Finance
Afterthoughts on the Budget
ALTHOUGH as explained in the column of Financial Notes there his been a moderate reaction in securities during the past week, this reaction does not mean that the favourable opinion of the City concerning the Budget has in. any way lessened. The contrary is true. There has never yet been a Budget which has not been the subject of criticism, both inside and outside of the House of Commons, but the criticism of the present Budget has, on the whole, been of a very mild character, and in the City the belief holds that it will be a factor aiding a still further recovery in commercial activity in this country during the coming months. The reduction in the standard rate of Income Tax, although small, will become increasingly impressed upon the minds of investors when, as is now the case, they will find that their dividend warrants suffer the deduction of 4s. 6d. in the instead of the full 5s., while the labours of those who at the present time are busily engaged in making out their forms under Schedule "D will probably be lightened a little by hurried calculations showing that next year the amount payable in Income Tax will be materially under the figure of a year ago, unless, of course, the taxpayer should be in the happy position of having added materially to his income during the year.
CONTRAST WITH FOREIGN BUDGETS.
Not the least interesting comments upon the Budget have come from foreign countries where there has been quickness to appreciate the soundness of the Chancellor of the Exchequer's proposals; and the fact that Great Britain's determination to secure at all costs an equilibrium in the national balance sheet has produced a good effect upon our industrial situation. When, for example, our present prospective _substantial surplus is contrasted with the appalling deficits in the balance. sheets of some of the foreign Governments, and notably the United States, it may well be asked whether a revival of prosperity is most likely to be achieved by the sound principles of the English Budget, or whether the efforts made by America and some other countries to stimulate a trade revival by huge national expenditure and monetary manipulation will more rapidly bring about a satisfactory position. This is a point which is dealt with very effectively in the latest issue of the Westminster Bank Review, and I can thoroughly recom- mend a perusal of the article on " The Budge:Ary Positions of the Major Countries " to all who are interested in the national finances of the different countries. It is, of course, true that a policy suitable for one country may not be equally suitable for another, and the full outcome of President Roosevelt's experiments has still to be seen. But while the large expenditure by Washing- ton has, no doubt, stimulated industrial activity some- what, and while the rise in prices of commodities may have owed much to monetary and exchange manipula- tion, the fact remains that for all this expenditure there must presently be a reckoning in terms of taxation, and it remains to be seen how far this reckoning, when it comes, will have the effect of checking industrial progress.
" POLITICAL " CRITICISMS.
Nor has Mr. Chamberlain's Budget suffered by such criticism as has been offered by some of the politicians. When, for example, . Major Attlee in the House of Commons described the Budget as " quite the meanest Budget on record," and when he goes further and says " we shall oppose this Budget ; we regard it as an insult to the unemployed, from whom millions and millions have been taken,. that they are being given in exchange a few paltry words of thanks, a few words of insolence and £3,500,000, and told that they must rest content," we note that we are listening simply to the party politician. - In addition to the debates in the House of Commons, we have also had some broadcast speeches from members (Continued on page 883.)
Finance
(Continued from page 680.) of the three political parties. Mr. Chamberlain's broad- cast speech on Budget night may be said to have' expounded in simple terms the general principles of the Budget, and while both he and Mr. Thomas, who spoke later in the week, doubtless represented the Budget as a great attempt on the part of the Government to deal fairly with the situation, neither of those Ministers attempted in any way to exaggerate or still less distort the actual facts of the Budget.
I think, however, the same can scarcely be said for certain parts of some of the other broadcast speeches. Probably very many wage-earners would listen in to the wireless to hear the comments of Major Attlee on the Budget, by whom they were told that the £200 a year man will get off 30s. of tax and the £2,000 a year man will get off £37. It seems regrettable; however, that no further word should have been .said as to how much the £2,000 a year man actually contributed, and still contributes, to the revenue each year, or that no state- ment of the percentage of the tax on the income paid by the £2,000 a year man as compared with the £200 a year man was supplied. Again, Sir Herbert Samuel, in the course of his broadcast address, after complaining that the man with £500 a year and three children only got back this year 30s. in the tax, said " Others get back half of the additional burdens imposed upon them, he gets back only one-eighth. Why should-he not be treated in the same way as teachers, policemen, soldiers and sailors, and those whom some may regard as the less desirable class by Cabinet Ministers and Members of Parliament."
Sir Herbert Samuel, however, apparently failed to explain that the Civil Service and other salary cuts had repre- sented reductions in actual income, thus making any comparison between the half and eighth (the latter referring to taxation upon income) entirely misleading. This type of criticism has not unnaturally strengthened rather than weakened the favourable view of the City concerning Mr. Chamberlain's Budget.
ARTHUR W. KIDDY.
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