MILITARY FINANCE.*
MB. Lawson would have written a better book if he could have kept his temper better when dealing with Mr. Lloyd George's finance. We freely concede the greatness of the temptation, and most, if not all, of his criticisms of the new methods intro- duced into the Exchequer by its present chief are fully justified. What we fear is that some of his readers who might otherwise have profited by his exposition of the principles of military finance will put the book aside as a mere party pamphlet of more than common size. They will be quite wrong if they do this, because when all the personal part has been eliminated there remains a body of sound common sense on the relation of taxa- tion to war which deserves to be read by every one—every one, that is, who cares to see nothing left undone that can avert a possible disaster of the first magnitude. There is one matter, however, in which Mr. Lawson seems to us to be altogether in the wrong. Among the "Elements of Military Strength," to which lie devotes five of his chapters, he rightly includes "an intelligible foreign policy." But his definition of an intelligible foreign policy is purely negative.. All he tells us is that it is a policy which is not Sir Edward Grey's. Apparently Mr. Lawson is of opinion that no Cabinet which contains Mr. Lloyd George is capable of framing a foreign policy which shall be an element of military strength. He is so possessed by this conviction that he singles out for condemnation Mr. Lloyd George's solitary appearance in this particular field—his speech et the Lord Mayor's dinner to the bankers in July 1911. "No Minis- terial speech of the year—and their number was legion—concen- trated such an amount of mischief in so few sentences. It was a foolish utterance made by the wrong man, at the wrong time, in the wrong place, and to the wrong audience." The sentences which have called forth this quartet of censure did but say that a peace which allowed Britain "to be treated where her interests were vitally affected as if sho were of no account in the Cabinet of nations" would be an intolerable humiliation. So far was this utterance from being made at the wrong time that it was immediately followed by a marked change in the attitude of Germany towards France and in the feeling of France towards England. It removed any uncertainty that may have existed on the part of
either Power as to the lasting character of the entente between France and England. The Chancellor of the Exchequer was pre-eminently the right man to make such a declaration.
Doubts bad been felt both in this country and abroad as to the extent to which the ideas, of a section of the Radical party upon foreign policy bad infected the Cabinet, and no one could have disposed of this notion so effectually as the most Radical member of the Government. Why Mr. Lawson should think so poorly of Sir Edward Grey's foreign policy puzzles us. He has described what in his opinion ought to be the foreign policy of Great Britain in the opening of his second chapter. 'We are entirely satisfied with our existing share of possessions and responsibilities. We covet no other man's goods and envy no other man's prosperity. All we ask of our sister nations is to be left in peace to work out the destiny of the British Empire." There is Sir Edward Grey's policy in a nutshell. What can have led Mr. Lawson to quarrel with his own ideal P We have taken these two points first because with Mr. Lawson's main positions we are wholly in agreement. His first charge against our war finance is that not one of the "valuable and definite recommendations" contained in the Report of the Royal Commission on Food and Raw Material Supply in War has "received the slightest attention either from the Executive or the Legislature." The gravity of the matter was admitted by all the 'witnesses, memorials were sent in by public bodies, and a Conference of Trade Councils pointed out that in the event of a European war bread would rapidly rise to famine prices. It is eight years since the Commission reported, and for any visible result that has come of its recommendations it might as well not have been appointed. No provision has been made for feeding the forces in the field or at sea, or for keeping alive a popu-
it Modern Wars and War :faxes. By W. It. Lawson. Loudon: W. 111AckwoOTI and Bono. Da. net.i
Mien almost wholly dependent on foreign supplies. These demands will have to be met if ever war breaks out, and met at the greatest possible disadvantage. Mr. Lawson's next point ie that our ability to stand a great war must largely turn on the taxpayer's ability to answer the calls made on him. This will depend, in the long run, on the existence and amount of emer- gency revenue. He quotes Mr. Gladstone's Budget speech of 1858, "one of the boldest and best expositions of national finance to be found in English history," as giving the clearest exposition of the proper functions of an income-tax. For the House of Connnons to put to hazard "the most potent and effective among all the material resources" would be a gross breach of duty. Whether the tax were kept or parted with it should be left in a state in which" it will be fit for service in any emergency." Mr. Gladstone was then appealing against a. pro- posal to making distinctions between different kinds of incomes step which, as he held, would "break up the basis" of the income-tax. But the argument is equally good against Putting the normal income-tax at so high a figure as to make it of proportionately less value in "times of peril and emergency." So long as the income-tax remained low there was no tax to which a Chancellor of the Exchequer turned so naturally, and with such certainty of its answering his pur- pose. Mr. Lloyd George may be sanguine enough to expect that a 14d. tax has lost none of its elasticity, but not one of his predecessors at the Exchequer will share his con- Edemas. Other changes recently made in our system of taxation are open to the same objection. Safety at the outbreak of a war depends in part on the ability of the people to meet an all-round raising of the imposts which are to bring in the necessary revenue. The Budget for 1910-11 imposed taxes to the amount of something over 175 millions. It is yet to be seen whether this leaves an "ample margin of taxable resources which can be drawn upon in any sudden necessity." Yet it is not so much the vast amount of our present taxation that is disturbing to prudent politicians as the manner in which it is spent. It will be impossible, except in presence of national bankruptcy, to suspend the payment of old-age pensions or of the benefits, whatever in the end they may prove to be, of the Insurance Act. They are obliga- tions to the poorest class of our countrymen voluntarily under- taken by the State, and it is hard to imagine a more binding eontract.
Even this is not the most serious aspect of the new finance. If we could be sure that these two measures marked the extent of the new financial departure we might look to the elasticity which has so often characterized, our revenue and to great economy in the administration of the Acts to place our finances on a more satisfactory footing. The chief danger of the late experiments in social legislation is that their authors boast that they are only the initial stops in a course of legisla- tion designed to attain new ends by new methods. The meaning of Me Asquith's reference to "a large reservoir of possible taxation which has never yet been drawn upon, or never drawn upon adequately and justly," has been made plain by Mr. Lloyd George's famous Budget and by his Insurance Act. This reservoir is no longer treated as a margin reserved for excep- tional emergencies. It is to furnish means for what Mr. Lawson, harshly, perhaps, but not untruly, calls a constantly growing system of "pensions, Parliamentary salaries, and universal doles." "Every Government," he says, "which enters upon this path will be hampered with a vast amount of administrative machinery quite outside of its proper political functions. . . . When the Lloyd George programme is completed, if it ever should be, three-fourths of our working people will be State pensioners, "
savings-bank depositors, and State-insured Citizens. It may be an excellent arrangement that they s_liould be all these things, but it opens up an alarming Proartect in the event of a European war. There is another element of military strength which is in a bad way. In the middle of the Boer War Consols stood at 941, and at the close they had only fallen one point. By the side of these figures we have to set 77, and ask our- selves what light the comparison throws upon British credit. We know what that credit used to be ; can we flatter ourselves that it is the same now P 21he change may be unimportant so long as the National Debt presents itself only in the light of a burden of which we are gradually getting rid. But how would affect us if we again had Occasion to raise fresh loans on a great scale P
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