ABSTRACT
IN one of his periodical lectures to the House of Commons on economy Sir William Harcourt declared that it was a lost art. “ There is,” he complained, “ a universal demand for more and more expenditure every year, for every conceivable object, all of them excellent objects, but all of them pursued absolutely without regard to their cost.” He spoke of Gladstone and himself on another occasion as the last survivors of a vanished creed. Growing expenditure, indeed, was the driving-force of the period. Both Harcourt and Sir Michael Hicks-Beach, who succeeded him, had to accommodate themselves to its demands, though they still professed their allegiance to traditional doctrine. In retrospect, the discussions of the years 1893 to 1903 have a significance which was not so clear to the disputants. On the side of expenditure, while the heaviest charges were due to the building up of a larger Navy, there was a considerable increase under other heads, for the State was forced by the Collectivist tendencies of the time to extend its functions beyond the limits prescribed by the principles of laissez-faire. The art of economy, of which Harcourt deplored the loss, was merely part of the Individualist teaching of the middle years of the century. It then seemed the best policy to leave as much money as possible in the pockets of the tax-payer, because it was believed that social well-being was more likely to be promoted if it was allowed to fructify there. The theory of expenditure must obviously rest on that of State function. If it is agreed that public provision for certain contingencies 170has greater social merits than the free operation of private interests can claim, more money will tend to be taken from the pockets of individuals. This raises important questions on the side of revenue. Taxation had been regarded as a method of supplying the State with the means of discharging well-recognised duties of defence and administration. It had been raised by direct and indirect taxes in a certain proportion of one to the other, which was observed when increases were made or remissions conceded. The supposition was that these taxes fell equally on the different classes of the community. If, however, a social purpose was to be accepted by the Chancellor of the Exchequer, taxation assumed a different aspect. It would not only need to be heavier, but it would have to be so designed that those who had the greater ability to pay would be charged at more than a proportionate rate. This idea is implicit in the discussions of incidence of taxation and of the principle of graduation which aroused considerable interest in the early ‘nineties. Taxation might not only supply the wants of the State, but actually become an instrument to redress social inequalities.
