The Framework of Home Rule Part 21

"Better farming, better business, better living," to use the admirable motto invented by Sir Horace Plunkett for the I.A.O.S. In the absence of an Irish Legislature, no special importance can be attached to individual expressions of opinion. Yet a measure of prophecy is permissible. The Irish Legislature will have to study the national interest, and it is possible to say with certainty at least this--that Ireland's interest lies in maintaining close and friendly trade relations with Great Britain. Unfortunately, we have no means of accurately ascertaining the amount of trade done by Ireland with Great Britain and with foreign and colonial countries respectively. Irish commerce takes, of course, three forms: _(a)_ Direct trade with countries outside Great Britain; _(b)_ indirect trade with these countries via Great Britain; _(c)_ direct local trade with Great Britain. The statisticians of the Irish Department of Agriculture make only an imperfect attempt to distinguish between these cla.s.ses, but their figures, so far as they go, prove beyond question that the great bulk of Irish external commerce belongs to Cla.s.s _(c)_--local trade with Great Britain. The total value of Irish trade in 1909 is estimated at 125,675,847, of which 63,947,155 was for imports, 61,728,692 for exports. Probably 80 per cent., at least, of this trade was strictly local. Certainly Great Britain is the market for very nearly the whole of Irish agricultural produce, and for most of her exports of linen, s.h.i.+ps, tobacco, liquor, etc. Any aggressive action likely to provoke a tariff war would be ruinous to Ireland, while it would hurt Great Britain far less in proportion. But, in fact, both countries would suffer, Great Britain from the loss of an easily accessible food-supply of extraordinary value, not only for economic, but for strategical reasons; Ireland from the loss of an excellent and indispensable customer.

On the other hand, whatever Ireland's trade policy may be, she certainly needs the power of fixing her own duties upon commodities like tea and sugar, which are of foreign origin, and are now merely transported to her through British ports. Taxation of this sort is a matter of the deepest concern to a country where agricultural wages average only eleven s.h.i.+llings a week, and which cannot reduce its exorbitant Old Age Pensions Bill without giving some compensatory relief to the cla.s.ses concerned. Tobacco, of which in its manufactured forms Ireland is a considerable producer as well as a large consumer, belongs to the same category. Liquor is an important article of production in Ireland, as well as of consumption, and the Irish Legislature ought to be able to form and carry out its own liquor policy. Ireland is just as able and willing to promote temperance as Great Britain, and just as competent to reconcile a temperance policy with due regard to producing and distributing interests.

The Customs tariff is an Irish question, not an Ulster question. The interests of the Protestant farmers of North-East Ulster are identical with those of the rest of Ireland, and obviously it will be a matter of the profoundest importance for Ireland as a whole to safeguard the interests of the s.h.i.+pbuilding and linen industries in the North in whatever way may seem best. The Industrial Development a.s.sociations, which are affiliated in a national organization, and are far above petty sectarian jealousies, may be trusted to see that Ireland steers a safe financial course in her trade policy.

If there is little or no danger that a Home-Ruled Ireland will commit tariff follies of her own, she has unquestionably a right to escape from further entanglement in the tariff policy of Great Britain. What may be the issue of Great Britain's great fiscal controversy n.o.body can foretell. But as long as a protective tariff remains the cardinal point in the constructive policy of one of the British parties, there is a strong likelihood of such a tariff, which would be uniform for the whole United Kingdom, being carried into law. Free Traders, like myself, may deplore the possibility, but we cannot shut our eyes to it. That tariff, if and when it is framed, will, like the Free Trade tariff of the past, be framed without regard to Irish interests, which are predominantly agricultural, and with exclusive regard to British interests, which are mainly industrial. Whatever may have been the original ideal of the Conservative Protectionists, however highly they may once have valued the protection of agriculture, irresistible political forces have driven them in the direction of a tariff framed mainly to secure the adhesion of the great manufacturing towns. The electoral power of these towns, the growing resentment of the working cla.s.ses in most parts of the world at the increasing cost of living, the fact that Great Britain cannot under any conceivable circ.u.mstances feed her own population, have been reflected in the definite abandonment by the party leaders of the proposed small duty against colonial imports, and in the admission by Mr. Bonar Law at Manchester, during the last General Election, that the proposed tariff would not benefit the farmers. Nor will the failure of the Reciprocity Agreement between Canada and the United States appreciably diminish the obstacles to food-taxes in the United Kingdom.

Any practicable protective tariff, therefore, on the ground of its injustice to Ireland, would cause strong and legitimate resentment in that country, which is subjected to the most formidable compet.i.tion from foreign and colonial foodstuffs, but whose great compet.i.tion in manufactured goods is Great Britain herself. The one Irish industry which might favour it is the linen industry of the North. It would have no attraction for the s.h.i.+pbuilding industry, which in no part of the British Isles has anything to gain by Protection, as I believe all parties to the controversy agree. Other small manufacturing industries would complain that they gained nothing; while the agricultural population would complain that, as consumers, they would be damaged by higher prices for clothing and other manufactured articles, while as producers they were ignored.

The difficulty is only one further proof of the dissimilarity of economic conditions between Great Britain and Ireland, and of the artificial and unnatural character of the present fiscal union. Justice to Ireland demands its dissolution. The dangers are imaginary. Liberals, however firm their belief in Free Trade, should hold, with Lord Welby and his Home Rule colleagues on the Financial Relations Commission, that "even if Ireland initiates a protective policy, in this case, as in that of the Colonies, freedom is a greater good than Free Trade." As for the Protectionists, I have never seen an argument from that source, and I do not see how any consistent or plausible argument could possibly be framed, to show that a uniform tariff for the United Kingdom could be fair to Ireland. Professor Hewins, the leading Tariff Reform economist, virtually acknowledges the impossibility in his Introduction to Miss Murray's "Commercial Relations between England and Ireland." There were two sound lines of policy, he points out, which might have been adopted towards Ireland in the period prior to the Union: (1)To have placed her on a level of equality with the Colonies, applying the mercantile system indiscriminately and impartially to the Colonies and to her; or (2) to have aimed from the first at the financial and commercial unity of the British Isles. Neither of these courses was taken. Ireland, while kept financially and commercially separate, "was in a less favourable position than that of a Colony." With regard to the present, "Most of the difficulties of an economic character," says the Professor, "in the financial relations between England and Ireland, arise from the differences of economic structure and organization between the two countries. If Ireland were a highly organized, populous, manufacturing country, the present fiscal system would probably work out no worse than it does in the urban districts of Great Britain. But whatever be the virtues or demerits of that system, it was certainly not framed with any reference to the economic conditions which prevail in Ireland." We wait for the seemingly unavoidable political inference, but in vain.

Professor Hewins is a Unionist. "A 'national' policy for Ireland ... is never likely to be possible." Well, that is plain speaking, and the more plainly these things are said the better. Let Unionists, if they will, tell Ireland frankly that she must eternally suffer for the Union, but let them not pretend, as they do pretend, that Ireland profits by the Union.

VII.

FEDERAL FINANCE.

Directly we leave the simple path of financial independence, and endeavour to construct schemes which on the one hand disguise the financial difficulties of Ireland, and on the other provide for Imperial control of Irish Customs and Excise, we involve ourselves in a tangle of difficulties. A brief examination of these schemes will throw into still stronger relief the merits of the simpler solution.

First of all, let us dispose finally of the Federal a.n.a.logy. In Chapter X. I showed that the framework of Home Rule cannot be Federal, because the conditions of Federation do not exist in the United Kingdom. One of the invariable features of a Federation is the Federal control of Customs and Excise, but I pointed out that an equally invariable condition precedent to Federation was the willingness on the part of a self-supporting State, previously possessing complete financial independence, to abandon its individual control over this realm of taxation to a Federal Government of its own choosing,[141] and that no such condition existed in the case of Ireland. But some features of Federal finance undoubtedly may be made to show a superficial a.n.a.logy to Anglo-Irish conditions, and may therefore have an attraction for those who shrink from giving Ireland financial independence. In the first place, it is possible to find Federal precedents for the payment out of the common purse of certain large items of Irish expenditure. There is no precedent for the payment of Police, but Old Age Pensions, for example, are paid in Australia by the Commonwealth, not by the States.

The chief point of interest, however, is the mechanism of Federal finance. The Australian and Canadian Federations are the only two which suggest even a remote parallel. There the subordinate States are actually "subsidized" by regular annual payments out of Federal revenues, mainly derived from Customs and Excise, and in the case of Australia, as I observed at p. 245, the process at present entails an elaborate system of bookkeeping to distinguish between the "collected"

and "true" revenue of the several States, similar in kind to the calculations now made by the Treasury for ascertaining the "collected"

and "true" revenue derived from Ireland, Scotland, and England.[142]

In Australia this system of bookkeeping is discredited, although the recent attempt by a Commonwealth Referendum to abolish both it and the financial system of which it forms a part just failed. It is to be hoped that, whatever financial scheme is adopted for Ireland, this bad colonial precedent, together with the precedent of the Home Rule Bill of 1893, will not be made pretexts for perpetuating a system whose defects are so glaring, and which is a source of continual dissatisfaction to Ireland. If Irish Customs and Excise are to be outside Irish control, while their proceeds are to be credited to Ireland, let her whole collected revenue from those sources be credited to her, in spite of the excessive allocation that step would involve.

Apart from this point of similarity in mechanism, the Australian and Canadian subsidies to the States and Provinces respectively are of no value as models for a Home Rule Bill. Let us examine the case of Australia. There the Commonwealth, besides having exclusive control of Customs and Excise, has general powers of taxation concurrently with the States, though in practice Commonwealth taxation is almost entirely confined to Customs and Excise. All surplus Commonwealth revenue is, by the present law, returnable to the States, and the total annual amount so returned must not be less than three-fourths of the total proceeds of Customs and Excise; so large are these proceeds, and so small, relatively, the expenses of the Commonwealth Government.[143] Here at the outset is a feature which places Australian Federal Finance in an altogether different category to that of the United Kingdom, where only 47.6 per cent, of the revenue is from Customs and Excise. Nor are the distributions of surplus revenue to the States really "subsidies," even in the case of the poorest States, but repayments, on a method laid down in the Const.i.tution, of that part of the State contribution to Federal services which the Federal Government does not want. Here the system of bookkeeping is of some service to us, because it reveals, approximately, at any rate, both the contribution and the actual repayment, which is based on a calculation of the amount saved to the State by the transference of certain departments to the Federal Government, set off by a _per capita_ charge for new Federal expenditure, as, for example, for Old Age Pensions (see Table on p. 297).

The great bulk of the tax revenue shown comes, as I have said, from Customs and Excise, and it is unnecessary to set out the respective figures of revenue derived from these duties.[144] It will be seen, after deducting repayments from contributions, that even the poorest States make a substantial net contribution to Federal purposes. On the other hand, the relative proportion of revenue contributed by Western Australia and Tasmania is diminis.h.i.+ng. In Western Australia it was 12-49 per cent. of the whole in 1905, 8-13 per cent. of the whole in 1909. In the same period, not only relatively, but actually, the gross contribution of Western Australia has diminished from 1,431,624 in 1905 to 1,166,126 in 1909, while the repayment to her has also diminished from 1,031,223 in 1905 to 627,933. Tasmania's repayment is also diminis.h.i.+ng, though her gross contribution has increased. These circ.u.mstances suggest a slight resemblance to the growing disproportion between the resources of Ireland and Great Britain, but they do not a.s.sist us towards a solution of the Irish problem. Each Australian State, while contributing the whole of its Customs and Excise to the Federal Government, receives back at least half, and in some cases two-thirds,[146] and adds that sum to its own independent revenue for the maintenance of the State Government. The sum refunded amounts on the average to a little below a quarter of the total State revenue--to be accurate, 23.01 per cent. Of the remaining 76.99 per cent., only 10 per cent, on the average is derived from direct taxation; 10.10 per cent from public lands, 4.15 per cent, from miscellaneous services, and no less than 52.55 per cent, from Public Works--railways, tramways, harbours, etc.

CONTRIBUTIONS OF, AND REPAYMENTS TO, THE STATES OF THE AUSTRALIAN COMMONWEALTH, 1908-09.[145]

----------------------------------------------------------- Contributions to Repayments from Revenue. Commonwealth.

New South Wales 5,621,958 3,326,276 Victoria 3,750,161 1,987,435 Queensland 1,989,540 1,027,047 South Australia 1,307,621 716,957 Western Australia 1,166,126 627,938 Tasmania 515,387 244,747 ------------------------------- Total Common- Total wealth Revenue. Repayments.

-------------------------------- 14,350,793 7,930,395 -----------------------------------------------------------

Here are the details of revenue for 1908-1909 in the richest and the poorest State, respectively:

Particulars. New South Wales. Tasmania.

Refunded by the Commonwealth 3,377,213 232,342 Taxation (direct) 907,249 250,835 Public Works and Services 7,309,062 329,192 Land 1,778,002 96,519 Miscellaneous 274,600 25,017

Totals 13,646,126 934,405

Now, Ireland raises no public revenues at all from Public Works, only 24,500 out of a total of ten millions from public lands; while 29.25 per cent, of her "true" tax revenue comes from direct taxation and 70.75 per cent, from Customs and Excise. To take away even a third of her receipts from Customs and Excise would be to leave her with a deficit of three millions and a half, which would have to be made up by additions to a direct taxation, which is already vastly higher than in any part of Australia. She needs every penny of her revenue from whatever source derived, and there is no possibility of extracting from her a contribution to Imperial services, unless it be an illusory contribution based on faked figures.

The real moral to be derived from the Australian comparison is that both Australia and Ireland are countries where acc.u.mulated wealth is comparatively small, and where the importance of indirect taxation is very great. All the more reason for giving Ireland control of her own indirect taxation. Canada, and, indeed, all the self-governing Colonies, suggest the same moral. In Canada the Federal or Dominion Parliament has an unlimited power of taxation, the Provinces being vested only with the concurrent right of direct taxation within their respective borders (B.N. America Act, Clauses 91 and 92). In practice, nearly the whole Federal tax revenue is derived from Customs and Excise. We have no materials for a comparison of gross and net provincial contributions, because no records are compiled. Under an Act of 1907, revising the former arrangements, two small subsidies, forming a fixed charge on the gross Federal revenue, and bearing no specific proportion to the income from Customs and Excise, are given to each Province.

1. A subsidy (from 20,000 to 40,000) based on the total provincial population.

2. A payment of 80 cents per head of the provincial population.

Both together are very small by comparison with the Australian payments.

Neither is really a subsidy, though it is given that name, but the return of a surplus indirectly contributed. It is, indeed, conceivable that a new and poor Province might actually contribute less than she received back. One Province, British Columbia, having long complained that she contributed far more than her share, and received back too little, obtained an exceptional grant of 20,000 under the Act of 1907.[147] The sums raised independently in each Province for the support of the provincial administration are, as in Australia, derived to a very slight extent from direct taxation, and to a very large extent from public property; not, as in Australia, from railways, tramways, etc., but mainly from vast tracts of public land. In this respect the Provinces resemble the Dominion, which derives a large revenue from the same source.

In three vital points, then, Anglo-Irish finance differs from that of the Colonial Federations. Ireland's whole net income comes from taxes; she needs it all; and her economic conditions are totally different from those of Great Britain. So far from borrowing anything from Federal finance, we should deduce from it the moral of financial independence for Ireland. With all the powerful centripetal forces, moral and material, which originally united, and now hold together, the federated States of Australia and Canada, there is continual controversy, and sometimes considerable friction, over finance, generally in connection with the position of the poorer Provinces or States. Some problems are still unsolved. Good authorities, among them Sir Arthur Bourinot, think that the Canadian subsidies are unsound. Australia is dissatisfied with her system. The American States, while giving up Customs and Excise, are self-supporting ent.i.ties; but that system has its drawback, in Federal extravagance. We must remember, too, that even if these examples were of any use to us, the weak States or Provinces in a Federation have a greater control over Federal financial policy than Ireland could have under any scheme which reserved Customs and Excise to the Imperial Parliament; because the Federal principle, partially infringed only in the case of Canada, is to give them disproportionately high representation in the Upper Federal chamber, which can reject money Bills.[148]

On all counts, Ireland's position is that of a country which imperatively needs fiscal isolation similar to that enjoyed by States prior to Federation, before it can dream of embarking on the perilous sea of quasi-Federal finance. Trouble enough comes from the present joint system. We should make a clean sweep of it, permit Ireland, with a minimum of temporary a.s.sistance, to find her own financial equilibrium, and so lay the foundation, perhaps, for a genuine Federation in the future.

VIII.

ALTERNATIVE SCHEMES OF HOME RULE FINANCE[149]

Historically, these fall into two cla.s.ses; though, as I shall show, they are for all intents and purposes merged in one to-day.

The two cla.s.ses are--(1) The Gladstonian; (2) the "Contract."

1. _Mr. Gladstone's Schemes_.--It is unnecessary to examine these in close detail, though, if the reader cares to do so, he will find details set forth in the Appendix. Four outstanding features were common to the schemes both of 1886 and 1893: (_a_) Permanent Imperial control over the imposition of Customs and Excise; (_b_) Irish control over all other taxation; (_c_) an annual Irish contribution to Imperial expenditure; (_d_) Imperial payment of part cost of the Irish Police.

With regard to (_a_), the most important point of difference in the two Bills was that under the first Ireland was credited with her whole "collected" revenue from Customs and Excise, under the second (as amended) with only her "true" revenue, which was less than the former by 1,700,000. Another point in which the two Bills differed was the permission to Ireland, under the Bill of 1893, after six years, to collect her own Excise. Both imposition and collection were wholly reserved under the Bill of 1886. I have already given grounds for the impolicy of retaining control over Customs and Excise. Let me only ask the reader, in conclusion, to figure the situation. How could Ireland frame a financial policy? Three-quarters of the revenue, as at present levied, of a country profoundly dissimilar economically from Great Britain, and in need of drastic reforms of expenditure and marked changes in taxation, would be permanently outside the reach of an Irish Chancellor of the Exchequer, and, in spite of the representation at Westminster which Imperial control would entail, would in the long-run fluctuate according to British needs and notions. In the long-run, I repeat; but incidentally there would be sharp and damaging conflicts.

Occasions might occur like that of 1909, when the majority of Irishmen, rightly or wrongly, resented the form of new taxation, and would have secured the rejection of the Budget had not that step been hurtful to the prospects of Home Rule. It will be useless to blame either Ireland or Great Britain. Every country is bound to study its own circ.u.mstances.

A similar crisis would have imperilled even the strongest Federation. We are not in the least concerned at the moment with the goodness or badness of that famous Budget. We are concerned with the effect on the relations of the two countries, and with the indefeasible right of Ireland and Great Britain to do what they consider best for their own interests.

With regard to (_b_), the Bill of 1893 differed from that of 1886 in the provision of a suspensory period of six years, during which all existing taxation in Ireland was to be under Imperial control, though Ireland could impose additional taxes of her own. After six years--and, under the Bill of 1886, from the outset--Ireland was to have control over all taxation other than Customs and Excise. Where is the wisdom in selecting direct taxation as peculiarly suitable to Irish control? It is already higher in Ireland than in any country economically situated as Ireland is. Yet Ireland's power to reduce it will be very small and very difficult to use, if she is rigidly excluded from changes in the indirect taxation which presses mainly on the poor. Would she naturally be inclined to increase direct taxation? Land Value Duties produce next to nothing in Ireland, and their extension would be unpopular. The existing rates of Income-Tax and Estate Duties cannot be raised, though their incidence might be extended to cover poorer elements of the population, as, for example, the small farmers. That is a kind of measure which the farmers would, if necessary, willingly agree to, in order to balance the accounts of a financially independent Ireland, but it is not the kind of measure they would care about when their national finance was dictated by Great Britain. If one cared to make a dialectical point, one could add that a common argument against Home Rule is a fear of oppressive taxation of the rich or oppressive taxation of North-East Ulster, at the hands of an Irish Parliament, through high direct imposts. The fear is one of those which scarcely need serious discussion. If Irish statesmen were as black as their most industrious traducers paint them, they could not by any ingenuity invent any new direct tax which would not hit all the provinces equally, saving perhaps a tax on pasture ranches, which would hit North-East Ulster least; while super-taxes on the exceptionally rich, if they were worth the trouble of collecting, would drive wealth out of a poor country at the very moment when it was most urgently necessary to gain the confidence of investors and the few wealthy residents.

With regard to (c), Mr. Gladstone's various devices for obtaining from Ireland a contribution to Imperial services possess now only a melancholy and academical interest, because, without an elaborate manipulation of the accounts, so as to disguise their true significance, no such contribution can possibly be obtained. In 1886 Mr. Gladstone provided for an annual payment from Ireland, fixed in amount for thirty years; in 1893 for the contribution of a _quota_--namely, one-third--of her "true" annual revenue from Imperial taxes, to run for six years, and then to be revised. His calculations were conditioned to some extent by _(d),_ the part payment from the Imperial purse of the cost of Irish Police, coupled, of course, with continued Imperial control of that Police, pending its replacement by a new civil force. It is easy enough in ways like this to show a balance in Ireland's favour, and, at the same time, to cripple the responsibility of the Irish Legislature by transferring selected services from the Irish to the Imperial side of the account. We can extend the process to Old Age Pensions, the Land Commission, and what not. As I have repeatedly urged, this course is radically unsound. As for the Police, there can be no responsible government without control of the agents of law and order.

By crediting Ireland with her whole "collected" revenue, we can give her at once a balance of half a million. By freeing her from the payment of Old Age Pensions, we can make the balance three millions. With the elimination of the Land Commission and the Police, we can make it five millions. Then we can postulate an imaginary taxable capacity, an ideal contribution to Imperial services, and a hypothetical share of the National Debt, and so arrive at a Budget which will look well on paper, but which will deceive n.o.body, and be open to crus.h.i.+ng criticism.

2. "_Contract_" _Finance_.--It will be seen that both Mr. Gladstone's schemes set up in Ireland--though under the Bill of 1893 only after six years--a dual system of taxation, Imperial and Irish, after the Federal model. The revenue, "collected" or "true," derived from Imperial taxes levied in Ireland, was to be paid, after the deduction of sums due to the Imperial Government on various accounts, into the Irish Exchequer.

And into the same Exchequer went the proceeds of taxes levied by Ireland herself. The distinguis.h.i.+ng feature of "Contract" finance is that it maintains the fiscal unity of the British Isles. All taxation in Ireland would be permanently levied and collected, as before, by the Imperial Parliament, Ireland being allowed only the barren and illusory privilege of levying new additional taxes of her own. Out of the Imperial Exchequer a lump sum of fixed amount, or a sum equivalent to the revenue _collected_ in Ireland, would be handed over to Ireland, by contract, as it were, for the maintenance of the Administration.

The simplicity of this scheme seems to me to be its only merit. It disposes of all complicated bookkeeping, all heart-burnings over "true"

and "collected" revenue, and all controversies, for a long time at any rate, over an Irish contribution to the Empire; while it involves and immensely facilitates a subsidy based on the reservation of selected Irish services for Imperial management and payment. On the other hand, it is not Home Rule. It annihilates the responsibility of Ireland for her own fortunes, and is, indeed, altogether incompatible with what we know as responsible government. Its germ appeared in the Irish Council Bill of 1907--a Bill which did not pretend to set up anything approaching responsible government, and to which the scheme was therefore in a sense appropriate, though it must, I think, have produced mischievous results if it had been carried into law.[150]

I wish to speak with the utmost respect of Lord MacDonnell and the other patriotic Irishmen who have advocated this kind of financial solution.

There was a time when it might have been good policy for Ireland to obtain any--even the smallest--financial powers of her own as a lever, though a very bad lever, for the attainment of more. But we ought now to make a sound and final settlement, and I do earnestly urge upon all those who have Irish interests at heart to reject schemes which merely evade, if they do not actually aggravate, some of the pressing difficulties of the Irish problem of to-day. The fact that Contract finance works well in India is _prima facie_ a reason why it should not work well in Ireland. It does not exist, and it could not be made to show good results, in any community of white men. If anyone is disposed to trace a faint a.n.a.logy--which in any case would be a false a.n.a.logy--with the lesser of the two small subsidies given by the Dominion of Canada in aid of the Provincial administrations,[151] let him imagine what the moral and practical consequences would be if, instead of const.i.tuting a small fraction of the provincial income, this subsidy were increased to a lump sum calculated by the Dominion Government as correct and sufficient for the whole internal government of the Province. And the pernicious results in a Canadian Province would be trivial beside the pernicious results in Ireland, where the whole system of expenditure and revenue needs to be recast; where large economies are needed, together with additional outlay on education; and where above all, the sense of national responsibility, deliberately stifled for centuries, needs to be evoked. Nothing could be more cruel to Ireland than to give her a fict.i.tious financial freedom, and then to complain that she did not use it well. No nation could use freedom well under the Contract system of finance, whether based on a fixed grant or on revenue derived from Ireland. It is not in human nature to reduce expenditure unless the reduction is reflected in reduced taxation. Every official threatened with retrenchment, even in the services under Irish control and, _a fortiori,_ in the services outside Irish control, would have a grievance in which the public would sympathize, while resentment at an unequal fiscal union would be unabated. Irish statesmen, like any other men in the same position, would be exposed unfairly to the continual temptation of preserving inst.i.tutions and payments as they were, of making changes only of personnel, and of annually appealing to Great Britain for more money for new expenditure. These appeals could not possibly be refused. If Great Britain chooses to place Ireland in a position of financial dependence, she must take the consequences and pay the bill, as in the past, even if the bill exceeds the revenue derived from Ireland. But, indeed, under Contract finance, attempts to make Irish expenditure conform to Irish revenue would necessarily be abandoned.

Bad as the results must be, we are inexorably driven to some form of Contract finance directly we relinquish its anti-type, financial independence. There is very little practical difference between the Gladstonian and later plans. We may be drawn along the downward path either by considerations of revenue, or considerations of expenditure, or by both combined. To retain Imperial control of Customs and Excise, while crediting the Irish proceeds to Ireland, is in itself equivalent to making three-quarters of Irish tax revenue take the form of an annual money grant fixed by Great Britain. If Englishmen also want to retain control over Irish Police, and Irishmen are short-sighted enough to desire Imperial control, as a corollary of Imperial payment, of Old Age Pensions, National Insurance, or Land Purchase, there at once are four millions, or more than a third of present Irish expenditure, withheld from Irish authority. To cover the remaining seven millions by a Contract allowance, instead of going through the pretence of allotting items of revenue and of deducting a contribution to Imperial services, is a step which is only too likely to commend itself to hara.s.sed statesmen. But it would not be Home Rule.

This is not a matter of speculation, but of experience. As long ago as 1818, in the case of Canada, we discarded as vicious the old doctrine that a dependency ought not to be allowed to provide for the whole cost of government out of its own taxes, for fear that its Legislature would control policy. If we are going to remove features which make Ireland resemble a Crown Colony now, do not let us import others which recall the ancient fallacies of a century ago.

There remains to be considered the important question of loans, and to that I shall devote a separate chapter.

FOOTNOTES: