able pamphlet by "an Irishman," entitled "The Financial Relations of Ireland with the Imperial Exchequer," and I mention below a few of the criticisms made by the writer. His and other investigations seem to prove that Irish revenue is considerably underestimated, perhaps by half a million.* My second reason is that errors of adjustment in either direction cannot affect in any substantial way the kind of financial scheme we are to adopt in the Home Rule Bill.

Let us fix our attention, then, on the second of the two columns in the table on p. 276, showing the aggregate "true"

* Income Tax, Schedules C and D (dividends from Government Stocks, public companies, foreign dividends, etc.). The Treasury estimate (as stated in a side-note to the Return) is based on statistics of Estate Duty for the five years ending 1908. But what light can Estate Duty throw on (for example) the dividends collected at the source from British or foreign securities held by Irish banks? Schedule C deals with "Government Stocks, etc.," Schedule D with "Public Companies, Foreign Dividends, etc.," but in the adjustment for "true" revenue no distinction is made between them. Now the Banking Statistics (Ireland) of 1910 show that dividends were payable at the Bank of Ireland on £38,732,000 of Government securities, and that, in addition, a debt bearing interest was due to the Bank from the Government of 2 millions. Income Tax on these items alone would be £65,000, less rebates; but the whole of Schedule C, which includes Foreign and Colonial Government Stocks, is given in 1909-10 as only £30,000.

No attempt is made to credit Ireland with a share of the profits made by English and Scottish companies through business done in Ireland.

The only reliable items in Income Tax are those of A and B (Land, Houses, and Occupation of Land), where in 1908-09 Ireland contributed about 6 per cent. of the total; under other heads, according to the Treasury, only 3.5 per cent. The writer estimates the true contribution as several hundred thousand pounds more.

Post Office.-The Treasury give no clue as to how they calculate the profit and loss on Postal Services. Figures of letters, telegrams, parcels, etc., delivered in Ireland are known from the Postmaster-General's report, but the report does not distinguish Irish from English postal orders, of which 121 millions were issued in the United Kingdom in 1909-10. There is good reason to believe that a part of the postal profit now wholly credited to England should in reality be credited to Ireland.

Stamps.-Far too little allowance is made by the Treasury for stamps on transfers executed through English and Scottish exchanges for shares bought or sold by Irishmen, and for bonds, deeds, insurances, issues of capital, etc.

Tea and Sugar.-The Treasury base their calculation" on quantities interchanged between Great Britain and Ireland in 1903-04," and I learn from the Inland Revenue Department that by this means the consumption per head of the population was arrived at, and that the present official figures are based on the assumption that the relation of consumption per head in Ireland to consumption per head in the United Kingdom as a whole has not altered since 1903-04. The unreliability of this assumption is manifest. It is probable that the heavy additional duty on spirits has raised the consumption of tea in Ireland more than in Great Britain, and the figures of Imports compiled by the Department of Agriculture seem to confirm this view.

revenue of Ireland at the present day. Disregard the non-tax revenue from the various postal services (which represents payment for services rendered, and is swallowed up by an excess on the expenditure side of £249,000), and examine the heads of tax revenue shown in the upper half of the column. It will be seen that 70-75 per cent. of Irish true revenue is derived from Customs and Excise duties, which, with the exception perhaps of licence duties, may be classed as indirect taxation. The deduction for "true" revenue, it will be observed, has considerably modified the proportion, which for "collected revenue works out at 77.61 per cent., or nearly four-fifths.

As the reader is aware, this is not a new feature in Irish finance. It formed the basis of the Report of the Financial Relations Commission with regard to the over-taxation of Ireland. Much the greater part of Irish revenue, even since the abolition of protective duties and the substitution of direct taxation, has always been derived from taxes on articles of common consumption, the simple reason being that Ireland is a country where there is little accumulated wealth from which to extract direct taxation. In Great Britain, whose circumstances dictate the finance of the United Kingdom, no less than 54.79 per cent. of the tax revenue is derived from direct taxation, only 45.21 per cent. from Customs and Excise.*

The Irish figures show that to retain in the hands of the Imperial Parliament the control of Irish Customs and Excise will be to retain almost paramount control over Irish revenue; to deny Ireland the main lever she needs for co-ordinating her expenditure and her revenue, and for making her taxation suitable to her economic conditions. It will be to preserve the framework of a fiscal system which the highest financial authorities have pronounced to be unfair to Ireland, and which incontrovertible facts show to be uneconomical both for Ireland and Great Britain.

Meanwhile that system has at length produced a deficit, with which I shall deal in the next chapter. Its amount, probably exaggerated, must necessarily remain uncertain under the present fiscal Union. One thing alone is certain, that it will grow as long as that Union lasts.

* On the basis of the mean revenue of 1909-10 and 1910-11.

CHAPTER XIII

FINANCIAL INDEPENDENCE

I.

THE ESSENCE OF HOME RULE.

LET us now sum up this financial question, and give its place in the general problem of Home Rule. In Chapter X. I argued that, on broad grounds of political policy, Ireland, in her own interest, and in the general interest of the United Kingdom, should have "Colonial" Home Rule without representation in the Imperial Parliament. Leaving finance temporarily aside, while observing that any substantial Imperial control over Irish finance would defeat the "colonial " solution of the problem, I endeavoured to show that there were no tenable grounds of a non-financial character for retaining Irish Members at Westminster, nor any dangers to be feared from excluding them. I have now reviewed the history of AngloIrish finance up to the present day, and I hope in so doing to have proved that, so far from presenting an obstacle to Colonial" Home Rule, the financial conditions demand such a solution. Finance and policy are inseparably one. All the considerations which render Home Rule desirable lead irresistibly to the financial independence of Ireland, with complete control assigned to her over all branches of taxation. Without financial independence it is impossible to realize the objects of Home Rule. It would be a miracle were the case otherwise. Ireland would, indeed, be abnormal if, after her history, she could reach prosperity and stability without passing through a phase of financial independence. No parallel, even in the most distant degree, could be found for any such metamorphosis in the whole of the British Empire.

If we study Ireland's interest, we shall promote Imperial interests. The main object of Home Rule is to make Ireland self-reliant. Lord Welby and his colleagues were right in 1896 when they declared that ideal to be impracticable without giving

Ireland entire responsibility both for her revenue and her expenditure. This declaration is as true as ever. The situation has changed only in one respect that financial independence will now mean a financial sacrifice to Ireland, whereas in 1896 it would have meant a financial gain to Ireland—that is, if Lord Welby's recommendation in favour of remitting the Irish contribution to Imperial services had been carried out. At that time Ireland contributed two millions. Now Great Britain contributes over a million to Ireland. Sooner or later that subsidy must stop, and the sooner it stops the better.

But it is of vital importance that Ireland should understand the situation. The present position is dangerous, because the Irish people at large are ignorant of the facts, and their leaders are taking no steps to enlighten them. The reasons are intelligible, but they are not sound reasons. Faced with the facts and the choice, Ireland would not hesitate, but she must know the facts and understand the nature of the choice.

II.
THE DEFICIT.

Let us deal at once with the question of the deficit. It is inconceivable surely that the existence of a deficit should be used as an argument against financial independence, much less as an argument against Home Rule in general. Will anyone be found to say that an island with a fertile soil, several flourishing industries, and a clever population of four and a half millions, is to be regarded, whatever its past history, as incapable of supporting a Government of its own out of its own resources? Let nobody be tempted by the fallacy that, given time, Ireland will regain financial stability under the fiscal Union, and at a later stage, perhaps, be more fitted to bear the burden of fiscal independence. The supposition is chimerical. The present system, besides being radically vicious in a purely scientific sense, undermines the moral power of Ireland to secure her own regeneration.

It is now 1911. The deficit, once a large surplus, came into being only two years ago. It was the direct and inevitable result of a fiscal Union against which Ireland has for generations

unceasingly protested, and it was a result actually foretold in 1896 by Lord Welby and his two colleagues. It could have been averted, as they pointed out, only by a form of Home Rule giving financial independence to Ireland. But the warning was older than the Report of the Financial Relations Commission. Mr. Gladstone told the House of Commons in 1886, when introducing his Home Rule Bill, that no limit could be set to Irish expenditure under the Union; he and Sir William Harcourt repeated the warning in 1893, and if the reader will study the debates on the financial clauses of the Bill of 1893,* he will find pages of bitter diatribe founded on the small net contribution from Ireland to Imperial services for which the revised financial scheme provided. Ireland, said the Opposition, was to make money out of Great Britain, and escape her fair proportion of Imperial charges. Mr. Chamberlain showed that, with allowance for payment from the Imperial purse of part of the cost of Irish police, the net initial contribution was about one-fortieth, and asked: "Is Irish patriotism a plant of such sickly growth that it has to be watered with British gold?" The taunt was as pointless as it was cruel, for although the Union had kept Ireland poor, Irish leaders, in spite of that poverty, had asked for a financial independence which Mr. Gladstone in neither of his Bills felt disposed to give her. Mr. Chamberlain had his way; the Union was maintained, and as a result Ireland's actual contribution of two millions at that date has been replaced by a subsidy from Great Britain. Are we to be told now by Unionists that the Union must be maintained in order to maintain this subsidy? or by Home Rulers that the Irish deficit is an argument for the perpetuation of the financial dependence which caused it, and an insuperable bar to the financial independence which alone can extinguish it?

No; let us look the facts in the face. Here is a deficit officially given as £1,312,000. It is probably less, owing to an underestimate of Irish revenue. But it may grow to be more, even with allowance for an automatic growth of revenue, owing to the increased votes of the present year, and the expenses peculiar to the establishment of the new Irish Legislature and Government. What her really healthy and normal

* Hansard, July 21 and 25, 1898.