S3 o ENGLISH FINANCE 



V. United Kingdom Finance, 1905 

 The history of English public finance for the period from 1905 to 1912-13 offers 

 many aspects of interest and importance. The Salisbury-Balfour administrations of 

 1895-1905 have been followed by those of Sir Henry Campbell-Bannerman (1005-8), 

 and of Mr. Asquith (1008- ), and the transfer of political power is reflected in prom- 

 inent features of the public finance of these periods. 



When Sir Henry Campbell-Bannerman became Prime Minister on December o, 

 1905, the financial position was still affected seriously by the events and work of the 



period just closed. Public expenditure had been growing rapidly, and 

 1895-1905. h a( l reached a total which was substantially higher than the level of 1895, 



nor did there seem a prospect of any serious reduction. In 1895-6 the total 

 expenditure was 97.7 millions, with grants to local taxation of 7.4 millions a total of 

 105.1 millions: in 1005-6 the expenditure was 140.5 plus 9.88 millions to local taxa- 

 tion, or a total of i 50.4 millions. The figures just given do not include sums spent on 

 account of capital expenditure, though annuities to meet that expenditure were included 

 in the various estimates. In 1895 there were only three items in this account, viz. those 

 for the Imperial Defence and the Barracks Acts of 1888 and 1890 respectively, and for 

 the Telegraph Acts. The total was only 810,000, of which 670,000 was under the 

 Barracks Act. In 1905-6 the sum thus spent was 6.1 millions, but it had been higher 

 for some years; and on these accounts there were pending among the liabilities of the 

 State about 45 millions. (In March 1912 the sum owing under this head had reached 

 50 millions, but the only item added to those of 1905 was 3 millions, in part payment 

 for the purchase of the National Telephone Company.) 



The growth of expenditure from 105 to 150 millions (with extras) in the decade 

 had, however, been more serious than these figures themselves suggest. The South 

 African War broke out in October 1899, and has left its mark on the finances permanent- 

 ly, besides keeping expenditure at a higher level. Large sums were paid toward the 

 war from current revenue, the rest being borrowed in various ways. The borrowings 

 to the end of 1902-3 (March) amounted to about 160 millions, but the direct cost of 

 that War must have exceeded 230,000,000. Internationally, moreover, relations were 

 strained in Europe, leaving a legacy in higher expenditure on the services in time of 

 peace, and British trade was checked in a career which had promised very favourably. 

 The surpluses of 1895 to 1899 gave place to the deficits of the war time for five years 

 (but reappeared before Mr. Balfour left office); and meantime new taxation had been 

 imposed up to 1902-3 to about 757 millions, which included additions to the tea, 

 tobacco, beer, and spirit duties, the imposition of taxes on sugar, coal (export), corn and 

 flour, and the raising of the poundage of the Income Tax first by 4d., then by 2d., and then 

 by a penny more (7d. in the altogether) to is. 3d. The South African War, in short, 

 disorganised finances, and necessarily caused difficulties at home and abroad; nor can 

 its effects cease for some years. On the other hand, it is a surprise to many how re- 

 markably strong the recovery has been since peace was signed at Vereeniging in 1902. 

 To this period also, 1901 and 1902, belongs the Boxer outbreak in China, which involved 

 an expense to the United Kingdom of over 6 millions. 



But the South African War does not account for the whole of the growth in expendi- 

 ture up to 1905-6. The debt service at 28 millions was 3 millions higher and was a 



war charge. The cost of the Army in 1895-6 was 18.4 and in 1905-6 

 t899"i90S-6. 2 8- millions; that of the Navy 19.7 and 33.3 millions. All the civil 



services exhibited a growing cost, and especially the revenue departments 

 which had heavier work in collection; but special mention of the education services is 

 required, which went upfromn to 16 millions; and of a sum of 6.5 millions in 1901-2, 

 with another of 8 millions in 1902-3 (or 14.5 millions in all), granted to the Trans- 

 vaal and Orange River Colony to aid reorganisation. This last was virtually a part of 

 the war's expense. It may be added that the revenue during this period was strong, 

 1 See E. B. ix, 458 el seq. 



