Mr. Wyndham said--
"It leads to results which all must hold to be illogical, and results which everybody in Ireland holds to be unjust because the greater the increase of taxation the less is the proportion that comes from Ireland, the poorer partner in the business, and so the less is the equivalent grant. As the evil increases the remedy diminishes, and you have only to force up taxation sufficiently high to extinguish the remedy altogether."[83]
Mr. Asquith said--
"A more confused and illogical condition of things it is impossible to imagine. The House ought really to take the opportunity of threshing out the principle upon which these equivalent grants ought to be distributed between the three countries."[84]
Lord St. Aldwyn said--
"That he always had a very strong objection to the system of Equivalent Grants, because when they had to make a grant for certain purposes to England, they were obliged to make proportionate grants to Ireland and Scotland quite irrespective of whether they needed them or not."[85]
Neither the "Imperial" contribution basis nor the "Population" basis, which has in some instances been resorted to for grants in aid, is satisfactory, nor is the method desirable of setting aside a certain fund raised by some particular tax to finance a particular service. For instance, the subvention of Education in Ireland out of the "Whisky money" recently broke down owing to the diminution of the Revenue from this source. The more sober Ireland became, the less she got for Education. Chaos was imminent, and finally, after much friction, a special grant had to be made from the Treasury to save the situation.
There are numerous instances in which great complications have been caused in dealing with local authorities owing to these methods of making grants in aid, and the system should be reformed. The true basis is the basis of each Kingdom"s need.... England has her needs, let them be supplied. Scotland has hers, let them be supplied. Ireland has hers, and having regard to her present comparative poverty, let them be supplied "not grudgingly or of necessity," but by the Chancellor of the Exchequer "as a cheerful giver." This is the const.i.tutional principle under the Act of Union, and the soundest financial principle to observe for the United Kingdom.
FOOTNOTES:
[Footnote 76: 56 Geo. III. c. 98.]
[Footnote 77: "Hansard," Feb. 27, 1865, vol. 177, p. 813.]
[Footnote 78: "Financial Relations Report," 1896, c. 8262, vol. iii. p.
194.]
[Footnote 79: 1896, c. 8262, p. 194.]
[Footnote 80: "Hansard," 1888, vol. 327, p. 1287.]
[Footnote 81: "Parl. Deb.," vol. 332, p. 790.]
[Footnote 82: Ibid., vol. 120, p. 976.]
[Footnote 83: "Parl. Deb.," vol. 120, p. 823.]
[Footnote 84: Ibid., vol. 175, p. 1088.]
[Footnote 85: Ibid., May 31, 1903.]
XVI
THE ECONOMICS OF SEPARATISM
BY L. S. AMERY, M.P.
The history of Ireland for the last two centuries and more is a continuous exposition of the disastrous consequences of political and economic separatism within an area where every natural condition, and the whole course of historical development, pointed to political and economic union. Geographically, racially and historically an integral part of a single h.o.m.ogeneous island group, Ireland has never really been allowed to enjoy the full advantages of political and economic union with the adjoining main island. Almost every misfortune which Ireland has suffered is directly traceable to this cause. In spite of this, it is now seriously proposed to subject her once again to the disadvantages of political separation, and that on the very eve of an inevitable change of economic policy, which, while it would restore real vitality and purpose to political union, would also once more intensify all the injury which economic disunion has inflicted upon Ireland in the past.
In the long const.i.tutional struggle of the seventeenth century her position as a separate political unit made Ireland a convenient instrument of Stuart policy against the English Parliament. Cromwell, with true insight, solved the difficulty by legislative union with England. But his work was undone at the Restoration, and for another 122 years Ireland remained outside the Union as a separate and subordinate state. Her economic position was that of a Colony, as Colonies were then administered. But it was that of a "least favoured Colony." This was due, in part, to a real fear of Ireland as a danger to British const.i.tutional liberty and British Protestantism[86] which long survived the occasion which has seemed to justify it. But what was a more serious and permanent factor was the circ.u.mstance that Ireland"s economic development could only be on lines which competed with England, and not like Colonial development on lines complementary to English trade. One after another Irish industries were penalised and crippled by being forbidden all part in the export trade. A flourishing woollen industry, a prosperous shipping, promising cotton, silk, gla.s.s, glove making and sugar refining industries were all ruthlessly repressed,[87]
not from any innate perversity on the part of English statesmen, or from any deliberate desire to ruin Ireland, but as a natural and inevitable consequence of exclusion from the Union under the economic policy of the age. Whatever outlet Irish economic activity took there was always some English trade whose interests were prejudicially affected, and which promptly exercised a perfectly legitimate pressure upon the Government to put a stop to the compet.i.tion. The very poverty of Ireland, as expressed in the lowness of Irish wages, was an ever convenient and perfectly justifiable argument for exclusion. The linen industry alone received a certain amount of toleration, and even encouragement. These regulations were so little animated by direct religious or racial antipathy that it was upon the Protestant Scotch and English settlers that they fell with the greatest severity, driving them into exile by thousands, to become, subsequently, one of the chief factors in the American Revolution. But if the direct economic effect of political separation weighed less heavily upon the Catholic majority, they suffered all the more from the utter paralysis of all industry and enterprise consequent upon the Penal Laws. These laws, monstrous as they seemed even to Burke, were in their turn a natural outcome of a political separation which made the security of Protestantism in Ireland rest upon the domination of a narrow oligarchy in instant terror of being swamped. Under Union they would never have been devised, or could certainly never have endured.
The revolution by which the Irish Parliament, in 1782, a.s.serted its const.i.tutional equality with the British Parliament, subject only to the power of bribery, direct or indirect, retained by the Crown, brought out in still more glaring relief the utter unsoundness of the existing political structure under separation. After eighteen years of ferment within Ireland and friction without, British and Irish statesmen, face to face with civil war and French invasion, realised that the sorry farce had to come to an end. Meanwhile the immediate economic effect of liberation from the direct restrictions on Irish foreign trade, already conceded in 1779, and helped in various directions by judicious bounties, was undoubtedly to give a new impetus to production in Ireland. The first ten years of Grattan"s Parliament were, on the whole, years of growing prosperity. Whether, even apart from civil war and increasing taxation, that prosperity would have continued to increase, if the Union had not come about, is, however, a more doubtful matter.
The immense industrial development of England during the next half-century would probably, in any case, have crushed out the smaller and weaker Irish industries, while the existence of a separate tariff in Great Britain would have been a serious obstacle to the development of Irish agriculture. A full customs union, with internal free trade, was undoubtedly the best solution of the difficulty. But Pitt"s Commercial Propositions of 1785 failed, partly, indeed, owing to political intrigues, but still more owing to the fundamental impossibility of securing an effective customs union without some form of political union.
When finally Ireland entered the Union it was with the severe handicap of an industrial system artificially repressed for over a century. The removal of the last traces of internal protection in 1824 only accelerated the process, inevitable in any case, by which Irish industries, with the exception of linen, were submerged. But manufacturing industry was at the best a small matter in Ireland compared with agriculture. And to Irish agriculture the Union meant an immense development in every direction. Unfortunately the inheritance of the preceding century, a vicious agrarian system and a low standard of living, was not easily to be eliminated, and little attempt was made to eliminate it. The great increase of agricultural production was accompanied, not by a progressive and well-diffused rise in the standard of national well-being, but by high rents and extravagance on the one side, and, on the other, the rapid multiplication of a population living on the very margin of subsistence. The terrible year of famine was a warning to British statesmanship of the need of a constructive and Conservative policy for the reorganisation of Irish agricultural life and for the broadening of the economic basis in Ireland by the deliberate encouragement of new industries. Under a true conception of Union, political and economic--and there were not wanting men like Lord George Bentinck and Disraeli who entertained it--Ireland might within a generation have been levelled up to the general standard of the United Kingdom.
But the evil effects of political and economic separatism in the eighteenth century were still unremedied when the whole economic policy of Union was abandoned. The very principle and conception of Free Trade is, inherently, as opposed to the maintenance of national as of Imperial Union. Ireland was deprived of that position of advantage in the British market which was one of the implied terms of the Union, and was not allowed to protect her own market. Incidentally, and as a consequence of the new fiscal policy, Ireland was saddled with a heavy additional burden of taxation which only handicapped her yet further in the struggle to recover from the famine and to meet foreign compet.i.tion. The full severity of that compet.i.tion was, however, not experienced till towards the end of the seventies, when the opening up of the American West, coupled with the demonetisation of silver, brought down prices with a run. A series of bad harvests aggravated the evil. The same conditions were experienced all over Europe, and were everywhere met by raising tariffs to the level required to enable agriculture to maintain itself. Even in England "Fair Trade" became a burning issue. Given normal agrarian conditions in Ireland the Irish vote would have gone solid with the Fair Traders, and the United Kingdom would in all probability have reverted to a national system of economics a generation ago. As things were, landlords and farmers in Ireland, instead of uniting to defend their common interest, each endeavoured to thrust the burden of the economic _debacle_ on the other. The bitterness of the agrarian struggle which ensued was skilfully engineered into the channel of the Home Rule agitation. In other words, the evils of economic separatism, aggravated by the social evils surviving from the separatism of an earlier age, united to revive a demand for the extension and renewal of the very cause of these evils.
Since then the underlying conditions of Irish economic life have undergone a complete transformation. The wealth and credit of the United Kingdom have been used to inaugurate a settlement of the agrarian question. The productive and compet.i.tive efficiency of Irish agriculture has been enormously increased both by Government advice and a.s.sistance and by patriotic private effort. Old Age Pensions have alleviated the burden of an excessive residue of older persons, and irrigated the poorer districts with a stream of ready money. In every direction there is a deliberate effort to raise the economic standard of Ireland to the British level. Last, but by no means least, the exclusion of all foreign live stock from the United Kingdom, though originally designed only as a precautionary measure against cattle disease, has in effect protected one most important branch of Irish agriculture and given it a vital interest in the maintenance of the Union. On the eve of the revival of a national policy of economic development Ireland stands on a far sounder basis, and in a far better position to take advantage of that development, than in 1800. The standard of life is rising, and will of itself put a check on a mere multiplication of beings living on the margin of subsistence. For the natural increase of population, which will once more come about, there will be provision not only through more intensive cultivation and in rural industries, but also in a real, though possibly gradual, development of new manufacturing industries.
Incidentally the establishment of a protective tariff for the United Kingdom will, by lowering the excessive duties on tea and tobacco which weigh so heavily upon Ireland, increase still further the local excess of Government expenditure over revenue and facilitate the local acc.u.mulation of capital, already so noticeable a feature of recent years, and thus provide an essential factor in stimulating new enterprise, whether agricultural or industrial. Nor would it be in any way inconsistent with a national economic policy for the United Kingdom as a whole to devote special sums, through bounties and in other ways, towards the opening up of new fields for the economic activities of the Irish people. For the first time in her history Ireland will have a fair start, and, under the Union, the twentieth century may yet prove Ireland"s century just as Canadians claim that it will prove Canada"s century.
Now let us turn to the other side of the picture. The establishment of Home Rule, in other words of political separatism, must inevitably be followed by active economic separatism, _i.e._ by the creation of a completely separate fiscal system in Ireland. The idea that an Irish Chancellor of the Exchequer can carry on in dependence on a British Budget, which may at any moment upset all his calculations of revenue, is absurd. So is the idea that there can be separate tariffs with mutual Free Trade, or a common tariff without a common government to frame it.
If Free Trade, indeed, were to be maintained in England, fiscal separation would be no disadvantage to Ireland. On the contrary, she would continue to enjoy the same access to the British market while giving her own industries such protection as might be convenient. It is one of the glaring weaknesses of the policy of Free Imports that it actually puts a premium on separatism. But it is impossible to discuss the future on that a.s.sumption. Whatever the fate of the Home Rule Bill may be it is certain that Free Trade is doomed, and that the United Kingdom, whether united or divided, will revert to a policy of national protection and national development.
What will be the effect upon Ireland? a.s.suming mutual good will, a.s.suming that the Irish Government will be ready to grant a substantial preference to British trade over foreign trade, there can be no doubt that Great Britain would respond and give to Irish products the same preference as might be extended to Canadian or Australian products. But the first duty of the British Government would be to British producers.
While Empire-grown wheat, and possibly meat, would come in free, the British farmer would receive a measure of protection against the rest of the Empire in dairy products and poultry, in barley and oats, in hops, tobacco, sugar beet, vegetables and fruit, in all those crops, in fact, in which the British production could meet the British demand without an undue effect upon prices.
Now, it is precisely by these intensive forms of production that Ireland stands to gain most under Union. Under Home Rule she would lose this advantage and have to compete on an equality with the rest of the Empire both in respect to these products and in respect to wheat and meat. It is extremely doubtful, too, whether her special privileges with regard to store cattle would long survive. They could no longer be defended, as against Canada, by the arguments now used, and as a piece of pure protectionism there would be no reason for Great Britain to give them a separate fiscal ent.i.ty. And if the hopes of Irish agriculture would be severely checked, still more would that be true of those hopes of new industries already referred to. Even the great linen industry might find a small duty enough to transfer a large part of its production within the British tariff zone. On the other hand, it is doubtful whether any tariff that Ireland could impose, consistently either with preference or with reasonable prices in so small a market and on so small a scale of production, could be of much effect against the compet.i.tion of British industries, strengthened and made aggressive under the stimulus of a national trade policy.
This is the most favourable hypothesis. But it is at least conceivable that a Nationalist Government, whether actuated by a laudable desire to hurry on Irish industrial development, or influenced by the tradition of animosity which still plays so strong a part in Nationalist politics, may refuse to enter upon the policy of Imperial preference. It might even be tempted by various considerations to give a preference to the United States or to Germany. Germany is a large importer of foodstuffs.
The establishment of a British tariff may prove a serious blow to her manufacturing interests. A trade agreement with Ireland might be a very useful temporary business expedient from the German point of view.
Incidentally a large increase of German merchant shipping in Irish harbours might, in the case of possible hostilities, be of no little service in providing commerce destroyers with a most convenient excuse for being in the most favourable area for their operations. Any fiscal excursions of that sort would inevitably be visited upon Ireland by severe economic reprisals of one kind or another on the part of Great Britain, from which Ireland would receive permanent injury far outweighing any temporary advantage which might be secured from foreign countries.
In other words, Ireland under Home Rule would be in almost every respect thrust back into her eighteenth century position of "least favoured Colony." She would, at the best, be handicapped in the British market in respect of those products by which she could profit most, and in those which she is less fitted to produce would have to compete with the virgin soil and compet.i.tive energy and organisation of the great Dominions. At the worst, her fiscal policy might invite reprisals and make her "least favoured" not only by her circ.u.mstances but by the intention of those who would frame the British tariff. It is true that the British Government would no longer dream of directly interdicting Irish exports. But in that respect modern organised capital has an influence to promote or kill almost as great as that of governments in former times. And the influence of British capital, under such circ.u.mstances, would certainly not tend to be directed towards the economic development of Ireland.
But the use of the customs tariff is by no means the only great instrument of a national economic policy. To promote the flow of trade in national channels, to secure the fullest development of the national territory and resources, the removal of natural internal barriers is often even more important than the setting up of artificial external barriers. Statesmen who have had to face the task of giving strength and solidity to weak political unions have always aimed at the development of internal communications. Washington"s first concern after the success of the American War of Independence was to endeavour to create a system of internal river and ca.n.a.l navigation in order to help to bind the loosely allied States into a real union. Bismarck used the Prussian railways as well as the Zollverein to build up German unity. In the making of Canada the Intercolonial railway and the Canadian Pacific were essential complements to the national tariff. Railways forced South Africa into union, and will gradually give Australia real cohesion and unity. In the United Kingdom there has been no national policy with regard to communications, least of all any nationally directed or stimulated effort to cement the political union of 1800. But such a policy is essential to the reality of the Union. To get rid, as far as possible, of the barrier which the St. George"s Channel presents to-day both to the convenience of pa.s.senger traffic and to the direct through carriage of goods between internal points in the two islands should be one of the first objects of Unionist policy in the future. In the train-ferry, which has bridged the channels of sea-divided Denmark, which in spite of the Baltic, has made Sweden contiguous with Germany, which for the purposes of railway traffic, has practically abolished Lake Michigan, modern developments have provided us with the very instrument required. To Irish agriculture the gain of being put into direct railway communication with all England and Scotland would be immense. From the tourist and sporting point of view Ireland would reap a doubled and trebled harvest. More than that, the bridging of St.
George"s Channel will for the first time enable the west coast of Ireland to become what it ought to be, the true west coast of the United Kingdom, the starting point of all our fast mail and pa.s.senger services across the Atlantic.
But all this implies the Union, the existence of a single Government interested in the development of the United Kingdom as a whole. Separate governments in Great Britain and Ireland would not have the same inducement to give financial encouragement to such schemes. Irish manufacturers and British farmers alike might protest against being taxed to facilitate the compet.i.tion of rivals in their own markets. An Irish Government would have neither sufficient money nor sufficient interest to give the subsidies necessary to secure a three days" service across the Atlantic. A British Government would naturally develop one of its existing ports, or some new port on the west coast of Scotland, rather than build up a new source of revenue and national strength in a separate State. No one could blame it, any more than we could blame the Canadian Government for wishing to subsidise a fast service from Halifax or some other port in the Dominion rather than one from St. John"s, Newfoundland. In the seventeenth and eighteenth centuries the Navigation Acts deliberately destroyed Irish shipping. A policy of _laisser faire_ in matters of national communication has. .h.i.therto prevented its revival.
To-day new ideas are in the air. Those ideas can be applied, either from the standpoint of the Union or from that of separatism. In the one case Ireland has the prospect of becoming, what her geographical position ent.i.tles her to be, the eastern bridge-head of the North Atlantic. In the other the immense power of the larger capital and larger subsidies of Great Britain will be as effective as any navigation laws of the past in leaving her a derelict by the wayside, continuing to wait idle and hungry, with empty harbours, while the great streams of commerce flow past her to north and south.
And if the theory of _laisser faire_ is rapidly dying out in matters of trade and communications, it has already been largely superseded in regard to social questions. The duty of the State to expend money in order to level up the standard of life of its citizens, or to prevent their sinking below that standard, is to-day universally recognised. The methods by which that object is aimed at are various. There is the crudest form, that of direct money relief, such as is involved in Old Age Pensions. There is the subsidising of socially desirable economic operations, such as insurance against sickness or the acquisition of freehold by tenants. There is the expenditure of money on various forms of education, in the scientific a.s.sistance of industry and agriculture, in promotion of forestry, drainage, or the improvement of local communication. There is the enforcement of innumerable regulations to safeguard the health and safety of the working population. Nowhere has this conception of the duty of the State exercised a greater influence than in Ireland during the last twenty years. The Congested Districts Board, the Department of Agriculture, the Land Purchase Scheme, ill.u.s.trate one phase of its carrying into effect. Old Age Pensions, cheap labourers" cottages, sickness insurance ill.u.s.trate another. All these have been provided out of the United Kingdom exchequer. They could not be provided out of Irish revenues. Still less could Irish revenues provide for a continuous extension of this policy in order to keep on a level with English conditions.
It has been stated by Mr. Churchill that under the Government scheme of Home Rule, Land Purchase and Old Age Pensions will be paid by Great Britain. Even if that were a workable arrangement it only covers a small part of the field. For the rest Home Rule would mean the complete abandonment of the attempt to level up the social conditions of Great Britain and Ireland to a common standard. The Irish Government would never have the means to carry out the same programme of social legislation as will be carried out in Great Britain. Handicapped in compet.i.tion with British industries it would, moreover, naturally be disinclined, even apart from the question of cost, to apply any legislation or any regulations which might tend to raise the cost of production. There will thus not only be an inevitable falling back for want of means, but, in addition, a continual temptation to the weaker and more backward State to meet superior industrial efficiency by the temporary cheapness of inferior social conditions.[88]
But such a policy would not only be disastrous in itself in its ultimate effect upon Irish national life. It would at once provide a fresh and valid excuse for effective fiscal differentiation against Ireland in Great Britain. Once again, as in the eighteenth century, Ireland would be penalised for being a poor and "sweated" country.
So far the discussion of the economic results of separation has been confined to Ireland, because Ireland would undoubtedly be the chief sufferer. Her dependence on the English market, the smallness of her home market, her backward social condition, would all be insuperable obstacles to a really healthy development on independent lines. Great Britain, on the other hand, would suffer relatively much less from Home Rule. The immediate shrinkage of trade with Ireland, even with an Irish tariff to overcome, might not be very great. The real loss would be not so much any actual decrease of trade, as the loss judged by the standard of the possibilities of Irish development under the Union. The essence of the situation after all is that the United Kingdom is a single economic area. The exclusion of one part of that area from the political and economic life of the rest, while injurious to the rest, must prove disastrous above all to the part excluded. After centuries of alternate neglect and repression Ireland has at last been brought to a condition in which she is capable of taking the fullest advantage of a new era of progress and development for the United Kingdom as a whole.
And this is the time which is chosen for seriously suggesting that she should once again be excluded from all the benefits of partnership in the United Kingdom and driven out into the wilderness of poverty and decay. The plea for this folly is an unreal sentiment which is itself merely the survival of the mistaken political or economic separatism of the past, and which is nothing to the real and justifiable sentiment of bitterness which would be roused in Ireland if the plea were accepted.
FOOTNOTES:
[Footnote 86: This fear itself was the result of separatism. Miss A. E.
Murray, in her work on "The Commercial Relations between England and Ireland" (p. 51), points out: "It was not so much jealousy of Ireland as jealousy and fear of the English Crown which influenced the English legislature. Experience seemed to show that Irish prosperity was dangerous to English liberty.... The difficulty was that Ireland was a separate kingdom, and that the English Parliament had no direct authority over her. It was this absence of direct authority which made England so nervously anxious to restrict Irish resources in all those directions in which they might even indirectly interfere with the growth of English power."]
[Footnote 87: For details, see Miss Murray"s "Commercial Relations between England and Ireland."]