QUARTERLY REVIEW.

No. 406.-JANUARY, 1906.

Art. I.-THE COST OF GOVERNMENT.

1. Finance Accounts of the United Kingdom for the year ended March 31, 1905. (Commons Papers, 200 of 1905.) 2. Statistical Abstract for the United Kingdom, 1890 to 1904. Fifty-second number. 1905. (Cd. 2622.)

3. Gross Public Income and Expenditure in the year ended March 31, 1905. (Commons Papers, 135 of 1905.)

4. Annual Reports of the Local Government Boards for England, Scotland, and Ireland. (Cd. 2661, 2514, 2655.) 5. Local Taxation Returns, 1903-4. (No. 285 of 1905.) 6. Royal Commission on Local Taxation. Reports and Minutes of Evidence. 1899. (C. 9141, 9142, etc.)

7. Annual Reports, Estimates, and Accounts of Receipts and Expenditure of the London County Council. (Nos. 814, 877, 879.)

8. Some Aspects of National Finance. By Edgar Speyer. (Read before the Institute of Bankers, July 7, 1905.) 9. The Rake's Progress in Finance. By J. W. Cross. Edinburgh and London: Blackwood, 1905.

10. National Finance: an Imminent Peril. By T. Gibson Bowles, M.P. London: Fisher Unwin, 1904.

And other parliamentary and official papers.

THE famous Vatican sculpture of Laocoon and his sons being strangled by huge serpents, while embodying an ancient Greek myth, is an emblem of the modern British taxpayer. Repeated and reasonable complaints are made that public imposts have reached the breaking-point. What was once contemptuously described as an 'ignorant impatience of taxation' has far more to be urged in its behalf than official persons and statisticians suppose. Vol. 204.-No. 406.

B

The average householder, called upon to meet what appear to be insatiable demands for taxes and rates, asks whether he obtains value for money. He has only dim perceptions of how it is disbursed. He abandons as hopeless all attempts to understand the mysteries of administration or to fathom the bottomless pit of expenditure. He reads in the daily papers of millions being voted by a handful of members in the House of Commons in a few minutes, and with little or no discussion, for purposes said to be imperative. He may take a casual glance at one of the plethoric blue-books issued by the ton every year; but the details are bewildering, and the columns of figures repellent. He sees gigantic edifices arising in Whitehall, and is told that they are intended to accommodate hundreds of clerks in some branch of Dickens's 'circumlocution office.' He is confronted all over the country by palatial structures known as town-halls, municipal buildings, asylums, hospitals, union-houses, infirmaries, pauper village-schools, and public buildings of various kinds. Their origin, methods of work, and the practical results, are beyond his comprehension. But the unpleasant facts remain that he is paying a war incometax of a shilling in the pound in a time of peace; that he is assessed for house-duty at eightpence on his rackrental in addition to a shilling in the pound as propertytax if he happens to own his house; that the indirect imposts on tea and other necessaries are irritating; and that, taking the country as a whole, his local rates have increased fifty per cent. in twenty years, and show no signs of abatement. Less than a generation ago, rates and taxes were about one sixth of the rent, except in villages, where the proportion was less; they now average nearly one half the rental, and they threaten to equal it in amount.

In his trenchant pamphlet, 'National Finance: an Imminent Peril,' Mr T. Gibson Bowles, M.P., shows, perhaps with some rhetorical embellishment, how expenditure has increased in recent years, how indebtedness has been piled up, and how confused is our financial system. The pretended checks upon extravagance are inadequate, as is the theoretical control of the House of Commons. The national balance-sheet is complicated and unscientific; and the effect of this is to conceal the

actual facts. A comparison of the returns and reports shows that the grand total of Exchequer receipts and payments is far larger than is commonly supposed. The total revenue from customs, excise, income-tax, stamps, and other sources during the year that ended March 31, 1905, according to the Finance Accounts, was 143,370,4047., against 96,162,600l. in 1894-5, not including temporary loans contracted and repaid and adjustments of accounts, which bring up the aggregate Treasury receipts for the last year to 225,731,3277. The budget estimate for 1905-6 is 142,454,000l. The principal disbursements during the last financial year were:

The last item represents sums which are being constantly raised as temporary loans to meet emergencies, and repaid as taxes come in, to be borrowed again; and so on perpetually. The annual Return of Public Income and Expenditure,' usually issued in August, and commonly known as Sir Henry Fowler's, gives figures differing from those above, by deducting from both sides the Post-office receipts and expenditure, and certain items connected with the national debt and the Civil Service, with the grants-in-aid of local taxation. These, however, are mere matters of bookkeeping; and the actual results are those we have cited. A grave danger arises from the abandonment of the sound rule established by the Act of 1866, that all receipts and payments should be directly with the Exchequer, instead of large sums being intercepted and appropriated, to an extent of 22,000,000l. last year, or nearly double the amount of ten years ago. The aggregate expenditure is as follows:

Within the last ten years the growth has been 45.5 per cent., the various spending departments showing an increase as follows, comparing 1905 with 1895: the army 61.5 per cent., the navy 60-3, education 60.2, other branches of the Civil Service 26.8, collection of customs 7.6, collection of inland revenue 31.4, Post-office 52.7, and telegraphs 73.9. Owing to the amounts involved, the largest and most rapid expansion is in the naval and military services, the growth of which may be thus exhibited, as a matter of statistics, and without trenching upon questions of policy :

The increase during the last decade is 31,045,9617., and during the twenty years, 35,411,2647., or 90 and 115 per cent. respectively. The approximate sum to be expended on military works during the current year is 2,915,000l.

Certain questions here occur, which ought to be seriously pondered. Does the country receive a commensurate return for the money? Is this enormous annual and increasing premium an adequate protection for the Empire? Are we prepared for eventualities and complications abroad? Speaking in the House of Lords last July, and at various public functions, Earl Roberts declared that our military forces are not in a position to do the work expected of them. He said that the Boer war had shown the grave imperfections of the military machine, but that nothing had been done to rectify them since the conclusion of peace. Except that the officers and men have had experience of actual warfare, we are as unprepared as we notoriously were in 1899. With the remedies for this condition of things, as suggested by Earl Roberts, the present article is not concerned. The immediate point is that, notwithstanding the enormous and constantly increasing outlay on our military forces, they are proclaimed, on the highest authority, to be inadequate and inefficient,