October 23, 1919] 



NATURE 



163 



the revenue required, not in any one year, but in .11 

 future years. Such a scheme, could it be discovered, 

 would meet entirely that very important desideratum 

 of a tax, namely, that it should be based on ability 

 to pay. 



Two other points must be kept in view. A tax 

 must be equitable in its incidence and reasonably 

 continuous in its imposition. Given these three con- 

 ditions, the economic burden of the imfwst will quickly 

 fall on the right shoulders. We may dismiss the 

 argument which asks for a levy on capital, and de- 

 fends it against the accusation of being' confiscatory 

 on the ground that it is no more confiscatory 

 than any other means of raising money by the State. 

 No juggling with the balance-sheets of the nations 

 of the world will get rid of the fact that many thou- 

 sands of millions of wealth slowly accumulated in the 

 generations which lived before August, 1914, have 

 been dissipated. 



[After a brief examination of the changes in the 

 amount of the National Debt for the past century and 

 its gradual reduction since 1814, the address pro- 

 ceeds : — ] 



In the last five years all this has been changed. 

 From August, 1914, to March, 1915, 450,000,000!. 

 were added. The next year added more than 

 1,000, 000, oooL By March, 1917, it stood at 

 3,906, ooo,oooZ., and now it has nearly doubled, and 

 is more than ten times what it was at the outbreak 

 of the war. 



It is true we have something to set against this 

 vast sum. We have acted as the financial agents of 

 our Allies. The sums we have found for them amount 

 to close on 2,000,000,000!. On the other hand, we 

 have ourselves contracted debts abroad to the extent 

 of well on to 1,500,000,000/. On balance, therefore, 

 we have interest to receive on about 40o,ooo,ooo(. to 

 500,000,0007. But to enable the inhabftants of this 

 country to find money for our Government, we have 

 sold fully as large an amount of our holdings in 

 foreign securities. It may be contended that we are 

 little worse off. I fear on closer examination this 

 view will not be found good. 



Let us admit that our Allies will find no difficulty 

 in paying the 100,000,000!. a year or thereabouts due 

 for the interest on their debt to us. We must recog- 

 nise that this will make a serious draft on their re- 

 sources. Very different were the securities held by 

 individuals in this country with which they parted to 

 take up each successive issue of Government Bonds 

 at the urgent insistence of successive Chancellors of 

 the Exchequer. The securities sold were usually first- 

 class industrial or public utility issues. What have 

 we got now? A charge on a heavily burdened country 

 of which, it may t)e, many thousand acres have passed 

 out of cultivation for years to come. 



Put at the highest, not many of our millions of 

 pounds will find their own interest. .Ml the balance 

 must come out of the product of the other and real 

 industries of the debtor country, and to this branch 

 of the subject we must now turn. 



At the present moment it is of more vital importance 

 than ever that we should come to a clear and un- 

 prejudiced understanding on this subject. To judge 

 by appearances, the vaguest opinions exist as to the 

 capacity of the community to meet the various claims 

 which are preferred for a share of the wealth from 

 which alone these claims can be satisfied. Many 

 IK>ople seem to think that no demand is too exorbitant. 

 We are asked to provide houses by the' hundred thou- 

 sand, undeterred by the consideration that they will cost 

 two-, three-, or even four-fold the amount at which 

 they could have been built before the war. They are, 



NO. 2608. VOL. I04I 



moreover, to afford accommodation of a much better 

 character than was thought sufficient a very short 

 time ago. Houses built so recently as twenty years 

 ago are no longer good enough for the social re- 

 formers of to-day. It is forgotten that something like 

 80,000 houses are needed each year to accommodate 

 the growth of the population. There are to-day 

 something more than eight million inhabited houses 

 in Great Britain. Not more than half of these are 

 above fifty years old. During the war housebuilding 

 had almost ceased, but before 1914 the building of 

 houses had been checked by two causes. The various 

 Acts of Parliament dealing with matters affecting the 

 building of houses had so enhanced their cost that 

 there was the greatest uncertainty whether houses 

 could be built to return a reasonable interest on their 

 cost. 



But the second cause was of as great, or possibly 

 even greater, significance. The trade unions con- 

 nected with the building trades had gradually suc- 

 ceeded in imposing conditions which had added enor- 

 mously to the cost of building. It would not be diffi- 

 cult to show why this had been possible, but it would 

 take us too far to follow this line of thought. The 

 fact will not be denied by anyone conversant with the 

 circumstances. The result of all this is a serious 

 shortage of houses, and this it is proposed to make up 

 by grants from the public purse. If this were the 

 only demand of the kind we might face it with more 

 equanimity than is in fact the case. But when we 

 look elsewhere we see other claims comparable in their 

 effects on the public purse, but differing in kind. 



The railway enterprise in this country may serve 

 as typical of what is meant. Prior to the war the 

 railways were carrying on their duties in a manner 

 which enabled the country to get through its business 

 in a profitable and, on the whole, fairly satisfactory 

 way. They earned sufficient revenue to pay a fair 

 return to the shareholders. It is true the prospect was 

 not reassuring. The railway management was meet- 

 ing the usual contradictory claims preferred against 

 almost every industry. It was asserted that they were 

 rendering services which were not nearly so great as 

 were demanded by their customers, and they were 

 charging for them rates which were regarded as quite 

 out of proportion to the value of the services. On the 

 other hand, they were paying wages which the re- 

 cipients thought entirely inadequate, for much longer 

 hours of service than their workmen were disposed to 

 give. Negotiations between the parties had obtained 

 certain concessions as to hours of work, and also as 

 to rates of pay ; but these were not accepted as suffi- 

 cient, and Parliament was called upon to intervene, 

 with the result that statutory hours were imposed. 



The very essential difference between hours of work 

 or rates of pay resulting from convention between the 

 parties interested and the same imjxjsed by statute is 

 often overlooked. The convention can be varied to 

 meet the varying circumstances. The statute provides 

 a hard-and-fast rule, from which it is impossible to 

 depart without incurring penalties. 



When the railway companies pointed out the serious 

 effect which these statutory obligations imposed on 

 them had on their revenue-earning capacity, and 

 sought power to increase the rates, their customers 

 were up in arms. The very men who, in Parliament 

 and elsewhere, were applauding the decision to give 

 relief to the railway servants, resolutely refused to pay 

 the extra cost thus incurred. With difficulty was Par- 

 liament induced to give the companies leave to add to 

 their charges something towards meeting this cost. 

 The companies found still greater difficulty in obtain- 

 ing a settlement with their customers as to the amount 



