Budget-time

London was wrapped in the darkness of night. A casual pedestrian, had he chanced to pass the House of Commons, would probably have stopped to admire its solemn dignity. His eye would have strayed upward, climbed the tower on which sits "Big Ben" and would have seen the light which shines above go out--the sign that a session had just ended. Not many minutes earlier, a weary man had risen from the Treasury Bench to make his way--some few hundred yards to his downy bed. . . . Winston Leonard Spencer Churchill, Chancellor of the Exchequer, had been battling for his maiden budget.

A few days previously, the House having gone into Committee of Ways and Means, the Chancellor had mounted the Treasury Bench to expound to "his honorable friends" and to "the honorable gentlemen of the Opposition," including eight ex-Chancellors* and to the country and the world his deep laid plans for raising this fiscal year's revenues (Apr. 1, 1925, to Mar. 31, 1926).

Unlike the U. S. Budget which is primarily an estimate of expenditure, the British budget is just the reverse--a revenue bill, or more properly a series of revenue bills.

The expenses are voted or sanctioned by Acts of Parliament before the Chancellor presents his budget to the House./- The Chancellor, in the course of his budget speech, reviews the financial situation of the Nation, proposes (by separate bills) new, or amends old, legislation to raise revenue, makes important announcements on Government fiscal policy, presents a provisional balance sheet for the fiscal year. The House receives, discusses, amends, rejects or passes the budget while sitting in Committee of Ways and Means (of raising revenue).

Between the passage of the estimates and the presentation of the Budget, the Chancellor of the Exchequer is very busy. He may call on certain departments to reduce their estimates, knowing that when he goes to Parliament with the budget, a reckoning must be held. Then he must set forth the means he has devised of squeezing the necessary revenue out of the country. Then, if the measures he proposes are too drastic, there will be an outcry, a battle of words and of politics. Fingers will be levelled at him with the demand: ''Why have you not reduced the estimates?" Or, if the burden of taxes is not too heavy, but is poorly distributed so that it galls the Nation's back, the cry is: "Why so clumsy? Why such favoritism?" For the Chancellor of the Exchequer is supposed to be a sort of magician, conjuring painless taxation to meet the Nation's expenses. For him budget-time is the great trial of the year. So Mr. Churchill arrived at the annual Armageddon.

Thus did he marshal his battalions:

Gold Standard. The Chancellor announced most significantly that Great Britain was henceforth on a gold basis. He explained with meticulous care this did not mean the adoption of a gold coinage, but for the present a return "to the gold standard in international matters . with free export of gold." Until the end of the present year (Dec. 31) when the Gold and Silver Export Control Act of 1920 will be allowed to lapse, the Bank of England is alone authorized to export gold and bullion. The conversion of paper currency into gold will be undertaken only at the option of the Bank of England and the right to tender bullion to the mint for coinage is likewise restricted to the Bank (see BUSINESS).

As a warning to speculators the Chancellor announced that a gold reserve of -L-153,000,000 was already established (this is approximately 35% of the note issue as against 40% kept in the U. S. against Federal Reserve notes), and a credit of $300,000,000 to be used if necessary had been arranged for in the U. S. Said Mr. Churchill:

"When we made up our minds to take this course, now many months ago, the Treasury began discreetly to accumulate dollars, and we have already accumulated the whole of the $166,000,000 which are required not only for June, but also for the December payments of our American debt" [laughter and cheers].

The reason Mr. Churchill gave for this "grave" decision was that the U. S., Germany, Sweden, Austria, Hungary were already on or related to a gold standard and that Britain could not long afford to remain on a managed currency. He told the House that Holland and the Dutch East Indies were taking simultaneous action in returning to the gold standard. (They did.) So far as the self-governing Dominions were concerned, Canada was already on a gold basis, South Africa had decided to return to one on July 1, Australia and New Zealand were taking simultaneous action with the London Government. (They did.) "Thus," he said, "over the whole area of the British Empire and over a very wide and important area of the world there has been established at once one uniform standard of value."

Revenue.

P: Reimposition of the McKenna duties (War tax imposed on imports from foreign countries of cinema films, clocks, watches, automobiles, motorcycles, musical instruments). This bill, to be operative as from July 1, is a small measure of Imperial preference much welcomed by the Dominions. Last year (TIME, May 12), Chancellor of the Exchequer Philip Snowden secured the repeal of the duties, and was much criticized for so doing by the conservative Opposition.

P: Reduction of 6d. (about 12-c-) in the tax per -L- on all earned incomes of less than -L-1,000 per annum. This makes the income tax on this class of income 4 s. instead of 4/6d.

P: Reduction of supertax levied on all incomes exceeding -L-2,000 per annum. (No details.)

P: Increase of death duties corresponding to decrease in the supertax. (No details.) Death or estate duties at present range from 1% to 40% on estates valued from -L-100 to -L-2,000,000.

P: Tariff of 4 s. per pound on raw silk; ad valorem taxation of "made up" silk. Tax of -L-4 per hundredweight (112 Ib.) on hops with rebate of 1/3 to Dominions.

P: Increase of Imperial preference on tobacco from 1/6 to 1/4 of the full duty. The Chancellor stated that the Government's policy is to give effect to Imperial preference when it does not involve taxation on food.

P: New National Insurance to be paid for by contributions from employers and employes. It provides that all persons not in pensioned service and not earning more than -L-250 per annum, including all persons at present insured under the National Health Insurance Act, are to receive a weekly pension after reaching the age of 65 without reference to their private means. The same bill provides that in the event of the death at any time of an insured, married man, his widow and children are to receive weekly pensions: widow 10 s. per week for life or until remarriage; eldest child 5 s. per week until 14 years of age; all other children 3 s. per week until 14 years of age. This proposal, warmly welcomed by the Laborites, was held to be grand larceny of the Labor Party's thunder.

Total. Revenue, excluding expected Reparations receipts, was estimated at -L-826,000,000; expenditure at -L-799,400,000; surplus: -L-26,600,000.

Comment. Philip Snowden (Labor) : ". . . the worst rich man's budget ever presented"; Mr. Churchill has "compassion" for "the poor, overburdened, starving, unemployed supertax payer. . . . So much for this example of protection, pure and simple, by this greatest apostle and protagonist of free trade, a Tory protectionist Chancellor of Exchequer."

J. N. Keynes, Economist: "It is too late to turn back and we must now commit ourselves, with the best face we can, to . . . a gamble which may have a more than even chance of partial success. Nevertheless, most people now . . . sincerely wish that they had not talked so much about the blessings of hurrying back to par. It is in this chastened mood that the British public will submit their necks once more to the golden yoke-as a prelude, perhaps, to throwing it off forever at not a distant date."

Ramsay MacDonald (Labor) was reticent. He derided the budget for taking money out of one rich man's pocket and putting it into the pocket of another. As regards the new insurance scheme, he would consider it when it was produced.

Winston Churchill (Conservative, Chancellor): "Let the Socialists go after Jan. 4 next to the 200,000 widows who, with 350,000 children, will be enjoying their pensions and let them say to these people: 'You are victims of a rich man's budget.' Let them go into 6,000,000 homes and tell the wives who will have behind them a guarantee they will not be left penniless if anything happens to the breadwinner: 'Here is another case of the Conservative Party helping their friends.' Let them go in 1928 to the 500,000 men and women of 65 who will march or hobble up to receive their pensions and say: 'Comrades, we meant to give you these pensions ourselves; we would have given them to you on a noncontributory basis, but we had to go and help our Russian friends first.' "

Sterling. The pound sterling, perambulating Wall Street said: "$4.80 3/4; $4.82 1/4; $4.82 3/8; $4.83 1/4; $4.84-1/10; $4.84 1/4; $4.84 3/8; $4.84 5/8." (Par is $4.86 5/8.)

* Premier Stanley Baldwin (Bonar Law and Baldwin 'Cabinets), Philip Snowden (MacDonald), Neville Chamberlain (Baldwin), Sir Robert Home (George),. Austen Chamberlain (Balfour and George), ex-Premier David Lloyd George (Asquith). In the galleries were Reginald McKenna (Asquith), Lord Oxford and Asquith (Campbell-Bannerman).

/- After passing the estimates (which are really authorizations), the House. from time to time passes appropriation bills as financial needs may require, and even afterward exercises control over the Government's account at the Bank of England through which all disbursements are made. This is done through the Comptroller and Auditor General (Sir Malcolm G. Ramsay), a permanent Civil Service official who cannot be removed except by the King on petition of both Houses of Parliament. Occupying this post (similar to that of the Comptroller General of the U. S.), he can veto any disbursement which he does not believe accords with the will of Parliament.