S3 2 ENGLISH FINANCE 



1906-7 Mr. Asquith fixed the Tea Duty at 5<i., readjusted the rebate on stripped tobacco, 

 and repealed the export duty on coal at a cost of about 3.8 millions. This was followed 

 in 1907-8 by changes of much interest. Income Tax was at a shilling in the , at which 

 it had been left by Mr. Chamberlain in 1004-5. Mr. Asquith now fixed the duty on 

 earned incomes which do not exceed 2,000 at 9d., provided the taxpayer claims the re- 

 duction by September 3oth, a concession which was computed to cost ij millions. 

 That was balanced, however, by reframing the scale of ascending charges for Estate 

 Duty more severely (i per cent up to 500: 10 up to i million, and 10 for i milllion 

 and 15 per cent on sums above that when the total exceeds 3 millions), to bring in 1.2 

 millions to revenue. Several minor concessions were also made on income-tax. The 

 most important budget reform, however, was the power taken to pay the sums hitherto 

 transferred directly to the Local Taxation Account into the Treasury, whence in future 

 there should be paid to local authorities a fixed sum equal to their share in this year 

 (1907-8); by this method an automatic growth of these grants was checked, and the 

 taxation by which the money had been raised accounted for without any interception 

 in the Consolidated Fund. In 1908-9 again reductions of taxation were made. The 

 Sugar Duty of 1901 was reduced to is. lod. a cwt. from 43. 2d., at a cost of 3.6 millions: 

 the Establishment Licences transferred for collection to County and Borough Councils 

 (which had received them before by transfer from the Treasury), and marine insurance 

 stamps reduced from 3d. to id. per cent. The Licences represented a loss of 1,650,000; 

 and when the duty on glucose and on saccharine had been adjusted to the reduced sugar 

 duty, the total concession for the year was computed at 5,450,000. During the three 

 years, therefore, remissions of taxation (including the licences transferred) amounted to 

 10,590,000, the additions 1.2 millions, or a total reduction of 9.3 millions; but it 

 should be observed that this involved a shifting of a weightier portion to death duties, 

 while duties on tea, coal, and sugar were either reduced or repealed. It may be added 

 that provision was made for an excise duty on tobacco grown in Ireland, and for the 

 transfer of the care of excise duties from the Inland Revenue to the Commissioners of 

 " Customs and Excise." 



Mr. Asquith's tenure of the Exchequer was distinguished also for his operations on 

 the National Debt. During the South African War the Sinking Fund had been sus- 

 Reductloa of pended for two years, but interest on War Loans had been paid; for two 

 National other years the sum devoted to the service of the debt had been reduced from 

 Debt ' 2 5 to 23 millions. From 1903-4 interest on the War Loans had been 



included among the permanent burdens on this charge, which was raised first to 27 

 millions in that year, and to 28 millions in 1905-6. Mr. Asquith, pursuing the rein- 

 statement of credit for the period 1906-9, kept this charge at 28.5, 29 and 28 millions 

 respectively, thus devoting the largest amount recorded to swell the " New " Sinking 

 Fund. The result of this policy may be gathered by the figures of the triennial period 

 19056 to 1907-8 (inclusive). These were years of large surpluses, allocated to the 

 " Old " Sinking Fund, and amounting to nearly 14 millions for the period; and these 

 payments, together with large sums applied from the charge for the debt/coupled with 

 the purely financial operations of the Debt Commissioners, reduced the " dead weight " 

 debt from 755 millions at which it had been left in 1905, to 711.4 in 1908 (March): 

 or a reduction of 43^ millions. On the other hand, the liabilities on capital expendi- 

 ture had matured, and grown from 41.6 to 50.8 millions; but as the policy by which 

 they were incurred had been reversed by this time, the reduction on the " dead weight " 

 debt was so much gained. 



When Mr. Asquith handed over the work of the Exchequer to his successor in April 



1908, the financial position had undoubtedly improved very considerably since 1905. 



At the outset affairs were still in the shadow of the war, and though trade 



1908. was growing and even buoyant amid the shocks which it had to endure. 



public credit was low and public expenditure at a high figure. Consols, 



which had been at 113! in May 1897, were 89^- in December 1905 (but in 1903 had been 



reduced from a 2^% to a 2^% security). In that situation a policy of caution and re- 



