§ I come now to the Estimates for the coming year. I think the Committee is in possession of these figures, and I therefore will not enter into them in detail. The expenditure is up by £5,601,000. The total expenditure is £186,885,000. That is what I have got to find funds for. I shall just call attention to one or two items, and that is all, in this expenditure. I should like to say a word or two about the Navy Estimates. I had anticipated a considerable reduction this year. When I made my financial statement last year I gave expression to that hope, and I need hardly say it was not a mere expression of my own personal wish, or desire, or expectation; I made that statement after consultation with my right hon. Friend the then First Lord of the Admiralty. He hoped to effect a very considerable reduction this year, and a still greater reduction next year. But, unfortunately, conditions over which we have no control have supervened, and the Estimates for the year are considerably higher than I had anticipated. There is a reduction, a substantial one so far as it goes, but not so much as we certainly might have effected had it not been for the unfortunate conditions for which we are in no sense responsible, and for which my right hon. Friend the First Lord of the Admiralty is certainly not respon- 1068 sible. But that does make a difference. In financing the programme which we looked forward to in 1909, it was part of my anticipation that the Naval programme would grow rapidly for three years and then decline. The eight "Dreadnoughts" I thought would pass out of account by this year, and I looked forward to that saving very largely to assist in financing the Insurance scheme, which I knew was due somewhere about that time, all being well. I am afraid that the prospect of securing a reduction in our Naval expenditure is not a particularly bright one. We should have good cause to rejoice if this year we could go through without a substantial increase, and if we could pass through next year without a still larger increase.
§ I would only utter one word of warning. If the needs of the nation demand it, it has to be faced; but the methods of raising the revenue for that purpose must also be faced. There is only one way of reducing taxation, or even of preventing an increase of taxation, and that is by reducing expenditure, for every pound spent on armaments costs the taxpayer as much as a pound spent on any other purpose. The next item of increase is £2,600,000 for health and unemployment insurance. There is £200,000 for small landholders in Scotland, £364,000 for education, most of it automatic, but part of it due to the provision for assisting local authorities in medical attention to diseased children. There is a considerable increase in the Post Office, but that is entirely due to the fact that the National Telephones have been taken over. The only other item to which I wish to call attention is one which does not, perhaps, appear on the face of these Estimates, but it is one I note with considerable satisfaction. It is, I think, the only decrease I have an opportunity of dwelling upon, and therefore I take the opportunity of dwelling upon it. It is a decrease of £450,000 in regard to our African Protectorates. I think that is a subject of satisfaction, because it shows not merely that the administration of the Colonial Office is a very admirable one, but it also demonstrates that the prosperity of these Protectorates is increasing so greatly under British rule that they are almost self-supporting for the first time. Then there is an increase of £170,000 for the Army, which is due to aviation. So much for expenditure.
§ I now come to the Revenue. When you come to estimate the Revenue for this 1069 year, there are two main considerations to be taken into account. The first is the effect of the strike, and the second is the prospects of trade. The effect of the strike, even if it comes to an end this week, would be very considerable. The working classes during the first few weeks of the resumption of work have just as much as they can do with their wages to buy the necessaries of life, to pay off debt which has been incurred in purchasing those necessaries, and to pay arrears of rent, and they will have no margin for dutiable commodities. I therefore estimate that between spirits, beer, tobacco, and, also to a certain extent, tea and sugar, the loss of revenue for the coming year, owing to the strike, will aggregate £800,000— that is, taking the loss up to the 31st March, and adding it on to the prospective loss, it is a loss of £1,200,000 to the Revenue alone which arises from this labour trouble, and the Committee may readily infer from that what the loss must be to the country. The second item I have to consider is the trade outlook. The difference between good and bad trade is a difference of millions to the Chancellor of the Exchequer. He has only to look at the receipts of last year to find out what a great difference excellent trade has made in the receipts of the Exchequer. Practically the whole of the surplus on the revenue side has been due to good trade. That is £3,500,000, and it would be £4,000,000 but for the strike, and I budgetted for probably another £2,000,000 or £3,000,000 in anticipation of good trade. Therefore the first consideration of the Chancellor of the Exchequer and his advisers in estimating the revenue of the year is, Is it going to be a good or a bad year for trade? Last year I predicted good trade, and I need hardly say I did not do it upon my own authority. I consulted some of the best available authorities on the subject, and after hearing all they had to say I formed my own conclusions. I have done the same this year.
§ Everything depends upon the outlook, not merely here, but throughout the world. Nations are becoming more and more interdependent in trade and, as our international trade is the greatest in the world, we are more dependent to that extent upon healthy conditions in other countries as well as our own. There is no self-supporting Empire in trade. What are the prospects according to my advisers? I am told that the conditions throughout the world appear excep- 1070 tionally healthy. The production of gold during the last few years has been abnormal and that, in spite of the criticisms of my hon. Friend behind me, has had great effect in greasing the wheels of commerce. Most of the recent storms which have blighted our industrial prospects in this country and on the Continent have come from across the Atlantic. I am informed that the conditions there this year are sounder than they have been for a good many years, and that instead of having the devastating cyclone which effected such destruction upon the trade of Europe a few years ago, we are likely to get a steady trade wind which will bring treasure to our shores from across the Atlantic. There is only one disturbing factor, and that is that there is a Presidential election due this year. I do not know anything about elections in America, but if they are anything like elections in this country I have no doubt there will be rows of bogies along the roads of commerce to frighten timid capitalists But still, when these roads are paved with gold nervous indeed will be the capitalists who will be frighted off the track, and I do not think that is going to have a very serious effect, from all I hear, upon the trade of the United States of America, and that is full of hope for our trade here.
§ Another important element is this. All our best customers throughout the world are prosperous. The Argentine Republic, the countries of South America, Canada, India, Australia, and, I think, South Africa, are all doing better than ever. There has been a great development in all these countries during the last four or five years, very largely due to the beneficent use which has been made of British capital. It has increased their purchasing power, and that means that they buy more from us, and not only that, but they have been opening up railways to an extent that is almost unprecedented. During the years of the South African and Japanese wars there was less money spent upon developing new countries than had been spent for decades, I think, at least for a good many years. Capital was being absorbed in other ways. The result was that there was a sudden contraction in the development of those countries. It had a great effect upon increasing the cost of the necessaries of life, because the opening up of new harvest fields did not keep up with the increasing demands of the world. During the last few years there has been more enterprise displayed in those countries, and more money has been spent upon 1071 railways than has been spent for many years, and although the effect, of course, is not instantaneous, it began to operate last year, and the cost of the necessaries of life began to fall again. I believe in the coming year that tendency will grow, and that the working classes and all classes of this country will begin to reap the beneficent effects of the expenditure which has been incurred in opening out new countries. Our best customer on the Continent of Europe, Germany, is doing well, and the same, I believe, applies to France, and to Russia, who are also good customers of ours.
§ At home, in spite of the disturbing effects of the strike, I am assured that the prospect is good. I believe the outcries about predatory legislation are losing their efficacy through sheer staleness. There has been nothing more entertaining and more instructive than the difference between what appears to be the belief of the capitalist and his action. He has always talked as if he were trembling on the brink of impending ruin through legislation, and he has always acted as if he was making a fortune. He attends a political meeting in the evening and hears that the, foundations of civilised society are being undermined, and he cheers the sentiment with great satisfaction. He goes to the counting house in the morning and orders his business as a man who knows that all is well with the world. So he enjoys the double sensation of receiving large actual profits whilst at the same time prophesying dire future evils. It seems to be the correct thing for every respectable man to talk in that strain, and also to leave it merely to cranks to arrange their affairs as if they believed it. They know from their experience that there is a great chasm between fear and fact, and therefore during the last two or three years the capitalists in this country have never shown greater enterprise and greater confidence, and trade shows every prospect, according to all I have heard, of a very booming time in the coming year. There may be labour troubles, but the future depends on the readiness with which capital is prepared to share its luck with labour and upon the moderation with which labour makes and presses its demands on capital. I have come to the conclusion that there is nothing on the horizon which will upset the promise which the world gives of a bountiful year. I ought also to mention the exceptional 1072 cotton crop of America, which is a great factor in our prosperity. I shall therefore base my Estimates for the year upon that assumption.