MR SNOWDEN’S FINANCE.

Evening Star, Issue 20779, 29 April 1931, Page 8

MR SNOWDEN’S FINANCE.

“ Not so bad as it might have been” appears to bo the tenor of British Press comment on Mr Philip Snowden’s 1931 Budget. Nevertheless, the anti-Labour papers do not refrain from caustic remarks on certain aspects of what they describe as financial jugglery. This consists in Mr Snowden having done something like what Mr Forbes has just done in Now Zealand. Because of tho extraordinary expenditure thrown on our Treasury by tho Hawke’s Bay earthquake Mr Forbes partially depletes a reserve fund maintained in readily realisable form by the dominion in London for emergency purposes. England, which has to make regular heavy payments of interest to tho United States on account of war loans, maintains in New York a fund ntilisablo in case of tho monetary rate of pound sterling—dollar exchange going against Britain. The extent of this overseas fund in New York was thirty-three million pounds, and Mr Snowden has reduced it to £13,000,000 by appropriating £20,000,000 of it for Budget balancing purposes. This latter requires elucidation, for according to our New Zealand w’ay of regarding national finances Mr Snowdon has actually produced a surplus of £43,ss2,ooo—revenue £775,893,000 and expenditure £732,341,000. But million pounds falls below the amount England has set herself annually to pay towards reduction of the principal of tho debt to America, and Mr Snowden has supplemented it by adding twenty millions of funds already hold there and nine millions from German sources. It may bo said in criticism that tho so-called “raiding” of such funds amounts to drawing on capital to meet current expenses. That is so, but there is tho important qualification that the amount is being applied to reduction of debt overseas. That is, capital is. being drawn on to reduce capital liability. Tho British Budget discloses sounder financial administration than can be found in any of the overseas dominions. They arc showing Budget deficits, while at tho same time they are increasing, instead of reducing, their national indebtedness.

The magnitude of Britain’s effort and tho amount of self-sacrifice it entails on the taxpayer need not bo dilated on. Some six weeks before tho financial year closed Mr Snowden delivered himself of a very pessimistic Budget forecast. Ho spoke of “disagreeable and drastic measures ” being necessary. Income tax payers at onco became apprehensive, because he

supplemented this by saying that it would be “disagreeable for the people upon whom taxation was to bo levied.'’ But among the masses, whether Labour supporters or not, there was also apprehension, lor there was talk of “disagreeable sacrifices by all,’’ and rumour had it that there was to bo wage reduction. Mr Snowden subsequently explained that by this he had not meant wage-lowering, which he had never contemplated, but a “ temporary suspension of social schemes.” This can mean nothing else than, primarily, revision downwards of the “ dole.” Mr Snowden latterly has repeatedly expressed his conviction that Britain’s national expenditure must bo reduced. In the year lately ended he showed how his practice had coincided with his belief by exceeding his estimated expenditure by only half a million, meaning that for every £1,500 ho had calculated to spend ho was forced to spend one extra pound. That is good budgeting, especially as tho trade revival be had looked for a year ago did not materialise, and there was an increase instead of a diminution of unemployment. Because of that experience Mr Snowden now declines to calculate on improved trade conditions. Ho definitely says there is a prospect of them in tho current year; and he as definitely says that ho is not going to retard or discount them by putting additional burdens on industry. Even if ho did, tho proceeds would hardly be available in the current year’s revenue. Thus bo is now content to let present sources of taxation yield an amount that would show a deficit of £37,366,000, of which nearly ten millions would result from lowered revenue. Tho raising of the petrol tax by 2d a gallon and tho imposition of a tax of Id per £1 on tho capital value of land, together with a certain anticipation of revenue which otherwise would not bo receivable until tho no: t year, would, however, enable him to balance this year’s Budget.

But from a Labour Chancellor of the Exchequer it is most reassuring to learn that “ although ho was in favour of every possible effort to reduce the debt, ho held tho view that in times of desperate depression and unemployment it was better to use their resources to stimulate trade than to make undue sacrifices.” Broadly speaking, depression may bo said to bo duo to, or actually consist of, the fact that a largo proportion of manufacturing firms cannot carry on except at a loss, or, as Mr J. M. Keynes recently put it; ‘‘Unemployment exists because employers have been deprived of profit. Tho loss of pr ; may bo duo to all sorts of causes. But, short of going over to Communism, there is no possible means of curing unemployment except by restoring to employers a proper margin of profit.” By refraining from putting fresh burdens on industry Mr Snowden, though ho would desperately need more revenue if tho fixed goal of debt reduction were still to be aspired to, virtually admits that there are limits to class taxation which, if ipossed, bring ruin not alone to tho class directly aimed at, but to the masses and the nation as a whole. This is a lesson which Labour financiers, in or out of office, have been unwilling to learn. The ablest of them all has now definitely given his actual experience and tho conviction ho has derived from it. On that account-chiefly wc attribute tho appreciative tone of the first two speakers, representative of the Conservative and tho Liberal Parties to follow Mr Snowden in tho Budget debate in the Commons. v