the free trade hall, manchester, may 23, 1909

(from the manchester guardian, by permission.)

considering that you have all been ruined by the budget, i think it very kind of you to receive me so well. when i remember all the injuries you have suffered—how south africa has been lost; how the gold mines have been thrown away; how all the splendid army which mr. brodrick got together has been reduced to a sham; and how, of course, we have got no navy of any kind whatever, not even a fishing smack, for the thirty-five millions a year we give the admiralty; and when i remember that in spite of all these evils the taxes are so oppressive and so cruel that any self-respecting conservative will tell you he cannot afford either to live or die, i think it remarkable that you should be willing to give me such a hearty welcome back to manchester. yes, sir, when i think of the colonies we have lost, of the empire [298]we have alienated, of the food we have left untaxed, and the foreigners we have left unmolested, and the ladies we have left outside, i confess i am astonished to find you so glad to see me here again.

it is commonly said that our people are becoming hysterical, and that britain is losing her old deep-seated sagacity for judging men and events. that is not my view. i have been taught that the dock always grows near the nettle. i am inclined to think that in a free community every evil carries with it its own corrective, and so i believe that sensationalism of all kinds is playing itself out, and, overdoing, is itself undone. and the more our scaremongers cry havoc, and panic, and airships, and sea-serpents, and all the other things they see floating around, the greater is the composure and the greater is the contempt with which the mass of the nation receives these revelations, and the more ready they are to devote their mind to the large and serious problems of national and social organisation which press for solution and for action at the present time, and upon which his majesty's government have notable proposals to make.

i come to you this afternoon to speak [299]about the political situation and the budget, or rather i come to speak to you about the budget, because the budget is the political situation; and i ask you, as if it were at an election, whether you will support the policy of the budget or not. let us look into it.

what is the position in which we find ourselves? after reducing the taxes on coal, on tea, on sugar, and on the smaller class of incomes by nearly ￡7,000,000 a year, and after paying back ￡40,000,000 of debt in three years, we find that new circumstances and new needs make it necessary that we should obtain fresh revenue for the service of the state.

what are the reasons for this demand? there are three reasons—and only three. old-age pensions, the navy, and the decrease in the revenue derived from alcoholic liquor. from those three causes we require sixteen millions more money this year than we did last year. now who has a right—this is my first question—to reproach us for that? certainly the conservative party have no right.

take first the case of old-age pensions. i do not think their record is a very good one on that. they promised old-age pensions to win the general election of 1895. [300]they were in power for ten years and they made no effort to redeem their pledge. again, mr. chamberlain, in 1903, promised old-age pensions as a part of his tariff reform proposal, but the conservative party refused to agree to the inclusion of old-age pensions in that programme and forced that great man in the height of his power and his career to throw out old-age pensions from the tariff reform programme and to write a letter to the newspapers to say that he had done so.

we, the liberal party, did not promise old-age pensions at the election of 1906. the subject was scarcely mentioned by any of the candidates who are now your members. certainly it did not occupy at all a prominent position. we did not promise old-age pensions; we gave old-age pensions. when the old-age pensions bill was before the house of commons, what was the attitude of the conservative party? did they do anything to try to reduce or control the expenditure of that great departure? on the contrary. as my right honourable friend the chancellor of the exchequer has told the house of commons, amendments to the old-age pensions bill were moved or received the official support of the whips [301]of the conservative party which would have raised the cost of that scheme to fourteen millions a year. and the liberal government, which was making this great effort, which was doing the work, which was keeping the tory promise, was reproached and was derided for not accepting the proposals which these irresponsible philanthropists, these social reformers on the cheap, these limited-liability politicians, were so ready to move. and lord halsbury, the late lord chancellor, one of the leaders of the conservative party, a man with a powerful influence in their councils, said in a public speech that the old-age pensions as proposed by the government were so paltry as to be almost a mockery.

i do not think any fair-minded or impartial man, or any average british jury, surveying the record of the conservative party upon old-age pensions, could come to any other conclusion than that they had used this question for popularity alone; that they never meant to give old-age pensions; that they only meant to get votes by promising to give them; that they would have stopped them being given if they could; that while the bill was on its way they tried to embarrass the government, [302]and to push things to unpractical extremes; and now, even when the pensions have been given, they would not pay for them if they could help it. let me say that i think the conclusion, which i believe any jury would come to, would perhaps be rather harsh upon the conservative party. i believe they meant better than their record; i am willing to admit that. but their record is before us, and it is a bad one, and upon the facts i have no hesitation in saying that it is not open to them to protest—they have not even an inch of foothold to protest—against any expenditure which we may now have to incur in order to defray the consequences of the policy of old-age pensions. so much for the first cause of the increased expenditure.

i pass to the navy. the naval estimates have risen by three millions this year. i regret it; but i am prepared to justify it. there will be a further increase next year. i regret it; but within proper limits necessary to secure national safety i shall be prepared to justify it; but i hope you will not expect me to advocate a braggart and sensational policy of expenditure upon armaments. i have always been against that, as my father was before me.

[303]in my judgment, a liberal is a man who ought to stand as a restraining force against an extravagant policy. he is a man who ought to keep cool in the presence of jingo clamour. he is a man who believes that confidence between nations begets confidence, and that the spirit of peace and goodwill makes the safety it seeks. and, above all, i think a liberal is a man who should keep a sour look for scaremongers of every kind and of every size, however distinguished, however ridiculous—and sometimes the most distinguished are the most ridiculous—a cold, chilling, sour look for all of them, whether their panic comes from the sea or from the air or from the earth or from the waters under the earth.

his majesty's government are resolved that the defensive measures of this country shall be prescribed by the policy of ministers responsible to parliament, and by the calculations, subject to that policy, of the experts on whom those ministers rely, and not by the folly and the clamour of party politicians or sensational journalists. in that determination we as a government are united, and we shall remain united. yet it is clear that the increase in the naval [304]estimates of this year must be followed by another increase in those of next year. that is deplorable. it will impose upon our finances a strain which some other nations would not find it very easy to bear, but which, if the necessity be proved, this country will not be unwilling, and will certainly not be unable to support.

well, but what have the conservative party got to say about it? have they any right to complain of the taxes which are necessary for the maintenance of our naval power? do we not see that they are ever exerting themselves to urge still greater expenditure upon the nation? he is a poor sort of fellow, a penny-plain-twopence-coloured kind of patriot who goes about shouting for ships, and then grudges the money necessary to build them. and when mr. balfour tells us that "gigantic sacrifices" are required, and that those gigantic sacrifices "must begin now," and then at the same time objects to the taxes by which the government proposes to raise the money, he puts himself in a very queer position.

i have dealt with two of the causes which have led to our demand for further revenue—old-age pensions and the navy. upon neither of them have the conservative [305]party any ground for attacking us. what is the third? ah, gentlemen, i agree that there is one cause of the prospective deficit for which we are budgeting for which the conservative party is in no way responsible. i mean the decline in the consumption of alcoholic liquors. nothing that they have said and nothing that they have done has, in intention or in fact, contributed to the drying up of that source of revenue. on the contrary, by their legislation, by the views they have taken of the rights of the licensed trade, by their resistance to every measure of temperance reform, by their refusal even to discuss in the house of lords the great licensing bill of last year, by their association with the brewers and with the liquor traffic generally, they have done all they could—i do them the justice to admit it—to maintain the customs and excise from alcoholic liquors at the highest level. if the habits of the people, under the influences of a wider culture, of variety, of comfort, of brighter lives, and of new conceptions, have steadily undergone a beneficent elevation and amelioration, it has been in spite of every obstacle that wealth and rank and vested interest could interpose.

the money has to be found. there is [306]no party in the state who can censure us because of that. our proposals for enlarging the public revenue are just and fair to all classes. they will not, in spite of all these outcries you hear nowadays, sensibly alter the comfort or status, or even the elegance of any class in our great and varied community. no man, rich or poor, will eat a worse dinner for our taxes.

of course, from a narrow, electioneering point of view, there are a great many people—i believe they are wrong—who think we should have done much better if we had put another penny on the income tax instead of increasing the tax upon tobacco. well, i have come here this afternoon to tell you that we think it right that the working classes should be asked to pay a share towards the conduct of a democratic state. and we think that taxes on luxuries, however widely consumed, are a proper channel for such payment to be made. we believe that the working classes are able to pay by that channel, and we believe, further, that they are ready to pay. we do not think that in this old, wise country they would have respected any government which at a time like this had feared to go to them for their share.

[307]i have a good confidence that this budget is going to go through. if there are hardships and anomalies in particular cases or particular quarters, we are ready to consider them. they will emerge in the discussions of the house of commons, and we have every desire to consider them and to mitigate them. but we believe in the situation in which we find ourselves in this country, and in the general situation of the world at the present time—that the taxes on incomes over ￡3,000 a year, upon estates at death, on motor-cars before they cause death, upon tobacco, upon spirits, upon liquor licences, which really belong to the state, and ought never to have been filched away; and, above all, taxes upon the unearned increment in land are necessary, legitimate, and fair; and that without any evil consequences to the refinement or the richness of our national life, still less any injury to the sources of its economic productivity, they will yield revenue sufficient in this year and in the years to come to meet the growing needs of imperial defence and of social reform.

this budget will go through. it will vindicate the power of the house of commons. it will show, what some people were [308]inclined to forget, that in our constitution a government, supported by a house of commons and the elected representatives of the people, has in fact a full control of national affairs, and has the means of giving effect to its intentions, to its policy, and to its pledges in every sphere of public affairs.

that is one thing which the passage of this budget will show. let not that be overlooked. but that is not the only thing; the budget will do more than that. it will reveal the financial strength of britain. at a time when every european country is borrowing merely for the needs of ordinary annual expenditure, when all these disturbing naval programmes, which are injuring the peace of the world and the security and progress of civilisation, are being supported by borrowed money; and when the credit of germany has fallen below that of italy, this country, which has necessarily to make the biggest expenditure for naval defence of any country, will be found, under a free trade system and by our proposals, able not only to pay its way, but to pay off the debts of the past—to pay off the debts of our predecessors—even in the worst of times at the rate of something like ￡7,000,000 a year.

[309]i have spoken to you of the causes which in the past have led up to this budget. i have spoken to you of its present justification. what of the future? if i had to sum up the immediate future of democratic politics in a single word i should say "insurance." that is the future—insurance against dangers from abroad. insurance against dangers scarcely less grave and much more near and constant which threaten us here at home in our own island. i had the honour and opportunity a few days ago of explaining to the house of commons our proposals for unemployment insurance. that is a considerable matter. it stands by itself. it is a much simpler question than invalidity insurance; but it is a great matter by itself. indeed, i thought while i was explaining it to the house of commons that i had not made such an important speech since i had the honour of explaining the details of the transvaal constitution.

well, what is the proposal? the proposal is that you should make a beginning. we have stood still too long. we should begin forthwith, taking some of the greatest trades of the country in which unemployment is most serious, in which fluctuations are most severe, in which there are no short-time [310]arrangements to mitigate the severity to the individual; and that a system of compulsory contributory insurance, with a large subvention from the state, should be introduced into those great industries.

but our proposals go farther than that. the state assistance to unemployment insurance will not be limited to those trades in which it is compulsory. side by side with the compulsory system we shall offer facilities to voluntary insurance schemes in other trades, managed by trade unions or by societies or groups of workmen. moreover, we contemplate that the state insurance office should undertake, if desired, the insurance against unemployment of any individual workman in any trade outside of those for which compulsory powers are required, and should afford to these individuals an equivalent support to that which is given in the trades which are subject to the compulsory system.

of course you will understand that the terms, that can be offered under a voluntary or partial system, are not so good as those which can be obtained in the compulsory system of a great trade. where all stand together, it is much better for each. but still it is certain that individuals who take [311]advantage of the insurance policy which will be introduced, and i trust carried through parliament next year, will be able to secure terms which will be much more favourable than any which are open to them by their unaided contributions at the present time, because their contributions will be reinforced by the contributions of the state. further, if our beginning proves a success the attempt and the system will not stop there. it will be extended, and in proportion as experience and experiment justify its extension, in proportion as the people of this country desire its extension, it must eventually cover, in course of years, the whole of our great industrial community.

well now, it is said that in adopting the policy of contributory insurance the government have admitted that they were wrong in establishing old-age pensions upon the non-contributory basis. now i do not think that is true. there is no inconsistency or contradiction between a non-contributory system of old-age pensions and a contributory system of insurance against unemployment, sickness, invalidity, and widowhood. the circumstances and conditions are entirely different. the prospect of attaining extreme old age, of living beyond [312]threescore years and ten, which is the allotted span of human life, seems so doubtful and remote to the ordinary man, when in the full strength of manhood, that it has been found in practice almost impossible to secure from any very great number of people the regular sacrifices which are necessary to guard against old age.

but unemployment, accident, sickness, and the death of the bread-winner are catastrophes which may reach any household at any moment. those vultures are always hovering around us, and i do not believe there is any sensible, honest man who would not wish to guard himself against them, if it were in his power to make the necessary contribution, and if he were sure—this is a very important point—that he would not by any accident or fraud or muddle be done out of the security he had paid for. and if we choose to adopt one system of state-aid for dealing with one class of need, and quite a different system for dealing with quite a different class of need, it does not lie with any one, least of all does it lie with those who have impartially neglected every problem and every solution, to reproach us with inconsistency.

[313]but i go farther. the old-age pensions act, so far from being in conflict with a scheme of contributory insurance, is really its most helpful and potent ally. the fact that at seventy the state pension is assured to all those who need it, makes a tremendous difference to every form of insurance confined to the years before seventy, whether for old age or for invalidity. i asked an eminent actuary the other day to make me some calculations. they are rough, general calculations, and no doubt they might be more exact. but roughly, i believe it to be no exaggeration to say that the rates to cover a man till seventy are in many cases scarcely half what they would be, if they had to cover him till death. do you see what that means? it is a prodigious fact. it is the sort of fact by the discovery of which people make gigantic fortunes; and i suggest to you that we should make this gigantic fortune for john bull. it means that the whole field of insurance has become much more fruitful than it ever was before, that there is a new class of insurance business possible which never was possible before. it means that the whole field of insurance is far more open to the poorest class of people than it was before, and that [314]with a proper system the benefits of the old-age pensions act would not be confined to the actual pensioners who are drawing their money, but would extend forwards in anticipation to all other classes and to all other people, and that so far as five shillings a week is concerned—that is not much unless you have not got it—the actuarial position of every man and woman in this country has been enormously improved by the old-age pensions act.

it is of that improvement that we mean to take advantage next year. next year, when free trade will have yielded the necessary funds to the revenue, we mean to move forward into this great new field. but let me say one thing which is of the utmost importance. we must remember that the field of insurance is already largely covered by a great mass of benevolent and friendly societies, just as the field of unemployment insurance is already occupied to some extent by trade unions, and the government would not approve of any development or extension of the policy of insurance which did not do full justice to existing institutions, or which did not safeguard those institutions, to whom we owe so inestimable and incommensurable a [315]debt, or caused any sudden disturbance or any curtailment of their general methods of business. on the contrary, we believe that when our proposals are put in their full detail before the country, they will be found to benefit and encourage and not to injure those agencies which have so long been voluntarily and prosperously at work.

the decisive question is this—will the british working classes embrace the opportunities which will shortly be offered to them? they are a new departure; they involve an element of compulsion and of regulation which is unusual in our happy-go-lucky english life. the opportunity may never return. for my own part, i confess to you, my friends in manchester, that i would work for such a policy and would try to carry it through even if it were a little unpopular at first, and would be willing to pay the forfeit of a period of exclusion from power, in order to have carried such a policy through; because i know that there is no other way within the reach of this generation of men and women by which the stream of preventable misery can be cut off.

if i had my way i would write the word "insure" over the door of every cottage, [316]and upon the blotting-book of every public man, because i am convinced that by sacrifices which are inconceivably small, which are all within the power of the very poorest man in regular work, families can be secured against catastrophes which otherwise would smash them up for ever. i think it is our duty to use the strength and the resources of the state to arrest the ghastly waste not merely of human happiness but of national health and strength which follows when a working man's home which has taken him years to get together is broken up and scattered through a long spell of unemployment, or when, through the death, the sickness, or the invalidity of the bread-winner, the frail boat in which the fortunes of the family are embarked founders, and the women and children are left to struggle helplessly on the dark waters of a friendless world. i believe it is well within our power now, before this parliament is over, to establish vast and broad throughout the land a mighty system of national insurance which will nourish in its bosom all worthy existing agencies and will embrace in its scope all sorts and conditions of men.

i think it is not untrue to say that in [317]these years we are passing through a decisive period in the history of our country. the wonderful century which followed the battle of waterloo and the downfall of the napoleonic domination, which secured to this small island so long and so resplendent a reign, has come to an end. we have arrived at a new time. let us realise it. and with that new time strange methods, huge forces, larger combinations—a titanic world—have sprung up around us. the foundations of our power are changing. to stand still would be to fall; to fall would be to perish. we must go forward. we will go forward. we will go forward into a way of life more earnestly viewed, more scientifically organised, more consciously national than any we have known. thus alone shall we be able to sustain and to renew through the generations which are to come, the fame and the power of the british race.