Scottish, and Irish contribution to Excess Profits Revenue. We are told that the Excess Profits "collected" in Ireland was £7,484,000; yet the White Paper estimates that Ireland really "contributed" £10,040,000 under that head of revenue-the reason being that the Treasury has had all Excess Profits revenue 'adjusted between England, Scotland and Ireland on the same basis as Schedule D, Income Tax." I do not stop now to argue about the wisdom of this adjustment; for I am going to omit Excess Profits revenue altogether. So far, then, as regards all taxes other than Excess Profits Duty, the rise from 1913-14 to 1918-19 has been as follows: for Great Britain, from £153,408,000 to £477,588,000-a rise of 311 4 per cent.; for Ireland, from £9,627,000 to £25,238,000-a rise of 2621 per cent. We might state this result approximately, viz. : In the last year of warfare the tax-revenue (other than Excess Profits Duty) had increased by three times for Great Britain, by two and a half times for Ireland. Let us think where the money went. The White Paper for 1918-19 tells that the whole expenditure of the United Kingdom in that year was £2,579,301,500. It then picks out £185,536,500 of that vast sum and tells us how it was distributed, viz., the cost of English Services was £143,847,000; of Scottish Services was £19,527,500; of Irish Services was £22,161,500. That is local expenditure in each area respectively. But there still remains a sum amounting to £2,393,765,000 which is set down as spent on "General Services." The Exchequer Issues that authorised this vast expenditure might, perhaps, enable us to trace the money to its destination where it was finally paid away. How much of it was outlay spent in England, how much in Scotland, how much in Ireland, how much was spent abroad outside these three Kingdoms? These are questions which should not be asked while indiscriminate finance obtains between Great Britain and Ireland. But the Treasury in its White Papers has gone behind that principle of indiscriminate finance in order to supply an approximate statement of the facts as they exist at the moment. Therefore, I wish that we could get from the Treasury a Third White Paper telling us the true facts of the geographical distribution of this "General" expenditure. We could then be in a position to understand why it is that a tax revenue two and a half times larger from Ireland is economically far more exhausting to our country than the tax revenue three times larger from Great Britain has been to the sister island. C. H. OLDHAM Postscript. The text of the Government's Irish Bill has just reached me; so I may be allowed to add a note on its financial proposals (Sections 19 to 34). The Bill is very skilfully drafted. But the disentanglement of British and Irish finances is not attempted, it is postponed; it is to be done eventually (if ever) by a Joint Exchequer Board of five experts (Section 30). The principle adopted, for the present, is to "reserve" all those branches of tax-revenue which require adjustment of the "collected proceeds in order to determine the "true" proceeds really contributed by each country. That explains why Customs and Excise Duties, Income Taxes, and Excess Profits Duties are all "reserved"; whereas the Estate Duties, Stamps, and Land Values Duties are forthwith transferred, with provisions (Sections 26, 27) against double duties becoming payable in these cases. The aforesaid adjustments for the "reserved" taxes, hitherto done approximately by the annual Treasury White Paper, is under the Bill (Section 20, § 2) to be done by the Joint Exchequer Board; and, as the Bill (Section 19, § 4) will secure accurate returns of merchandise traffic in the Cross-Channel Trade, this adjustment can be effected with more precision than has been possible hitherto in the White Paper. It is manifest that Ireland would lose heavily if this adjustment were not to be made, i.e., if each country were simply to retain so much of those taxes, now "reserved," as it collected in its own territory. Thus, in 1918-19 (see my last table above) Ireland would lose a total sum of £9,101,000 upon Customs, Income Taxes, and Excess Profits Duty; and Great Britain would lose £3,013,000 on Excise: therefore, on balance, Ireland would suffer in 1918-19 a net loss of £6,088,000-which would probably be greater still in 1919-20. But it is only the initiated who would understand this point. And it is certain that this fiscal advantage (were it widely understood) would not appease the strong resentment that will be felt in Ireland at seeing all those important branches of taxation "reserved" to the London Parliament, where Ireland will be represented only by forty-two members. If all those taxes (it will be argued) were transferred, in place of being "reserved," the adjustments above mentioned could be still made with sufficient precision (though, with differing rates of taxation, it would be more complicated); so that the Irish will not see any just reason why they should lose that £6,088,000 of Irish revenue in any case. Neither administrative convenience nor fiscal advan tage will palliate what the Irish will see to be a "reservation of political power in an essential part of self-government. The same remark will apply to the "reservation" of the Post Office, on the ground merely of administrative convenience. What prospect does the Bill hold out as to the future transfer of these "reserved" taxes? Under no section does it foreshadow any transfer of Income Taxes or Excess Profits at any time. A perfectly good case can be made for this, assuming that a selfgoverned Ireland remains "within the Empire"; these taxes will always be "reserved" as the great instruments of taxation for war purposes. But the equity of the matter will become more apparent to Irishmen when these taxes in the Dominions and self-governed Colonies "within the Empire" also will be "reserved "-not to the Parliament of the British Isles, but to that future Imperial Parliament which will ultimately take charge of war finances for the whole British Empire. Meanwhile, the present Bill, while "reserving " Income Taxes and Excess Profits. Duties for all time, has provided under Section 23 (the best bit of draftsmanship in the whole Bill!) for powers to be conferred on the Irish Parliaments "of levying surtax in addition to, or granting relief from, Income Tax and Super Tax." So that the perpetual "reservation" of these taxes can, I think, be justified when the Bill has been properly understood. There remain Customs and Excise Duties. The Bill (Section 34) postpones the consideration of their transfer until after "Irish Union" has been consummated by identical constituent Acts passed by the two Irish Parliaments. If the question is then raised by "an Address for the purpose," the Joint Exchequer Board must forthwith consider the problems of their transfer and must "report thereon and on the methods by which in case of such transfer the payment of the Irish contribution to Imperial liabilities and expenditure can be secured." After a copy of their report has been laid before the two Parliaments of the United Kingdom and of Ireland, the question of further legislation will remain open. There is no promise that such legislation to effect the transfer will be pushed through and passed; and it is obviously impossible that any such promise could be given— simply because no future Parliaments can be bound by anything that the existing Parliament may do, or may wish to have then done, in any such matter. As regards Ireland's contribution towards Imperial liabilities and expenditure, the items towards which she shall contribute are defined in the Third Schedule of the Bill. For the first two years the amount of the Irish contribution is named at £18,000,000-which is the estimated sum that Ireland will be contributing in any case, whether this Bill passes into law or not. But the Exchequer of the United Kingdom will now be undertaking to provide a sum of between £4,000,000 and £5,000,000 (in lieu of the Land Purchase Annuities and instalments towards repayment of certain existing Public Loans) which will in future be going to the Irish Exchequers wholly. Thus the United Kingdom, in effect, will stand to receive a net annual contribution from Ireland of about £13,000,000 or £14,000,000-for the first two years. By that time the Joint Exchequer Board must have determined what proportion the "taxable capacity" of Ireland justly bears to that of the United Kingdom as a whole. The Irish contribution shall then be in that proportion, or fraction, of the amount certified (also by the Joint Exchequer Board) to have been the total of the Imperial liabilities and expenditure "for the preceding financial year." This "taxable capacity" proportion is to be "revised at the end of every fifth financial year thereafter." Of course, this phrase "taxable capacity" covers a great many highly contentious and complicated considerations, which in this note it is impossible to indicate. It is really a matter for experts to handle; the experts are directed "to be just "; and it is pretty certain that they will be obliged to report fully on the process by which they will have arrived at their determination of the matter. Provision is made by which the Joint Exchequer Board shall also settle how the whole contribution from Ireland is to be apportioned as between the two Irish Exchequers. In this note I make no reference to the political aspects of this Bill. The disentanglement of the public finances of Great Britain and Ireland is a scientific problem which must be tackled under any such measure. Whether the present Bill passes into law or not, it has made an interesting contribution to this problem on the lines originally sketched by Lord Welby, Lord Farrer and Mr. Bertram Currie in their well-known Report for the Financial Relations Commission of 1896. In words of Byron's Manfred, these distinguished men are, in this matter :— The dead, but sceptred sovereigns, who still rule March. C. H. OLDHAM REVIEWS The Economic Consequences of the Peace. By JOHN MAYNARD KEYNES, C.B., Fellow of King's College, Cambridge. (London: Macmillan and Co. 1919. Pp. 279.) PRIVILEGED and yet perilous the state of one called upon to commit the double sacrilege of reviewing the work of his master and his editor-to bear the knife, like Macbeth, in defiance of the laws alike of hospitality and allegiance. But the knife is not very sharp. Mr. Keynes' book is like a banquet of which the more austere and filling courses are both heralded and crowned by a number of more succulent and alluring dishes. His detailed dissection of the economic clauses of the Treaty of Versailles occupies the central tract of the work; but the reader is, as it were, lured into the midst of it, and again rewarded for the patient attention which it demands, by a series of vivid and arresting pictures of men, of institutions and of tendencies. Indeed, the first impression left on the mind is not merely that Mr. Keynes has written a very powerful and important book, but that he has written two, or possibly three-a mordant political pamphlet, a masterly technical discussion of the economic provisions of the Treaty, and interwoven with both an impressive and largely original philosophical critique of the economic relations of nations and classes. And the reader's first impulse is to wonder whether the whole effect would not have been even more compelling if these separate elements could have been disentangled and segregated within separate covers. Further reflection tends to weaken this impulse, as I hope to show; but perhaps it will be in accordance with the traditions of this JOURNAL to yield to it provisionally, and to confine attention for as long as possible to the more purely economic portions of the work. Let it not be supposed from the simile employed above that their solidity implies obscurity or dullness. Mr. Keynes has an eye for words and a cleanness of phrasing which at once purge his eloquence of rhetoric and clothe his analysis |