§ I now come to the question, What is to be done with the surplus? There are several circumstances which have to be taken into account which are of an abnormal character. The first is not merely the underspending which has contributed to the surplus, but the nature of that underspending. The Chancellor of the Exchequer always looks forward to these underspendings. It is not always possible for a Department to estimate, for a whole year in advance, to the very last penny, what sum of money it will require. Departments are very loth to come to the House of Commons and ask for Supplementary Estimates, and, therefore, I have no doubt they estimate liberally, though fairly, the requirements of the year. Chancellors of the Exchequer have always expected, and very rarely expected in vain, that, at the end of the year, they will get money back from most of these Departments to assist them either in swelling the surplus or in meeting a deficiency.
§ The underspending on the part of the Admiralty is of a rather different character. There is a kind of underspending which represents permanent saving, but that is not the case here. The under-spending of the Admiralty means postponement and not saving. For instance, 1065 there is not a single ship the less in the Programme of this year, nor will there be in the next, because the ships of last year have not had this money spent on them. The ships are ordered, the orders will be executed, and the underspending has had no effect at all in diminishing, by a single torpedo boat, the number of ships ordered this year. This money which was voted by Parliament and which would, in the course of things, have been spent this year, will be spent either next year or the following year. Part of it is in the Estimates for this year—I think about £600,000. The rest, and the heaviest part of it, will fall on next year's Estimates. That represents something like £1,500,000.
§ There are two other contingencies I have to take into account, but they are incalculable at the present moment. The first is the effect of the strike. I have every confidence that the struggle will be brought to an end this week. Still, one must prepare for contingencies. Even if work were resumed this week or next week the strike has had an effect—a considerable effect— on the trade of the country, and, consequently, upon its revenue. For five weeks about a million of men have been earning no wages. For three weeks probably another million have been out of work. I am not sure that is not an underestimate. You have got five weeks of arrears on the part of a million of men, and two or three weeks' arrears on the part of another million who have earned no wages, to make up. In addition to that, what they produce is for the moment lost. Some industries have been very hard hit, much worse than others, how hardly hit no one can tell yet. There was a good deal of pressure of work before the strike, and I have no doubt there will be a good deal of pressure of work after, and that will limit its effects. But still, making full allowance for all these things, the effect of the strike will be very considerable. I will give the House later on figures showing what the strike has cost and will cost in the coming year. All that has to be taken into account as a contingency which is for the moment incalculable. We cannot measure it.
§
What is the second contingency—the possibility referred to by my right hon. Friend the First Lord of the Admiralty in the powerful speech he delivered in introducing the Naval Estimates this year? No one in this Committee deplores more than I do the enormous waste upon armaments. They are a burden on our industrial
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energy, and they limit the activities of the State in making provision for our social needs. An enormous amount of wealth which would be available for, I think, much better purposes, is drained by these epileptic fits of militarism which seize civilisation from time to time. But so long as they last we can take no risks. So much depends on securing the actual inviolability of our shores that, if we err, I think we ought to err on the safe side. As long as I am satisfied, as I am satisfied, that my right hon. Friend has only demanded Estimates which, high as they are, are only adequate to secure the minimum which is necessary for our safety, as long as I have the honour to hold the high office of Chancellor of the Exchequer, it will be my duty to do all I can to find the necessary finance to carry his purposes through. But in arranging the finance of the year I must take into account the very serious contingencies to which my right hon. Friend has referred. What it means, how much it means, it is premature to estimate, and therefore all we can do at the present moment is to provide the necessary reserve. I was fortified, before I came here, by a private letter, written by one of our most distinguished Chancellors of the Exchequer in the past, Sir William Harcourt, who was a great financial purist. He would have been the last man in the world to have encouraged any departure from the strict line of financial orthodoxy. He wrote a private letter in the year 1896, I think, to Sir Henry Fowler, in reference to a proposal made by Sir Michael Hicks-Beach, as he then was, in that year, to deal with the realised surplus, which was a large one. I remember Sir Michael Hicks-Beach said that it was the argest realised surplus for fifty years. He proposed that the whole of that surplus should be utilised for naval purposes, and Sir William Harcourt wrote this letter, for which I am obliged to the courtesy of my right hon. Friend (Mr. Harcourt) for giving it to me. It is dated 23rd January, 1896:—
The Government, I think, may spend their millions with less disadvantage on the Navy than on many of the other objects which they are supposed to contemplate. I should not be much disinclined to make them a present of the Old Sinking Fund for this single year, as twelve millions is more than we can fairly demand should be devoted to Debt in one year. I have always regarded the Sinking Fund as a resource in emergencies. I myself should be satisfied if we could secure the permanent maintenance of the Terminable Annuities and the New Sinking Fund, which amounts to seven millions, and it is about as much as we are bound to do for our successors. If we are too stiff we shall lose the whole.
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That contains the principle on which I propose to act, although it is a justification which comes after the event. I therefore propose in the present year to devote the whole of the surplus to strengthening the Exchequer Balances. If at the end of the year it has not been found necessary to draw upon this reserve, or to the extent that it has been found unnecessary to draw upon it, Parliament can then, judging the situation as it then appears, deal with this reserve, and, if it so decides, devote it wholly, or in part, to the reduction of Debt. I hope I have made that clear. What I propose is that the money should pass for the moment to the Exchequer Balances, to strengthen them as a reserve. We do not prejudge the question at the present moment of what shall be done, either with the whole, or the balance, of that amount. If it is found unnecessary to expend it either in whole or in part, we propose that Parliament should decide at the time upon the facts as they present themselves to Parliament then what should be done with this amount.