The Framework of Home Rule Part 20

[135] On the basis of the mean revenue of 1909-10 and 1910-11.

CHAPTER XIII

FINANCIAL INDEPENDENCE

I.

THE ESSENCE OF HOME RULE.

Let us now sum up this financial question, and give its place in the general problem of Home Rule. In Chapter X. I argued that, on broad grounds of political policy, Ireland, in her own interest, and in the general interest of the United Kingdom, should have "Colonial" Home Rule without representation in the Imperial Parliament. Leaving finance temporarily aside, while observing that any substantial Imperial control over Irish finance would defeat the "colonial" solution of the problem, I endeavoured to show that there were no tenable grounds of a non-financial character for retaining Irish Members at Westminster, nor any dangers to be feared from excluding them. I have now reviewed the history of Anglo-Irish finance up to the present day, and I hope in so doing to have proved that, so far from presenting an obstacle to "Colonial" Home Rule, the financial conditions demand such a solution.

Finance and policy are inseparably one. All the considerations which render Home Rule desirable lead irresistibly to the financial independence of Ireland, with complete control a.s.signed to her over all branches of taxation. Without financial independence it is impossible to realize the objects of Home Rule. It would be a miracle were the case otherwise. Ireland would, indeed, be abnormal if, after her history, she could reach prosperity and stability without pa.s.sing through a phase of financial independence. No parallel, even in the most distant degree, could be found for any such metamorphosis in the whole of the British Empire.

If we study Ireland's interest, we shall promote Imperial interests. The main object of Home Rule is to make Ireland self-reliant. Lord Welby and his colleagues were right in 1896 when they declared that ideal to be impracticable without giving Ireland entire responsibility both for her revenue and her expenditure. This declaration is as true as ever. The situation has changed only in one respect: that financial independence will now mean a financial sacrifice to Ireland, whereas in 1896 it would have meant a financial gain to Ireland--that is, if Lord Welby's recommendation in favour of remitting the Irish contribution to Imperial services had been carried out. At that time Ireland contributed two millions. Now Great Britain contributes over a million to Ireland.

Sooner or later that subsidy must stop, and the sooner it stops the better.

But it is of vital importance that Ireland should understand the situation. The present position is dangerous, because the Irish people at large are ignorant of the facts, and their leaders are taking no steps to enlighten them. The reasons are intelligible, but they are not sound reasons. Paced with the facts and the choice, Ireland would not hesitate, but she must know the facts and understand the nature of the choice.

II.

THE DEFICIT.

Let us deal at once with the question of the deficit. It is inconceivable surely that the existence of a deficit should be used as an argument against financial independence, much less as an argument against Home Rule in general. Will anyone be found to say that an island with a fertile soil, several nourishing industries, and a clever population of four and a half millions, is to be regarded, whatever its past history, as incapable of supporting a Government of its own out of its own resources? Let n.o.body be tempted by the fallacy that, given time, Ireland will regain financial stability under the fiscal Union, and at a later stage, perhaps, be more fitted to bear the burden of fiscal independence. The supposition is chimerical. The present system, besides being radically vicious in a purely scientific sense, undermines the moral power of Ireland to secure her own regeneration.

It is now 1911. The deficit, once a large surplus, came into being only two years ago. It was the direct and inevitable result of a fiscal Union against which Ireland has for generations unceasingly protested, and it was a result actually foretold in 1896 by Lord Welby and his two colleagues. It could have been averted, as they pointed out, only by a form of Home Rule giving financial independence to Ireland. But the warning was older than the Report of the Financial Relations Commission.

Mr. Gladstone told the House of Commons in 1886, when introducing his Home Rule Bill, that no limit could be set to Irish expenditure under the Union; he and Sir William Harcourt repeated the warning in 1893, and if the reader will study the debates on the financial clauses of the Bill of 1893,[136] he will find pages of bitter diatribe founded on the small net contribution from Ireland to Imperial services for which the revised financial scheme provided. Ireland, said the Opposition, was to make money out of Great Britain, and escape her fair proportion of Imperial charges. Mr. Chamberlain showed that, with allowance for payment from the Imperial purse of part of the cost of Irish police, the net initial contribution was about one-fortieth, and asked: "Is Irish patriotism a plant of such sickly growth that it has to be watered with British gold?" The taunt was as pointless as it was cruel, for although the Union had kept Ireland poor, Irish leaders, in spite of that poverty, had asked for a financial independence which Mr. Gladstone in neither of his Bills felt disposed to give her. Mr. Chamberlain had his way; the Union was maintained, and as a result Ireland's actual contribution of two millions at that date has been replaced by a subsidy from Great Britain. Are we to be told now by Unionists that the Union must be maintained in order to maintain this subsidy? or by Home Rulers that the Irish deficit is an argument for the perpetuation of the financial dependence which caused it, and an insuperable bar to the financial independence which alone can extinguish it?

No; let us look the facts in the face. Here is a deficit officially given as 1,312,000. It is probably less, owing to an underestimate of Irish revenue. But it may grow to be more, even with allowance for an automatic growth of revenue, owing to the increased votes of the present year, and the expenses peculiar to the establishment of the new Irish Legislature and Government. What her really healthy and normal revenue should be only Ireland herself can discover in the future. What her right expenditure should be she alone can determine. We can only work upon the data we have before us. Economy cannot be instantaneous, either in Ireland or anywhere else. a.s.sume, then, an initial deficit in the Irish balance-sheet on the basis of present taxation. Its exact size cannot affect the manner of dealing with it. How are we to deal with it?

Let us dismiss at once the theory of "rest.i.tution" with the earnest hope that we shall hear nothing of it in the coming controversy. No Irishman will argue that a subsidy to the extent of, or exceeding the deficit, is a good thing in itself, and should be large and lasting because it will represent compensation for money unfairly exacted in the past. It is, indeed, true that the Union impoverished Ireland, but the most grievous wrong was moral, and for that wrong alone is reparation possible. Home Rule is not worth fighting for if it has not as its end and aim a self-reliant and self-supporting Ireland. Nor does it improve the argument in the least to represent the subsidy as productive expenditure for the purpose of raising Ireland's taxable capacity and improving her economic position. No money raised outside of Ireland will have that effect. Once admit the principle of rest.i.tution, and where are you to stop? What rational or scientific limit can be set to it? More pertinent question still, what are the conditions which will inevitably be imposed in exchange? Ireland cannot have it both ways. She must either hold out for financial independence or, for every financial boon, submit to a corresponding deduction from her political liberty.

If there were no alternative between financial independence without a farthing of temporary aid, and permanent financial dependence with a permanent loss of liberty, it would pay Ireland a thousandfold in the future to choose the former scheme, remodel taxation promptly to meet the initial deficit, and with equal prompt.i.tude set on foot such a drastic reduction of expenditure as would ensure the rapid attainment of a proper financial equilibrium. When once the Irish realized the issue, they would accept the responsibility with all its attendant sacrifices, which would no doubt be severe.

But there is an alternative, and that is to make good the initial deficit, whatever the financial authorities finally p.r.o.nounce it to be, with an initial subsidy of equal size, or perhaps of somewhat greater size so as to admit of a small initial surplus, _but destined to diminish by stated amounts, and within a few years to terminate_. To such a.s.sistance, given unconditionally, Ireland has an unanswerable claim, and to such a.s.sistance she ought, in my opinion, to limit her claim. Until two years ago she contributed uninterruptedly, and sometimes excessively, to the support of the Empire. With men and money she has made efforts for the common weal which no self-governing Colony has made, though she has been treated, politically and financially, as not even a Crown Colony has been treated. Just at the point where the self-governing Colonies, thanks to the liberty allowed them, are beginning to contribute indirectly to the defence of the Empire, Ireland, as the ultimate result of a century of coercive government, ceases to contribute. She can claim honourably, if she wills, to be placed, by temporary financial aid from the authority which is responsible for her undoing, in the financial position of a self-governing Colony.

From the British point of view it is difficult to see any valid objection to the course suggested. There will be no stinginess in the settlement. Even if there were any disposition in that direction, it would be idle to grudge the initial subsidy, because an equivalent sum is already being paid. The Union will infallibly continue to accentuate the deficit and increase the resulting burden on the taxpayers of Great Britain. The plan proposed would eventually remove that burden. But, obviously, its success hinges on the concession of full financial powers to an Ireland unrepresented at Westminster. In their own interests, if not for very shame, Englishmen should decline to make use of the old adage, that "he who pays the piper should call the tune." For more than a century Ireland paid the piper and England called the tune--and what a tune, and with what results! Representation has nothing to do with the case. Precedents are needless, but there are, as a fact, many. Crown Colonies have frequently received free grants for the relief of distress--Jamaica and other West Indian islands, for example. The Transvaal and Orange River Colony received several millions after the war to enable the ruined farmers to start business on a footing of solvency. During the whole period of their adolescence, and, indeed, until quite a recent date, all the self-governing Colonies were virtually subsidized by the allocation of British forces for local defence, maintained at the Imperial charge. And Ireland paid her share of this charge. Similar garrisons were, are, and will be, maintained in Ireland. Yes, but Ireland contributed to their cost, and in course of time will, it is to be hoped, resume her contributions with a gladder heart and a freer conscience than ever before.

Canada was economically stagnant under coercion. If, in her case, we had carried coercion as far as we carried it in Ireland, it would have been necessary to give her a temporary subsidy in order to enable her to a.s.sume the position of a self-governing Colony. Ireland's proximity does not alter economic laws. "Facts are stubborn things," and these are the Irish facts. Duty apart, no more profitable investment could possibly be made by the British tax-payer than a subsidy designed to enable Ireland to stand on her legs again. The present tribute to her is a dead loss.

The subsidy, if given, ought, I submit, on no account to be earmarked, on the bad precedent set by the Bills of 1886 and 1893,[137] for any particular head of expenditure in Ireland, as for Police, Pensions, Land Commission, or Education. As I have shown previously, nothing is easier than to pick out items of excessive expenditure, or of under-expenditure, for which Ireland is not herself responsible. But to allocate a grant specially to any of these purposes would be superfluous unless the intention were to maintain Imperial control over the service in question. As I urged in Chapter X., none of the services mentioned above ought to be retained under Imperial control. Extravagance in the first three will not be properly checked, save by a responsible Ireland.

Nor will extra money on Education be properly spent until it is raised and spent by Ireland. There are no other services, with the possible exception of Posts, to which a subsidy could possibly be applicable.

Even in that case an earmarked subsidy would be out of place. But Posts are outside the point we are discussing. If for mutual convenience they were to be kept under Imperial control--a step which would not render imperative Irish representation at Westminster--their finance would remain, as at present, common to the whole United Kingdom. There is officially held, on bad evidence, to be a loss on Irish Posts of 249,000, and this loss is debited against Ireland, and goes to swell the deficit we have been considering. With the Posts under Imperial control, the initial deficit to be made good by subsidy would be reduced by the amount of the loss. Should it, however, be decided that Ireland is fairly ent.i.tled to a share of the large general profit earned by the Postal Services of the United Kingdom, the annual profit so attributable to Ireland would be set off against the annual subsidy as long as the subsidy lasted, and after it was at an end would be a clear item of revenue to Ireland. My own opinion, as I stated in Chapter X., is that the Irish postal system, whether standing by itself it shows a profit or a loss, ought to be under Irish control.

III.

FUTURE CONTRIBUTION TO IMPERIAL SERVICES.

This must be left a voluntary matter for Ireland, as it is for the self-governing Colonies. There is no contribution from Ireland at present, and to fix a future date at which a fixed contribution, like that from the Isle of Man, should begin, is a course hardly practicable even if it were desirable.

IV.

IRELAND'S SHARE OF THE NATIONAL DEBT.

Until two years ago Ireland, of course, contributed, _inter alia_, to the annual interest and sinking fund, amounting in 1910-11 to 24,554,000, on the National Debt of the United Kingdom. It is impossible to estimate her share of the capital of the Debt, and I scarcely think that anyone would seriously propose to enc.u.mber the new Ireland with an old Debt, based on some arbitrary estimate. For the great bulk of Debt created in the past she has little moral responsibility--no more, at any rate, than the self-governing Colonies.

In this respect she must begin, like them, with a clean sheet.

V.

IRELAND'S SHARE OF IMPERIAL MISCELLANEOUS REVENUE.

On the other hand, Ireland, in consideration of the remissions mentioned, must renounce the share to which she is technically ent.i.tled of the Imperial Miscellaneous Revenue, derived mainly from Suez Ca.n.a.l shares and the Mint, and amounting altogether in 1910-11 to 2,769,500.[138]

VI.

IRISH CONTROL OF CUSTOMS AND EXCISE.

Let us now come to close quarters with this important issue. The grand argument on the affirmative side is that the products of these duties represent nearly four-fifths of the tax revenue collected in Ireland.

What are the objections?

We need scarcely consider the general objection, sometimes made ostensibly in the interests of Ireland, that her public men have little financial experience. The fact is true, and it is not their fault. But the financial scheme cannot reasonably be based on a recognition of a temporary lack of experience.

I place Customs and Excise together because I believe there is no serious question of making a distinction between the two, and of allowing Ireland to levy and collect her own Excise duties, while denying her authority over Customs. It is true that until 1860 such a distinction was made, and a lower Excise duty levied upon Irish than upon British spirits;[139] but the tendency in all modern States is to make the authority over Customs the same as that over Excise, and any departure from that principle, in the case of modern Ireland, is likely to cause considerable inconvenience. License Duties, which are included under the head of Excise, may, no doubt, without much inconvenience, be differentiated from the rest, but their Irish proceeds (284,000) are too small to influence the question.

Excise, then, follows Customs. What are the objections to giving Ireland, like the Isle of Man and the Channel Islands, control over her own Customs? Without doubt, the establishment of a new Customs barrier between Ireland and Great Britain is in itself a drawback. The Custom-house machinery exists, of course, at present, because Ireland is an island; nor would the additional function of checking British as well as foreign imports into Ireland cause any great increase of expense; but since the great bulk of Irish external trade is with Great Britain, there will unquestionably be a certain amount of inconvenience and expense both to Ireland and Great Britain in submitting merchandise on both sides of the Irish Channel to the pa.s.sage of a Customs barrier.

That seems to be the limit to which criticism can justly go in the case of Ireland and Great Britain. That is as far as it goes in the a.n.a.logous case of New Zealand and the Australian Commonwealth, where a small island State has a separate Customs system from that of a large, wealthy, and populous neighbour of the same race, and with many identical interests. That is as far as it goes in the parallel case of little Newfoundland and the great Dominion of Canada. Neither the Dominion nor the Commonwealth claim that proximity, power, and racial ident.i.ty give them the right to control the trade and taxation of their small independent neighbours, nor does the smallest friction result from the mutual independence. On the contrary, both the Dominions and the Commonwealth were founded on that vital principle of a pre-existent State independence surrendered voluntarily for larger ends. The whole Empire depends on the principle of local autonomy, and, above all, on the principle of local financial autonomy. Endeavours in America to sustain the opposite theory led to disaster. We have for generations regarded it as perfectly natural that the self-governing Colonies should have Customs systems of their own, even when they are used for the purpose of imposing heavy duties on goods coming from the Mother Country, and we know that that liberty has borne fruit a hundredfold in affection and loyalty to the Imperial Government. Until the Union of Great Britain and Ireland it was regarded as equally natural that Ireland should have control of her own Customs, along with all other branches of revenue. Even after the Union, although there was no Irish control over anything Irish, it was recognized, until the fiscal unification of the two countries in 1817, that Irish conditions required a separate Customs system, which, in fact, existed until 1826.[140] How fiscal unification and the subsequent abolition of separate Customs was brought about I have told in Chapter XI. It is not a pleasant story. To say the least, the conditions, moral and material, were not such as to warrant the inference that there is any inherent necessity for joint Customs between Ireland and Great Britain. The presumption raised by all subsequent events is in the opposite direction.

But the tradition of unified Customs, now nearly a century old, has immense potency, and unless it is fearlessly scrutinized and challenged, may be able, reinforced by the pa.s.sions excited by the great controversy over Free Trade and Protection, to defy the warnings writ large upon the page of history. The tradition must be so challenged. Say what we will about the proximity of Ireland and Great Britain, descant as we will in law-books, pamphlets, leading articles, debates, on what ought theoretically to be the fiscal relations of the two countries, we cannot escape from the fact that, in this as in so many other respects, both the human and economic problem before us is fundamentally a colonial problem, and that its being so is not the fault of Ireland, but of Great Britain.

Belief in Home Rule seems to me necessarily to involve a willingness to give Ireland her Customs. Great Britain has no moral right to lay it down that her views about trade shall govern the course of Irish policy; and if Great Britain believes sincerely in Home Rule, she should be willing to trust Ireland, regardless of the economic consequences, and regardless of the effect upon the great Tariff controversy.

The effect upon that controversy I shall not discuss. It seems to me to possess only a tactical and electioneering interest, and that side of the Home Rule problem I have rigidly avoided, while expressing in general terms my belief that sound policy and sound tactics in reality coincide. The Home Rule Bill is far more likely to be wrecked by timidity than by boldness, by precautions and compromises than by a fearless accommodation of British policy to Irish facts and needs.

As to the danger to Great Britain of separate Irish Customs, it seems to me to be greatly exaggerated. Ireland's own interests will primarily dictate her action. What she will decide her interest to be, n.o.body can foretell with certainty beyond a limited point, because Irish public opinion is not formed. Ireland has taken little or no part in the fiscal controversy, for the simple reason that she has been absorbed in the task of getting Home Rule, and until she gets it she is precluded from formulating a trustworthy national opinion on most of the great subjects which agitate modern societies. There is, however, no tradition in favour of high Protection, even from Grattan's commercially free Parliament. The question of a low protective or purely revenue tariff on imports has not received any serious investigation. Let us frankly admit at the outset that no country in the world, economically situated as Ireland is, dispenses with a general tariff of some sort, and undoubtedly there are to-day a good many Irishmen outside political life who advocate the encouragement of infant Irish manufacturing industries by sufficient protective duties directed against Great Britain as well as against the outside world. It would be strange if there were not, in view of the distressing past history of Ireland's throttled industries, and in view of the strenuous efforts now being made by the Development a.s.sociations to push the manufacture and sale of Irish goods in all parts of the world. There are many avowed Free Traders also; nor are the Development a.s.sociations themselves officially protectionist. The opinion is sometimes expressed that Ireland, which could easily be self-supporting in the matter of food, occupies an unhealthy position in exporting a large proportion of her own agricultural produce, b.u.t.ter, bacon, meat, etc., and in importing for her own consumption inferior British and foreign qualities of some of the princ.i.p.al foodstuffs; but, so far as it is possible to ascertain it, the predominant opinion seems to be that an agricultural tariff would not be a good remedy for this weakness, if it be one, and that Ireland's future development, like that of Denmark, lies in the increasingly scientific organization of her agricultural industries, and in the better cultivation of her own soil.