
the working people, it would combine the whole world against us, and
it would be a cause of irritation and menace. Our free commerce makes
for the peace of the world."

Let us then seek to impress year after year upon the British Empire an
inclusive and not an exclusive character. We who sit on this side of
the House, who look forward to larger brotherhoods and more exact
standards of social justice, value and cherish the British Empire
because it represents more than any other similar organisation has
ever represented, the peaceful co-operation of all sorts of men in all
sorts of countries, and because we think it is, in that respect at
least, a model of what we hope the whole world will some day become.
The House has to-night a considerable and important opportunity. If in
rejecting this vote of censure, which is so ill-conceived and so
little deserved, we choose to adopt the Amendment, we shall have
written upon the records of Parliament a profound political truth,
which will not, I think, soon be challenged, and which, I believe,
will never be overthrown.

FOOTNOTES:

[4] Mr Lyttelton.

[5] Prime Minister of the Australian Commonwealth.



THE HOUSE OF LORDS

HOUSE OF COMMONS, _June 29, 1907_

    On June 24, Sir Henry Campbell-Bannerman had moved:

      "That, in order to give effect to the will of the people
      as expressed by their elected representatives, it is
      necessary that the power of the other House to alter or
      reject Bills passed by this House should be so restricted
      by law as to secure that within the limits of a single
      Parliament the final decision of the Commons shall
      prevail."

    This was carried after three days' debate by 315 to 100.


I will not venture at any length into an abstract constitutional
discussion upon this Motion, because, after all, we have an extremely
practical issue before us. It seems to me that this great question
must be looked at from three points of view. There is the issue
between the two Houses; there is the issue between the two political
Parties; and then there is the national issue. The quarrel which is
now open between the House of Lords and the House of Commons arises
from two events--the general election of 1906, and the rejection of
the measures of the new Liberal Government, culminating in the
destruction of the Education Bill by the House of Lords at the end of
that year. Either of these events is memorable in itself, but placed
in juxtaposition and considered together they have a multiplied
significance. The general election of 1906 was the most vehement
expression of public opinion which this generation has known; and that
expression of public will was countered in the December of the same
year by the most arbitrary and uncompromising assertion of
aristocratic privilege upon record.

Let the House think of it. The process of the election of Members of
Parliament is extremely elaborate. The candidates go about the country
for two or three weeks saying all they have to say for themselves in
the different constituencies which they are contesting; at the end of
that exhaustive discussion there is an elaborate process of voting;
the returns are counted with the most scrupulous care; and as the
result 670 Members, representing 6,000,000 of voters and many more who
take a deep interest in public affairs but have no votes, are
returned to the House of Commons in the name of the people of Great
Britain and Ireland. The new Parliament assembles. Scarcely any
question at the election had been more a test question, so far as the
supporters of the Government are concerned, than the question of the
amendment of the education system of the country. A Bill dealing with
education is brought forward as the principal measure of the first
session of the new Parliament. Weeks are occupied in its discussion.
It represents the fulfilment of the election pledges of every Member
who supported it. The Bill is passed by perhaps the largest majority
that ever sent a Bill from this House to another place.

Nor was it a revolutionary Bill, to turn the world upside down and
inside out; on the contrary, it was a Bill which, if vitiated in any
respect, was vitiated by the element of compromise. Immense
concessions were made in it, and rightly, I think, to conscientious
and agitated minorities. It was a Bill which so moderate and
consistent a statesman as the Duke of Devonshire, of whose ill-health
the House learns with grave concern, urged the House of Lords to pass
into law.

Sir, the Leader of the Opposition told us the other day that it was
the habit of his Majesty's Government to introduce Bills which they did
not mean to pass. No one--not even the right hon. gentleman
himself--can say that the Government have not earnestly desired to pass
the Education Bill. Every concession that could be conceived was made,
but to what purpose? After the House of Commons had humbled itself
before the House of Lords, after we had gone to the extreme limit of
concession which self-respect, which a proper sense of the dignity of
this House, and a due observance of the pledges of the Liberal Party
permitted, the House of Lords curtly, bluntly, uncharitably, and
harshly flung the Bill out in our faces mutilated and destroyed. I do
not wish to import an element of heat into this discussion, but I
respectfully submit to the Conservative Party that that act on the part
of the House of Lords places them in a new position--a new position in
the sense that never before had their old position been taken up so
nakedly, so brazenly, and so uncompromisingly.

It is true that we have an excuse put before us with much suavity of
language in these debates--we are told that the House of Lords seeks
to interpret the will of the people, and it is explained that by "the
will of the people," what is meant is the persistent, sub-conscious
will, as opposed to any articulate expression of it. The right hon.
gentleman who leads the Opposition told us that what he meant by the
persistent will was the will of the people expressed continuously over
a period of thirty years. That is what he called "democracy properly
understood."

Having regard to that part of the question which concerns the issue
between the two Houses, we repudiate emphatically the claim of the
other House to what the French call _faire l'ange_--to "play the
angel," to know better than the people themselves what the people
want, to have a greater authority to speak in the name of the people
than their representatives sent to Parliament by the elaborate process
I have described. To dispute the authority of a newly elected
Parliament is something very like an incitement to violence on the
part of the other House. The noble Lord[6] laughs; but we are anxious
to convince him and his friends that we are in earnest. We go through
all the processes which the Constitution prescribes, we produce an
enormous majority, and we express the opinion of that majority, but
still the noble Lord and other noble Lords, less intelligent, but more
remote, tell us that they are not convinced. What steps do they
suggest that we should take in order to bring home to them the
earnestness of our plea? What steps do they suggest that the people
should take in order to assert their wishes? I hold entirely by what I
said that to dispute the authority of an elected body fresh from its
constituents is a deliberate incitement to the adoption of lawless and
unconstitutional methods. The assertion which the House of Lords made
at the end of last year is an intolerable assertion. I believe the
country is altogether unprepared for it; and I wonder it was thought
worth while to risk an institution which has lasted so many centuries,
in the very skirmish line of Party warfare.

I am aware there is a special reason for the temerity of the House of
Lords. It is not a very complimentary reason to the Members or the
leaders of the late Government, but it is argued that the Conservative
Party cannot be worse than they are. No matter what they do, nor how
they are hated or reprobated by the country, the Conservative Party
cannot possibly occupy a more humiliating and unpleasant position than
they did after the last two years of the late Administration.
Consequently, having reached the low-water mark of political fortune,
they think they can afford to be a little reckless, and that at the
very worst they will be returned in their present numerical
proportions.

That is a very natural explanation of their action; but if we for our
part were to accept the assertion lately made by the House of
Lords--an assertion which is the furthest point to which aristocratic
privilege has attained in modern times--that assertion itself would
become only the starting-point for a whole new series of precedents
and of constitutional retrogressions; and worse than that, if by any
chance, having raised this issue, we were to be defeated upon it--if
having placed this Resolution on the records of the House we were to
fail to give effect to it, or were to suffer an electoral reverse as
the conclusion of it--then good-bye to the power of the House of
Commons. All that long process of advance in democratic institutions
which has accompanied the growth of the power of the House of Commons,
and which has also been attended by an expansion of the circles of
comfort and culture among the people of this country--all that long
process which has gone steadily onward for 200 years, and which has
almost exclusively occupied the politics of the nineteenth
century--will have reached its culmination. It will have come in
contact with that barrier of which we have heard so much in this
debate. The tide will have turned, and in the recoil of the waters
they will gradually leave exposed again, altered no doubt by the
conditions of the age, all the old assertions of aristocratic and
plutocratic domination which we had fondly hoped had been engulfed for
ever.

Hon. gentlemen opposite would be well advised to treat this Resolution
seriously. This Parliament is still young, but there are some things
at which they have laughed which have already become accomplished
facts, I could not have during the past eighteen months listened to
their taunts about the permanence of Chinese labour without reflecting
now with satisfaction that Chinese labour is going. Yes, and other
people may follow. We are only at the beginning of this struggle. We
are not necessarily committed to every detail of the proposal; we are
opening the first lines for a great siege, we have to sap up to the
advanced parallels, to establish our batteries, and at no distant date
open our bombardment. It may be many months before we shall be able to
discern where there is a practicable breach; but the assault will come
in due time.

The right hon. gentleman opposite[7] said he welcomed this contest
with great confidence. I wonder if the Conservative Party realise, to
use an expressive vulgarism, what they are "letting themselves in for"
when this question comes to be fought out on every platform in every
constituency in the country? They will not have to defend an ideal
Second Chamber; they will not be able to confine themselves to airy
generalities about a bicameral system and its advantages; they will
have to defend _this_ Second Chamber as it is--one-sided, hereditary,
unpurged, unrepresentative, irresponsible, absentee. They will have to
defend it with all its anomalies, all its absurdities, and all its
personal bias--with all its achievements that have darkened the pages
of the history of England. And let me say that weighty constitutional
authorities have not considered that the policy on which we have
embarked in moving this Resolution is unreasonable. Mr. Bagehot says
of the House of Lords:

"It may lose its veto as the Crown has lost its veto. If most of its
members neglect their duties, if all its members continue to be of one
class, and that not quite the best; if its doors are shut against
genius that cannot found a family, and ability which has not £5,000 a
year, its power will be less year by year, and at last be gone, as so
much kingly power is gone--no one knows how."

What is the position of the Conservative Party when they attempt to
defend the House of Lords? They are always telling us to imitate the
Colonies; they are always telling us that we ought to adopt the fiscal
systems and other methods employed in the self-governing Colonies; but
what is their unprejudiced view of the relations which are held
between the two Chambers under the bicameral system in the Colonies
and as established by their own Australian Commonwealth Act in the
last Parliament? By that Act they have given power to the Lower
Chamber to over-ride the Upper Chamber in certain circumstances. The
Commonwealth Act says that when the Chambers differ they shall meet
together, and that the majority shall decide, measures being taken,
however, that the numbers of the Upper Chamber shall not be such as
to swamp the opinion of the Lower Chamber. Imitating them, and
following in their footsteps, we have adopted such a plan in the
Transvaal and Orange River Colony Constitutions.

The Leader of the Opposition asked us yesterday whether the people are
not often wrong, and he proceeded characteristically to suggest that
he always considered them wrong when they voted against him. I am not
prepared to take such a rough-and-ready test of the opinion and of the
mental processes of the British democracy as that. I should hesitate
to say that when the people pronounce against a particular measure or
Party they have not pretty good reasons for doing so. I am not at all
convinced that in 1900 the electors were wrong in saying that the war
should be finished--by those who made it. Even in the last election I
could, I daresay, find some few reasons to justify the decision which
the people then took; and if we should be so unfortunate in the future
as to lose that measure of public confidence now abundantly given to
us, then I shall not be too sure that it will not be our own fault.
Certain am I that we could not take any step more likely to forfeit
the confidence of the people of England, than to continue in office
after we have lost the power to pass effective legislation.

I will retort the question of the Leader of the Opposition by another
question. Has the House of Lords ever been right? Has it ever been
right in any of the great settled controversies which are now beyond
the reach of Party argument? Was it right in delaying Catholic
emancipation and the removal of Jewish disabilities? Was it right in
driving this country to the verge of revolution in its effort to
defeat the passage of reform? Was it right in resisting the Ballot
Bill? Was it right in the almost innumerable efforts it made to
prevent this House dealing with the purity of its own electoral
machinery? Was it right in endeavouring to prevent the abolition of
purchase in the Army? Was it right in 1880, when it rejected the
Compensation for Disturbance Bill? I defy the Party opposite to
produce a single instance of a settled controversy in which the House
of Lords was right.

[An honourable Member: What about Home Rule?]

I expected that interruption. That is not a settled controversy. It is
a matter which lies in the future. The cases I have mentioned are
cases where we have carried the law into effect and have seen the
results, and found that they have been good.

Let me remind the House that, but for a lucky accident, but for the
fact that Letters Patent can be issued by the Crown and do not require
the statutory assent of Parliament, it would very likely have been
impossible for this Government to have made the constitutional
settlement in the Transvaal and in the Orange River Colony, because
the Constitutions would probably have been mutilated or cast out by
the House of Lords, and the Executive Government would have found
itself responsible for carrying out the government of Colonies on
lines of which it wholly disapproved, and after their own policy had
been rejected.

I proceed to inquire on what principle the House of Lords deals with
Liberal measures. The right hon. Member for Dover[8] by an imaginative
effort assures us that they occupy the position of the umpire. Are
they even a sieve, a strainer, to stop legislation if it should reveal
an undue or undesirable degree of Radicalism or Socialism? Are they
the complementary critic--the critic who sees all the things which the
ordinary man does not see? No one can maintain it. The attitude which
the House of Lords adopts towards Liberal measures is purely tactical.
When they returned to their "gilded Chamber" after the general
election they found on the Woolsack and on the Treasury Bench a Lord
Chancellor and a Government with which they were not familiar. When
their eyes fell upon those objects, there was a light in them which
meant one thing--murder; murder tempered, no doubt, by those
prudential considerations which always restrain persons from acts
which are contrary to the general feeling of the society in which they
live. But their attitude towards the present Government has from the
beginning been to select the best and most convenient opportunity of
humiliating and discrediting them, and finally of banishing them from
power.

Examine, in contrast with that of the Education Bill, their treatment
of the Trades Disputes Bill. Lord Halsbury described that Bill as
outrageous and tyrannous, and said it contained a section more
disgraceful than any that appeared in any English Statute. On what
ground then did they pass that Bill, if it was not the ground of
political opportunism and partisanship? What safeguard can such a
Second Chamber be to the commercial interests of this country? Is it
not clear that they are prepared to sacrifice, if necessary, what they
consider to be the true interests of the country in order to secure an
advantage for the political Party whose obedient henchmen they are?
The Trades Disputes Bill was a very inconvenient measure for the
Conservative Party to leave open, because so long as it was left open
a great mass of democratic opinion was directed against them. And so
it was passed. On the other hand, the Education Bill was very
inconvenient for the Liberal Party to leave open, because they are
supported by Catholics and Nonconformists, and to bring in an
Education Bill to satisfy those two extremes is not to solve a
problem, but to solve a double acrostic. So that Bill was not passed.
Upon a measure which it would be inconvenient to the Liberal Party to
leave open the House of Lords rejected all compromise. Upon a measure
which it would be inconvenient for the Conservative Party to leave
open, they submitted at once--their action being irrespective of
merits in either case. That, I suppose, is what the Leader of the
Opposition called "an averaging machinery."

I press these points in order to justify me in making this statement,
that the House of Lords, as it at present exists and acts, is not a
national institution, but a Party dodge, an apparatus and instrument
at the disposal of one political faction; and it is used in the most
unscrupulous manner to injure and humiliate the opposite faction. When
Conservative Members go about the country defending a Second Chamber,
let them remember that this is the kind of Second Chamber they have to
defend, and when they defend the veto let them remember that it is a
veto used, not for national purposes, but for the grossest purposes of
unscrupulous political partisanship.

I have dealt with the issues between Houses, and I come to that
between Parties. Great changes in a community are very often
unperceived; the focus of reality moves from one institution in the
State to another, and almost imperceptibly. Sometimes the forms of
institutions remain almost the same in all ceremonial aspects, and yet
there will be one institution which under pretentious forms is only
the husk of reality, and another which under a humble name is in fact
the operative pivot of the social system. Constitutional writers have
much to say about the estates of the realm, and a great deal to say
about their relation to each other, and to the Sovereign. All that is
found to be treated upon at length. But they say very little about the
Party system. And, after all, the Party system is the dominant fact in
our experience. Nothing is more striking in the last twenty-five years
than the growth and expansion of Party organisation, and the way in
which millions of people and their votes have been woven into its
scope.

There are two great characteristics about the Party institutions of
this country: the equipoise between them, and their almost incredible
durability. We have only to look at the general elections of 1900 and
1906. I do not suppose any circumstances could be more depressing for
a political Party than the circumstances in which the Liberal Party
fought the election in 1900, except the circumstances in which the
Conservative Party fought the election of 1906. At those two
elections, what was the salient fact? The great mass of the voters of
each political Party stood firm by the standard of their Party, and
although there was an immense movement of public opinion, that
movement was actually effected by the actual transference of a
comparatively small number of votes.

When Parties are thus evenly balanced, to place such a weapon as the
House of Lords in the hands of one of the Parties is to doom the other
to destruction. I do not speak only from the Party point of view,
although it explains the earnestness with which we approach this
question. It is a matter of life and death to Liberalism and
Radicalism. It is a question of our life or the abolition of the veto
of the House of Lords. But look at it from a national point of view.
Think of its injury to the smooth working of a Liberal Government. At
the present time a Liberal Government, however powerful, cannot look
far ahead, cannot impart design into its operations, because it knows
that if at any moment its vigour falls below a certain point another
body, over which it has no control, is ready to strike it a blow to
its most serious injury.

It comes to this, that no matter how great the majority by which a
Liberal Government is supported, it is unable to pass any legislation
unless it can procure the agreement of its political opponents.
Observe the position in which the present Executive Government is
consequently placed. Take only the question of passive resistance. The
action of the House of Lords at the present time forces the Executive
Government to lock up in prison men with whose action they entirely
sympathise and whose grievance they have faithfully promised to
redress. Such a position is intolerable. Indeed, I am sure that if
right hon. gentlemen opposite would only utilise that valuable gift of
putting themselves in imagination in the position of others, they
would see that no self-respecting men could continue to occupy such a
position except with the object of putting an end to it for ever.

Much might be said for and against the two-Party system. But no one
can doubt that it adds to the stability and cohesion of the State. The
alternation of Parties in power, like the rotation of crops, has
beneficial results. Each of the two Parties has services to render in
the development of the national life; and the succession of new and
different points of view is a real benefit to the country. A choice
between responsible Ministries is a great strength to the Crown. The
advantage of such a system cannot be denied. Would not the ending of
such a system involve a much greater disturbance than to amend the
functions of the House of Lords? Is there not a much greater cataclysm
involved in the breakdown of the constitutional organisation of
democracy--for that is the issue which is placed before us--than would
be involved in the mere curtailment of the legislative veto which has
been given to another place?

I ask the House what does such a safeguard as the House of Lords mean?
Is it a safeguard at all? Enormous powers are already possessed by the
House of Commons. It has finance under its control, it has the
Executive Government; the control of foreign affairs and the great
patronage of the State are all in the power of the House of Commons at
the present time. And if you are to proceed on the basis that the
people of this country will elect a mad House of Commons, and that the
mad House of Commons will be represented by a mad Executive, the House
of Lords is no guarantee against any excesses which such a House of
Commons or such an Executive might have in contemplation. Whatever you
may wish or desire, you will be forced to trust the people in all
those vital and fundamental elements of government which in every
State have always been held to involve the practical stability of the
community.

Is the House of Lords even a security for property? Why, the greatest
weapon which a democracy possesses against property is the power of
taxation, and the power of taxation is wholly under the control of
this House. If this House chooses, for instance, to suspend payment to
the Sinking Fund, and to utilise the money for any public purpose or
for any social purpose, the House of Lords could not interfere. If the
House of Commons chose to double taxation on the wealthy classes, the
House of Lords could not interfere in any respect. Understand I am not
advocating these measures; what I am endeavouring to show to the House
is that there is no real safeguard in the House of Lords even in
regard to a movement against property.

But surely there are other securities upon which the stability of
society depends. In the ever-increasing complexities of social
problems, in the restrictions which are imposed from day to day with
increasing force on the action of individuals, above all, in the
dissemination of property among many classes of the population, lie
the real elements of stability on which our modern society depends.
There are to-day, unlike in former ages, actually millions of people
who possess not merely inert property, but who possess rent-earning,
profit-bearing property; and the danger with which we are confronted
now is not at all whether we shall go too fast. No, the danger is that
about three-fourths of the people of this country should move on in a
comfortable manner into an easy life, which, with all its ups and
downs, is not uncheered by fortune, while the remainder of the people
shall be left to rot and fester in the slums of our cities, or wither
in the deserted and abandoned hamlets of our rural districts.

That is the danger with which we are confronted at the present moment,
and it invests with a deep and real significance the issue which is
drawn between the two Parties to-night. It is quite true that there
are rich Members of the Liberal Party, and there are poor men who are
supporters of the Conservative Party; but in the main the lines of
difference between the two Parties are social and economic--in the
main the lines of difference are increasingly becoming the lines of
cleavage between the rich and the poor. Let that reflection be with
us in the struggle which we are now undertaking, and in which we shall
without pause press forward, confident of this, that, if we persevere,
we shall wrest from the hands of privilege and wealth the evil, ugly,
and sinister weapon of the Peers' veto, which they have used so ill so
long.

FOOTNOTES:

[6] Lord Robert Cecil.

[7] Mr. Balfour.

[8] Mr. Wyndham.



THE DUNDEE ELECTION

KINNAIRD HALL, DUNDEE, _May 14, 1908_


A new Government has come into being under a Prime Minister who, like
his predecessor, is tied to Scotland by strong and intimate bonds.
Give him a fair chance. Give the Government which he has brought into
being the opportunity of handling the great machinery of State. Be
assured that, if you do, they will employ it for the greatest good of
the greatest number. I am well satisfied at what has taken place since
I have been in Dundee. I see a great concentration of forces
throughout the constituency. I see the opportunity of retrieving, and
more than retrieving, the injury which has been done to the cause of
progress and reform by elections in other parts of our island.

Ah, but, a very sad thing has happened; an awful thing has
happened--the Liberal Party has gone in for Home Rule. _The Scotsman_
is shocked, _The Times_ is speechless, and takes three columns to
express its speechlessness; _The Spectator_, that staid old weekly,
has wobbled back to where it never should have wobbled from; the
Ulster Unionists declare that the Government has forfeited all the
confidence that they never had in it, and thousands of people who
never under any circumstances voted Liberal before are saying that
under no circumstances will they ever vote Liberal again. And I am
supposed to be responsible for this revolution in our policy.

Why, the statements I have made on the Irish question are the logical
and inevitable consequence of the Resolution which was passed by the
House of Commons, in which every member of the Government voted, which
was carried by an enormous majority--more than 200--a month ago[9]--a
Resolution which, after explaining the plain and lamentable evils
which can be traced to the existing system of government in Ireland,
affirmed that the remedy for those evils would be found in a
representative body with an Executive responsible to it, subject to
the supreme authority of the Imperial Parliament.

The Irish question at the present time occupies a vastly different
position to what it did in the year 1886. Ever since 1880 the
attention of Parliament has been devoted constantly to Ireland, and
the attention of Parliament, when devoted constantly to one object, is
rarely fruitless. The twenty-five years that have passed have seen
great changes in Ireland. We have seen a great scheme of local
government, which Lord Salisbury said would be more disastrous than
Home Rule itself, actually put into force. We have seen the scheme of
land purchase, which in the year 1886 did more to injure the Home Rule
Bill than anything else, actually carried, not indeed to a complete
conclusion, but carried into practical effect by a Unionist
Administration. These are great events; and their consequences, I
think, ought to encourage us to move forward, and not to move back.
They have produced results in Ireland which are beneficent, and the
Irish question no longer presents itself in the tragic guise of the
early eighties. They have produced an effect on Great Britain too. All
over our country people have seen Bills which they were told
beforehand would be ruinous to the unity and integrity of the United
Kingdom--Land Bills and Local Government Bills--passed into law; and
so far from the dire consequences which were apprehended from these
measures, they have found--you here have found--that great good has
resulted from that legislation. Many people are encouraged by what has
taken place to make a step forward in the future; and I think if we
need to look for any further encouragement, we should find it in the
great and undisputed triumph which, under the mercy of Heaven, has
attended our policy in South Africa, and has resulted in bringing into
the circle of the British Empire a strong and martial race, which
might easily have been estranged for ever.

The Irish polity finds its fellow nowhere in the world. It is a
Government responsible neither to King nor people. It is not a
democratic Government, nor an autocratic Government, nor even an
oligarchical Government. It is a Government hag-ridden by forty-one
administrative Boards, whose functions overlap one another and
sometimes conflict with one another. Some are fed with money from the
Consolidated Fund, some are supplied by vote of the House of Commons,
some are supplied from savings from the Irish Development grant. Some
of these Boards are under the Viceroy, some under the Chief Secretary,
some under Treasury control, and some are under no control at all. The
administration resulting from that system is costly, inefficient,
unhandy beyond all description: a mighty staff of officials and
police; a people desperately poor; taxation which rises automatically
with every increase in the expenditure of this vast and wealthy
island; and a population which dwindles tragically year by year. Add
to all this a loyalist caste, capable and well-organised, who are
taught generation after generation to look for support not to their
own countrymen, but to external force derived from across the sea.
There exists in effect in Ireland at the present time almost exactly
the same situation which would have grown up in South Africa, if we
had not had the wit and the nerve to prevent it. Take the whole of
this situation as I have described it, thrust it into the arena of
British politics to be the centre of contending factions, and the
panorama of Irish government is complete.

With these facts before us, upon the authority of men like Lord
Dunraven, Sir Joseph West-Ridgeway, Sir Antony MacDonnell, Lord
Dudley, and others who have served the Crown in Ireland--is it
wonderful that we should refuse to turn our eyes away from the vision
of that other Ireland, free to control her own destiny in all that
properly concerns herself, free to devote the native genius of her
people to the purposes of her own self-culture--the vision of that
other Ireland which Mr. Gladstone had reserved as the culminating
achievement of his long and glorious career? Is it wonderful that we
should refuse to turn our eyes away from that? No; I say that the
desire and the aim of making a national settlement with Ireland on
lines which would enable the people of that country to manage their
own purely local affairs, is not an aim that can be separated from the
general march of the Liberal army. If I come forward on your platform
here at Dundee it is on the clear understanding that I do not preclude
myself from trying to reconcile Ireland to England on a basis of
freedom and justice.

I said just now that this was an important election. Yes, the effect
upon his Majesty's Government and upon the Liberal Party for good or
ill from this election cannot fail to be far-reaching. There are
strong forces against us. Do not underrate the growing strength of the
Tory reaction now in progress in many of the constituencies in
England. I say it earnestly to those who are members of the Labour
Party here to-day--do not underrate the storm which is gathering over
your heads as well as ours. I am not afraid of the forces which are
against us. With your support we shall overwhelm them--with your
support we shall bear them down. Ah, but we must have that support.

It is not the enemy in front that I fear, but the division which too
often makes itself manifest in progressive ranks--it is that division,
that dispersion of forces, that internecine struggle in the moments of
great emergency, in the moments when the issue hangs in the
balance--it is that which, I fear, may weaken our efforts and may
perhaps deprive us of success otherwise within our grasp.

There are cross-currents in this election. You cannot be unconscious
of that. They flow this way and that way, and they disturb the clear
issue which we should like to establish between the general body of
those whose desire it is to move forward, and those who wish to revert
to the old and barbarous prejudices and contentions of the past--to
the fiscal systems and to the methods of government and
administration, and to the Jingo foreign policies across the seas,
from which we hoped we had shaken ourselves clear.

I want to-night to speak about these cross-currents; and let me first
say a word about Socialism. There are a great many Socialists whose
characters and whose views I have much respect for--men some of whom I
know well, and whose friendship I enjoy. A good many of those
gentlemen who have delightful, rosy views of a noble and brilliant
future for the world, are so remote from hard facts of daily life and
of ordinary politics that I am not very sure that they will bring any
useful or effective influence to bear upon the immediate course of
events. To the revolutionary Socialist, whether dreamer or politician,
I do not appeal as the Liberal candidate for Dundee. I recognise that
they are perfectly right in voting against me and voting against the
Liberals, because Liberalism is not Socialism, and never will be.
There is a great gulf fixed. It is not only a gulf of method, it is a
gulf of principle. There are many steps we have to take which our
Socialist opponents or friends, whichever they like to call
themselves, will have to take with us; but there are immense
differences of principle and of political philosophy between our views
and their views.

Liberalism has its own history and its own tradition. Socialism has
its own formulas and aims. Socialism seeks to pull down wealth;
Liberalism seeks to raise up poverty. Socialism would destroy private
interests; Liberalism would preserve private interests in the only way
in which they can be safely and justly preserved, namely, by
reconciling them with public right. Socialism would kill enterprise;
Liberalism would rescue enterprise from the trammels of privilege and
preference. Socialism assails the pre-eminence of the individual;
Liberalism seeks, and shall seek more in the future, to build up a
minimum standard for the mass. Socialism exalts the rule; Liberalism
exalts the man. Socialism attacks capital; Liberalism attacks
monopoly.

These are the great distinctions which I draw, and which, I think, you
will agree I am right in drawing at this election between our
respective policies and moods. Don't think that Liberalism is a faith
that is played out; that it is a creed to which there is no expanding
future. As long as the world rolls round, Liberalism will have its
part to play--grand, beneficent, and ameliorating--in relation to men
and States.

The truth lies in these matters, as it always lies in difficult
matters, midway between extreme formulas. It is in the nice adjustment
of the respective ideas of collectivism and individualism that the
problem of the world and the solution of that problem lie in the years
to come. But I have no hesitation in saying that I am on the side of
those who think that a greater collective element should be introduced
into the State and municipalities. I should like to see the State
undertaking new functions, stepping forward into new spheres of
activity, particularly in services which are in the nature of
monopolies. There I see a wide field for State enterprise. But when we
are told to exalt and admire a philosophy which destroys individualism
and seeks to replace it absolutely by collectivism, I say that is a
monstrous and imbecile conception, which can find no real acceptance
in the brains and hearts--and the hearts are as trustworthy as the
brains--in the hearts of sensible people.

Now I pass over the revolutionary Socialists, who, I admit, if they
feel inclined, are justified in throwing away their votes on Saturday
next, and I come to the Labour and to the Trade Union element in our
midst. There I have one or two words to say of rather a straight
character, if you don't object, and which, I hope, will be taken in
good part, and will be studied and examined seriously. Labour in
Britain is not Socialism. It is quite true that the Socialistic
element has imposed a complexion on Labour, rather against its will,
and is now supported in its action by funds almost entirely supplied
by Trade Unions. But Trade Unions are not Socialistic. They are
undoubtedly individualist organisations, more in the character of the
old Guilds, and lean much more in the direction of the culture of the
individual than in that of the smooth and bloodless uniformity of the
mass. Now, the Trade Unions are the most respectable and the most
powerful element in the labour world. They are the social bulwarks of
our industrial system. They are the necessary guard-rails of a highly
competitive machine, and I have the right, as a member of his
Majesty's Government, to speak with good confidence to Trade
Unionists, because we have done more for Trade Unionists than any
other Government that has ever been.

How stands the case of the Trade Unionists? Do they really believe, I
put this question to them fairly--do they really believe that there is
no difference whatever between a Tory and a Liberal Government? Do
Trade Unionists desire the downfall of the existing Liberal
Government? Would they really like to send a message of encouragement
to the House of Lords--for that is what it comes to--to reject and
mutilate Liberal and Radical legislation--and Labour legislation now
before Parliament? Would they send such a message of encouragement to
the House of Lords as this--"House of Lords, you were right in your
estimate of public opinion when you denied the extension of the
Provision of Meals to School Children Bill to Scotland, when you threw
out the Scottish Land Valuation Bill, when you threw out the Scottish
Small Holders Bill--when you did all this you were right." Do you wish
to send that message to the House of Lords? But that will be the
consequence of every vote subtracted from the Liberal majority.

Why, gentlemen, let me return to the general current of events. What
is the Government doing at present, and what has it done in its brief
existence? Within the limits under which it works, and under the
present authority of the House of Lords, what has it done and what is
it doing for Trade Unionists? It has passed the Trades Disputes Act.
The Workmen's Compensation Act has extended the benefits of
compensation to six million persons not affected by previous
legislation. The qualification of Justices of the Peace--the citizens'
Privy Councillorship, as I call it--has been reduced so as to make it
more easy for persons not possessed of this world's goods to qualify
to take their place on the civic Bench. You know the land legislation
for England, which is designed to secure that the suitable man who
wants a small parcel of land to cultivate for his own profit and
advantage shall not be prevented from obtaining it by feudal
legislation, by old legal formalities or class prejudice. And is the
Licensing Bill not well worth a good blow struck, and struck now,
while the iron is hot? Then there is the Miners' Eight Hours Bill, a
measure that has been advocated by the miners for twenty years, and
justified by the highest medical testimony on humanitarian and
hygienic grounds. It is costing us votes and supporters. It is
costing us by-elections, yet it is being driven through. Have we not a
right to claim the support of the Trade Unionists who are associated
with the miners? Don't they feel that this measure is hanging in the
balance, not in the House of Commons, but in the balance in the House
of Lords, which attaches to by-elections an importance which, in their
arrogant assertion, entitles them to mutilate or reject legislation,
even although it comes to them by the majority of a Parliament newly
elected on a suffrage of six millions. Then there is the question of
old-age pensions, a question that has been much misused and mishandled
in the past.

That was a pledge given by our opponents to win the election of 1895,
and after the lapse of thirteen years of toil and stress, the Liberal
Party is able to take it up, and will implement it in an effective
fashion. Now, is there one of all these subjects which does not
command the support of Trade Unionists and responsible Labour leaders?
The Government is fighting for these measures. The Government is
risking its life and power for these and similar objects. The Tory
Party is opposing it on every point. The Tory Party is gaining
popularity from the resistance of the interests which are affected by
the passing of such measures of social reform. The House of Lords is
the weapon of the Tory Party. With that weapon they can make a Liberal
Government ridiculous. Are the Labour leaders, are Trade Unionists,
confronted at this moment with the menace of reaction, deliberately
going to throw in their lot with the House of Lords? I don't think
they will. The record in Labour legislation under the existence of the
present Government is a record which deserves, and will, I believe,
command, the support of the great mass of the labouring classes of our
country.

But I say, in all seriousness, that if the Liberal Government is on
the one hand confronted by the House of Lords, fortified by sporadic
by-elections, and on the other hand is attacked, abused, derided, by a
section of those for whom it is fighting, then that Government,
whatever its hopes, whatever its energies, whatever its strength, will
be weakened, will perhaps succumb, and will be replaced by another
Government. And by what other Government will it be replaced? There
can be no other result from such a division of progressive forces than
to instal a Tory and Protectionist Government in power. That will not
be fatal to us. Liberalism will not be killed. Liberalism is a
quickening spirit--it is immortal. It will live on through all the
days, be they good days or be they evil days. No! I believe it will
even burn stronger and brighter and more helpful in evil days than in
good--just like your harbour-lights, which shine out across the sea,
and which on a calm night gleam with soft refulgence, but through the
storm flash a message of life to those who toil on the rough waters.

But it takes a great party to govern Great Britain--no clique, no
faction, no cabal, can govern the forty millions of people who live in
this island. It takes a vast concentration of forces to make a
governing instrument. You have now got a Radical and democratic
governing instrument, and if this Administration is broken, that
instrument will be shattered. It has been recreated painfully and
laboriously after twenty years by courage and fidelity. It has come
into being--it is here. It is now at work, and by legislation and by
the influence which it can exercise throughout the whole world, it is
making even our opponents talk our language, making all parties in the
State think of social reform, and concern themselves with social and
domestic affairs. Beware how you injure that great instrument, as Mr.
Gladstone called it--or weaken it at a moment when the masses of this
country have need of it. Why, what would happen, if this present
Government were to perish? On its tomb would be written: "Beware of
social reform. The labouring classes will not support a Government
engaged in social reform. Every social reform will cost you votes.
Beware of social reform. 'Learn to think Imperially.'"

An inconclusive verdict from Dundee, the home of Scottish
Radicalism--an inconclusive, or, still more, a disastrous
verdict--would carry a message of despair to every one in all parts of
our island and in our sister island who is working for the essential
influences and truths of Liberalism and progress. Down, down, down
would fall the high hopes of the social reformer. The constructive
plans now forming in so many brains would melt into air. The old
régime would be reinstated, reinstalled. Like the Bourbons, they will
have learned nothing and will have forgotten nothing. We shall step
out of the period of adventurous hope in which we have lived for a
brief spell; we shall step back to the period of obstinate and
prejudiced negations. For Ireland--ten years of resolute government;
for England--dear food and cheaper gin; and for Scotland--the superior
wisdom of the House of Lords! Is that the work you want to do, men of
Dundee? Is that the work to which you will put your precious
franchises--your votes, which have been won for you by so much
struggle in the past? No; I am confident that this city, which has of
its own free will plunged into the very centre of national politics,
will grasp the opportunity now presented; that its command will not be
back, but forward; that its counsel will be not timidity, but courage,
and that it will aim not at dividing, but at rallying the progressive
forces, not at dissipating, but at combining the energies of reform.
That will be the message which you will send in tones which no man can
mistake--so that a keen, strong, northern air shall sweep across our
land to nerve and brace the hearts of men, to encourage the weak, to
fortify the strong, to uplift the generous, to correct the proud.

In time of war, when an action has been joined for a long time, and
the lines are locked in fierce conflict, and stragglers are coming in
and the wounded drifting away, when the reserves begin to waver here
and there, it is on such an occasion that Scottish regiments have so
often won distinction; it is on these occasions that you have seen
some valiant brigade march straight forward into the battle smoke,
into the confusion of the field, right into the heart of the fight.
That is what you have to do at this moment. "Scotland for ever!"

Now I turn my argument to the other side of the field, to the other
quarter, from which we are subject to attack; I turn in my appeal from
Trade Unionists, from the Labour men, who ought in all fairness to
recognise the work this Government is doing and back them in their
sore struggle; I turn to the rich and the powerful, to Unionist and
Conservative elements, who, nevertheless, upon Free Trade, upon
temperance, and upon other questions of moral enlightenment, feel a
considerable sympathy with the Liberal Party; I turn to those who say,
"We like Free Trade and we are Liberals at heart, but this Government
is too Radical: we don't like its Radical measures. Why can't they let
well alone? What do they mean by introducing all these measures, all
these Bills, which," so they say, "disturb credit and trade, and
interfere with the course of business, and cause so many
class-struggles in the country?" I turn to those who complain we are
too Radical in this and in that, and that we are moving too quickly,
and I say to them: "Look at this political situation, not as party
men, but as Britons; look at it in the light of history; look at it in
the light of philosophy; and look at it in the light of broad-minded,
Christian charity."

Why is it that life and property are more secure in Britain than in
any other country in the world? Why is it that our credit is so high
and that our commerce stretches so far? Is it because of the
repressive laws which we impose? Why, gentlemen, there are laws far
more severe than any prevailing in this country, or that have
prevailed here for many years, now in force in great States in Europe,
and yet there is no complete security of life and property
notwithstanding all these repressive laws. Is it because of the House
of Lords, that life and property are secure? Why, orders of
aristocracy more powerful, much more homogeneous, of greater
privileges, acting with much greater energy than our aristocracy, have
been swept away in other countries until not a vestige, or scarce a
vestige, of their existence remains. Is it because of the British
Constitution that life and property are secure? Why, the British
Constitution is mainly British common sense. There never were forty
millions of people dwelling together who had less of an arbitrary and
rigid Constitution than we have here. The Constitution of France, the
Constitution of Germany, the Constitution of the United States are far
more rigid, far better fortified against popular movement, than the
Constitution under which we in these islands have moved steadily
forward abreast of the centuries on the whole to a better state than
any other country.

I will tell those wealthy and powerful people what the secret of the
security of life and property in Britain is. The security arises from
the continuation of that very class-struggle which they lament and of
which they complain, which goes on ceaselessly in our country, which
goes on tirelessly, with perpetual friction, a struggle between class
and class which never sinks into lethargy, and never breaks into
violence, but which from year to year makes possible a steady and
constant advance. It is on the nature of that class-struggle in
Britain that the security of life and property is fundamentally
reposed. We are always changing; like nature, we change a great deal,
although we change very slowly. We are always reaching a higher level
after each change, but yet with the harmony of our life unbroken and
unimpaired. And I say also to those persons here, to whom I now make
my appeal: wealthy men, men of light and leading have never been all
on one side in our country. There have always been men of power and
position who have sacrificed and exerted themselves in the popular
cause; and that is why there is so little class-hatred here, in spite
of all the squalor and misery which we see around us. There,
gentlemen, lies the true evolution of democracy. That is how we have
preserved the golden thread of historical continuity, when so many
other nations have lost it for ever. That is the only way in which
your island life as you know it, and love it, can be preserved in all
its grace and in all its freedom--can be elevated, expanded, and
illumined for those who will occupy our places when our share in the
world's work is done.

And I appeal to the leaders of industry and of learning in this city
to range themselves on the side of a policy which will vigilantly seek
the welfare of the masses, and which will strictly refuse to profit
through their detriment; and, in spite of the violence of extremists,
in spite of the harshness of controversy which hard conditions
produce, in spite of many forces which may seem to those gentlemen
ungrateful, I ask them to pursue and persevere in their crusade--for
it is a crusade--of social progress and advance.

Cologne Cathedral took 600 years to build. Generations of architects
and builders lived and died while the work was in progress. Still the
work went on. Sometimes a generation built wrongly, and the next
generation had to unbuild, and the next generation had to build again.
Still the work went on through all the centuries, till at last there
stood forth to the world a mighty monument of beauty and of truth to
command the admiration and inspire the reverence of mankind. So let it
be with the British Commonwealth. Let us build wisely, let us build
surely, let us build faithfully, let us build, not for the moment, but
for future years, seeking to establish here below what we hope to
find above--a house of many mansions, where there shall be room for
all.

    The result of the election was declared as follows

        Churchill (Liberal)                     7,079
        Baxter (Conservative)                   4,370
        Stuart (Socialist)                      4,014
        Scrymgeour (Prohibitionist)               655
                                                -----
          Liberal majority                      2,709
                                                -----

FOOTNOTES:

[9] March 30, 1908.



II

SOCIAL ORGANISATION


                                                        PAGE

MINES [EIGHT HOURS] BILL (July 6, 1908)                  173

UNEMPLOYMENT (Oct. 10, 1908)                             189

THE SOCIAL FIELD (Jan. 13, 1909)                         211

THE APPROACHING CONFLICT (Jan. 30, 1909)                 225

THE ANTI-SWEATING BILL (April 28, 1909)                  239

LABOUR EXCHANGES AND UNEMPLOYMENT INSURANCE
  (May 19, 1909)                                         253



THE SECOND READING OF THE MINES [EIGHT HOURS] BILL

HOUSE OF COMMONS, _July 6, 1908_


Whatever arguments may be urged against this measure, no one can say
that the Government have acted with precipitation in bringing it
before the House and the country. It has been debated for twenty
years. Parliaments, Tory and Liberal, have affirmed the principle, and
I do not suppose there ever was a similar reform put forward in this
House upon a greater volume of scientific and accurate information, or
after more prolonged, careful, and sustained scrutiny. If the debate
on the Second Reading has thrown very little new light on this
question, it is because it has been fully and thoroughly explored on
former occasions; and not only has it been fully explored, but it is
now illuminated by the admirable Report which has been presented by
the Departmental Committee appointed last session.

This Report, while exciting approval on all sides, gives no complete
satisfaction to any. It balances, and weighs, but it does not finally
pronounce. It aims less at deciding this controversy, than at defining
the limits within which its economic aspect may be said to lie. I
think any one who reads the Report with attention will feel, after
careful study, that the limits of the economic controversy are
moderately restricted. We have to consider on the one hand the gross
reduction of one-tenth in the hours of labour of underground workmen,
taking the average over all classes of men and all sorts of mines. And
on the other hand we have as a set-off against that gross reduction
certain very important mitigations which are enumerated in the Report,
to which I shall briefly refer.

The first economic question which the House has to settle is, whether
these mitigations which are enumerated will have the effect of
overtaking the reduction which is to follow the curtailment of hours,
or, if not, how far they will fall short in overtaking that reduction.

I do not suppose that any hon. gentleman is likely to change his
opinion on a question of such complexity at this late stage of the
debate, and therefore I shall only refer by name to these mitigations,
bearing in mind how important they are. There are those which depend
on the arrangements of employers, and those which depend on the
volition of the workers. With regard to the employers, there is
improved organisation by methods of haulage and winding, and other
means specified in the Report. There is the more extensive application
of coal-cutting machinery, and the sinking of new pits with modern
appliances, which is progressing in many parts of the country.

There is the system of double and multiple shifts. The extension of
the system will not be so difficult as has sometimes been supposed. At
the present moment, taking the statistics of 1906, a quarter only of
the workers below ground are employed in mines in which there is only
one coal-getting shift, and in all the mines in which there are two or
more coal-getting shifts the first shift preponderates in number
greatly over the second, and, therefore, in applying this system of
double or multiple shifts, in so far as it is necessary to apply it,
we shall not have to face the difficulty of a complete transformation
in the methods of working a great many of the mines, but it will be a
mere extension of the system which at present exists over a great
portion of the coal-getting area.

From the side of labour, the mitigations which may be expected as
off-sets to the original reduction are not less important. There is
the increased efficiency, of which we have instances actually on
record in this Report, which has followed from the reduction of hours.
There is the power of the worker, if he chooses, to increase his
earnings on a short day. There is "absenteeism," which has always been
affected by a reduction of hours, and which amounts to 6.6 per cent.
of the working time of the mines, and there is the margin of stoppages
through slack trade and other circumstances, which at present
aggregates 7 per cent. of the working time of the mines. Taking these
last two alone, they aggregate 13 per cent., or considerably more, as
a margin, than the reduction of working time which will be caused by
the operation of this Bill, even when the full operation is reached.

First of all then, let the House consider carefully whether from these
sources it is possible to overtake the 10 per cent. reduction which,
in the first instance, the Bill imposes. It is a question nicely
balanced; it offers matter for fair argument this way and that, but,
taking all the means of mitigation together, not only singly but
collectively, it is surely very difficult to believe that masters and
men, organised as they are, and working together with good will, and
with ample time to accommodate themselves to new arrangements, will
not be able from all sources to overtake the comparatively small
reduction in hours the Bill will effect.

I am inclined to an opinion that good use will be made of these
margins, but even if we assume, for the sake of the argument, that
there will be a net reduction in consequence of the passage of this
Bill in the output of coal, that reduction must be temporary and
transient in its character. For fifty years there have been continuous
changes in the conditions of coal-mining in this country. The hours
have been reduced, the conditions of boy labour have been restricted,
wages have been raised, compensation has been provided, and
precautions against accidents have been multiplied. All these changes,
the wisdom of which nobody disputes, may from a purely and crudely
economic standpoint be said to militate against production. We have
heard many prophecies, but what has been the history of the coal
trade? There has been a steady, unbroken expansion of output during
the last fifty years. In the period of ten years ending in 1874,
76,000,000 tons were produced; in the next ten years 112,000,000; in
the next ten years 145,000,000; in the next ten years 172,000,000; and
in the last period of ten years 214,000,000--a figure which has been
greatly exceeded since.

If it be admitted that there may be a certain reduction in output as a
consequence of this Bill, that reduction must be considered, not by
itself, not in isolation, but in relation to the steady and persistent
movement of coal production for the last fifty years. To me it seems
certain that the small temporary restriction will be lost in the
general tendency to expansion, as the eddy is carried forward by the
stream and the recoiling wave is lost in the advancing tide.

But these arguments would be wholly vitiated if it could be shown that
the restriction of hours was so violent in its character, so sudden in
its application, so rigid in its methods as, not merely to cause a
certain shrinkage in the volume of the output, but to upset the
economy of the coal-mining industry. In that case there would be not
merely a curtailment which might be mitigated, but we should have
injured and possibly disorganised the industry; and it is at this
point that it is proper for the House to consider the safeguards
introduced by the Government into the Bill. These safeguards are of
the greatest importance.

There is the safeguard of overtime. Sixty hours a year are permitted.
In districts where men work ten days a fortnight, twelve weeks may be
one hour longer than the usual time allowed by the Bill; and where the
days laboured are only four in the week, fifteen weeks of extended
time will be possible through the provision of overtime. There are
provisions with regard to the labour of certain persons permitted to
remain below ground beyond the legal hours for special purposes, and
there is a power which relaxes the Bill altogether in an emergency
which is likely to delay or arrest the general work of the mine, and,
of course, in any case where there is accident or danger. Finally, if
there should be risk of a corner or an unexpected rise in price, the
Government have power by Order in Council to suspend the whole
operation of the law in order to prevent anything like a serious
crisis arising in the coal trade.

I cannot bring myself to believe that with all these safeguards it
will not be possible for the coal industry, if given time, to
accommodate itself to the new conditions. It is only two years ago
that I was invited from the benches opposite to contemplate the
approaching ruin of the gold mines of the Rand through the change
introduced in the methods of working. That change has been enforced,
with the result that working expenses have been reduced, and the
standard of production has increased. In making that transition, if
time had not been allowed to tide over the period of change, then,
indeed, you might have had that disaster which hon. gentlemen opposite
have always been ready to apprehend. But there is here to be a gradual
process of adaptation, for which not less than five years is
permitted.

We are told that positive reasons, and not negative reasons, ought to
be given in support of a measure which regulates the hours of adult
labour--that you ought to show, not that it will do no harm, but that
good will come from it. There are, of course, such reasons in support
of this Bill, but they are so obvious that they have not been dwelt
upon as much as they might have been. The reasons are social reasons.
We believe that the well-being of the mining population, numbering
some 900,000 persons, will be sensibly advanced in respect of health,
industrial efficiency, habits of temperance, education, culture, and
the general standard of life. We have seen that in the past the
shortening of hours has produced beneficial effects in these respects,
and we notice that in those parts of the country where the hours of
coal-mining are shortest, the University Extension lecturers find that
the miners take an intelligent interest in their lectures--and it is
among the miners of Fifeshire that a considerable development in
gardening and also of saving to enable them to own their own houses,
has followed on a longer period of leisure.

But the general march of industrial democracy is not towards
inadequate hours of work, but towards sufficient hours of leisure.
That is the movement among the working people all over the country.
They are not content that their lives should remain mere alternations
between bed and the factory. They demand time to look about them, time
to see their homes by daylight, to see their children, time to think
and read and cultivate their gardens--time, in short, to live. That is
very strange, perhaps, but that is the request they have made and are
making with increasing force and reason as years pass by.

No one is to be pitied for having to work hard, for nature has
contrived a special reward for the man who works hard. It gives him an
extra relish, which enables him to gather in a brief space from simple
pleasures a satisfaction in search of which the social idler wanders
vainly through the twenty-four hours. But this reward, so precious in
itself, is snatched away from the man who has won it, if the hours of
his labour are too long or the conditions of his labour too severe to
leave any time for him to enjoy what he has won.

Professor Marshall, in his "Principles of Economics," says:

"The influence which the standard of hours of work exerts on economic
activities is partially obscured by the fact that the earnings of a
human being are commonly counted gross; no special reckoning being
made for his wear-and-tear, of which he is himself rather careless.
Further, very little account is taken of the evil effects of the
overwork of men on the well-being of the next generation.... When the
hours and the general conditions of labour are such as to cause great
wear-and-tear of body or mind or both, and to lead to a low standard
of living; when there has been a want of that leisure, rest, and
repose which are among the necessaries for efficiency, then the labour
has been extravagant from the point of view of society at large....
And, since material wealth exists for the sake of man, and not man for
the sake of material wealth, the replacement of inefficient and
stunted human lives by more efficient and fuller lives would be a gain
of a higher order than any temporary material loss that might have
been occasioned on the way."

If it be said that these arguments are general, is it not true that
special circumstances differentiate the case of coal-miners from that
of many other industries in this country? Others have spoken of the
heat of the mine, the danger of fire-damp, of the cramped position, of
the muscular exertions of the miner, at work in moist galleries
perhaps a mile under the ground. I select the single fact of
deprivation of natural light. That alone is enough to justify
Parliament in directing upon the industry of coal-mining a specially
severe scrutiny and introducing regulations of a different character
from those elsewhere.

The hon. Member for Windsor[10] who moved the rejection of this Bill
described it as a reckless and foolhardy experiment. I see the miner
emerging from the pit after eight hours' work with the assertion on
his lips that he, at any rate, has paid his daily debt to his fellow
men. Is the House of Commons now going to say to him, "You have no
right to be here. You have only worked eight hours. Your appearance on
the surface of the earth after eight hours' work is, to quote the hon.
Member, 'a reckless and foolhardy experiment'"? I do not wonder at the
miners' demand. I cannot find it in my heart to feel the slightest
surprise, or indignation, or mental disturbance at it. My capacity for
wonder is entirely absorbed, not by the miners' demand, but by the
gentleman in the silk hat and white waistcoat who has the composure
and the complacency to deny that demand and dispute it with him.

The hon. Member for Dulwich[11]--himself a convinced protectionist,
with a tariff with 1,200 articles in its schedules in his coat-tail
pocket--has given us a delightful lecture on the importance of
cheapness of production. Think of the poor consumer! Think of the
importance to our industries of cheapness of production! We on this
side are great admirers of cheapness of production. We have reminded
the hon. gentleman of it often; but why should cheapness of production
always be achieved at the expense of the human factor? The hon.
gentleman spoke with anxiety of the possibility of a rise in miners'
wages as a consequence of this Bill. Has he considered the relation of
miners' wages to the selling prices of coal? At the pit's mouth the
underground-workers' wages are only 60 per cent. of the selling price
of coal. Free on board on the Tyne, the proportion is only 38 per
cent. As coal is sold here in the south of England the proportion of
wages is less than one-fifth of the whole price. Is it not clear that
there are other factors at least which require consideration before
you decide to deal with the human factor, which first attracts the
attention of the hon. gentleman?

What about mining royalties? In all this talk about the importance of
cheap coal to our industries and to the poor consumer we have had no
mention of mining royalties. No. We never mention that. Yet, will the
House believe it, it is estimated that mining royalties impose a toll
of 6 per cent., calculated on the price of coal at the pit's mouth, or
considerably more than half the total diminished production which
could result from this humane Act of labour legislation.

But we are asked: "Why stop here? Why don't your arguments apply
elsewhere?" and we are told of people whose conditions of life are
worse than some of those of coal-miners. Why stop here? Who ever said
we would stop here? I welcome and support this measure, not only for
its own sake, but much more because it is, I believe, simply the
precursor of the general movement which is in progress all over the
world, and in other industries besides this, towards reconciling the
conditions of labour with the well-ascertained laws of science and
health. If we are told that because we support this measure we shall
be inflicting an injury or injustice on other classes of the
population, I say there is a great solidarity among all classes of
manual labourers. I believe that when they consider this matter they
will see that all legitimate interests are in harmony, that no one
class can obtain permanent advantage by undue strain on another, and
that in the end their turn will come for shorter hours, and will come
the sooner because they have aided others to obtain that which they
desire themselves.

When the House is asked to contemplate gloomy pictures of what will
follow on this Bill, let them recur to the example of Parliaments gone
by. When the Ten Hours Bill was introduced in 1847, a Bill which
affected the hours of adult males inferentially, the same lugubrious
prophecies were indulged in from both sides of the House.
Distinguished economists came forward to prove that the whole profit
of the textile industry was reaped after the eleventh hour. Famous
statesmen on both sides spoke strongly against the measure. The
Parliament, in 1847, was in the same sort of position as we are to-day
in this respect, but how differently circumstanced in other respects.
That Parliament did not enjoy the wide and accurate statistical
information in every branch of labour which enables us to-day to move
forward with discretion and prudence. They were not able to look to
the general evidences of commercial security and expansion on which
modern politicians can rely. They could not show, as we can show,
overwhelming examples of owlish prophets dazzlingly disproved; they
could not point, as we can point, to scores of cases where not only
increased efficiency, but a positive increase in output has followed
the reduction of the hours of labour. The principle was new, the
future was vague. But the Parliament of those days did not quail. They
trusted to broad, generous instincts of common sense; they drew a
good, bold line; and we to-day enjoy in a more gentle, more humane,
more skilful, more sober, and more civilised population the blessings
which have followed their acts. Now it is our turn. Let us vote for
the Second Reading of this Bill, and in so doing establish a claim
upon the respect of Parliaments to come, such as we ourselves owe to
Parliaments of the past.[12]

FOOTNOTES:

[10] Mr. J.F. Mason.

[11] Mr. Bonar Law.

[12] This concluded the debate, and the Second Reading was carried by
390 to 120.



UNEMPLOYMENT

KINNAIRD HALL, DUNDEE, _October 10, 1908_

(From _The Times_, by permission.)

What is the political situation which unfolds itself to our
reflections to-night? I present it to you without misgivings or
reserve. For nearly three years a Liberal Administration, more
democratic in its character, more widely selected in its _personnel_,
more Radical in the general complexion of its policy, than any that
has previously been known to British history, has occupied the place
of power. During the whole of that period no single serious
administrative mistake, either at home or abroad, has embarrassed or
discredited the conduct of public affairs. Three Parliamentary
Sessions, fruitful beyond precedent in important legislation, have
been surmounted with dignity and dispatch. The authority and influence
of Great Britain among foreign Powers have been prudently guarded, and
are now appreciably augmented, and that authority and influence have
been consistently employed, and will be in the future employed, in
soothing international rivalries and suspicion, in asserting a proper
respect for public law, in preserving a just and harmonious balance
amongst great Powers, and in forwarding as opportunities have served,
whether in the Near East or in the Congo, causes of a generous and
disinterested humanitarianism.

The British Empire itself has enjoyed under Liberal rule a period of
prosperous tranquillity, favourable both to development and
consolidation; and it is no exaggeration to say that it was never more
strong or more peacefully united than at the present moment. The
confidence which the whole country, irrespective of party, feels in
Sir Edward Grey in the present European crisis, is the measure of our
success in foreign affairs. The gathering of the Convention of a
United South Africa is in itself a vindication of colonial policy.
Each year for which we have been responsible has been marked by some
great and beneficent event which has commanded the acquiescence--or at
least silenced the dissent--of many of our professed opponents. In
1906 the charter of trade unions; in 1907, the conciliation and
settlement of South Africa; in 1908, the establishment of old-age
pensions. These are large matters; they will take their place in the
history book; and on them alone, if necessary, I would confidently
base the claims of his Majesty's Government to respect, if not to
renown, in future times.

But although we do not meet to-night in any atmosphere of crisis, nor
in any expectation of a general election, nevertheless I feel, and I
dare say you feel too, that we have reached a climacteric in the life
of this Parliament. The next six months will probably determine the
whole remaining fortunes of the Government, and decide whether a
gradual but progressive decline will slowly carry the Administration
in the natural course to the grave where so many others are peacefully
slumbering, or whether, deriving fresh vigour from its exertions, it
will march forward conquering and to conquer.

I said a few minutes ago that this session had been marked by a
measure of great and cardinal importance. Surely no one will deny the
magnitude and significance of the step which has been taken in the
establishment of a system of old-age pensions. It marks the assertion
in our social system of an entirely new principle in regard to
poverty, and that principle, once asserted, cannot possibly be
confined within its existing limits. Old-age pensions will carry us
all a very long way. They have opened a door which will not soon or
easily be closed. The members of both Houses of Parliament have been
led to the verge of the cruel abyss of poverty, and have been in
solemn session assembled to contemplate its depths and its gloom. All
alike have come to gaze; none have remained unmoved. There are some
distinguished and eminent men, men whose power and experience I cannot
impugn, who have started back appalled by what they have seen, and
whose only idea is to slam the door on the grim and painful prospect
which has been revealed to their eyes.

But that is not the only spirit which has been awakened in our
country; there are others, not less powerful, and a greater number,
who will never allow that door to be closed; they have got their feet
in it, they are resolved that it shall be kept open. Nay, more, they
are prepared to descend into the abyss, and grapple with its evils--as
sometimes you see after an explosion at a coal mine a rescue party
advancing undaunted into the smoke and steam. Now there is the issue
on which the future of this Parliament hangs--"Forward or back?"
Voices sound loud and conflicting in our ears; the issue, the sharpest
and simplest, the most tremendous that can be put to a generation of
men--"Forward or backward?"--is the issue which confronts us at the
present time, and on it the future of the Government is staked. There
are faint-hearted friends behind; there are loud-voiced foes in front.
The brewer's dray has been pulled across the road, and behind it are
embattled a formidable confederation of vested interests. A
mountainous obstacle of indifference and apathy bars our advance. What
is your counsel? Forward or Back?

Let it be remembered that aged poverty is not the only evil with
which, so far as our means allow, we have to grapple. What is the
problem of the hour? It can be comprised in one word--Unemployment.
After two years of unexampled trade expansion, we have entered upon a
period of decline. We are not alone in this. A reaction from
overtrading is general all over the world. Both Germany and the United
States are suffering from a similar commercial contraction, and in
both countries, in spite of their high and elaborate protective
tariffs, a trade set-back has been accompanied by severe industrial
dislocation and unemployment. In the United States of America,
particularly, I am informed that unemployment has recently been more
general than in this country. Indeed the financial collapse in the
United States last autumn has been the most clearly marked of all the
causes to which the present trade depression may be assigned.

It is not yet possible to say that the end of that period of
depression is in sight; but there are some significant indications
which I think justify the hope that it will be less severe and less
prolonged than has been known in other trade cycles, or than some
people were at first inclined to believe. But the problem of
unemployment is not confined to periods of trade depression, and will
not be solved by trade revival; and it is to that problem in its
larger and more permanent aspects that I desire to draw your attention
for a short time to-night.

There is no evidence that the population of Great Britain has
increased beyond the means of subsistence. On the contrary, our wealth
is increasing faster than our numbers. Production is active; industry
grows, and grows with astonishing vigour and rapidity. Enterprise in
this country requires no artificial stimulant; if it errs at all, it
is from time to time upon the side of overtrading and overproduction.
There is no ground for believing that this country is not capable of
supporting an increasing population in a condition of expanding
prosperity.

It must, however, be remembered that the British people are more than
any other people in the world a manufacturing people. It is certain
that our population could never have attained its present vast
numbers, nor our country have achieved its position in the world,
without an altogether unusual reliance upon manufacture as opposed to
simple agriculture. The ordinary changes and transitions inseparable
from the active life and growth of modern industry, therefore, operate
here with greater relative intensity than in other countries. An
industrial disturbance is more serious in Great Britain than in other
countries, for it affects a far larger proportion of the people, and
in their distresses the urban democracy are not sustained by the same
solid backing of country-folk and peasant cultivators that we see in
other lands. It has, therefore, become a paramount necessity for us to
make scientific provision against the fluctuations and set-backs
which are inevitable in world commerce and in national industry.

We have lately seen how the backwash of an American monetary
disturbance or a crisis in the Near East or in the Far East, or some
other cause influencing world trade, and as independent of our control
as are the phases of the moon, may easily have the effect of letting
loose upon thousands of humble families and households all the horrors
of a state of siege or a warlike blockade. Then there are strikes and
trade disputes of all kinds which affect vast numbers of people
altogether unconcerned in the quarrel. Now, I am not going to-night to
proclaim the principle of the "right to work." There is not much use
in proclaiming a right apart from its enforcement; and when it is
enforced there is no need to proclaim it. But what I am here to
assert, and to assert most emphatically, is the responsibility of
Government towards honest and law-abiding citizens; and I am surprised
that that responsibility should ever be challenged or denied.

When there is a famine in India, when owing to some unusual course of
nature the sky refuses its rains and the earth its fruits, relief
works are provided in the provinces affected, trains of provisions are
poured in from all parts of that great Empire, aid and assistance are
given to the population involved, not merely to enable them to survive
the period of famine, but to resume their occupations at its close. An
industrial disturbance in the manufacturing districts and the great
cities of this country presents itself to the ordinary artisan in
exactly the same way as the failure of crops in a large province in
India presents itself to the Hindu cultivator. The means by which he
lives are suddenly removed, and ruin in a form more or less swift and
terrible stares him instantly in the face. That is a contingency which
seems to fall within the most primary and fundamental obligations of
any organisation of Government. I do not know whether in all countries
or in all ages that responsibility could be maintained, but I do say
that here and now in this wealthy country and in this scientific age
it does in my opinion exist, is not discharged, ought to be
discharged, and will have to be discharged.

The social machinery at the basis of our industrial life is deficient,
ill-organised, and incomplete. While large numbers of persons enjoy
great wealth, while the mass of the artisan classes are abreast of and
in advance of their fellows in other lands, there is a minority,
considerable in numbers, whose condition is a disgrace to a scientific
and professedly Christian civilisation, and constitutes a grave and
increasing peril to the State. Yes, in this famous land of ours, so
often envied by foreigners, where the grace and ease of life have been
carried to such perfection, where there is so little class hatred and
jealousy, where there is such a wide store of political experience and
knowledge, where there are such enormous moral forces available, so
much wisdom, so much virtue, so much power, we have not yet succeeded
in providing that necessary apparatus of insurance and security,
without which our industrial system is not merely incomplete, but
actually inhumane.

I said that disturbances of our industrial system are often started
from outside this country by causes utterly beyond our control. When
there is an epidemic of cholera, or typhoid, or diphtheria, a healthy
person runs less risk than one whose constitution is prepared to
receive the microbes of disease, and even if himself struck down, he
stands a far greater chance of making a speedy recovery. The social
and industrial conditions in Great Britain at this present time cannot
be described as healthy. I discern in the present industrial system of
our country three vicious conditions which make us peculiarly
susceptible to any outside disturbance of international trade. First,
the lack of any central organisation of industry, or any general and
concerted control either of ordinary Government work, or of any
extraordinary relief works. It would be possible for the Board of
Trade to foretell with a certain amount of accuracy the degree of
unemployment likely to be reached in any winter. It ought to be
possible for some authority in some Government office--which I do not
care--to view the whole situation in advance, and within certain
limits to exert a powerful influence over the general distribution of
Government contracts.

There is nothing economically unsound in increasing temporarily and
artificially the demand for labour during a period of temporary and
artificial contraction. There is a plain need of some averaging
machinery to regulate and even-up the general course of the labour
market, in the same way as the Bank of England, by its bank rate,
regulates and corrects the flow of business enterprise. When the
extent of the depression is foreseen, the extent of the relief should
also be determined. There ought to be in permanent existence certain
recognised industries of a useful, but uncompetitive character, like,
we will say, afforestation, managed by public departments, and capable
of being expanded or contracted according to the needs of the labour
market, just as easily as you can pull out the stops or work the
pedals of an organ. In this way, you would not eliminate unemployment,
you certainly would not prevent the creation of unemployables; but you
would considerably limit the scale of unemployment, you would reduce
the oscillation of the industrial system, you would increase its
stability, and by every step that you took in that direction you would
free thousands of your fellow-countrymen from undeserved agony and
ruin, and a far greater number from the haunting dread of ruin. That
is the first point--a gap, a hiatus in our social organisation--to
which I direct your attention to-night, and upon which the
intelligence of this country ought to be concentrated.

The second vicious condition is positive and not negative. I mean the
gross, and, I sometimes fear, increasing evil of casual labour. We
talk a great deal about the unemployed, but the evil of the
_under-employed_ is the tap-root of unemployment. There is a tendency
in many trades, almost in all trades, to have a fringe of casual
labour on hand, available as a surplus whenever there is a boom, flung
back into the pool whenever there is a slump. Employers and foremen in
many trades are drawn consciously or unconsciously to distribute their
work among a larger number of men than they regularly require, because
this obviously increases their bargaining power with them, and
supplies a convenient reserve for periods of brisk business activity.

And what I desire to impress upon you, and through you upon this
country, is that the casual unskilled labourer who is habitually
under-employed, who is lucky to get three, or at the outside four,
days' work in the week, who may often be out of a job for three or
four weeks at a time, who in bad times goes under altogether, and who
in good times has no hope of security and no incentive to thrift,
whose whole life and the lives of his wife and children are embarked
in a sort of blind, desperate, fatalistic gamble with circumstances
beyond his comprehension or control, that this poor man, this terrible
and pathetic figure, is not as a class the result of accident or
chance, is not casual because he wishes to be casual, is not casual as
the consequence of some temporary disturbance soon put right. No; the
casual labourer is here because he is wanted here. He is here in
answer to a perfectly well-defined demand. He is here as the result of
economic causes which have been too long unregulated. He is not the
natural product, he is an article manufactured, called into being, to
suit the requirements, in the Prime Minister's telling phrase, of all
industries at particular times and of particular industries at all
times.

I suppose no Department has more means of learning about these things
than the Board of Trade, which is in friendly touch at every stage all
over the country both with capital and labour. I publish that fact
deliberately. I invite you to consider it, I want it to soak in. It
appears to me that measures to check the growth and diminish the
quantity of casual labour must be an essential part of any thorough or
scientific attempt to deal with unemployment, and I would not proclaim
this evil to you without having reason to believe that practicable
means exist by which it can be greatly diminished.

If the first vicious condition which I have mentioned to you is lack
of industrial organisation, if the second is the evil of casual
labour, there is a third not less important. I mean the present
conditions of boy labour. The whole underside of the labour market is
deranged by the competition of boys or young persons who do men's work
for boys' wages, and are turned off so soon as they demand men's wages
for themselves. That is the evil so far as it affects the men; but how
does it affect the boys, the youth of our country, the heirs of all
our exertion, the inheritors of that long treasure of history and
romance, of science and knowledge--aye, of national glory, for which
so many valiant generations have fought and toiled--the youth of
Britain, how are we treating them in the twentieth century of the
Christian era? Are they not being exploited? Are they not being
demoralised? Are they not being thrown away?

Whereas the youth of the wealthier class is all kept under strict
discipline until eighteen or nineteen, the mass of the nation runs
wild after fourteen years of age. No doubt at first employment is easy
to obtain. There is a wide and varied field; there are a hundred odd
jobs for a lad; but almost every form of employment now open to young
persons affords them no opening, is of no use to them whatever when
they are grown up, and in a great number of cases the life which they
lead is demoralising and harmful. And what is the consequence? The
consequence may be measured by this grim fact, that out of the
unemployed applying for help under the Unemployed Workmen Act, no less
than twenty-eight per cent. are between twenty and thirty years of
age, that is to say, men in the first flush of their strength and
manhood already hopelessly adrift on the dark and tumultuous ocean of
life. Upon this subject, I say to you deliberately that no boy or girl
ought to be treated merely as cheap labour, that up to eighteen years
of age every boy and girl in this country should, as in the old days
of apprenticeship, be learning a trade as well as earning a living.

All attempts to deal with these and similar evils involve the
expenditure of money. It is no use abusing capitalists and rich
people. They are neither worse nor better than any one else. They
function quite naturally under the conditions in which they find
themselves. When the conditions are vicious, the consequence will be
evil; when the conditions are reformed, the evil will be abated. Nor
do I think the wealthy people of Great Britain would be ungenerous or
unwilling to respond to the plain need of this nation for a more
complete or elaborate social organisation. They would have a natural
objection to having public money wasted or spent on keeping in
artificial ease an ever-growing class of wastrels and ne'er-do-weels.
No doubt there would also be a selfish element who would sullenly
resist anything which touched their pocket. But I believe that if
large schemes, properly prepared and scientifically conceived for
dealing with the evils I have mentioned were presented, and if it
could be shown that our national life would be placed upon a far more
stable and secure foundation, I believe that there would be thousands
of rich people who would cheerfully make the necessary sacrifices. At
any rate, we shall see.

The year that lies before us must be a year of important finance. No
doubt that finance will be a subject of fierce and protracted
discussion; but I shall certainly not exclude from my mind, in
weighing the chances of social reform, that strong element of
patriotism which is to be found among the more fortunate of our
fellow-countrymen, and which has honourably distinguished them from
the rich people of other countries I could name.

I have been dealing with three, and only three, of the evil causes
which principally affect labour conditions in Great Britain at the
present time. Do not forget, however, as the Prime Minister has
reminded us, how intimate is the co-relation of all social reforms,
how vital it is to national health and security that we should
maintain an adequate and independent population upon the land, and how
unsatisfactory, in Scotland, at any rate, are the present conditions
for small holdings. Do not forget, either, how fatal to the social,
moral, and political progress of British democracy is the curse of
intemperance. There is not a man or woman who lifts a voice and exerts
an influence in support either of land or of temperance reform, who
will not be doing something not only to alleviate the sufferings of
the poor, but to stimulate the healthy advance of British prosperity.

But see how vast is the range of this question of unemployment with
which we are confronted. See now how intricate are its details and
its perplexities; how foolish it would be to legislate in panic or
haste; how vain it would be to trust to formulas and prejudices; how
earnest must be the study; how patient and laborious the preparation;
how scientific the spirit, how valiant the action, if that great and
hideous evil of insecurity by which our industrial population are
harassed is to be effectually diminished in our national life. See
now, also, what sort of politicians those are, whichever extreme of
politics they may belong to, who tell you that they have an easy,
simple, and unfailing remedy for such an evil. What sort of
unscrupulous and reckless adventurers they are who tell you that
tariff reform, that a trumpery ten per cent. tariff on foreign
manufactures, and a tax on wheat would enable them to provide "work
for all." I was very glad to see that Mr. Balfour frankly and honestly
dissociated himself, the other night at Dumfries, from the impudent
political cheap-jacks who are touting the country on behalf of the
Tory Party, by boldly declaring that tariff reform, or "fiscal
reform," as he prefers to call it, would be no remedy for unemployment
or trade oscillations.

Now that Mr. Balfour has made that admission, for which we thank him,
and for which we respect him, I will make one in my turn. If tariff
reform or protection, or fiscal reform, or whatever you choose to call
it, is no remedy for unemployment--and it is pretty clear from the
experience of other countries who have adopted it on a large scale
that it is not--neither is free trade by itself a remedy for
unemployment. The evil lies deeper, the causes are more complex than
any within the reach of import duties or of no import duties, and its
treatment requires special measures of a social, not less than of an
economic character which are going to carry us into altogether new and
untrodden fields in British politics.

I agree most whole-heartedly with those who say that in attempting to
relieve distress or to regulate the general levels of employment, we
must be most careful not to facilitate the very disorganisation of
industry which causes distress. But I do not agree with those who say
that every man must look after himself, and that the intervention by
the State in such matters as I have referred to will be fatal to his
self-reliance, his foresight, and his thrift. We are told that our
non-contributory scheme of old-age pensions, for instance, will be
fatal to thrift, and we are warned that the great mass of the working
classes will be discouraged thereby from making any effective
provision for their old age. But what effective provision have they
made against old age in the past? If terror be an incentive to thrift,
surely the penalties of the system which we have abandoned ought to
have stimulated thrift as much as anything could have been stimulated
in this world. The mass of the labouring poor have known that unless
they made provision for their old age betimes they would perish
miserably in the workhouse. Yet they have made no provision; and when
I am told that the institution of old-age pensions will prevent the
working classes from making provision for their old age, I say that
cannot be, for they have never been able to make such provision. And I
believe our scheme, so far from preventing thrift, will encourage it
to an extent never before known.

It is a great mistake to suppose that thrift is caused only by fear;
it springs from hope as well as from fear; where there is no hope, be
sure there will be no thrift. No one supposes that five shillings a
week is a satisfactory provision for old age. No one supposes that
seventy is the earliest period in a man's life when his infirmities
may overwhelm him. We have not pretended to carry the toiler on to dry
land; it is beyond our power. What we have done is to strap a lifebelt
around him, whose buoyancy, aiding his own strenuous exertions, ought
to enable him to reach the shore.

And now I say to you Liberals of Scotland and Dundee two
words--"Diligence and Daring." Let that be your motto for the year
that is to come. "Few," it is written, "and evil are the days of man."
Soon, very soon, our brief lives will be lived. Soon, very soon, we
and our affairs will have passed away. Uncounted generations will
trample heedlessly upon our tombs. What is the use of living, if it be
not to strive for noble causes and to make this muddled world a better
place for those who will live in it after we are gone? How else can we
put ourselves in harmonious relation with the great verities and
consolations of the infinite and the eternal? And I avow my faith that
we are marching towards better days. Humanity will not be cast down.
We are going on--swinging bravely forward along the grand high
road--and already behind the distant mountains is the promise of the
sun.



THE SOCIAL FIELD

BIRMINGHAM, _January 13, 1909_[13]

(From _The Times_, by permission.)


I am very glad to come here to-night to wish good luck in the New Year
to the Liberals of Birmingham. Good luck is founded on good pluck, and
that is what I think you will not fail in. Birmingham Liberals have
for twenty years been over-weighted by the influence of remarkable men
and by the peculiar turn of events. This great city, which used to be
the home of militant Radicalism, which in former days supplied with
driving power the cause of natural representation against hereditary
privilege, has been captured by the foe. The banner of the House of
Lords has been flung out over the sons and grandsons of the men who
shook all England in the struggle for the great Reform Bill; and while
old injustice has but been replaced by new, while the miseries and the
privations of the poor continue in your streets, while the
differences between class and class have been even aggravated in the
passage of years, Birmingham is held by the enemy and bound to
retrogression in its crudest form.

But this is no time for despondency. The Liberal Party must not allow
itself to be overawed by the hostile Press which is ranged against it.
Boldly and earnestly occupied, the platform will always beat the
Press. Still less should we allow ourselves to be perturbed by the
fortuitous and sporadic results of by-electoral warfare. I suppose I
have fought as many by-elections as most people, and I know that all
the advantages lie with the attacking force. The contests are
complicated by personal and local influences. The discussions turn
upon the incidents of current legislation. There are always grievances
to be urged against the Government of the day. After a great victory,
all parties, and particularly the Liberals, are prone to a slackening
of effort and organisation; after a great defeat all parties, and
especially the Tories, are spurred to supreme exertions.

These factors are common to all by-elections, under all Governments;
but never, I venture to say, has it been more important to an
Opposition to gain by-electoral successes than during the present
Parliament. It is their only possible line of activity. In the House
of Commons they scarcely show their noses. In divisions they are
absent; in debate--well, I do not think we need say much about that;
and it is only by a combination of by-electoral incidents properly
advertised by the Party Press on the one hand, and the House of Lords'
manipulation upon the other, that the Conservative Party are able to
keep their heads above water. And when I speak of the importance to
the Opposition of by-elections, let me also remind you that never
before have by-electoral victories been so important, not only to a
great Party, but to a great trade.

Therefore, while I am far from saying that we should be content with
recent manifestations of the opinion of the electorate, while I do not
at all deny that they involve a sensible reaction of feeling of an
unfavourable character, and while I urge the most strenuous exertions
upon all concerned in party organisation, I assert that there is no
reason, as the history of this country abundantly shows, why a general
election, at a well-chosen moment, and upon some clear, broad, simple
issue, should not retrieve and restore the whole situation.

There could be no question of a Government, hitherto undisturbed by
internal disagreement and consistently supported in the House of
Commons by a large, united, and intact majority, being deflected one
hair's breadth from its course by the results of by-elections. We have
our work to do, and while we have the power to carry it forward, we
have no right, even if we had the inclination, to leave it
uncompleted. Certainly we shall not be so foolish, or play so false to
those who have supported us, as to fight on any ground but that of our
own choosing, or at any time but that most advantageous to the general
interest of the Progressive cause.

The circumstances of the period are peculiar. The powers of the House
of Lords to impede, and by impeding to discredit, the House of Commons
are strangely bestowed, strangely limited, and still more strangely
exercised. There are little things which they can maul; there are big
things they cannot touch; there are Bills which they pass, although
they believe them to be wrong; there are Bills which they reject,
although they know them to be right. The House of Lords can prevent
the trams running over Westminster Bridge; but it cannot prevent a
declaration of war. It can reject a Bill prohibiting foreign workmen
being brought in to break a British strike; it cannot amend a Bill to
give old-age pensions to 600,000 people. It can thwart a Government in
the minute details of its legislation; it cannot touch the whole vast
business of finance. It can prevent the abolition of the plural voter;
but it could not prevent the abolition of the police. It can refuse a
Constitution to Ireland, but not, luckily, to Africa.

Lord Lansdowne, in his leadership of the House of Lords during the
present Parliament, has put forward claims on its behalf far more
important and crude than ever were made by the late Lord Salisbury. No
Tory leader in modern times has ever taken so high a view of its
rights, and at the same time no one has shown a more modest conception
of its duties. In destroying the Education Bill of 1906 the House of
Lords asserted its right to resist the opinion of a majority of members
of the House of Commons, fresh from election, upon a subject which had
been one of the most prominent issues of the election. In rejecting
the Licensing Bill of 1908 they have paraded their utter unconcern for
the moral welfare of the mass of their fellow-countrymen.

There is one feature in the guidance of the House of Lords by Lord
Lansdowne which should specially be noticed, and that is the air of
solemn humbug with which this ex-Whig is always at pains to invest its
proceedings. The Nonconformist child is forced into the Church school
in single-school areas in the name of parents' rights and religious
equality. The Licensing Bill is rejected in the highest interests of
temperance. Professing to be a bulwark of the commercial classes
against Radical and Socialistic legislation, the House of Lords passes
an Old-Age Pensions Bill, which it asserts will be fatal alike to
public finance and public thrift, a Mines Eight Hours Bill, which it
is convinced will cripple British industry, and a Trades Disputes
Bill, which it loudly declared tyrannous and immoral. Posing as a
Chamber of review remote from popular passion, far from the swaying
influences of the electorate, it nevertheless exhibits a taste for
cheap electioneering, a subserviency to caucus direction, and a party
spirit upon a level with many of the least reputable elective
Chambers in the world; and beneath the imposing mask of an assembly of
notables backed by the prescription and traditions of centuries we
discern the leer of the artful dodger, who has got the straight tip
from the party agent.

It is not possible for reasonable men to defend such a system or such
an institution. Counter-checks upon a democratic Assembly there may
be, perhaps there should be. But those counter-checks should be in the
nature of delay, and not in the nature of arrest; they should operate
evenly and equally against both political parties, and not against
only one of them; and above all they should be counter-checks
conceived and employed in the national interest and not in a partisan
interest. These abuses and absurdities have now reached a point when
it is certain that reform, effective and far-reaching, must be the
necessary issue at a general election; and, whatever may be the result
of that election, be sure of this, that no Liberal Government will at
any future time assume office without securing guarantees that that
reform shall be carried out.

There is, however, one reason which would justify a Government,
circumstanced and supported as we are, in abandoning prematurely the
trust confided to us by the country. When a Government is impotent,
when it is destitute of ideas and devoid of the power to give effect
to them, when it is brought to a complete arrest upon the vital and
essential lines of its policy, then I entirely agree that the sooner
it divests itself of responsibilities which it cannot discharge, the
better for the country it governs and the Party it represents. No one
who looks back over the three busy years of legislation which have
just been completed can find any grounds for such a view of our
position; and although we have sustained checks and vexations from
circumstances beyond our control which have prevented us settling, as
we otherwise would have done, the problems of licensing and of
education, no lover of progress who compares the Statute-book as it
stands to-day with its state in 1905, need feel that he has laboured
in vain.

No one can say that we have been powerless in the past. The trade
unionist as he surveys the progress of his organisation, the miner as
the cage brings him to the surface of the ground, the aged pensioner
when he visits the post office with his cheque-book, the Irish
Catholic whose son sees the ranges of a University career thrown
open, the child who is protected in his home and in the street, the
peasant who desires to acquire a share of the soil he tills, the
youthful offender in the prison, the citizen as he takes his seat on
the county bench, the servant who is injured in domestic service, all
give the lie to that--all can bear witness to the workings of a
tireless social and humanitarian activity, which, directed by
knowledge and backed by power, tends steadily to make our country a
better place for the many, without at the same time making it a bad
place for the few.

But, if we have been powerful in the past, shall we then be powerless
in the future? Let the year that has now opened make its answer to
that. We shall see before many months are passed whether his Majesty's
Government, and the House of Commons, by which it is supported, do not
still possess effective means to carry out their policy, not only upon
those important political issues in which we have been for the time
being thwarted, but also in that still wider and, in my opinion, more
important field of social organisation into which, under the
leadership of the Prime Minister, we shall now proceed to advance.

I do not, of course, ignore the fact that the House of Lords has the
power, though not the constitutional right, to bring the government of
the country to a standstill by rejecting the provision which the
Commons make for the financial service of the year. That is a matter
which does not rest with us, it rests with them. If they want a speedy
dissolution, they know where to find one. If they really believe, as
they so loudly proclaim, that the country will hail them as its
saviours, they can put it to the proof. If they are ambitious to play
for stakes as high as any Second Chamber has ever risked, we shall not
be wanting. And, for my part, I should be quite content to see the
battle joined as speedily as possible upon the plain, simple issue of
aristocratic rule against representative government, between the
reversion to protection and the maintenance of free trade, between a
tax on bread and a tax on--well, never mind. And if they do not
choose, or do not dare to use the powers they most injuriously
possess, if fear, I say, or tactics, or prudence, or some lingering
sense of constitutional decency, restrains them, then for Heaven's
sake let us hear no more of these taunts, that we, the Liberal Party,
are afraid to go to the country, that we do not possess its
confidence, and that we are impotent to give effect to the essential
purposes of our policy.

Subject to such a constitutional outrage as I have indicated, his
Majesty's Government will claim their right and use their power to
present the Liberal case as a whole to the judgment of the whole body
of electors. That case is already largely developed. How utterly have
all those predictions been falsified that a Liberal Government would
be incapable of the successful conduct of Imperial affairs! Whether
you look at our position in Europe, or at the difficult conduct of
Indian administration, or the relations which have been preserved, and
in some cases restored, with our self-governing Colonies, the policy
of the Government has been attended with so much success that it has
not only commanded the approval of impartial persons, but has silenced
political criticism itself.

It was in South Africa that we were most of all opposed and most of
all distrusted, and by a singular inversion it is in South Africa that
the most brilliant and memorable results have been achieved. Indeed, I
think that the gift of the Transvaal and Orange River Constitutions
and the great settlement resulting therefrom will be by itself as a
single event sufficient to vindicate in the eyes of future generations
the administration of Sir Henry Campbell-Bannerman, and to dignify his
memory in Parliaments and periods which we shall not see. But our work
abroad is not yet completed, has not yet come to its full fruition. If
we should continue, as I expect we shall, to direct public affairs for
the full five years which are the normal and the healthy period of
British Administrations, we may look for a further advance and
improvement in all the great external spheres of Imperial policy. We
may look in India for a greater sense of confidence and solidarity
between the people and the Government. We shall salute the sunrise of
South Africa united under the British Crown. And in Europe I trust
that Sir Edward Grey will have crowned his work at the Foreign Office
by establishing a better and kindlier feeling between the British and
the German peoples. That will be the record of policy beyond the seas
on which we shall appeal for judgment and for justice.

If it be said that, contrary to general expectation, our policy has
prospered better abroad than at home, you have not far to look for
the reason. Abroad we have enjoyed full responsibility, a free hand,
and fair-play; at home we have had a divided authority, a fettered
hand, and the reverse of fair-play. We have been hampered and we have
been harassed. We have done much; we could have done much more.

Our policy at home is less complete and less matured than it is
abroad. But it so happens that many of the most important steps which
we should now take, are of such a character that the House of Lords
will either not be able or will not be anxious to obstruct them, and
could not do so except by courting altogether novel dangers. The
social field lies open. There is no great country where the
organisation of industrial conditions more urgently demands attention.
Wherever the reformer casts his eyes he is confronted with a mass of
largely preventable and even curable suffering. The fortunate people
in Britain are more happy than any other equally numerous class have
been in the whole history of the world. I believe the left-out
millions are more miserable. Our vanguard enjoys all the delights of
all the ages. Our rearguard straggles out into conditions which are
crueller than barbarism. The unemployed artisan, the casual labourer,
and the casual labourer's wife and children, the sweated worker, the
infirm worker, the worker's widow, the under-fed child, the untrained,
undisciplined, and exploited boy labourer--it is upon these subjects
that our minds should dwell in the early days of 1909.

The Liberal Party has always known the joy which comes from serving
great causes. It must also cherish the joy which comes from making
good arrangements. We shall be all the stronger in the day of battle
if we can show that we have neglected no practicable measure by which
these evils can be diminished, and can prove by fact and not by words
that, while we strive for civil and religious equality, we also labour
to build up--so far as social machinery can avail--tolerable basic
conditions for our fellow-countrymen. There lies the march, and those
who valiantly pursue it need never fear to lose their hold upon the
heart of Britain.

FOOTNOTES:

[13] In the interval between this and the preceding speech the House of
Lords had rejected the Licensing Bill.



THE APPROACHING CONFLICT

NOTTINGHAM, _January 30, 1909_

(From _The Manchester Guardian_, by permission of the Editor.)


We are met together at a time when great exertions and a high
constancy are required from all who cherish and sustain the Liberal
cause. Difficulties surround us and dangers threaten from this side
and from that. You know the position which has been created by the
action of the House of Lords. Two great political Parties divide all
England between them in their conflicts. Now it is discovered that one
of these Parties possesses an unfair weapon--that one of these
Parties, after it is beaten at an election, after it is deprived of
the support and confidence of the country, after it is destitute of a
majority in the representative Assembly, when it sits in the shades of
Opposition without responsibility, or representative authority, under
the frown, so to speak, of the Constitution, nevertheless possesses a
weapon, an instrument, a tool, a utensil--call it what you will--with
which it can harass, vex, impede, affront, humiliate, and finally
destroy the most serious labours of the other. When it is realised
that the Party which possesses this prodigious and unfair advantage is
in the main the Party of the rich against the poor, of the classes and
their dependants against the masses, of the lucky, the wealthy, the
happy, and the strong against the left-out and the shut-out millions
of the weak and poor, you will see how serious the constitutional
situation has become.

A period of supreme effort lies before you. The election with which
this Parliament will close, and towards which we are moving, is one
which is different in notable features from any other which we have
known. Looking back over the politics of the last thirty years, we
hardly ever see a Conservative Opposition approaching an election
without a programme, on paper at any rate, of social and democratic
reform. There was Lord Beaconsfield with his policy of "health and the
laws of health." There was the Tory democracy of Lord Randolph
Churchill in 1885 and 1886, with large, far-reaching plans of Liberal
and democratic reform, of a generous policy to Ireland, of
retrenchment and reduction of expenditure upon naval and military
armaments--all promises to the people, and for the sake of which he
resigned rather than play them false. Then you have the elections of
1892 and 1895. In each the Conservative Party, whether in office or
opposition, was, under the powerful influence of Mr. Chamberlain,
committed to most extensive social programmes, of what we should call
Liberal and Radical reforms, like the Workmen's Compensation Act and
Old-Age Pensions, part of which were carried out by them and part by
others.

But what social legislation, what plans of reform do the Conservative
Party offer now to the working people of England if they will return
them to power? I have studied very carefully the speeches of their
leaders--if you can call them leaders--and I have failed to discover a
single plan of social reform or reconstruction. Upon the grim and
sombre problems of the Poor Law they have no policy whatever. Upon
unemployment no policy whatever; for the evils of intemperance no
policy whatever, except to make sure of the public-house vote; upon
the question of the land, monopolised as it is in the hands of so
few, denied to so many, no policy whatever; for the distresses of
Ireland, for the relations between the Irish and British peoples, no
policy whatever unless it be coercion. In other directions where they
have a policy, it is worse than no policy. For Scotland the Lords'
veto, for Wales a Church repugnant to the conscience of the
overwhelming majority of the Welsh people, crammed down their throats
at their own expense.

Yet we are told they are confident of victory, they are persuaded that
the country has already forgotten the follies and even the crimes of
the late Administration, and that the general contempt and disgust in
which they were dismissed from power has already passed away. They are
already busy making their Cabinet, who is to be put in and, what is
not less important, who is to be put out. Lists of selection and lists
of proscription are being framed. The two factions into which they are
divided, the Balfourites and the tariff reformers, are each acutely
conscious of one another's infirmities, and, through their respective
organs, they have succeeded in proving to their apparent satisfaction
what most of us have known, and some of us have said for a long time
past, that they are an uncommonly poor lot all round.

It would be bad enough if a Party so destitute, according to its own
statement, of political merit were to return with the intention of
doing nothing but repeating and renewing our experiences under Mr.
Balfour's late Administration, of dragging through empty sessions, of
sneering at every philanthropic enthusiasm, of flinging a sop from
time to time to the brewers or the parsons or the landed classes. But
those would not be the consequences which would follow from the Tory
triumph. Consequences far more grave, immeasurably more disastrous,
would follow. We are not offered an alternative policy of progress, we
are not confronted even with a policy of standstill, we are confronted
with an organised policy of constructive reaction. We are to march
back into those shades from which we had hoped British civilisation
and British science had finally emerged.

If the Conservative Party win the election they have made it perfectly
clear that it is their intention to impose a complete protective
tariff, and to raise the money for ambitious armaments and colonial
projects by taxing the poor. They have declared, with a frankness
which is, at any rate, remarkable, that they will immediately proceed
to put a tax on bread, a tax on meat, a tax on timber, and an
innumerable schedule of taxes on all manufactured articles imported
into the United Kingdom; that is to say, that they will take by all
these taxes a large sum of money from the pockets of the wage-earners,
by making them pay more for the food they eat, the houses they live
in, and the comforts and conveniences which they require in their
homes, and that a great part of this large sum of money will be
divided between the landlords and the manufacturers in the shape of
increased profits; and even that part of it which does reach the
Exchequer is to be given back to these same classes in the shape of
reductions in income-tax and in direct taxation. If you face the
policy with which we are now threatened by the Conservative Party
fairly and searchingly, you will see that it is nothing less than a
deliberate attempt on the part of important sections of the propertied
classes to transfer their existing burdens to the shoulders of the
masses of the people, and to gain greater profits for the investment
of their capital by charging higher prices.

It is very natural that a Party nourishing such designs should be
apprehensive of criticism and of opposition; but I must say I have
never heard of a Party which was in such a jumpy, nervous state as our
opponents are at this present time. If one is led in the course of a
speech, as I sometimes am, to speak a little firmly and bluntly about
the Conservative tariff reformers, they become almost speechless with
indignation. They are always in a state of incipient political
apoplexy, while as for the so-called Liberal Unionists, whenever they
are criticised, they never leave off whining and say that it is
unchivalrous to attack them while Mr. Chamberlain is disabled. Sorry I
am that he is out of the battle, not only on personal, but on public
grounds. His fiercest opponents would welcome his re-entry into the
political arena, if only for the fact that we should then have a man
to deal with, and some one whose statement of the case for his side
would be clear and bold, whose speeches would be worth reading and
worth answering, instead of the melancholy marionettes whom the
wire-pullers of the Tariff Reform League are accustomed to exhibit on
provincial platforms. But I hope you will not let these pretexts or
complaints move you or prevent you from calling a spade a spade, a tax
a tax, a protective tariff a gigantic dodge to cheat the poor, or the
Liberal Unionist party the most illiberal thing on record.

But if the tariff reformers are so touchy and intolerant that they
resent the slightest attack or criticism from their opponents as if it
were sacrilege, that is nothing to the fury which they exhibit when
any of their friends on the Conservative side begin to ask a few
questions. One would have thought at least that matters of such
gravity and such novelty should be considered fairly on their merits.
But what does Mr. Austen Chamberlain say? He tells us that no
hesitation will be tolerated from Unionist Members of Parliament in
regard to any tariff reform proposals which may in a future Parliament
be submitted--by whoever may be the Chancellor of the Exchequer. No
hesitation will be tolerated. Not opposition, not criticism, not
dissent, but no hesitation will be tolerated. The members of the
Unionist Party are to go to the next Parliament, not as honest
gentlemen, free to use their minds and intelligences. They are to go
as the pledged, tied-up delegates of a caucus, forced to swallow
without hesitation details of a tariff which they have not even seen;
denied the right which every self-respecting man should claim, to give
their vote on grand and cardinal issues according to their faith and
their conscience. And in order that those who would refuse to be bound
by these dishonouring conditions may be smelt out and excluded from
the House of Commons, a secret society of nameless but probably
interested busybodies is hard at work in all the dirtiest sewers of
political intrigue.

But, after all, these methods are an inseparable part of the process
of carrying a protectionist tariff. The whole question resolves itself
into a matter of "business is business," and the predatory interests
which have banded themselves together to finance and organise the
tariff campaign cannot be expected to put up with the conscientious
scruples and reasonable hesitations of Members of Parliament. It will
be a cash transaction throughout, with large profits and quick
delivery. Every little would-be monopolist in the country is going to
have his own association to run his own particular trade. Every
constituency will be forced to join in the scramble, and to secure
special favours at the expense of the commonwealth for its special
branches of industry. All the elections of the future will turn on
tariffs. Why, you can see the thing beginning already. That egregious
Tariff Commission have been dividing all the loot among themselves
before the battle has been won--dividing the lion's skin while the
beast lives--and I was reading only the other day that the
Conservatives of Norwood have decided that they could not support
their Member any longer, because, forsooth, he would not pledge
himself to vote for a special tax on foreign imported chairs and
window panes. It is the same in every country.

Such is the great conspiracy with which the British democracy is now
confronted--an attempt to place the main burden of taxation upon the
shoulders of wage-earners and not on income-drawers, a disastrous blow
at the prosperity, the freedom, the flexibility, and the expansive
power of British industry, and a deadly injury to the purity of
English public life. The Conservative Party tell us that if they win
the victory they will screw a protective tariff on our necks. What do
we say? What of the House of Lords? We say that if we win, we will
smash to pieces the veto of the House of Lords. If we should obtain a
majority at the next election--and I have good hopes that if we act
with wisdom and with union, and, above all, with courage, we shall
undoubtedly obtain an effective majority--the prize we shall claim
will be a final change in the relations of the two Houses of
Parliament, of such a character as to enable the House of Commons to
make its will supreme within the lifetime of a single Parliament; and
except upon that basis, or for the express purpose of effecting that
change, we will not accept any responsibility for the conduct of
affairs.

But there is another issue which must not be overlooked. I mean the
social issue. We have taken a great step already. I must say that he
is rather a sour kind of man who can find nothing to notice in the
Old-Age Pensions Act except its little flaws and petty defects. I
think you will feel, on the contrary, that the establishment of the
pensions system is a marvellous and impressive example of the power
which British Governments possess. Without a hitch, perfectly
smoothly, punctual to the minute, regular as clockwork, nearly
600,000 aged persons are being paid their pensions every week. That is
a wonderful and beneficent achievement, a good job well worth some
risk and sweat to finish. Nearly eight millions of money are being
sent circulating through unusual channels, long frozen by poverty,
circulating in the homes of the poor, flowing through the little shops
which cater to their needs, cementing again family unions which harsh
fate was tearing asunder, uniting the wife to the husband, and the
parent to the children. No; in spite of Socialistic sneer and Tory
jeer and glorious beer, and all the rest of it, I say it is a noble
and inspiring event, for which this Parliament will be justly honoured
by generations unborn. I said just now that a Tory tariff victory
meant marching backwards, but there are some things they cannot undo.
We may be driven from power. We may desire to be released from
responsibility. Much of our work may be cut short, much may be
overturned. But there are some things which Tory reaction will not
dare to touch, and, like the settlement and reconciliation of South
Africa, so the Old-Age Pensions Act will live and grow and ripen as
the years roll by, far beyond the reach of Party warfare and far
above the changing moods of faction.

There are many political injustices in this country and many absurd,
oppressive, or obsolete practices. But the main aspirations of the
British people are at this present time social rather than political.
They see around them on every side, and almost every day, spectacles
of confusion and misery which they cannot reconcile with any
conception of humanity or justice. They see that there are in the
modern state a score of misfortunes that can happen to a man without
his being in fault in any way, and without his being able to guard
against them in any way. They see, on the other hand, the mighty power
of science, backed by wealth and power, to introduce order, to provide
safeguards, to prevent accidents, or at least to mitigate their
consequences. They know that this country is the richest in the world;
and in my sincere judgment the British democracy will not give their
hearts to any Party that is not able and willing to set up that
larger, fuller, more elaborate, more thorough social organisation,
without which our country and its people will inevitably sink through
sorrow to disaster and our name and fame fade upon the pages of
history.

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



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

HOUSE OF COMMONS, _April 28, 1909_



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

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

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

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

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

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

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

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

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

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

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

An investigator in the East End of London writes:

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

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

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

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

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

FOOTNOTES:

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



LABOUR EXCHANGES AND UNEMPLOYMENT INSURANCE

HOUSE OF COMMONS, _May 19, 1909_


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

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

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

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

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

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

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

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

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

The expense of this system will no doubt be considerable. Its ordinary
working will not need a sum less than about £170,000 per year, and
during the period when the building is going on the expenditure will
rise to about £200,000 per year.

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

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

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

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

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

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

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

That is a very considerable group of industries. They comprise,
probably at the present time, 2¼ millions of adult males. Two and a
quarter millions of adult males are, roughly speaking, one-third of
the population of these three kingdoms engaged in purely industrial
work; that is to say, excluding commercial, professional,
agricultural, and domestic occupations. Of the remaining two-thirds of
the industrial population, nearly one-half are employed in the textile
trades, in mining, on the railways, in the merchant marine, and in
other trades, which either do not present the same features of
unemployment which we see in these precarious trades, or which, by the
adoption of short time or other arrangements, avoid the total
discharge of a proportion of workmen from time to time. So that this
group of trades to which we propose to apply the system of
unemployment insurance, roughly speaking, covers very nearly half of
the whole field of unemployment; and that half is, on the whole,
perhaps the worse half.

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

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

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

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

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

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

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

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

FOOTNOTES:

[15] Mr. Ramsay MacDonald.



III

THE BUDGET


THE BUDGET RESOLUTIONS (May 4, 1909)                     277

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

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

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

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

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

THE CONSTITUTIONAL MENACE (Oct. 9, 1909)                 405



THE BUDGET RESOLUTIONS

HOUSE OF COMMONS, _May 4, 1903_


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

On many grounds we may commend this Budget to the House. It makes
provision for the present. It makes greater provision for the future.
Indirect taxation reaches the minimum. Food taxation reaches the
minimum since the South African war. Certainly the working classes
have no reason to complain. Nothing in the Budget touches the
physical efficiency and energy of labour. Nothing in it touches the
economy of the cottage home. Middle-class people with between £300 and
£2,000 a year are not affected in any considerable degree, except by
the estate duties, and in that not to a large extent, while in some
cases they are distinctly benefited in the general way of taxation.
The very rich are not singled out for peculiar, special, or invidious
forms of imposition.

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

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

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

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

FOOTNOTES:

[16] Mr. Wyndham.

[17] Mr. Austen Chamberlain.



THE BUDGET AND NATIONAL INSURANCE

THE FREE TRADE HALL, MANCHESTER, _May 23, 1909_

(From _The Manchester Guardian_, by permission.)


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

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

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

What is the position in which we find ourselves? After reducing the
taxes on coal, on tea, on sugar, and on the smaller class of incomes
by nearly £7,000,000 a year, and after paying back £40,000,000 of debt
in three years, we find that new circumstances and new needs make it
necessary that we should obtain fresh revenue for the service of the
State.

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

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

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

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

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

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

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

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

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

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

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

I have a good confidence that this Budget is going to go through. If
there are hardships and anomalies in particular cases or particular
quarters, we are ready to consider them. They will emerge in the
discussions of the House of Commons, and we have every desire to
consider them and to mitigate them. But we believe in the situation in
which we find ourselves in this country, and in the general situation
of the world at the present time--that the taxes on incomes over
£3,000 a year, upon estates at death, on motor-cars before they cause
death, upon tobacco, upon spirits, upon liquor licences, which really
belong to the State, and ought never to have been filched away; and,
above all, taxes upon the unearned increment in land are necessary,
legitimate, and fair; and that without any evil consequences to the
refinement or the richness of our national life, still less any injury
to the sources of its economic productivity, they will yield revenue
sufficient in this year and in the years to come to meet the growing
needs of Imperial defence and of social reform.

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

That is one thing which the passage of this Budget will show. Let not
that be overlooked. But that is not the only thing; the Budget will do
more than that. It will reveal the financial strength of Britain. At a
time when every European country is borrowing merely for the needs of
ordinary annual expenditure, when all these disturbing naval
programmes, which are injuring the peace of the world and the security
and progress of civilisation, are being supported by borrowed money;
and when the credit of Germany has fallen below that of Italy, this
country, which has necessarily to make the biggest expenditure for
naval defence of any country, will be found, under a Free Trade system
and by our proposals, able not only to pay its way, but to pay off the
debts of the past--to pay off the debts of our predecessors--even in
the worst of times at the rate of something like £7,000,000 a year.

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

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

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

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

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

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

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

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

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

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

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



LAND AND INCOME TAXES IN THE BUDGET

EDINBURGH, _July 17, 1909_

(From _The Times_, by permission.)


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

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

A year ago I was fighting an election in Dundee. In the course of that
election I attempted to draw a fundamental distinction between the
principles of Liberalism and of Socialism, and I said "Socialism
attacks capital; Liberalism attacks monopoly." And it is from that
fundamental distinction that I come directly to the land proposals of
the present Budget.

It is quite true that the land monopoly is not the only monopoly which
exists, but it is by far the greatest of monopolies; it is a perpetual
monopoly, and it is the mother of all other forms of monopoly. It is
quite true that unearned increments in land are not the only form of
unearned or undeserved profit which individuals are able to secure;
but it is the principal form of unearned increment, derived from
processes, which are not merely not beneficial, but which are
positively detrimental to the general public. Land, which is a
necessity of human existence, which is the original source of all
wealth, which is strictly limited in extent, which is fixed in
geographical position--land, I say, differs from all other forms of
property in these primary and fundamental conditions.

Nothing is more amusing than to watch the efforts of our monopolist
opponents to prove that other forms of property and increment are
exactly the same and are similar in all respects to the unearned
increment in land. They talk to us of the increased profits of a
doctor or a lawyer from the growth of population in the towns in which
they live. They talk to us of the profits of a railway through a
greater degree of wealth and activity in the districts through which
it runs. They tell us of the profits which are derived from a rise in
stocks and shares, and even of those which are sometimes derived from
the sale of pictures and works of art, and they ask us--as if it were
their only complaint--"Ought not all these other forms to be taxed
too?"

But see how misleading and false all these analogies are. The
windfalls which people with artistic gifts are able from time to time
to derive from the sale of a picture--from a Vandyke or a Holbein--may
here and there be very considerable. But pictures do not get in
anybody's way. They do not lay a toll on anybody's labour; they do not
touch enterprise and production at any point; they do not affect any
of those creative processes upon which the material well-being of
millions depends. And if a rise in stocks and shares confers profits
on the fortunate holders far beyond what they expected, or, indeed,
deserved, nevertheless, that profit has not been reaped by withholding
from the community the land which it needs, but, on the contrary,
apart from mere gambling, it has been reaped by supplying industry
with the capital without which it could not be carried on.

If the railway makes greater profits, it is usually because it carries
more goods and more passengers. If a doctor or a lawyer enjoys a
better practice, it is because the doctor attends more patients and
more exacting patients, and because the lawyer pleads more suits in
the courts and more important suits. At every stage the doctor or the
lawyer is giving service in return for his fees; and if the service is
too poor or the fees are too high, other doctors and other lawyers can
come freely into competition. There is constant service, there is
constant competition; there is no monopoly, there is no injury to the
public interest, there is no impediment to the general progress.

Fancy comparing these healthy processes with the enrichment which
comes to the landlord who happens to own a plot of land on the
outskirts or at the centre of one of our great cities, who watches the
busy population around him making the city larger, richer, more
convenient, more famous every day, and all the while sits still and
does nothing! Roads are made, streets are made, railway services are
improved, electric light turns night into day, electric trams glide
swiftly to and fro, water is brought from reservoirs a hundred miles
off in the mountains--and all the while the landlord sits still. Every
one of those improvements is effected by the labour and at the cost of
other people. Many of the most important are effected at the cost of
the municipality and of the ratepayers. To not one of those
improvements does the land monopolist, as a land monopolist,
contribute, and yet by every one of them the value of his land is
sensibly enhanced.

He renders no service to the community, he contributes nothing to the
general welfare, he contributes nothing even to the process from which
his own enrichment is derived. If the land were occupied by shops or
by dwellings, the municipality at least would secure the rates upon
them in aid of the general fund; but the land may be unoccupied,
undeveloped, it may be what is called "ripening"--ripening at the
expense of the whole city, of the whole country--for the unearned
increment of its owner. Roads perhaps have to be diverted to avoid
this forbidden area. The merchant going to his office, the artisan
going to his work, have to make a detour or pay a tram fare to avoid
it. The citizens are losing their chance of developing the land, the
city is losing its rates, the State is losing its taxes which would
have accrued, if the natural development had taken place--and that
share has to be replaced at the expense of the other ratepayers and
taxpayers; and the nation as a whole is losing in the competition of
the world--the hard and growing competition in the world--both in time
and money. And all the while the land monopolist has only to sit still
and watch complacently his property multiplying in value, sometimes
manifold, without either effort or contribution on his part. And that
is justice!

But let us follow the process a little farther. The population of the
city grows and grows still larger year by year, the congestion in the
poorer quarters becomes acute, rents and rates rise hand in hand, and
thousands of families are crowded into one-roomed tenements. There are
120,000 persons living in one-roomed tenements in Glasgow alone at the
present time. At last the land becomes ripe for sale--that means that
the price is too tempting to be resisted any longer--and then, and not
till then, it is sold by the yard or by the inch at ten times, or
twenty times, or even fifty times, its agricultural value, on which
alone hitherto it has been rated for the public service.

The greater the population around the land, the greater the injury
which they have sustained by its protracted denial, the more
inconvenience which has been caused to everybody, the more serious the
loss in economic strength and activity, the larger will be the profit
of the landlord when the sale is finally accomplished. In fact you may
say that the unearned increment on the land is on all-fours with the
profit gathered by one of those American speculators who engineer a
corner in corn, or meat, or cotton, or some other vital commodity, and
that the unearned increment in land is reaped by the land monopolist
in exact proportion, not to the service, but to the disservice done.

It is monopoly which is the keynote; and where monopoly prevails, the
greater the injury to society, the greater the reward of the
monopolist will be. See how this evil process strikes at every form of
industrial activity. The municipality, wishing for broader streets,
better houses, more healthy, decent, scientifically planned towns, is
made to pay, and is made to pay in exact proportion, or to a very
great extent in proportion, as it has exerted itself in the past to
make improvements. The more it has improved the town, the more it has
increased the land value, and the more it will have to pay for any
land it may wish to acquire. The manufacturer purposing to start a
new industry, proposing to erect a great factory offering employment
to thousands of hands, is made to pay such a price for his land that
the purchase-price hangs round the neck of his whole business,
hampering his competitive power in every market, clogging him far more
than any foreign tariff in his export competition; and the land values
strike down through the profits of the manufacturer on to the wages of
the workman. The railway company wishing to build a new line finds
that the price of land which yesterday was only rated at its
agricultural value has risen to a prohibitive figure the moment it was
known that the new line was projected; and either the railway is not
built, or, if it is, is built, only on terms which largely transfer to
the landowner the profits which are due to the shareholders and the
advantages which should have accrued to the travelling public.

It does not matter where you look or what examples you select, you
will see that every form of enterprise, every step in material
progress, is only undertaken after the land monopolist has skimmed the
cream off for himself, and everywhere to-day the man, or the public
body, who wishes to put land to its highest use is forced to pay a
preliminary fine in land values to the man who is putting it to an
inferior use, and in some cases to no use at all. All comes back to
the land value, and its owner for the time being is able to levy his
toll upon all other forms of wealth and upon every form of industry. A
portion, in some cases the whole, of every benefit which is
laboriously acquired by the community is represented in the land
value, and finds its way automatically into the landlord's pocket. If
there is a rise in wages, rents are able to move forward, because the
workers can afford to pay a little more. If the opening of a new
railway or a new tramway, or the institution of an improved service of
workmen's trains, or a lowering of fares, or a new invention, or any
other public convenience affords a benefit to the workers in any
particular district, it becomes easier for them to live, and therefore
the landlord and the ground landlord, one on top of the other, are
able to charge them more for the privilege of living there.

Some years ago in London there was a toll-bar on a bridge across the
Thames, and all the working people who lived on the south side of the
river, had to pay a daily toll of one penny for going and returning
from their work. The spectacle of these poor people thus mulcted of so
large a proportion of their earnings appealed to the public
conscience: an agitation was set on foot, municipal authorities were
roused, and at the cost of the ratepayers the bridge was freed and the
toll removed. All those people who used the bridge were saved 6d. a
week. Within a very short period from that time the rents on the south
side of the river were found to have advanced by about 6d. a week, or
the amount of the toll which had been remitted. And a friend of mine
was telling me the other day that in the parish of Southwark about
£350 a year, roughly speaking, was given away in doles of bread by
charitable people in connection with one of the churches, and as a
consequence of this the competition for small houses, but more
particularly for single-roomed tenements is, we are told, so great
that rents are considerably higher than in the neighbouring district.

All goes back to the land, and the landowner, who in many cases, in
most cases, is a worthy person utterly unconscious of the character of
the methods by which he is enriched, is enabled with resistless
strength to absorb to himself a share of almost every public and
every private benefit, however important or however pitiful those
benefits may be.

I hope you will understand that when I speak of the land monopolist, I
am dealing more with the process than with the individual landowner. I
have no wish to hold any class up to public disapprobation. I do not
think that the man who makes money by unearned increment in land, is
morally a worse man than any one else, who gathers his profit where he
finds it, in this hard world under the law and according to common
usage. It is not the individual I attack; it is the system. It is not
the man who is bad; it is the law which is bad. It is not the man who
is blameworthy for doing what the law allows and what other men do; it
is the State which would be blameworthy, were it not to endeavour to
reform the law and correct the practice. We do not want to punish the
landlord. We want to alter the law. Look at our actual proposal.

We do not go back on the past. We accept as our basis the value as it
stands to-day. The tax on the increment of land begins by recognising
and franking all past increment. We look only to the future; and for
the future we say only this: that the community shall be the partner
in any further increment above the present value after all the owner's
improvements have been deducted. We say that the State and the
municipality should jointly levy a toll upon the future unearned
increment of the land. A toll of what? Of the whole? No. Of a half?
No. Of a quarter? No. Of a fifth--that is the proposal of the Budget.
And that is robbery, that is plunder, that is communism and
spoliation, that is the social revolution at last, that is the
overturn of civilised society, that is the end of the world foretold
in the Apocalypse! Such is the increment tax about which so much
chatter and outcry are raised at the present time, and upon which I
will say that no more fair, considerate, or salutary proposal for
taxation has ever been made in the House of Commons.

But there is another proposal concerning land values which is not less
important. I mean the tax on the capital value of undeveloped urban or
suburban land. The income derived from land and its rateable value
under the present law depend upon the use to which the land is put. In
consequence, income and rateable value are not always true or
complete measures of the value of the land. Take the case to which I
have already referred, of the man who keeps a large plot in or near a
growing town idle for years, while it is "ripening"--that is to say,
while it is rising in price through the exertions of the surrounding
community and the need of that community for more room to live. Take
that case. I daresay you have formed your own opinion upon it. Mr.
Balfour, Lord Lansdowne, and the Conservative Party generally, think
that that is an admirable arrangement. They speak of the profits of
the land monopolist, as if they were the fruits of thrift and industry
and a pleasing example for the poorer classes to imitate. We do not
take that view of the process. We think it is a dog-in-the-manger
game. We see the evil, we see the imposture upon the public, and we
see the consequences in crowded slums, in hampered commerce, in
distorted or restricted development, and in congested centres of
population, and we say here and now to the land monopolist who is
holding up his land--and the pity is, it was not said before--you
shall judge for yourselves whether it is a fair offer or not--we say
to the land monopolist: "This property of yours might be put to
immediate use with general advantage. It is at this minute saleable in
the market at ten times the value at which it is rated. If you choose
to keep it idle in the expectation of still further unearned
increment, then at least you shall be taxed at the true selling value
in the meanwhile." And the Budget proposes a tax of a halfpenny in the
pound on the capital value of all such land; that is to say, a tax
which is a little less in equivalent, than the income-tax would be
upon the property, if the property were fully developed.

That is the second main proposal of the Budget with regard to the
land; and its effects will be, first, to raise an expanding revenue
for the needs of the State; secondly that, half the proceeds of this
tax, as well as of the other land taxes, will go to the municipalities
and local authorities generally to relieve rates; thirdly, the effect
will be, as we believe, to bring land into the market, and thus
somewhat cheapen the price at which land is obtainable for every
object, public and private. By so doing we shall liberate new springs
of enterprise and industry, we shall stimulate building, relieve
overcrowding, and promote employment.

These two taxes, both in themselves financially, economically, and
socially sound, carry with them a further notable advantage. We shall
obtain a complete valuation of the whole of the land in the United
Kingdom. We shall procure an up-to-date Doomsday-book showing the
capital value, apart from buildings and improvements, of every piece
of land. Now, there is nothing new in the principle of valuation for
taxation purposes. It was established fifteen years ago in Lord
Rosebery's Government by the Finance Act of 1894, and it has been
applied ever since without friction or inconvenience by Conservative
administrations.

And if there is nothing new in the principle of valuation, still less
is there anything new or unexpected in the general principles
underlying the land proposals of the Budget. Why, Lord Rosebery
declared himself in favour of taxation of land values fifteen years
ago. Lord Balfour has said a great many shrewd and sensible things on
this subject which he is, no doubt, very anxious to have overlooked at
the present time. The House of Commons has repeatedly affirmed the
principle, not only under Liberal Governments, but--which is much more
remarkable--under a Conservative Government. Four times during the
last Parliament Mr. Trevelyan's Bill for the taxation of land values
was brought before the House of Commons and fully discussed, and twice
it was read a second time during the last Parliament, with its great
Conservative majority, the second time by a majority of no less than
ninety votes. The House of Lords, in adopting Lord Camperdown's
amendment to the Scottish Valuation Bill, has absolutely conceded the
principle of rating undeveloped land upon its selling value, although
it took very good care not to apply the principle; and all the
greatest municipal corporations in England and Scotland--many of them
overwhelmingly Conservative in complexion--have declared themselves in
favour of the taxation of land values; and now, after at least a
generation of study, examination, and debate, the time has come when
we should take the first step to put these principles into practical
effect. You have heard the saying "The hour and the man." The hour has
come, and with it the Chancellor of the Exchequer.

I have come to Scotland to exhort you to engage in this battle and
devote your whole energy and influence to securing a memorable
victory. Every nation in the world has its own way of doing things,
its own successes and its own failures. All over Europe we see systems
of land tenure which economically, socially, and politically are far
superior to ours; but the benefits that those countries derive from
their improved land systems are largely swept away, or at any rate
neutralised, by grinding tariffs on the necessaries of life and the
materials of manufacture. In this country we have long enjoyed the
blessings of Free Trade and of untaxed bread and meat, but against
these inestimable benefits we have the evils of an unreformed and
vicious land system. In no great country in the new world or the old
have the working people yet secured the double advantage of free trade
and free land together, by which I mean a commercial system and a land
system from which, so far as possible, all forms of monopoly have been
rigorously excluded. Sixty years ago our system of national taxation
was effectively reformed, and immense and undisputed advantages
accrued therefrom to all classes, the richest as well as the poorest.
The system of local taxation to-day is just as vicious and wasteful,
just as great an impediment to enterprise and progress, just as harsh
a burden upon the poor, as the thousand taxes and Corn Law sliding
scales of the "hungry 'forties." We are met in an hour of tremendous
opportunity. "You who shall liberate the land," said Mr. Cobden, "will
do more for your country than we have done in the liberation of its
commerce."

You can follow the same general principle of distinguishing between
earned and unearned increment through the Government's treatment of
the income-tax. There is all the difference in the world between the
income which a man makes from month to month or from year to year by
his continued exertion, which may stop at any moment, and will
certainly stop, if he is incapacitated, and the income which is
derived from the profits of accumulated capital, which is a continuing
income irrespective of the exertion of its owner. Nobody wants to
penalise or to stigmatise income derived from dividends, rent, or
interest; for accumulated capital, apart from monopoly, represents the
exercise of thrift and prudence, qualities which are only less
valuable to the community than actual service and labour. But the
great difference between the two classes of income remains. We are all
sensible of it, and we think that that great difference should be
recognised when the necessary burdens of the State have to be divided
and shared between all classes.

The application of this principle of differentiation of income-tax has
enabled the present Government sensibly to lighten the burden of the
great majority of income-tax payers. Under the late Conservative
Government about 1,100,000 income-tax payers paid income-tax at the
statutory rate of a shilling in the pound. Mr. Asquith, the Prime
Minister, when Chancellor of the Exchequer, reduced the income-tax in
respect of earned incomes under £2,000 a year from a shilling to
ninepence, and it is calculated that 750,000 income-tax payers--that
is to say, nearly three-quarters of the whole number of income-tax
payers--who formerly paid at the shilling rate have obtained an actual
relief from taxation to the extent of nearly £1,200,000 a year in the
aggregate. The present Chancellor of the Exchequer in the present
Budget has added to this abatement a further relief--a very sensible
relief, I venture to think you will consider it--on account of each
child of parents who possess under £500 a year, and that concession
involved a further abatement and relief equal to £600,000 a year.
That statement is founded on high authority, for it figured in one of
the Budget proposals of Mr. Pitt, and it is to-day recognised by the
law of Prussia.

Taking together the income-tax reforms of Mr. Asquith and Mr.
Lloyd-George, taking the two together--because they are all part of
the same policy, and they are all part of our treatment as a
Government of this great subject--it is true to say that very nearly
three out of every four persons who pay income-tax will be taxed after
this Budget, this penal Budget, this wicked, monstrous, despoliatory
Budget--three out of every four persons will be taxed for income-tax
at a lower rate than they were by the late Conservative Government.

You will perhaps say to me that may be all very well, but are you sure
that the rich and the very rich are not being burdened too heavily?
Are you sure that you are not laying on the backs of people who are
struggling to support existence with incomes of upwards of £3,000 a
year, burdens which are too heavy to be borne? Will they not sink,
crushed by the load of material cares, into early graves, followed
there even by the unrelenting hand of the death duties collector? Will
they not take refuge in wholesale fraud and evasion, as some of their
leaders ingenuously suggest, or will there be a general flight of all
rich people from their native shores to the protection of the
hospitable foreigner? Let me reassure you on these points.

The taxes which we now seek to impose to meet the need of the State
will not appreciably affect, have not appreciably affected, the
comfort, the status, or even the style of living of any class in the
United Kingdom. There has been no invidious singling out of a few rich
men for special taxation. The increased burden which is placed upon
wealth is evenly and broadly distributed over the whole of that
wealthy class who are more numerous in Great Britain than in any other
country in the world, and who, when this Budget is passed, will still
find Great Britain the best country to live in. When I reflect upon
the power and influence that class possesses, upon the general
goodwill with which they are still regarded by their poorer
neighbours, upon the infinite opportunities for pleasure and for
culture which are open to them in this free, prosperous, and orderly
commonwealth, I cannot doubt that they ought to contribute, and I
believe that great numbers of them are willing to contribute, in a
greater degree than heretofore, towards the needs of the navy, for
which they are always clamouring, and for those social reforms upon
which the health and contentment of the whole population depend.

And after all, gentlemen, when we are upon the sorrows of the rich and
the heavy blows that have been struck by this wicked Budget, let us
not forget that this Budget, which is denounced by all the vested
interests in the country and in all the abodes of wealth and power,
after all, draws nearly as much from the taxation of tobacco and
spirits, which are the luxuries of the working classes, who pay their
share with silence and dignity, as it does from those wealthy classes
upon whose behalf such heartrending outcry is made.

I do not think the issue before the country was ever more simple than
it is now. The money must be found; there is no dispute about that.
Both parties are responsible for the expenditure and the obligations
which render new revenue necessary; and, as we know, we have
difficulty in resisting demands which are made upon us by the
Conservative Party for expenditure upon armaments far beyond the
limits which are necessary to maintain adequately the defences of the
country, and which would only be the accompaniment of a sensational
and aggressive policy in foreign and in Colonial affairs. We declare
that the proposals we have put forward are conceived with a desire to
be fair to all and harsh to none. We assert they are conceived with a
desire to secure good laws regulating the conditions by which wealth
may be obtained and a just distribution of the burdens of the State.
We know that the proposals which we have made will yield all the money
that we need for national defence, and that they will yield an
expanding revenue in future years for those great schemes of social
organisation, of national insurance, of agricultural development, and
of the treatment of the problems of poverty and unemployment, which
are absolutely necessary if Great Britain is to hold her own in the
front rank of the nations. The issue which you have to decide is
whether these funds shall be raised by the taxation of a protective
tariff upon articles of common use and upon the necessaries of life,
including bread and meat, or whether it shall be raised, as we
propose, by the taxation of luxuries, of superfluities, and
monopolies.

I have only one word more to say, and it is rendered necessary by the
observations which fell from Lord Lansdowne last night, when,
according to the Scottish papers, he informed a gathering at which he
was the principal speaker that the House of Lords was not obliged to
swallow the Budget whole or without mincing.[18] I ask you to mark
that word. It is a characteristic expression. The House of Lords means
to assert its right to mince. Now let us for our part be quite frank
and plain. We want this Budget Bill to be fairly and fully discussed;
we do not grudge the weeks that have been spent already; we are
prepared to make every sacrifice--I speak for my honourable friends
who are sitting on this platform--of personal convenience in order to
secure a thorough, patient, searching examination of proposals the
importance of which we do not seek to conceal. The Government has
shown itself ready and willing to meet reasonable argument, not merely
by reasonable answer, but when a case is shown, by concessions, and
generally in a spirit of goodwill. We have dealt with this subject
throughout with a desire to mitigate hardships in special cases, and
to gain as large a measure of agreement as possible for the proposals
we are placing before the country. We want the Budget not merely to be
the work of the Cabinet and of the Chancellor of the Exchequer; we
want it to be the shaped and moulded plan deliberately considered by
the House of Commons. That will be a long and painful process to those
who are forced from day to day to take part in it. We shall not shrink
from it. But when that process is over, when the Finance Bill leaves
the House of Commons, I think you will agree with me that it ought to
leave the House of Commons in its final form. No amendments, no
excision, no modifying or mutilating will be agreed to by us. We will
stand no mincing, and unless Lord Lansdowne and his landlordly friends
choose to eat their own mince, Parliament will be dissolved, and we
shall come to you in a moment of high consequence for every cause for
which Liberalism has ever fought. See that you do not fail us in that
hour.

FOOTNOTES:

[18] Lord Lansdowne has since been at pains to explain that he did not
use the word "mincing." That word ought to have been "wincing" or
"hesitation"--it is not clear which.



THE BUDGET AND THE LORDS

NORWICH, _July 26, 1909_

(From _The Manchester Guardian_, by permission.)


The Budget is the great political issue of the day. It involves all
other questions; it has brought all other issues to a decisive test.
_The Daily Mail_ has stated that the Budget is hung up. So it is. It
is hung up in triumph over the High Peak; it is hung up as a banner of
victory over Dumfries, over Cleveland, and over Mid-Derby. The
miniature general election just concluded has shown that the policy
embodied in the Budget, and which inspires the Budget, has vivified
and invigorated the Liberal Party, has brought union where there was
falling away, has revived enthusiasm where apathy was creeping in.

You cannot but have been impressed with the increasing sense of
reality which political affairs have acquired during the last few
months. What is it they are doing at Westminster? Across and beyond
the complicated details of finance, the thousand amendments and more
which cover the order paper, the absurd obstruction, the dry
discussions in Committee, the interminable repetition of divisions,
the angry scenes which flash up from time to time, the white-faced
members sitting the whole night through and walking home worn out in
the full light of morning--across and beyond all this, can you not
discern a people's cause in conflict? Can you not see a great effort
to make a big step forward towards that brighter and more equal world
for which, be sure, those who come after us will hold our names in
honour? That is the issue which is being decided from week to week in
Westminster now, and it is in support of that cause that we are asking
from you earnest and unswerving allegiance.

I do not think that there is any great country in the world where
there are so many strong forces of virtue and vitality as there are in
our own country. But there is scarcely any country in the world where
there is so little organisation. Look at our neighbour and friendly
rival Germany. I see that great State organised for peace and
organised for war to a degree to which we cannot pretend. We are not
organised as a nation, so far as I can see, for anything except party
politics, and even for purposes of party politics we are not organised
so well as they are in the United States. A more scientific, a more
elaborate, a more comprehensive social organisation is indispensable
to our country if we are to surmount the trials and stresses which the
future years will bring. It is this organisation that the policy of
the Budget will create. It is this organisation that the loss of the
Budget will destroy.

But, we are told, "it presses too heavily upon the land-owning
classes." I have heard it said that in the French Revolution, if the
French nobility, instead of going to the scaffold with such dignity
and fortitude, had struggled and cried and begged for mercy, even the
hard hearts of the Paris crowd would have been melted, and the Reign
of Terror would have come to an end. There is happily no chance of our
aristocracy having to meet such a fate in this loyal-hearted,
law-abiding, sober-minded country. They are, however, asked to
discharge a certain obligation. They are asked to contribute their
share to the expenses of the State. That is all they are asked to do.
Yet what an outcry, what tribulation, what tears, what wrath, what
weeping and wailing and gnashing of teeth, and all because they are
asked to pay their share.

One would suppose, to listen to them, that the whole of the taxation
was being raised from, or was about to be raised from the owners of
agricultural estates. What are the facts? Nearly half the taxation of
the present Budget is raised by the taxation of the luxuries of the
working classes. Are they indignant? Are they crying out? Not in the
least. They are perfectly ready to pay their share, and to pay it in a
manly way, and two hundred thousand of them took the trouble to go to
Hyde Park the other day in order to say so.

What are the facts about agricultural land? It is absolutely exempt
from the operations of the new land taxation so long as agricultural
land is worth no more for other purposes than it is for agricultural
purposes: that is to say, so long as agricultural land is agricultural
land and not urban or suburban land, it pays none of the new land
taxation. It is only when its value for building purposes makes its
continued agricultural use wasteful and uneconomic, it is only when it
becomes building land and not agricultural land, and when because of
that change it rises enormously in price and value--it is only then
that it contributes under the new land taxation its share to the
public of the increment value which the public has given to it.

Then take the death duties. One would suppose from what one hears in
London and from the outcry that is raised, that the whole of the death
duties were collected from the peers and from the county families.
Again I say, look at the facts. The Inland Revenue report for last
year shows that £313,000,000 of property passing on death became
subject to death duties, and of that sum £228,000,000 was personalty
and not real estate, leaving only £85,000,000 real estate, and of that
£85,000,000 only £22,000,000 was agricultural land. These death duties
are represented as being levied entirely upon a small class of landed
gentry and nobility, but, as a matter of fact, there is collected from
that class in respect of agricultural land only seven per cent. of the
whole amount of money which the Exchequer derives from death
duties.[19]

I decline, however, to judge the question of the House of Lords simply
and solely by any action they may resolve to take upon the Budget. We
must look back upon the past. We remember the ill-usage and the
humiliation which the great majority that was returned by the nation
to support Sir Henry Campbell-Bannerman in 1906 has sustained in the
last three years at the hands of the House of Lords. That Assembly
must be judged by their conduct as a whole. Lord Lansdowne has
explained, to the amusement of the nation, that he claimed no right on
behalf of the House of Lords to "mince" the Budget. All, he tells us,
he has asked for, so far as he is concerned, is the right to "wince"
when swallowing it. Well, that is a much more modest claim. It is for
the Conservative Party to judge whether it is a very heroic claim for
one of their leaders to make. If they are satisfied with the wincing
Marquis, we have no reason to protest. We should greatly regret to
cause Lord Lansdowne and his friends any pain. We have no wish
whatever to grudge them any relief which they may obtain by wincing or
even by squirming. We accord them the fullest liberty in that
respect.

After all, the House of Lords has made others wince in its time. Even
in the present Parliament they have performed some notable exploits.
When the House of Lords rejected the Bill to prevent one man casting
his vote two or three times over in the same election, every one in
this country who desired to see a full and true representation of the
people in Parliament might well have winced. When the House of Lords
rejected or mutilated beyond repair the Land Valuation Bills for
England and for Scotland, every land reformer in the country might
have winced. When the House of Lords destroyed Mr. Birrell's Education
Bill of 1906, every man who cared for religious equality and
educational peace might have winced. When they contemptuously flung
out, without even discussing it or examining it, the Licensing Bill,
upon which so many hopes were centred and upon which so many months of
labour had been spent, they sent a message of despair to every
temperance reformer, to every social and philanthropic worker, to
every church, to every chapel, to every little Sunday school
throughout the land. If it should now prove to be their turn, if the
measure they have meted out to others should be meted out to them
again, however much we might regret their sorrows, we could not but
observe the workings of poetic justice.

But I hope the House of Lords and those who back them will not be
under any illusions about the Budget and the position of the
Government. The Government is in earnest about the Budget. The Budget
carries with it their fortunes and the fortunes of the Liberal Party.
Careful argument, reasonable amendment, amicable concession, not
affecting the principles at stake--all these we offer while the Bill
is in the House of Commons. But when all that is said and done, as the
Bill leaves the House of Commons so it must stand. It would be a great
pity if Lord Curzon, the Indian pro-Consul, or the London
_Spectator_--it would be a great pity if those potentates were to make
the great mistake of supposing that the Government would acquiesce in
the excision of the land clauses of the Budget by the House of Lords.
Such a course is unthinkable. Any Liberal Government which adopted it
would be swiftly ruined. The land proposals of the Government have not
been made without long deliberation and full responsibility. We shall
not fail to carry them effectively through the House of Commons; still
less shall we accept any amendment at the hands of the House of Lords.

Is it not an extraordinary thing that upon the Budget we should even
be discussing at all the action of the House of Lords? The House of
Lords is an institution absolutely foreign to the spirit of the age
and to the whole movement of society. It is not perhaps surprising in
a country so fond of tradition, so proud of continuity, as ourselves
that a feudal assembly of titled persons, with so long a history and
so many famous names, should have survived to exert an influence upon
public affairs at the present time. We see how often in England the
old forms are reverently preserved after the forces by which they are
sustained and the uses to which they were put and the dangers against
which they were designed have passed away. A state of gradual decline
was what the average Englishman had come to associate with the House
of Lords. Little by little, we might have expected, it would have
ceased to take a controversial part in practical politics. Year by
year it would have faded more completely into the past to which it
belongs until, like Jack-in-the-Green or Punch-and-Judy, only a
picturesque and fitfully lingering memory would have remained.

And during the last ten years of Conservative government this was
actually the case. But now we see the House of Lords flushed with the
wealth of the modern age, armed with a party caucus, fortified,
revived, resuscitated, asserting its claims in the harshest and in the
crudest manner, claiming to veto or destroy even without discussion
any legislation, however important, sent to them by any majority,
however large, from any House of Commons, however newly elected. We
see these unconscionable claims exercised with a frank and undisguised
regard to party interest, to class interest, and to personal interest.
We see the House of Lords using the power which they should not hold
at all, which if they hold at all, they should hold in trust for all,
to play a shrewd, fierce, aggressive party game of electioneering and
casting their votes according to the interest of the particular
political party to which, body and soul, they belong.

It is now suggested--publicly in some quarters, privately in many
quarters--that the House of Lords will not only use without scruple
their veto in legislation but they propose to extend their
prerogatives; they are going to lay their hands upon finance, and if
they choose they will reject or amend the Budget. I have always
thought it a great pity that Mr. Gladstone made a compromise with the
House of Lords over the Franchise Bill of 1884. I regret, and I think
many of my hon. friends in the House of Commons will regret, looking
back upon the past, that the present Government did not advise a
dissolution of Parliament upon the rejection of the Education Bill in
1906. A dissolution in those circumstances would not merely have
involved the measure under discussion, but if the Government of that
day had received the support of the electors at the poll their victory
must have carried with it that settlement and reform of the relations
between the two Houses of Parliament which is necessary to secure the
effective authority of the House of Commons. That is the question
which, behind and beyond all others, even the Budget, even Free Trade,
even the land--that is the question which, as the Prime Minister has
said, is the dominant issue of our time.

Opportunity is fickle, opportunity seldom returns; but I think you
will agree with me that if the House of Lords, not content with its
recent exploits with the legislative veto, were to seize on the new
power which its backers claim for it over finance--if, not content
with the extreme assertions of its own privileges, it were to invade
the most ancient privileges of the House of Commons--if, as an act of
class warfare, for it would be nothing less, the House of Lords were
to destroy the Budget, and thus not only create a Constitutional
deadlock of novel and unmeasured gravity, but also plunge the whole
finance of the country into unparalleled confusion, then, in my
judgment, opportunity, clear, brilliant, and decisive, would return,
and we should have the best chance we have ever had of dealing with
them once for all.

These circumstances may never occur. I don't believe they will occur.
If we only all stand firm together I believe the Budget will be
carried. I believe the Budget will vindicate the strength of the
Government supported by the House of Commons. I believe it will
vindicate the financial strength of this great country. I don't
believe, if we pursue our course without wavering or weakening, there
is any force in this country which can stand against us. The
Conservative Whip in the House of Lords, a friend of mine, Lord
Churchill, said the other day that the House of Lords when they
received the Budget would do their duty. I hope they will. But in any
case be sure of this--that the Government and the House of Commons
will do their duty. Then if there is anything more to be done, see
that you are ready to do your duty too.

FOOTNOTES:

[19] Since the date of this speech the new concessions, doubling the
allowance exempted from income tax for the expenses of agricultural
estates, have been made public.



THE SPIRIT OF THE BUDGET

LEICESTER, _September 5, 1909_

(From _The Times_, by permission.)

I have done my best to study the political history of the last forty
or fifty years, and I cannot find any Government which, at the end of
its fourth year, enjoyed the same measure of support, prestige, and
good fortune that we do. The only Administration which could compare
in the importance and the volume of its legislation with the present
Government is Mr. Gladstone's great Government of 1868. That was a
Government of measures and of men; but no measure of that Government
could equal in importance the Old-Age Pensions Act which we have
placed on the Statute-book. The settlement of the Irish Church
question by Disestablishment was not a more baffling and intricate
business, than the settlement of the Irish University question which
Mr. Birrell has achieved. The labour legislation of the Government of
1868, although very important, shows nothing which equals in
importance the Trades Disputes Act, which we have carried through, and
Mr. Cardwell's reforms in army organisation were not more successful,
and were certainly much less generally accepted, than those which have
been effected by Mr. Haldane. In the fourth year of its administration
the Government of 1868 was genuinely unpopular. It had quarrelled with
the Nonconformists without gaining the support of the Church; it had
offended the liquor interest without satisfying the Temperance forces
in the country; it had disturbed and offended many vested interests
without arousing popular enthusiasm.

Indeed, if you look back, you will find that the fourth year in the
history of a Government is always a very critical and has often been a
very unfortunate year. It is quite true that Mr. Disraeli's
Government, which assumed office in 1874, did enjoy in its fourth year
a fleeting flush of success, which, however, proved illusory. With
that single exception, every other modern Government that has lasted
so long, has occupied an unsatisfactory position in its fourth year.
The Government of 1880 in the year 1884 was brought very low, and was
deeply involved in disastrous enterprises beyond the sea which
ultimately resulted in sorrow and misfortune. The Conservative
Government which took office in 1886 was by the year 1890, owing to
its strange proceedings against Mr. Parnell, brought to the depths of
humiliation. The Government of 1895 was in the year 1899 thoroughly
unpopular, and if they had not plunged into the tumult of war in South
Africa, they would very shortly have been dismissed from power. As for
the Government of 1900, in the fourth year of Mr. Balfour's late
Administration, I am sure I could not easily do justice to the
melancholy position which they occupied.

Where do we stand to-day at the end of our fourth year of office? I
put it plainly to you to consider, whether one is not justified in
saying that we occupy a position of unexampled strength at the present
time. The Government is strong in its administrative record, which
reveals no single serious or striking mistake in all the complicated
conduct of affairs. There have been no regrettable incidents by land
or sea and none of those personal conflicts between the high officials
that used to occur so frequently under a late dispensation. We have
had no waste of public treasure and no bloodshed. We are strong in
the consciousness of a persistent effort to sweep away anomalies and
inequalities, to redress injustice, to open more widely to the masses
of the people the good chances in life, and to safeguard them against
its evil chances. We also claim that we are strong in the support and
enthusiasm of a majority of our fellow-countrymen. We are strong in
the triumph of our policy in South Africa; most of all we are strong
in the hopes and plans which we have formed for the future.

It is about this future that I will speak to you this afternoon. And
let me tell you that when I think about it, I do not feel at all
inclined to plead exhaustion in consequence of the exertions we have
made, or to dwell upon the successes which we have had in the past, or
to survey with complacency the record of the Government or to ask you
to praise us for the work which we have done. No; when I think of the
work which lies before us, upon which we have already entered, of the
long avenues of social reconstruction and reorganisation which open
out in so many directions and ever more broadly before us, of the
hideous squalor and misery which darken and poison the life of
Britain, of the need of earnest action, of the prospects of effective
and immediate action--when I dwell upon this, it is not of feelings of
lassitude or exhaustion that I am conscious, but only of a vehement
impulse to press onwards.

The social conditions of the British people in the early years of the
twentieth century cannot be contemplated without deep anxiety. The
anxiety is keen because it arises out of uncertainty. It is the
gnawing anxiety of suspense. What is the destiny of our country to be?
Nothing is settled either for or against us. We have no reason to
despair; still less have we any reason to be self-satisfied. All is
still in our hands for good or for ill. We have the power to-day to
choose our fortune, and I believe there is no nation in the world,
perhaps there never has been in history, any nation which at one and
the same moment was confronted with such opposite possibilities, was
threatened on the one hand by more melancholy disaster, and cheered on
the other by more bright, yet not unreasonable hopes. The two roads
are open. We are at the cross-ways. If we stand on in the old
happy-go-lucky way, the richer classes ever growing in wealth and in
number, and ever declining in responsibility, the very poor remaining
plunged or plunging even deeper into helpless, hopeless misery, then I
think there is nothing before us but savage strife between class and
class, with an increasing disorganisation, with an increasing
destruction of human strength and human virtue--nothing, in fact, but
that dual degeneration which comes from the simultaneous waste of
extreme wealth and of extreme want.

Now we have had over here lately colonial editors from all the
Colonies of the British Empire, and what is the opinion which they
expressed as to the worst thing they saw in the old country? The
representatives of every Colony have expressed the opinion that the
worst they saw here, was the extreme of poverty side by side with the
extreme of luxury. Do not you think it is very impressive to find an
opinion like that, expressed in all friendship and sincerity, by men
of our own race who have come from lands which are so widely scattered
over the surface of the earth, and are the product of such varied
conditions? Is it not impressive to find that they are all agreed,
coming as they do from Australia, or Canada, or South Africa, or New
Zealand, that the greatest danger to the British Empire and to the
British people is not to be found among the enormous fleets and armies
of the European Continent, nor in the solemn problems of Hindustan; it
is not the Yellow peril nor the Black peril nor any danger in the wide
circuit of colonial and foreign affairs. No, it is here in our midst,
close at home, close at hand in the vast growing cities of England and
Scotland, and in the dwindling and cramped villages of our denuded
countryside. It is there you will find the seeds of Imperial ruin and
national decay--the unnatural gap between rich and poor, the divorce
of the people from the land, the want of proper discipline and
training in our youth, the exploitation of boy labour, the physical
degeneration which seems to follow so swiftly on civilised poverty,
the awful jumbles of an obsolete Poor Law, the horrid havoc of the
liquor traffic, the constant insecurity in the means of subsistence
and employment which breaks the heart of many a sober, hard-working
man, the absence of any established minimum standard of life and
comfort among the workers, and, at the other end, the swift increase
of vulgar, joyless luxury--here are the enemies of Britain. Beware
lest they shatter the foundations of her power.

Then look at the other side, look at the forces for good, the moral
forces, the spiritual forces, the civic, the scientific, the patriotic
forces which make for order and harmony and health and life. Are they
not tremendous too? Do we not see them everywhere, in every town, in
every class, in every creed, strong forces worthy of Old England,
coming to her rescue, fighting for her soul? That is the situation in
our country as I see it this afternoon--two great armies evenly
matched, locked in fierce conflict with each other all along the line,
swaying backwards and forwards in strife--and for my part I am
confident that the right will win, that the generous influences will
triumph over the selfish influences, that the organising forces will
devour the forces of degeneration, and that the British people will
emerge triumphant from their struggles to clear the road and lead the
march amongst the foremost nations of the world.

Well, now, I want to ask you a question. I daresay there are some of
you who do not like this or that particular point in the Budget, who
do not like some particular argument or phrase which some of us may
have used in advocating or defending it. But it is not of these
details that I speak; the question I want each of you to ask himself
is this: On which side of this great battle which I have described to
you, does the Budget count? Can any of you, looking at it broadly and
as a whole, looking on the policy which surrounds it, and which
depends upon it, looking at the arguments by which it is defended, as
well as the arguments by which it is opposed--can any one doubt that
the Budget in its essential character and meaning, in its spirit and
in its practical effect, would be a tremendous reinforcement, almost
like a new army coming up at the end of the day, upon the side of all
those forces and influences which are fighting for the life and health
and progress of our race?

In the speeches which I have made about the country since the Budget
was introduced I have explained and defended in detail the special
financial proposals upon which we rely to provide the revenue for the
year. You are, no doubt, generally acquainted with them. There is the
increase in the income-tax of twopence, the further discrimination
between earned and unearned income, and the super-tax of sixpence on
incomes of over £5,000 a year. There are the increases in estate
duties and in the legacy duties, and there are the new duties on
stamps; there is the tax on motor-cars and petrol, the proceeds of
which are to go to the improvement of the roads and the abatement of
the dust nuisance; there are the taxes on working class
indulgences--namely, the increase in the tax on tobacco and on whisky,
which enable the working man to pay his share, as indeed he has shown
himself very ready to do; there are the taxes on liquor licences,
which are designed to secure for the State a certain special
proportion of the monopoly value created wholly by the State and with
which it should never have parted; and, lastly, there are the three
taxes upon the unearned increment in land, upon undeveloped land, upon
the unearned increment in the reversion of leases, and then there is
the tax upon mining royalties.

Now these are the actual proposals of the Budget, and I do not think
that, if I had the time, I should find any great difficulty in showing
you that there are many good arguments, a great volume of sound
reason, which can be adduced in support of every one of these
proposals. Certainly there is no difficulty in showing that since the
Budget has been introduced there has been no shock to credit, there
has been no dislocation of business, there has been no setback in the
beginning of that trade revival about the approach of which I spoke to
you, when I was in Leicester at the beginning of the year and which
there are now good reasons for believing is actually in progress. The
taxes which have been proposed have not laid any burden upon the
necessaries of life like bread or meat, nor have they laid any
increased burden upon comforts like tea and sugar. There is nothing in
these taxes which makes it harder for a labouring man to keep up his
strength or for the small man of the middle class to maintain his
style of living. There is nothing in these taxes which makes it more
difficult for any hard-working person, whether he works with his hands
or his head, to keep a home together in decent comfort. No impediment
has been placed by these taxes upon enterprise; no hampering
restrictions interrupt the flow of commerce. On the contrary, if the
tax upon spirits should result in a diminution in the consumption of
strong drink, depend upon it, the State will gain, and all classes
will gain. The health of millions of people, the happiness of hundreds
of thousands of homes, will be sensibly improved, and money that would
have been spent upon whisky will flow into other channels, much less
likely to produce evil and much more likely to produce employment. And
if the tax on undeveloped land, on land, that is to say, which is kept
out of the market, which is held up idly in order that its owner may
reap unearned profit by the exertions and through the needs of the
surrounding community, if that tax should have the effect of breaking
this monopoly and of making land cheaper, a tremendous check on every
form of productive activity will have been removed. All sorts of
enterprises will become economically possible which are now impossible
owing to the artificially high price of land, and new forces will be
liberated to stimulate the wealth of the nation.

But it is not on these points that I wish to dwell this afternoon. I
want to tell you about the meaning and the spirit of the Budget. Upon
the Budget and upon the policy of the Budget depends a far-reaching
plan of social organisation designed to give a greater measure of
security to all classes, but particularly to the labouring classes.
In the centre of that plan stands the policy of national insurance.
The Chancellor of the Exchequer has been for more than a year at work
upon this scheme, and it is proposed--I hope next year, if there is a
next year--it is proposed, working through the great friendly
societies, which have done so much invaluable work on these lines, to
make sure that, by the aid of a substantial subvention from the State,
even the poorest steady worker or the poorest family shall be enabled
to make provision against sickness, against invalidity, and for the
widows and orphans who may be left behind.

Side by side with this is the scheme of insurance against unemployment
which I hope to have the honour of passing through Parliament next
year. The details of that scheme are practically complete, and it will
enable upwards of two and a quarter millions of workers in the most
uncertain trades of this country--trades like ship-building,
engineering, and building--to secure unemployment benefits, which in a
great majority of cases will be sufficient to tide them over the
season of unemployment. This scheme in its compulsory form is limited
to certain great trades like those I have specified, but it will be
open to other trades, to trade unions, to workers' associations of
various kinds, or even to individuals to insure with the State
Unemployment Insurance Office against unemployment on a voluntary
basis, and to secure, through the State subvention, much better terms
than it would be possible for them to obtain at the present time.

It would be impossible to work a scheme of unemployment insurance
except in conjunction with some effective method of finding work and
of testing willingness to work, and that can only be afforded by a
national system of labour exchanges. That Bill has already passed
through Parliament, and in the early months of next year we shall hope
to bring it into operation by opening, all over the country, a network
of labour exchanges connected with each other and with the centre by
telephone. We believe this organisation may secure for labour--and,
after all, labour is the only thing the great majority of people have
to sell--it will secure for labour, for the first time, that free and
fair market which almost all other commodities of infinitely less
consequence already enjoy, and will replace the present wasteful,
heartbreaking wanderings aimlessly to and fro in search of work by a
scientific system; and we believe that the influence of this system in
the end must tend to standardising the conditions of wages and
employment throughout the country.

Lastly, in connection with unemployment I must direct your attention
to the Development Bill, which is now before Parliament, the object of
which is to provide a fund for the economic development of our
country, for the encouragement of agriculture, for afforestation, for
the colonisation of England, and for the making of roads, harbours,
and other public works. And I should like to draw your attention to a
very important clause in that Bill, which says that the prosecution of
these works shall be regulated, as far as possible, by the conditions
of the labour market, so that in a very bad year of unemployment they
can be expanded, so as to increase the demand for labour at times of
exceptional slackness, and thus correct and counterbalance the cruel
fluctuations of the labour market. The large sums of money which will
be needed for these purposes are being provided by the Budget of Mr.
Lloyd-George, and will be provided in an expanding volume in the
years to come through the natural growth of the taxes we are imposing.

I have hitherto been speaking of the industrial organisation of
insurance schemes, labour exchanges, and economic development. Now I
come to that great group of questions which are concerned with the
prevention and relief of distress. We have before us the reports of
the majority and minority of the Royal Commission on the Poor Law, and
we see there a great and urgent body of reforms which require the
attention of Parliament. The first and most costly step in the relief
of distress has already been taken by the Old-Age Pensions Act,
supplemented, as it will be if the Budget passes, by the removal of
the pauper disqualification. By that Act we have rescued the aged from
the Poor Law. We have yet to rescue the children; we have yet to
distinguish effectively between the _bonâ fide_ unemployed workman and
the mere loafer and vagrant; we have yet to transfer the sick, the
inebriate, the feeble-minded and the totally demoralised to
authorities specially concerned in their management and care.

But what I want to show you, if I have made my argument clear, is that
all these schemes--which I can do little more than mention this
afternoon, each one of which is important--are connected one with the
other, fit into one another at many points, that they are part of a
concerted and interdependent system for giving a better, fairer social
organisation to the masses of our fellow-countrymen. Unemployment
insurance, which will help to tide a workman over a bad period, is
intimately and necessarily associated with the labour exchanges which
will help to find him work and which will test his willingness to
work. This, again, will be affected by the workings of the Development
Bill, which, as I told you, we trust may act as a counterpoise to the
rocking of the industrial boat and give a greater measure of stability
to the labour market.

The fact that everybody in the country, man and woman alike, will be
entitled, with scarcely any exception, to an old-age pension from the
State at the age of seventy--that fact makes it ever so much cheaper
to insure against invalidity or infirmity up to the age of seventy.
And, with the various insurance schemes which are in preparation, we
ought to be able to set up a complete ladder, an unbroken bridge or
causeway, as it were, along which the whole body of the people may
move with a certain assured measure of security and safety against
hazards and misfortunes. Then, if provision can be arranged for widows
and orphans who are left behind, that will be a powerful remedy
against the sweating evil; for, as you know, these helpless people,
who in every country find employment in particular trades, are unable
to make any fair bargain for themselves, and their labour, and this
consequently leads to the great evils which have very often been
brought to the notice of Parliament. That, again, will fit in with the
Anti-Sweating Bill we are passing through Parliament this year.

Now, I want you to see what a large, coherent plan we are trying to
work out, and I want you to believe that the object of the plan and
the results of it will be to make us a stronger as well as a happier
nation. I was reading the other day some of the speeches made by
Bismarck--a man who, perhaps more than any other, built up in his own
lifetime the strength of a great nation--speeches which he made during
the time when he was introducing into Germany those vast insurance
schemes, now deemed by all classes and parties in Germany to be of
the utmost consequence and value. "I should like to see the State"
(said Prince Bismarck in 1881), "which for the most part consists of
Christians, penetrated to some extent by the principles of the
religion which it professes, especially as concerns the help one gives
to his neighbour, and sympathy with the lot of old and suffering
people." Then, again, in the year 1884 he said: "The whole matter
centres in the question, 'Is it the duty of the State or is it not to
provide for its helpless citizens?' I maintain that it is its duty,
that it is the duty, not only of the 'Christian' State, as I ventured
once to call it when speaking of 'Practical Christianity,' but of
every State."

There are a great many people who will tell you that such a policy, as
I have been endeavouring to outline to you this afternoon, will not
make our country stronger, because it will sap the self-reliance of
the working classes. It is very easy for rich people to preach the
virtues of self-reliance to the poor. It is also very foolish,
because, as a matter of fact, the wealthy, so far from being
self-reliant, are dependent on the constant attention of scores, and
sometimes even hundreds, of persons who are employed in waiting upon
them and ministering to their wants. I think you will agree with me,
on the other hand--knowing what you do of the life of this city and of
the working classes generally--that there are often trials and
misfortunes which come upon working-class families quite beyond any
provision which their utmost unaided industry and courage could secure
for them. Left to themselves, left absolutely to themselves, they must
be smashed to pieces, if any exceptional disaster or accident, like
recurring sickness, like the death or incapacity of the breadwinner,
or prolonged or protracted unemployment, fall upon them.

There is no chance of making people self-reliant by confronting them
with problems and with trials beyond their capacity to surmount. You
do not make a man self-reliant by crushing him under a steam roller.
Nothing in our plans will relieve people from the need of making every
exertion to help themselves, but, on the contrary, we consider that we
shall greatly stimulate their efforts by giving them for the first
time a practical assurance that those efforts will be crowned with
success.

I have now tried to show you that the Budget, and the policy of the
Budget, is the first conscious attempt on the part of the State to
build up a better and a more scientific organisation of society for
the workers of this country, and it will be for you to say--at no very
distant date--whether all this effort for a coherent scheme of social
reconstruction is to be swept away into the region of lost endeavour.

That is the main aspect of the Budget to which I wish to draw your
attention. But there is another significance of the highest importance
which attaches to the Budget. I mean the new attitude of the State
towards wealth. Formerly the only question of the tax-gatherer was,
"How much have you got?" We ask that question still, and there is a
general feeling, recognised as just by all parties, that the rate of
taxation should be greater for large incomes than for small. As to how
much greater, parties are no doubt in dispute. But now a new question
has arisen. We do not only ask to-day, "How much have you got?" we
also ask, "How did you get it? Did you earn it by yourself, or has it
just been left you by others? Was it gained by processes which are in
themselves beneficial to the community in general, or was it gained by
processes which have done no good to any one, but only harm? Was it
gained by the enterprise and capacity necessary to found a business,
or merely by squeezing and bleeding the owner and founder of the
business? Was it gained by supplying the capital which industry needs,
or by denying, except at an extortionate price, the land which
industry requires? Was it derived from active reproductive processes,
or merely by squatting on some piece of necessary land till enterprise
and labour, and national interests and municipal interests, had to buy
you out at fifty times the agricultural value? Was it gained from
opening new minerals to the service of man, or by drawing a mining
royalty from the toil and adventure of others? Was it gained by the
curious process of using political influence to convert an annual
licence into a practical freehold and thereby pocketing a monopoly
value which properly belongs to the State--how did you get it?" That
is the new question which has been postulated and which is vibrating
in penetrating repetition through the land.[20]

It is a tremendous question, never previously in this country asked so
plainly, a new idea, pregnant, formidable, full of life, that taxation
should not only have regard to the volume of wealth, but, so far as
possible, to the character of the processes of its origin. I do not
wonder it has raised a great stir. I do not wonder that there are
heart-searchings and angry words because that simple question, that
modest proposal, which we see embodied in the new income-tax
provisions, in the land taxes, in the licence duties, and in the tax
on mining royalties--that modest proposal means, and can only mean,
the refusal of the modern State to bow down unquestioningly before the
authority of wealth. This refusal to treat all forms of wealth with
equal deference, no matter what may have been the process by which it
was acquired, is a strenuous assertion in a practical form, that there
ought to be a constant relation between acquired wealth and useful
service previously rendered, and that where no service, but rather
disservice, is proved, then, whenever possible, the State should make
a sensible difference in the taxes it is bound to impose.

It is well that you should keep these issues clearly before you
during the weeks in which we seem to be marching towards a grave
constitutional crisis. But I should like to tell you that a general
election, consequent upon the rejection of the Budget by the Lords,
would not, ought not to be, and could not be fought upon the Budget
alone. "Budgets come," as the late Lord Salisbury said in
1894--"Budgets come and Budgets go." Every Government frames its own
expenditure for each year; every Government has to make its own
provision to meet that expenditure. There is a Budget every year, and
memorable as the Budget of my right hon. friend may be, far-reaching
as is the policy depending upon it, the Finance Bill, after all, is in
its character only an annual affair. But the rejection of the Budget
by the House of Lords would not be an annual affair. It would be a
violent rupture of constitutional custom and usage extending over
three hundred years and recognised during all that time by the leaders
of every Party in the State. It would involve a sharp and sensible
breach with the traditions of the past; and what does the House of
Lords depend upon if not upon the traditions of the past? It would
amount to an attempt at revolution not by the poor, but by the rich;
not by the masses, but by the privileged few; not in the name of
progress, but in that of reaction; not for the purpose of broadening
the framework of the State, but of greatly narrowing it. Such an
attempt, whatever you may think of it, would be historic in its
character, and the result of the battle fought upon it, whoever wins,
must inevitably be not of an annual, but of a permanent and final
character. The result of such an election must mean an alteration of
the veto of the House of Lords; if they win they will have asserted
their right, not merely to reject legislation of the House of Commons,
but to control the finances of the country, and if they lose, we will
deal with their veto once and for all.

We do not seek the struggle, we have our work to do; but if it is to
come, it could never come better than now. Never again perhaps,
certainly not for many years, will such an opportunity be presented to
the British democracy. Never will the ground be more favourable; never
will the issues be more clearly or more vividly defined. Those issues
will be whether the new taxation, which is admitted on all sides to be
necessary, shall be imposed upon luxuries, superfluities, and
monopolies, or upon the prime necessaries of life; whether you shall
put your tax upon the unearned increment on land or upon the daily
bread of labour; whether the policy of constructive social reform on
which we are embarked, and which expands and deepens as we advance,
shall be carried through and given a fair chance, or whether it shall
be brought to a dead stop and all the energies and attention of the
State devoted to Jingo armaments and senseless foreign adventure. And,
lastly, the issue will be whether the British people in the year of
grace 1909 are going to be ruled through a representative Assembly,
elected by six or seven millions of voters, about which almost every
one in the country, man or woman, has a chance of being consulted, or
whether they are going to allow themselves to be dictated to and
domineered over by a minute minority of titled persons, who represent
nobody, who are answerable to nobody, and who only scurry up to London
to vote in their party interests, in their class interests, and in
their own interests.

These will be the issues, and I am content that the responsibility for
such a struggle, if it should come, should rest with the House of
Lords themselves. But if it is to come, we shall not complain, we
shall not draw back from it. We will engage in it with all our hearts
and with all our might, it being always clearly understood that the
fight will be a fight to the finish, and that the fullest forfeits,
which are in accordance with the national welfare, shall be exacted
from the defeated foe.

FOOTNOTES:

[20] We do not, of course, ask it of the individual taxpayer. That
would be an impossible inquisition. But the House of Commons asks
itself when it has to choose between taxes on various forms of wealth,
"By what process was it got?"



THE BUDGET AND PROPERTY.

ABERNETHY, _October 7, 1909_

(From _The Daily Telegraph_, by permission of the Editor.)


This is a very fine gathering for a lonely glen, and it augurs well
for the spirit of Liberalism. Much will be expected of Scotland in the
near future. She will be invited to pronounce upon some of the largest
and most complicated questions of politics and finance that can
possibly engage the attention of thoughtful citizens, and her decision
will perhaps govern events.

There is one contrast between Parties which springs to the eye at
once. One Party has a policy, detailed, definite, declared, actually
in being. The other Party has no policy. The Conservative Party has no
policy which it can put before the country at the present time on any
of the great controverted questions of the day. On most of the
previous occasions when we have approached a great trial of strength,
the Conservative Party have had a policy of their own which they
could state in clear terms. You would naturally expect some reticence
or reserve from the head of a Government responsible for the
day-to-day administration of affairs. But what do you see at the
present time? Mr. Asquith speaks out boldly and plainly on all the
great questions which are being debated, and it is the Leader of the
Opposition who has to take refuge in a tactical and evasive attitude.
Why, Mr. Balfour is unable to answer the simplest questions. At
Birmingham, the Prime Minister asked him in so many words: What
alternative did he propose to the Budget? What did he mean by Tariff
Reform? and what was his counsel to the House of Lords?

It would not be difficult to frame an answer to all these questions.
Mr. Chamberlain, for instance, was quite ready with his answers to all
of them. At Glasgow in 1903 he stated what his Budget would have been,
and he explained precisely what he meant by Tariff Reform. At
Birmingham last month he was equally clear in urging the Lords to
reject the Budget. There is no doubt whatever where Mr. Chamberlain
and those who agree with him stand to-day. They would raise the extra
taxation which is required, by protective import duties on bread, on
meat, on butter, cheese, and eggs, and upon foreign imported
manufactured articles; and in order to substitute their plan for ours
they are prepared to urge the House of Lords to smash up the Budget
and to smash up as much of the British Constitution and the British
financial system as may be necessary for the purpose.

That is their policy; but, after all, it is Mr. Balfour who is the
leader of the Conservative Party. He is the statesman who would have
to form and carry on any administration which might be formed from
that Party, and he will not state his policy upon any of the dominant
questions of the day. Why will he not answer these simple questions?
He is the leader, and it is because he wishes to remain the leader
that he observes this discreet silence. He tells us he is in favour of
Tariff Reform, he loves Tariff Reform, he worships Tariff Reform. He
feels that it is by Tariff Reform alone that the civilisation of Great
Britain can be secured, and the unity of the Empire achieved; but
nothing will induce him to say what he means by Tariff Reform. That is
a secret which remains locked in his own breast. He condemns our
Budget, he clamours for greater expenditure, and yet he puts forward
no alternative proposals by which the void in the public finances may
be made good. And as for his opinion about the House of Lords, he dare
not state his true opinion to-day upon that subject. I do not say that
there are not good reasons for Mr. Balfour's caution. It sometimes
happens that the politics of a Party become involved in such a queer
and awkward tangle that only a choice of evils is at the disposal of
its leader; and when the leader has to choose between sliding into a
bog on the one hand and jumping over a precipice on the other, some
measure of indulgence may be extended to him if he prefers to go on
marking time, and indicating the direction in which his followers are
to advance by a vague general gesture towards the distant horizon.

Whatever you may think about politics, you must at least, in justice
to his Majesty's Government, recognise that their position is
perfectly plain and clear. Some of you may say to me, "Your course,
your policy may be clear enough, but you are burdening wealth too
heavily by your taxes and by your speeches." Those shocking speeches!
"You are driving capital out of the country." Let us look at these
points one at a time. The capital wealth of Britain is increasing
rapidly. Sir Robert Giffen estimated some years ago that the addition
to the capital wealth of the nation was at least between two hundred
and three hundred millions a year. I notice that the paid-up capital
of registered companies alone, which was 1,013 millions sterling in
1893, has grown naturally and healthily to 2,123 millions sterling in
1908. And, most remarkable of all, the figures I shall submit to you,
the gross amount of income which comes under the view of the Treasury
Commissioners who are charged with the collection of income-tax, was
in the year 1898-9 762 millions, and it had risen from that figure to
980 millions sterling in the year 1908-9: that is to say, that it had
risen by 218 millions in the course of ten years.

From this, of course, a deduction has to be made for more efficient
methods of collection. This cannot be estimated exactly; but it
certainly accounts for much less than half the increase. Let us assume
that it is a half. The increase is therefore 109 millions. I only wish
that wages had increased in the same proportion. When I was studying
those figures I have mentioned to you I looked at the Board of Trade
returns of wages. Those returns deal with the affairs of upwards of
ten millions of persons, and in the last ten years the increase in the
annual wages of that great body of persons has only been about ten
million pounds: that is to say, that the increase of income assessable
to income-tax is at the very least more than ten times greater than
the increase which has taken place in the same period in the wages of
those trades which come within the Board of Trade returns.

When we come to the question of how burdens are to be distributed, you
must bear these facts and figures in mind, because the choice is
severely limited. You can tax wealth or you can tax wages--that is the
whole choice which is at the disposal of the Chancellor of the
Exchequer. Of course I know there are some people who say you can tax
the foreigner--but I am quite sure that you will not expect me to
waste your time in dealing with that gospel of quacks and creed of
gulls. The choice is between wealth and wages, and we think that, in
view of that great increase in accumulated wealth which has marked
the last ten years, and is the feature of our modern life, it is not
excessive or unreasonable at the present stage in our national
finances to ask for a further contribution from the direct taxpayers
of something under eight millions a year. That is the total of all the
new taxes on wealth which our Budget imposes, and it is about equal to
the cost of four of those _Dreadnoughts_ for which these same classes
were clamouring a few months ago. And it is less than one-thirteenth
of the increased income assessable to income-tax in the last ten
years.

It is because we have done this that we are the object of all this
abuse and indignation which is so loudly expressed in certain quarters
throughout the country at the present time. While the working-classes
have borne the extra taxation upon their tobacco and whisky in
silence, all this rage and fury is outpoured upon the Government by
the owners of this ever-increasing fund of wealth, and we are
denounced as Socialists, as Jacobins, as Anarchists, as Communists,
and all the rest of the half-understood vocabulary of irritated
ignorance, for having dared to go to the wealthy classes for a fair
share of the necessary burdens of the country. How easy it would be
for us to escape from all this abuse if we were to put the extra
taxation entirely upon the wages of the working classes by means of
taxes on bread and on meat. In a moment the scene would change, and we
should be hailed as patriotic, far-sighted Empire-builders, loyal and
noble-hearted citizens worthy of the Motherland, and sagacious
statesmen versed in the science of government. See, now, upon what
insecure and doubtful foundations human praise and human censure
stand.

Well, then, it is said your taxes fall too heavily upon the
agricultural landowner and the country gentleman. Now, there is no
grosser misrepresentation of the Budget than that it hits the
agricultural landowner, and I think few greater disservices can be
done to the agricultural landowner, whose property has in the last
thirty years in many cases declined in value, than to confuse him with
the ground landlord in a great city, who has netted enormous sums
through the growth and the needs of the population of the city. None
of the new land taxes touch agricultural land, while it remains
agricultural land. No cost of the system of valuation which we are
going to carry into effect will fall at all upon the individual owner
of landed property. He will not be burdened in any way by these
proposals. On the contrary, now that an amendment has been accepted
permitting death duties to be paid in land in certain circumstances,
the owner of a landed estate, instead of encumbering his estate by
raising the money to pay off the death duties, can cut a portion from
his estate; and this in many cases will be a sensible relief.
Secondly, we have given to agricultural landowners a substantial
concession in regard to the deductions which they are permitted to
make from income-tax assessment on account of the money which they
spend as good landlords upon the upkeep of their properties, and we
have raised the limit of deduction from 12½ per cent. to 25 per cent.
Thirdly, there is the Development Bill--that flagrant Socialistic
measure which passed a second reading in the House of Lords
unanimously--which will help all the countryside and all classes of
agriculturists, and which will help the landlord in the country among
the rest. So much for that charge.

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

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

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

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

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

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

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

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

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

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

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



THE CONSTITUTIONAL MENACE

NATIONAL LIBERAL CLUB, _October 9, 1909_

(From _The Times_, by permission.)


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

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

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

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

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

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

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

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

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



_Printed by Hazell, Watson & Viney, Ld., London and Aylesbury._

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