I said that in the creation of such a system we may profit by the example of Germany; we may do more, we may improve upon the example of Germany. The German Exchanges, though co-ordinated and encouraged to some extent by State and Imperial Governments, are mainly munic.i.p.al in their scope. Starting here with practically a clear field and with the advantage of the experiment and the experience of other lands to guide us, we may begin upon a higher level and upon a larger scale.

There is reason to believe that the utility of a system like Labour Exchanges, like utility of any other market, increases in proportion to its range and scope. We therefore propose, as a first principle, that our system shall be uniform and national in its character; and here, again, we are supported both by the Minority and by the Majority Reports of the Royal Commission.

A Departmental Committee at the Board of Trade has, during the last six months, been working out the scheme in close detail. The whole country will be divided into ten or twelve princ.i.p.al divisions, each with a Divisional Clearing House, and each under a Divisional Chief, all co-ordinated with the National Clearing House in London.

Distributed among these 10 Divisions in towns of, let us say, 100,000 or upwards will be between 30 and 40 First-cla.s.s Labour Exchanges; in towns of 50,000 to 100,000 between 40 and 50 Second-cla.s.s Exchanges; and about 150 minor offices, consisting of Third-cla.s.s Exchanges, Sub-Offices, and Waiting-rooms, which last will be specially used in connection with Dock decasualisation.

The control and direction of the whole system will be under the Board of Trade. But in order to secure absolute impartiality as between the interests of capital and labour, Joint Advisory Committees, to contain in equal numbers representatives of employers and work-people, will be established in the princ.i.p.al centres. Thus we shall apply to the local management of Labour Exchanges the same principle of parity of representation between workmen and employers under impartial guidance and chairmanship, that we have adopted in the administration of the Trade Boards Bill, and that, _mutatis mutandis_, is the governing feature of the Courts of Arbitration which have recently been set up.

If this Bill should obtain the a.s.sent of Parliament without undue delay, I should hope to bring the system into simultaneous operation over the whole country, so far as practicable, in the early months of next year. Temporary premises will be procured in all cases in the first instance; but a programme of building has been prepared, which in ten years will by a gradual process enable in all the princ.i.p.al centres these temporary premises to be replaced by permanent buildings.

The expense of this system will no doubt be considerable. Its ordinary working will not need a sum less than about 170,000 per year, and during the period when the building is going on the expenditure will rise to about 200,000 per year.

We hope that the Labour Exchanges will become industrial centres in each town. We hope they will become the labour market. They may, where necessary, provide an office where the Trade Board, if there is one, will hold its meetings. We desire to co-operate with trade unions on cordial terms, while preserving strict impartiality between capital and labour in disputed matters. It may, for instance, be possible for trade unions to keep their vacant-book in some cases at the exchanges.

The structure of those Exchanges may in some cases be such as to enable us to have rooms which can be let to trade unions at a rent, for benefit and other meetings, so as to avoid the necessity under which all but the strongest unions lie at the present time of conducting their meetings in licensed premises. The Exchanges may, as they develop, afford facilities for washing, clothes-mending, and for non-alcoholic refreshments to persons who are attending them. Separate provision will be made for men and for women, and for skilled and for unskilled labour. Boy labour will be dealt with in conjunction with the local Education Authorities; and travelling expenses may be advanced on loan, if the management of the Exchange think fit, to persons for whom situations have been found.

So much for the policy of Labour Exchanges. That is a policy complete in itself. It would be considerable if it stood alone; but it does not stand alone. As my right hon. friend the Chancellor of the Exchequer has announced in his Budget speech, the Government propose to a.s.sociate with the policy of Labour Exchanges a system of Unemployment Insurance.

The House knows that the Minority Report advocates a system of compulsory labour exchanges, that no person shall engage any man for less than a month except through a Labour Exchange. That is not the proposal we are making. We are making a proposal of voluntary Labour Exchanges. I am quite ready to admit that no system of voluntary Labour Exchanges can deal adequately with the evils and difficulties of casual labour; but there is one conclusive reason against compulsory Labour Exchanges at the present time. To establish a system of compulsory Labour Exchanges in order to eliminate casual labour, and so to divide among a certain proportion of workers all available employment, would be absolutely and totally to cast out at the other end a surplus of unemployed: and to do this before preparations have been made for dealing with that surplus, would be to court an administrative breakdown which could not fail to be attended with the gravest possible disaster. Until poor law reform has made further progress, to establish a compulsory system of Labour Exchanges would only increase and not diminish the miseries with which we are seeking to cope.

We have, therefore, decided that our system of labour exchanges shall be voluntary in its character. For that very reason there is a great danger, to which I have never shut my eyes, that the highest ranks of labour, skilled workers, members of strong trade unions, would not think it necessary to use the Exchanges, but would use the very excellent apparatus which they have established themselves; that therefore this expensive system of Exchanges which we are calling into being would come to be used only by the poorest of the workers in the labour market, and, consequently, would gradually relapse and fall back into the purely distress machinery and non-economic machinery from which we are labouring to extricate and separate it. It is for that reason, quite apart from the merits of the scheme of unemployment insurance, that the Government are very anxious to a.s.sociate with their system of Labour Exchanges a system of unemployed insurance. If Labour Exchanges depend for their effective initiation and establishment upon unemployment insurance being a.s.sociated with them, it is equally true to say that no scheme of unemployment insurance can be worked except in conjunction with some apparatus for finding work and testing willingness to work, like Labour Exchanges. The two systems are complementary; they are man and wife; they mutually support and sustain each other.

So I come to Unemployment Insurance. It is not practicable at the present time to establish a universal system of unemployment insurance. We, therefore, have to choose at the very outset of this subject between insuring some workmen in all trades or all workmen in some. In the first case we should have a voluntary, and in the second a compulsory system. The risk of unemployment varies so much between one man and another owing to relative skill, character, demeanour, and other qualities, that any system of State-aided voluntary insurance is utilised mainly by those most liable to be unemployed, and, consequently, a preponderance of bad risks is established against the Insurance Office fatal to its financial stability. On the other hand, a compulsory system of insurance, which did not add to the contribution of the worker a substantial contribution from outside, would almost certainly break down, because of the refusal of the higher cla.s.s of worker to a.s.sume, unsupported, a share of the burden of the weaker members of the community.

We have decided to adopt the second alternative, and our insurance system will, in consequence, be based upon four main principles. It will involve contributions from workmen and employers; it will receive a substantial subvention from the State; it will be organised by trades; it will be compulsory upon all--employers and employed, skilled and unskilled, unionists and non-unionists alike--within those trades. The hon. Member for Leicester[15] with great force showed that to confine a scheme of unemployment insurance merely to trade unionists would be trifling with the subject. It would only be aiding those who have, thank G.o.d, been most able to aid themselves, without at the same time a.s.sisting those who hitherto, under existing conditions, have not been able to make any effective provision.

To what trades ought we, as a beginning, to apply this system of compulsory contributory unemployment insurance? There is a group of trades specially marked out for the operation of such a policy. They are trades in which unemployment is not only high, but chronic, for even in the best of times it persists; in which it is not only high and chronic, but marked by seasonal and cyclical fluctuations, and in which, wherever and howsoever it occurs, it takes the form not of short time or of any of those devices for spreading wages and equalising or averaging risks, but of a total, absolute, periodical discharge of a certain proportion of the workers. The group of trades which we contemplate to be the subject of our scheme are these: house-building, and works of construction, engineering, machine-and tool-making, ship-building and boat-building, making of vehicles, and mill-sawing.

That is a very considerable group of industries. They comprise, probably at the present time, 2 millions of adult males. Two and a quarter millions of adult males are, roughly speaking, one-third of the population of these three kingdoms engaged in purely industrial work; that is to say, excluding commercial, professional, agricultural, and domestic occupations. Of the remaining two-thirds of the industrial population, nearly one-half are employed in the textile trades, in mining, on the railways, in the merchant marine, and in other trades, which either do not present the same features of unemployment which we see in these precarious trades, or which, by the adoption of short time or other arrangements, avoid the total discharge of a proportion of workmen from time to time. So that this group of trades to which we propose to apply the system of unemployment insurance, roughly speaking, covers very nearly half of the whole field of unemployment; and that half is, on the whole, perhaps the worse half.

The financial and actuarial basis of the scheme has been very carefully studied by the light of all available information. The report of the actuarial authorities whom I have consulted leaves me in no doubt that, even after all allowance has been made for the fact that unemployment may be more rife in the less organised and less highly skilled trades than in the trade unions who pay unemployment benefits--which is by no means certain--there is no doubt whatever that a financially sound scheme can be evolved which, in return for moderate contributions, will yield adequate benefits. I do not at this stage propose to offer any figures of contributions or benefits to the House. I confine myself to stating that we propose to aim at a scale of benefits which would be somewhat lower both in amount and in duration of payments, than that which the best-organised trade unions provide for their own members, but which, at the same time, should afford a substantial weekly payment extending over by far the greater part of the average period of unemployment of all unemployed persons in these trades.

In order to enable such a scale of benefits to be paid, we should have to raise a total sum of something between 5d. and 6d. per week per head, and this sum will be met by contributions, not necessarily equal, from the State, the workman, and the employer. For such sacrifices, which are certainly not extortionate, and which, fairly adjusted, will not hamper industry nor burden labour, nor cause an undue strain on public finance, we believe it possible to relieve a vast portion of our industrial population from a haunting and constant peril which gnaws the very heart of their prosperity and contentment.

The House will see the connection of this to the Labour Exchanges. The machinery of the insurance scheme has been closely studied, and, as at present advised, we should propose to follow the example of Germany in respect of Insurance Cards or Books, to which stamps will be affixed week by week. When a worker in an insured trade loses his employment, all he will have to do is to take his card to the Labour Exchange, which, working in conjunction with the Insurance Office, will find him a job or pay him his benefit.

The relation of the whole scheme of insurance to the present voluntary efforts of trade unions requires, and will receive, the most anxious consideration, and I am in hopes that we shall be able to make proposals which would absolutely safeguard trade unions from the unfair compet.i.tion of a national insurance fund, and will indeed act as a powerful encouragement to voluntary organisations which are providing unemployed benefit.

I have thought it right to submit these not inconsiderable proposals in general outline to the House of Commons at this early stage, in order that the proposals for Labour Exchanges which we are now putting forward may be properly understood, and may not be underrated or misjudged. We cannot bring the system of unemployment insurance before Parliament in a legislative form this year for five reasons: We have not now got the time; we have not yet got the money; the finance of such a system has to be adjusted and co-ordinated with the finance of the other insurance schemes upon which the Chancellor of the Exchequer is engaged; the establishment of a system of Labour Exchanges is the necessary forerunner and foundation of a system of insurance; and, lastly, no such novel departure as unemployment insurance could possibly be taken without much further consultation and negotiation with the trade unions and employers specially concerned than the conditions of secrecy under which we have been working have yet allowed. This business of conference and consultation of the fullest character will occupy the winter, when the Board of Trade will confer with all parties affected, so that the greatest measure of agreement may be secured for our proposals when they are next year presented in their final form.

It is only necessary for me to add that the pressure and prospect of these heavy duties have required me to make a re-arrangement of the Labour Department of the Board of Trade. I propose to divide it into three sections. The first will be concerned with Wages questions and Trade disputes, with Arbitration, Conciliation, and with the working of the Trade Boards Bill, should it become law; the second, with Statistics, the Census of Production, Special Inquiries, and _The Labour Gazette_; and the third, with Labour Exchanges and Unemployment Insurance.

One of the functions of the last section will be to act as a kind of intelligence bureau, watching the continual changes of the labour market here and abroad, and suggesting any measure which may be practicable, such as co-ordination and distribution of Government contracts and munic.i.p.al work, so as to act as a counterpoise to the movement of the ordinary labour market, and it will also, we trust, be able to conduct examinations of schemes of public utility, so that such schemes can, if decided upon by the Government and the Treasury, be set on foot at any time with knowledge and forethought, instead of the haphazard, hand-to-mouth manner with which we try to deal with these emergencies at the present time.

Such are the proposals which we submit in regard to the organisation section of this problem. I have carefully confined myself to that section. I have not trespa.s.sed at all upon the other no less important or scarcely less important branches, and I am quite certain this Parliament will gladly devote whatever strength it possesses to attempting to grapple with these hideous problems of social chaos, which are marring the contentment and honour of our country, and which, neglected, may fatally affect its life and its strength.

FOOTNOTES:

[15] Mr. Ramsay MacDonald.

III

THE BUDGET

THE BUDGET RESOLUTIONS (May 4, 1909) 277

THE BUDGET AND NATIONAL INSURANCE (May 23, 1909) 297

THE LAND AND INCOME TAXES (July 17, 1909) 318

THE BUDGET AND THE LORDS (July 26, 1909) 344

THE SPIRIT OF THE BUDGET (Sept. 5, 1909) 357

THE BUDGET AND PROPERTY (Oct. 7, 1909) 384

THE CONSt.i.tUTIONAL MENACE (Oct. 9, 1909) 405

THE BUDGET RESOLUTIONS

HOUSE OF COMMONS, _May 4, 1903_

The Leader of the Opposition this afternoon told us that we were at the beginning of what would be a very complex and a very protracted discussion. If that discussion continues as it has begun, the Government will have no reason to complain of it. We have made extensive and even daring proposals. Those proposals have been accepted and, on the whole, even acclaimed by the public at large, and they have not been substantially challenged in this House. The Leader of the Opposition, it is true, devoted his reasoned and temperate speech to making a careful inquiry into the foundations and the character of certain of the taxes by which my right hon. friend proposes to raise the revenue for the year; and I gathered he accepted, with such reservations as are proper to all engaged in a large discussion, and as are particularly appropriate to a Party leader, the general principle of differentiation of taxation in regard to the amount of property, but that he demurred to and condemned differentiation in regard to the character of property. The right hon.

gentleman singled out for special censure and animadversion the two sets of taxes in relation to land and to the licensed trade. He used an expression about some of the forms of taxation proposed by the Chancellor of the Exchequer which was a striking one. He said that they diverged from the principles which have hitherto dominated civilised society.

Even at the risk of that accusation we on this side of the House have always taken and will always a.s.sert an entirely different position in regard to the taxation of land and of liquor licences from that of the taxation of other cla.s.ses of property. The immemorial custom of nearly every modern State, the mature conclusions of many of the greatest thinkers, have placed the tenure, transfer, and obligations of land in a wholly different category from other cla.s.ses of property. The mere obvious physical distinction between land, which is a vital necessity of every human being and which at the same time is strictly limited in extent, and other property is in itself sufficient to justify a clear differentiation in its treatment, and in the view taken by the State of the conditions which should govern the tenure of land from that which should regulate traffic in other forms of property. When the right hon. gentleman seeks by comparisons to show that the same reasoning which has been applied to land ought also in logic and by every argument of symmetry to be applied to the unearned increment derived from other processes which are at work in our modern civilisation, he only shows by each example he takes how different are the conditions which attach to the possession of land and speculation in the value of land from those which attach to other forms of business speculation.

"If," he inquires, "you tax the unearned increment on land, why don't you tax the unearned increment from a large block of stocks? I buy a piece of land; the value rises; I buy stocks; their value rises." But the operations are entirely dissimilar. In the first speculation the unearned increment derived from land arises from a wholly sterile process, from the mere withholding of a commodity which is needed by the community. In the second case, the investor in a block of shares does not withhold from the community what the community needs. The one operation is in restraint of trade and in conflict with the general interest, and the other is part of a natural and healthy process, by which the economic plant of the world is nourished and from year to year successfully and notably increased.

Then the right hon. gentleman instanced the case of a new railway and a country district enriched by that railway. The railway, he explained, is built to open up a new district; and the farmers and landowners in that district are endowed with unearned increment in consequence of the building of the railway. But if after a while their business apt.i.tude and industry creates a large carrying trade, then the railway, he contends, gets its unearned increment in its turn. But the right hon. gentleman cannot call the increment unearned which the railway acquires through the regular service of carrying goods, rendering a service on each occasion in proportion to the tonnage of goods it carries, making a profit by an active extension of the scale of its useful business--he cannot surely compare that process with the process of getting rich merely by sitting still. It is clear that the a.n.a.logy is not true.

We are further told that the Budget proposals proceed on the a.s.sumption that there is a corner in land, and that communities are denied the opportunity of getting the land required, whereas, it is a.s.serted, there is in fact nothing approaching a corner in land. I do not think the Leader of the Opposition could have chosen a more unfortunate example than Glasgow. He said that the demand of that great community for land was for not more than forty acres a year. Is that the only demand of the people of Glasgow for land? Does that really represent the complete economic and natural demand for the amount of land a population of that size requires to live on? I will admit that at present prices it may be all that they can afford to purchase in the course of a year. But there are one hundred and twenty thousand persons in Glasgow who are living in one-room tenements; and we are told that the utmost land those people can absorb economically and naturally is forty acres a year. What is the explanation? Because the population is congested in the city the price of land is high upon the suburbs, and because the price of land is high upon the suburbs the population must remain congested within the city. That is the position which we are complacently a.s.sured is in accordance with the principles which have hitherto dominated civilised society.

But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement. Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener--the market-gardener liable to be disturbed on the outskirts of great cities, if the population of those cities expands, if the area which they require for their health and daily life should become larger than it is at present.

I should like to point out to the Committee that the right hon.

gentleman, in using this argument about the market-gardener, recognises very clearly--and I think beyond the possibility of a withdrawal--the possibility of these cities expanding and taking up a larger area of ground in consequence of the kind of taxation which my right hon. friend in his land taxes seeks to impose. But let that pa.s.s. What is the position disclosed by the argument? On the one hand we have one hundred and twenty thousand persons in Glasgow occupying one-room tenements; on the other, the land of Scotland. Between the two stands the market-gardener, and we are solemnly invited, for the sake of the market-gardener, to keep that great population congested within limits that are unnatural and restricted to an annual supply of land which can bear no relation whatever to their physical, social, and economic needs--and all for the sake of the market-gardener, who can perfectly well move farther out as the city spreads, and who would not really be in the least injured.

We take the view that land cannot be regarded as an ordinary commodity, nor are we prepared to place publicans' licences in the same position as ordinary property. A licence is a gift from the State, and the licensed trade is subject to special restrictions and special taxation; this has been recognised by all parties and by all Governments. The position in regard to licences, as we know perfectly well, has been sensibly and, indeed, entirely altered in the course of the last few years. We have seen the a.s.sertion on the part of the licensed trade of their right to convert their annual tenancy of a licence from what it has been understood to be, to a freehold, and in that position they must face the logical consequences of the arguments they have used and of their action. If there are any hardships to them in the taxation proposed, let the hardships be exposed to Parliament and they will be considered in no spirit of prejudice or malice. Do not, however, let us have attempts to represent that the tax which involves an increase in the cost of production extinguishes the profits of the industry. It does not necessarily affect the profits of the industry; it is not a deduction from resultant profits; it is an incident in the turnover. If there are hard cases and special instances, we are prepared to meet them with the closest attention and with a desire to avoid severity or anything like the appearance of harsh treatment of individuals. But we decline to regard licences or land on the same footing as ordinary property. Licences are not to be regarded as ordinary private property, but as public property which ought never to have been alienated from the State.

No one will deny that we are making very considerable proposals to Parliament for the finance of the year; but the Conservative Party have gravely compromised their power of resistance. Those who desire to see armaments restricted to the minimum consistent with national security, those who labour to combat the scares of war, and to show how many alarms have no foundation,--those are not ill-situated, if they choose to make criticisms on the scale and scope of the finance required for the year's expenditure. But an Opposition that day after day exposes the First Lord of the Admiralty and the Prime Minister to a rain of questions and cross-questions, the only object of which, or an important object of which, is to promote a feeling of insecurity, involving demands for new expenditure of an almost indefinite character, those who, like the right hon. Member for Dover,[16] hurry to and fro in the land saying--or was it singing?--"We want eight, and we won't wait"--they, at least, are not in the best position to tell the taxpayer to call on some one else. Surely a reputation for patriotism would be cheaply gained by clamouring for ships that are not needed, to be paid for with money that is to come from other people.

There is another set of arguments to which I should like to refer. We have been long told that this Budget would reveal the bankruptcy of free-trade finance, and the Leader of the Opposition, seeking from time to time for a sound economic foothold in the fiscal quicksands in which he is being engulfed, has endeavoured to rest the sole of his foot on tariff for revenue. The adoption of a policy of tariff reform, we have been told, had become absolutely necessary if the revenue of the country was to be obtained and if a natural expansion were to be imparted to it. But now, if we may judge from the newspapers, one of the complaints made against the free-trade system and the free-trade Budget of my right hon. friend is not that the revenue will expand too little, but that there is the possibility that it will expand too much. It is not that we have reached the limits of practicable free-trade taxation, but that the taxation we now ask Parliament to a.s.sent to, will yield in the second year a much more abundant return than in the first year, and that in subsequent years the yield will increase still further. In the words of _The Times_ newspaper: "The Chancellor of the Exchequer has laid broad and deep the basis of further revenue for future years."