The Framework of Home Rule

The control of the Royal Irish Constabulary and Dublin Metropolitan Police does not affect the question of representation at Westminster. With or without representation, Ireland should be given the control of all her own police forces from the first, without the restrictions imposed by the Bills of 1886 and 1893 with regard to Imperial control of the existing forces.[85]

With the important exception of taxation, with which I shall deal last, no other power which should properly be reserved to the Imperial Parliament, or delegated to the Irish Parliament, has any appreciable bearing upon the exclusion of Irish Members from the House of Commons. Nor do any of them raise issues which are likely to be troublesome. Common sense and mutual convenience should decide them. The Army, Navy, and other military forces I have already dealt with. The Crown, the Lord-Lieutenant, War and Peace, Prize and Booty of War, Foreign Relations and Treaties (with the exception of commercial Treaties), Titles, Extradition, Neutrality,[86] and Treason, are subjects upon which the Colonies have no power to legislate or act, and of which it would be needless, strictly, to make any formal statutory exception in the case of Ireland, though the exception no doubt will be made in the Bill. Naturalization, Coinage, Copyright, Patents, Trademarks, are all matters in which the Colonies have local powers, whose existence, and the limitations attaching to them, are determined either solely by constitutional custom or with the addition of an implied or express statutory authority.[87] The two former would, I should think, be wholly reserved to the Imperial Parliament. In the case of the latter three, which were wholly reserved in the Bill of 1886 and 1893, Ireland might be placed in the position of a self-governing Colony.[88]

In Trade and Navigation it would be wise to take the same course. The Home Rule Bill of 1886, without giving Ireland representation at Westminster, denied her all powers over Trade and Navigation. The Bill of 1893 gave her powers over Trade within Ireland and Inland Navigation, and these powers at any rate should be given in the coming Bill, together with the larger functions also; though Ireland would naturally leave in operation the great bulk of the statutes concerned, since they intimately affect the commercial and industrial relations of the two countries. For the rest, Ireland no more than the Colonies can be freed from a measure of Imperial control maintained by Acts like the Merchant Shipping Act of 1894.

The Postal Service in Ireland should, as in the Bill of 1886, come under Irish control.

In the Home Rule Bill of 1893 (Section 34) it was laid down that for three years the Irish Legislature should not "pass an Act respecting the relations of landlord or tenant, or the sale, purchase, or letting of land generally." Such a provision repeated in the coming Bill would be inconsistent with the absence of Irish Members from Westminster. But I take it for granted that there is no question of its repetition. At first it might appear that Land Purchase should be distinguished from other branches of land legislation and reserved to the Imperial Government on the ground that it needs Imperial credit. I shall deal with this point fully in Chapter XIV., and only need here to express the view that Land Purchase cannot be separated from other branches of land legislation, or from the Congested Districts Board, or even from the control of the police, and that we are bound to give, and shall be acting wisely in giving, all these powers to the Irish Legislature from the first.

It is necessary perhaps to add that non-representation at Westminster does not in the smallest degree affect the complete legal supremacy of the Imperial Parliament over the subordinate Irish Legislature. This Legislature will in legal language be a "local and territorial" body, like those of the Colonies. It will be the creature of Parliament, and could be amended or even extinguished by it in a subsequent Act. The Bill of 1886 (perhaps because it never reached the Committee stage) said nothing explicit about the supremacy, though the Bill of 1893, while providing for representation at Westminster, repeatedly (and sometimes quite superfluously) affirmed it—in the Preamble, for example, and in a rider to Clause 2. The King's authority, through the Lord-Lieutenant, will be supreme in Ireland, as, through the Governors, it is supreme in the Colonies. Every Irish Bill, like every Colonial Bill, will require the Royal Assent, given through the Lord-Lieutenant, who will correspond to the Colonial Governors. The Lord-Lieutenant, like his colonial counterpart, will have to exercise both his Executive and Legislative functions in a double capacity: in the first instance by the advice of his Irish Cabinet, but subject to a veto by the British Cabinet. This dual capacity has belonged to all Colonial Governors ever since the principle of responsible government was established. As I showed in earlier chapters, it was regarded even by Lord John Russell as impossible and absurd as late as 1840; but it ought by now to be understood by every educated man, and we may hope to be spared the philosophical disquisitions and hair-splitting criticisms which it evoked from men who should have known better in the Home Rule debates of 1893.

Laws framed at Westminster will be applicable to Ireland, as they are frequently made applicable to the Colonies.[89] Conversely, only through the express legislative authority of Westminster will an Irish, like a Colonial Act,[90] be held to operate outside the borders of Ireland.

Apart from the strict legal omnipotence of Imperial sovereignty, it is, of course, impossible to say now what the exact constitutional position of Ireland will be under any form of Home Rule. No Bill can state it fully in set terms. Time, custom, and judicial decisions will build up a body of doctrine. It is so with the Colonies, whose exact constitutional relations with the Mother Country are still a matter of juristic debate, and are only to be deduced from the study of an immense number of judicial decisions and of Imperial Acts passed subsequently to the grant of the original Constitutions. Some of these Acts I have already illustrated. The one Act of general application, namely, the Colonial Laws Validity Act, cannot be read without the rest, though in form it appears to contain a complete set of rules. While giving general power to a self-governing Colony "to make laws for the peace, welfare, and good government of the Colony" (words which will also necessarily appear in the Home Rule Bill), the Act makes void all colonial laws or parts of laws which are "repugnant to the provisions of any Act of Parliament extending to the Colony to which such law shall relate," and this provision will no doubt, be applied, mutatis mutandis, to Ireland, as it was in Section 32 of the Home Rule Bill of 1893. The Irish Legislature, that is, will be able "to repeal or alter any enactments in force in Ireland except such as either relate to matters beyond the power of the Irish Legislature, or, being enacted by Parliament after the passing of this Act, may be expressly extended to Ireland."

It will be noticed that the words "beyond the power of the Irish Legislature" referred to the subjects expressly excepted in the Bill itself. This is one of the points in which the Irish Constitution will bear at any rate a superficial resemblance to that of a Province or State within a Federation rather than to that of a self-governing Colony. The practice of expressly, and in the text of a Constitution, forbidding a self-governing Colony to legislate upon certain subjects, or of expressly reserving concurrent or exclusive powers of legislation to the Mother Country, has fallen into disuse since the establishment of the principle of responsible government. Such restrictions were inserted in the Canadian Union Act of 1840, where the old right of the Mother Country to impose customs duties in the Colonies for the regulation of commerce was reaffirmed, and even in the Acts of 1855 for giving full powers of self-government to the Australian Colonies, which were forbidden to impose intercolonial customs, though they were expressly granted the power of imposing any other customs duties they pleased,[91] but they do not appear in modern Constitutions, for example in the Transvaal Constitution of 1906. As I have indicated, this implies no change in the strict legal theory of Colonial subordination to the Mother Country; for, although the tendency of modern juristic thought is to ascribe "plenary" power to a Colony, restrictions nevertheless do exist in practice, and are contained, express or implicit, in a number of disjointed Acts.

A Federating Colony, on the other hand, like a foreign Federation, has in its own self-made, domestic Constitution to apportion powers with some approach to precision between the federal and the provincial authorities, and in this respect the Irish Bill, in reserving certain powers to the Imperial Parliament, will resemble a federating Bill, and it should follow the American and Australian precedents in leaving residuary powers to the subordinate or Irish Legislature, not, in accordance with the Canadian precedent, to the Parliament at Westminster. That is an indispensable corollary of excluding Irish Members from Westminster.

In speaking of powers reserved or delegated, and of residuary or unallocated powers, I have thus far referred only to powers which must be exercised, or at any rate may need to be exercised, if not by the subordinate legislature, then by the superior Parliament. Those restrictions on the Irish Legislature which are imposed in order to protect the religious or economic interests of a minority within the State, or as a recognition that there are certain kinds of laws which it is morally wrong to pass, fall into an altogether different category. By implication they morally bind the superior Parliament too, and are irrelevant, therefore, to the question of representation. They will be necessary, no doubt, in the coming Irish Bill, though they need not be so extensive as those which are to be found in Clause 4 of the Bill of 1893, some of which are borrowed from the famous anti-slavery amendments of 1865-1869 to the Constitution of the United States.[92] In inserting them we shall again be following the "Federal" rather than the "Colonial" model. No such restrictions have been imposed by the Mother Country upon any self-governing Colony. The nearest approach, perhaps, to such a tendency was the provision in the Transvaal Constitution of 1906 (Section 39), that "any law whereby persons not of European birth or descent may be subjected or made liable to any disabilities or restrictions to which persons of European birth or descent are not also subjected or made liable" should be specially "reserved"—that is, sent home by the Governor—for the signification of the Royal pleasure; but no similar provision appeared in the Act of 1909 for constituting the South African Union. In Federal systems, on the other hand, such restrictions, taking the form of self-denying ordinances, are common, whether appearing in the Federal Constitution itself or in the subordinate State Constitutions. The Constitution of the United States, for example, in addition to the anti-slavery provisions noted above, enacts that the National Government cannot (by Amendment I.) establish any religion or prohibit its free exercise, or (by Amendment V.) take private property for public use without just compensation, or (by Article 1, § 9) grant a title of nobility. Neither (by Amendment XIV. and Article 1, § 10 respectively) can a State do these things. By Article 1, § 10, a State cannot pass a law impairing the obligation of a contract. Exactly similar restrictions appear in many of the individual State Constitutions. Others forbid the establishment of any church or sect; the introduction of armed men "for the suppression of domestic violence"; "perpetuities or monopolies," and a variety of other things. Analogous provisions are to be found in the British North America Act, 1867 (constituting the Dominion of Canada), where the provincial Legislatures are forbidden to interfere with certain rights and privileges of religious bodies in the matter of education. There are no limitations of the kind in the Australian Commonwealth Act of 1900. Australia, no doubt, correctly represents the tendency of modern thought on this matter. Some of the American safeguards have produced great inconvenience. Nor can it be denied that the most elaborately contrived legal safeguards are of less value than the moral safeguard afforded by the sense of honour, justice, and prudence in the community. The existence of these qualities in Ireland, as in other white countries, is the true foundation of Home Rule. Some day Irishmen will ask, as a united country, for the repeal of these statutory safeguards.

That brings me to the penultimate point of importance, which may be held to affect the inclusion or exclusion of Irish Members at Westminster—I mean the question of future constitutional amendment. Here the colonial analogies are a little complicated. Since the Australian Colonies Act of 1850, in the new grant of a Constitution to a self-governing Colony, power has invariably been given to amend its own Constitution, without, of course, detracting from any powers specified in it for preserving the sovereignty of the Mother Country. Canada, when federating in 1867, took the somewhat singular course of making no provision in her Federal Constitution for its subsequent amendment, though, by Section 92 of the British North America Act, she gave her Provinces the exclusive right to amend their own Constitutions, a right which three of them have used to abolish their Upper Chambers. The Dominion Constitution, then, cannot be amended otherwise than by an Imperial Act. Such amending Acts are promoted by the Dominion Government without any specially devised machinery for ascertaining the public opinion of Canadians. Australia, on the other hand, when federating in 1900, made elaborate arrangements, which have been put several times into operation, for the amendment of the Federal Constitution by the Australian people itself, without an Imperial Act. Now, it will follow as a matter of course that Ireland will be given powers, as in both the previous Bills,[93] to amend her own Constitution within certain defined limits, after a certain lapse of time, and without encroaching upon Imperial authority. For my part I would strongly urge that the powers now to be conferred should be much wider; for I believe that Ireland alone can make a really perfect Constitution for herself. But, that point apart, the question arises of the further amendment, outside such permissive powers, of the Home Rule Act itself, which will, of course, contain within its four corners the whole of the Irish Constitution, so far as it can be written down. No special arrangements were made for such a contingency in the Bill of 1893, presumably because Ireland was to be represented at Westminster and would have a share in the making of any amending act. In the Bill of 1886, which excluded the Irish Members, Mr. Gladstone proposed (in Clause 39) that no alteration of the Act should be made (apart, of course, from points left for Irish alteration) except (1) by an Imperial Act formally assented to by the Irish Legislature, or (2) by an Imperial Act for the passing of which a stated number of Members of both branches of the Irish Legislature should be summoned to sit at Westminster.

It will be clear, I think, now, in 1911, that this latter proposal is not worth revival. No substantial amendment of the Act should properly be made without the formal consent of the Irish Legislature, representing Irish public opinion, and the prior consultation with the Irish Cabinet which such consent would imply. If the lamentable necessity ever arose of amending the Act against the wishes of Ireland, the sudden invasion of Westminster by a body of angry Irish Members, too small to affect the result (for otherwise the attempt to amend would not be made) and large enough to revive the old political dislocation and passion, would not simplify the process of amendment or be of value to anybody concerned. The proposal was probably only suggested by a vague leaning towards the Federal principle, which, in the present case, we should certainly reject. It serves indeed as one more illustration of the anomalies which might result from the inclusion of Irish Members at Westminster. No more unhealthy position could be imagined than one which would render it possible for an amendment of the Home Rule Act, whether in the direction of greater latitude or of stricter limitation, to depend solely upon the Irish vote in an Assembly predominately non-Irish. That is not to the discredit of Ireland. The system would be just as indefensible, whatever the subordinate State concerned. It would be Federalism run mad, and would make Alexander Hamilton turn in his grave. It is worth while to note that, even under a sane and normal Federal system, the Irish Constitution would be less easily alterable in either direction than under the plan of treating her as a self-governing Colony. In the latter case action is direct and simple, while most Federal Constitutions are extraordinarily difficult to amend. The Dominion of Canada is only an apparent exception.

All Federal systems necessarily involve a certain amount of joint finance between the superior and the inferior Government. The distribution of financial powers varies widely in different Federations, but all have this feature in common—that the central or superior Government controls Customs and Excise, and is to a large degree financed by means of the revenue derived from those sources. The United States Government, as distinguished from that of the individual States, pays in this way for almost its entire expenditure.[94] So does the Dominion of Canada;[95] while in the Australian Commonwealth the receipts from Customs and Excise alone more than cover the whole Commonwealth expenditure.[96]

Finance makes or mars Federations. Some Federations or organic Unions of independent States have come into being through a strong desire in the separate States to have, among other things, a common system of Customs, and in the case of the German Empire and the South African Union a Customs Union or Zollverein has preceded Federation. These phenomena are the most marked illustration of the general truth that a common desire to federate, or unite, on the part of individual States is a condition precedent to a sound Federation or Union. On the other hand, finance, especially the question of joint Customs, has sometimes presented obstacles to a Federation which, on other grounds, was earnestly desired. The long delay in achieving the Australian Federation was largely due to the desire of New South Wales to maintain her Free Trade system, while the financial arrangements generally caused most of the practical difficulties met with in arranging the Federation both of Canada and Australia, and in their subsequent domestic relations. Nova Scotia in the former case, and Western Australia in the latter, held out to the last instant, and the former subsequently had to receive exceptionally favourable treatment. In both Federations some measure of friction is chronic, and in neither has a perfectly satisfactory system been evolved. The Union of Ireland and Great Britain in 1800 was in this respect, as in all others, a flagrant departure from sound principle. The Customs Union which followed it was a forced Customs Union, and, together with the other financial arrangements between the two countries, has produced results incredibly absurd and mischievous. Some of these results I briefly indicated in Chapter V. In the following chapters I shall tell the whole story fully, and I hope to convince the reader that we should follow, not only historically, but morally and practically, the correct line of action if, in dissolving the Legislative Union, we dissolve the Customs Union also. That would involve a virtually independent system of finance for Ireland, and place her fiscally in the position of a self-governing Colony. If and when a real Federation of the United Kingdom becomes practical politics, she would then have the choice of entering it in the spirit and on the terms invariably associated with all true Federations or Unions. That is, she would voluntarily relinquish, in her own interest, financial and other rights to a central Government solely concerned with central affairs.

Let us now examine Ireland's claim for fiscal autonomy.

CHAPTER XI

I.

BEFORE THE UNION.[97]

Before the Union Ireland had a fiscal system distinct from that of Great Britain, a separate Exchequer, a separate Debt, a separate system of taxation, a separate Budget. Yet she can never truly be said to have had financial independence, because she was never a truly self-governing country. Until 1779, when the Protestant Volunteers protested with arms in their hands against the annihilation of Irish industries in the interest of British merchants and growers, her external trade and, consequently, her internal production, were absolutely at the mercy of Great Britain. As I showed in Chapter I., Ireland was treated considerably worse than the most oppressed Colony, with permanently ruinous results. On the other hand, her internal taxation, never above a million a year, and her Debt, never above two millions in amount, were not heavy. But from 1779, through Grattan's Parliament to the Union, a short period of twenty-one years, Ireland, though still governed on the ascendancy system by an unrepresentative and corrupt Parliament of exactly the same composition as before, nevertheless had financial independence in the sense that her Parliament had complete control of Irish taxation, revenue, and trade. It was, moreover, in these financial matters that the Parliament showed most genuine national patriotism, together with a greatly enhanced measure of the Imperial patriotism traditional with it. Internal taxation, except in time of war, was still comparatively light; depressed home industries were judiciously encouraged by bounties; no attempt was made at vindictive retaliation upon British imports, though Irish exports to Great Britain were still unmercifully penalized; and sums, growing to a relatively enormous size during the French War, which began in 1793, were annually voted for the Imperial forces. This voluntary contribution, which had averaged £585,000 in the eleven years of peace, from 1783 to 1793, rose to £3,401,760 in 1797,[98] and in 1799, when Ireland was paying the bill for British troops called in to suppress her own Rebellion, to £4,596,762, out of a total Irish expenditure for the year on all purposes, military and civil, of £6,854,804. Not more than half, on the average, of these war expenses were met out of the annual taxes. Debt was created to meet the balance; but neither the debt, heavy as it was, nor the taxes, were intolerably burdensome—that is, if we regard Ireland as financially responsible for Imperial wars and for the suppression of a Rebellion which was provoked by scandalous misgovernment. Tax revenue rose from £1,106,504 in 1783, when the free Parliament first prepared a Budget, to £3,017,758 in 1800, and averaged a million and a half. In the same period the total amount of the funded and unfunded Irish Debt rose from £1,917,784 to £28,541,157, almost the whole of this increase having taken place in the seven years of war immediately preceding the Union. In Great Britain both Debt and taxation had risen in a larger ratio, and were relatively far greater. For example, in the six years, 1793-1798 inclusive, £186,000,000 had been added to the British Debt, only £14,000,000 to the Irish Debt. In 1801 the British Debt stood at £489,127,057; the Irish Debt at £32,215,223.

II.

The Union of 1800, therefore, could not be justified on the ground that a poor country would profit by fiscal amalgamation with a rich country, and Pitt and Castlereagh, when framing the Union Act, recognized that truth by leaving Ireland with a separate fiscal system, as before; though the administration of this system was, of course, now to be wholly in British hands. There were to be separate Exchequers, Debts,[99] taxes, and balance-sheets, with the following restrictions: That prohibitions against imports and bounties on exports (corn excepted), should cease reciprocally in both countries; that, with the exception of 10 per cent. ad valorem duties on a variety of articles named, there should be mutual free trade; and that no tax on any article of consumption should be higher in Ireland than in Great Britain.

But although Pitt and Castlereagh ostensibly carried out the principle of separate fiscal systems, they laid the foundations for a fiscal amalgamation which was disastrous to Ireland. Since his Commercial Propositions of 1785, Pitt had never abandoned the idea of obtaining from Ireland an obligatory annual contribution to Imperial services based on some fixed principle. By Clause 7 of the Act of Union he achieved his aim. It was settled that for twenty years Ireland should contribute in the proportion of 1 to 7½ (or 2 to 15)—that is, that Great Britain should pay 15/17, or 88.24 per cent., of common Imperial expenses, including the charge for debt contracted for Imperial services, and Ireland 2/17, or 11.76 per cent. Nobody now denies that this ratio was grossly unjust to Ireland. It took no account of the relative pre-Union Debts; it took no account of the tribute of nearly four millions paid in rents to absentee English proprietors; it was based on superficial deductions from inadequate and misleading data, and the Act was hardly passed before its absurdity became manifest. Fifteen years of almost incessant war followed the Union. Ireland, even by raising taxation to the highest possible point, was unable to pay her contribution without contracting a Debt colossal in proportion to her resources. While Great Britain only doubled her Debt, and paid 71 per cent. of her expenses out of current taxation, the Irish Debt quadrupled, and in 1817 reached the portentous total of £112,634,773; while only 49 per cent. of Irish expenditure was paid for out of revenue. Here is a little table which shows the effect upon Ireland of Clause 7 of the Act of Union:

The scandal could no longer be overlooked. It was impossible to raise the Irish taxes. Their yield was already showing signs of diminishing. But the Act of Union had provided for the situation which had arisen. One of the sections of the famous Clause 7 enacted that if and when the separate Debts of the two countries should reach the proportion of their respective Imperial contributions, Parliament might, if it thought fit, declare that all future expenses of the United Kingdom should be defrayed indiscriminately by equal taxes imposed on the same articles in both countries, "subject only to such exemptions and abatements in favour of Ireland as circumstances may appear from time to time to demand." The framers of this section had anticipated that the English Debt would sink to the level of the Irish Debt. Anglo-Irish finance teems with grim jokes of this sort; but the section was useful in either event. With its terms before them, a Committee sat to consider the state of Ireland, with the result that, by an Act which came into operation on January 5, 1817, the Exchequers, Debts, revenues, and expenditures, but not as yet the taxes, of the two countries were amalgamated. In Professor Oldham's words,[100] "the corpse of Ireland's insolvency was huddled into the grave, and no questions were to be asked." The whole expenditure, Imperial and local, of the United Kingdom, Ireland included, was to be defrayed out of a Consolidated Fund, and the arrangements, therefore, for a separate Irish contribution on a fixed basis to Imperial services were cancelled. Henceforth her Imperial contribution, for anyone who troubled to calculate it, was represented by the excess of revenue raised within Ireland over the expenditure in Ireland. A mutual free trade was also established, not instantaneously, but in the course of a few years. By 1824 all duties, as between Ireland and England, had ceased, and in 1826 the custom-houses ceased to record the transit of goods between England and Ireland, except in articles such as spirits, on which a different excise duty was charged. No statistics were compiled, therefore, of Anglo-Irish trade until ninety years later, when the Irish Department of Agriculture began to prepare returns. Such was the origin of our Customs Union against the world (for, needless to say, those were still the days of high Protection), and it is instructive to compare it with the voluntary pacts of the German States and South African Colonies, and with their political results.

In one important point unification was left incomplete. It was impossible in 1817 to equalize internal taxation in the two countries, though it was held desirable to do so, because Ireland could not have borne the higher British scale, and suffered enough under her own. Regard, too, was had at first to those important words in the Act of Union which guaranteed to Ireland such "exemptions and abatements" as might appear fair. But they were soon forgotten. Without any inquiry into the taxable capacity of Ireland, the stamp, tea, and tobacco duties were equalized early in the period, the enhancement in Ireland of the last duty from 1s. to 3s. on raw tobacco, and from 1s. to 16s. on manufactured tobacco, laying an exceptionally heavy burden on the Irish poor. Meanwhile the abolition, after the close of the war, of taxes representing about sixteen millions a year, and purely affecting Great Britain, gave a relief to her which Ireland did not feel. But it was not until 1853, when Mr. Gladstone extended the income-tax to Ireland, and raised the Irish spirit duty, that the principle of "exemptions and abatements" was most seriously infringed. Mr. Disraeli followed in 1855 with a further elevation of the spirit duty, which was finally equalized with the British duty in 1858, at 8s. a gallon; while in 1860 both duties were raised to 10s. In the seven years 1853-1860 the taxation of Ireland was raised by no less than two and a half millions per annum. It will be recalled that the great famine had taken place in 1846-47, and that between the Census of 1841 and that of 1861 the population sank from eight to six millions, while the British population rose from eighteen and a half to twenty-three millions. The statistical result of the increased taxes, therefore, was to show a rise in taxation per head of the Irish people from 13s. 11d. in 1849 to £1 5s. 4d. in 1859, while in Great Britain it rose only from £2 7s. 8d. to £2 10s. during the same period. Equality of taxation has never been wholly established, for to this day a few quite unimportant taxes are not levied, or are levied on a lower scale in Ireland;[101] but from 1858 onward we may regard the taxation of the two countries as almost identically the same.

In the meantime a great revolution, also beginning at the time of the famine, had taken place in the fiscal system of the United Kingdom. Free Trade with the outside world had been established, and whatever we may conclude about its effect, it had been established, as we know, with a special view to British industrial interests, and without the smallest concern for Irish interests, which were predominantly agricultural. It was certainly followed by an immense industrial expansion and prosperity in Great Britain; it was certainly initiated at the lowest point of Ireland's moral and physical wretchedness. Opinions differ as to the precise economic effect upon Ireland. Miss Murray, in her thoughtful and exhaustive study of the commercial relations between England and Ireland, holds that, as agricultural producers, the Irish lost far more than they have gained as consumers of foodstuffs, while a number of small and struggling rural industries, whose powerful counterparts in Great Britain could easily withstand foreign competition, did undeniably succumb in Ireland.

My own opinion is that the past influence upon Ireland of free trade, in the first instance with Great Britain, and later with the outside world, though a highly interesting and important topic in itself, is commonly exaggerated, to the neglect of the vastly more important question of the tenure of land. Free trade did not cause the famine. On the contrary, the presage of the famine was one of the minor causes which induced Peel to take up Cobden's policy for the free importation of foodstuffs. The effect of that policy upon Ireland sinks into insignificance beside an agrarian system which had reduced the mass of the Irish peasants to serfs, kept them near the borders of destitution, and in a state of sporadic crime for a century and a half before, and for forty years after the repeal of the Corn Laws, and, at the climax of a period of high protection for agricultural products, rendered it possible for a mere failure of the potato-crop to cause death to three-quarters of a million persons. These things do not happen in properly governed, in other words in self-governed, countries, whatever their fiscal system, and they have never happened to Irishmen in any other part of the world but in their own fertile island. Manufacturing industries stand on a different footing. Most of the staple industries of Ireland, notably the woollen industry, and the aptitudes which brought them into being, were deliberately destroyed long ago by fiscal measures imposed by England, and their destruction aggravated the misery and exhaustion produced by a bad land system. How far their partial revival under the fiscal Home Rule of Grattan's Parliament was genuine, and might, with a continuance of fiscal Home Rule, have been permanent, it is impossible to say. The retarding effect of the Rebellion, and the long start already obtained by Great Britain in the industrial race, are factors beyond accurate calculation. But one thing is certain, that the revival of industries was, at that stage, of trivial importance beside the rural regeneration of Ireland, and that Grattan's Parliament had not the remotest influence for good upon the land question, which it neglected as heartlessly as its predecessors for a century before and its successors for seventy years afterwards.[102]

Industries are valuable assets for any country; but countries almost wholly agricultural, like Denmark, can prosper remarkably, and without Protection, provided that they possess or evolve a sound system of agrarian tenure, in other words, a sound relation between tenant and landlord, or, in default of that, peasant ownership. In every country in the world that has been a sine qua non of prosperity. Suppose that English labourers had built out of their own money and by their own hands the factories, docks, and railways in which they worked, and that the resulting profits, wages deducted, went solely to ground landlords. That gives us some idea of the old Irish land system, whose overthrowal began only in 1870; a system under which the landlord put no capital into the land, though his rent represented the full profits of the tenant's capital and labour, less an amount equivalent to a bare subsistence wage, governed by competition.

Parliament gave no serious attention to any of these phenomena from the time of the fiscal union in 1817 until after the introduction of Mr. Gladstone's second Home Rule Bill in 1893. No settled conclusions were arrived at as to the relative wealth of the two countries, as to the capacity of Ireland to bear the British scale of taxation, or even as to the amount of revenue derived from and expended in the countries respectively, with the consequent contributions made to common Imperial services. A Committee sat in 1864-65, which compiled some interesting information and heard some important witnesses, but ignored the main questions at issue and produced what Sir Edward Hamilton described later as an "impotent" Report. Sir Joseph MacKenna, an able Irish banker, again and again, between 1867 and 1876, pleaded for an inquiry into Anglo-Irish finance, alleging gross injustice in the incidence of Irish taxation, and obtained nothing more than a rough return showing that between 1841 and 1871 the gross tax revenue per head of the population had risen in Ireland from 9s. 6.7d. to £1 6s. 2.2d. and had fallen in Great Britain from £2 9s. 9.5d. to £2 4s. 1.6d. For the first time also it was shown that the national beverages of England and Ireland, beer and whisky, respectively, were taxed in a ratio unfair to Ireland. In 1886 Mr. Gladstone, in preparing his first Home Rule Bill, had to re-open the question of the relative resources of Ireland and Great Britain for the first time since the Union, because he proposed a fixed annual contribution, unchangeable for thirty years, from Ireland towards the Imperial services. He fixed the contribution at one-fifteenth or approximately half that of two-seventeenths fixed by Pitt in 1800, and the new figure was certainly not too low. In 1888 the question was again incidentally raised by Mr. Goschen, who apportioned certain equivalent grants towards local taxation in England, Scotland, and Ireland, in the proportion of 80, 11, 9, apparently on the principle that those were the proportions in which each country respectively contributed to Imperial expenditure. Mr. Gladstone, in preparing the Home Rule Bill of 1893, made investigations which threw additional light on the true amount of revenue derived from Ireland, with allowance made for revenue from dutiable goods taxed in Ireland but consumed in Great Britain, and vice versa, but his financial scheme, as revised in the course of the Session and passed by the House of Commons, evaded the crucial issue by making Ireland's contribution to Imperial services a quota, one-third, of her true annual revenue. This quota, moreover, was indirectly reduced by temporary subsidies in aid of Irish charges (e.g., for Police) and was estimated, with these deductions, not to exceed at the outset one-fortieth.

III.

"3. The history of the financial relations between Great Britain and Ireland at and after the Legislative Union, the charge for Irish purposes on the Imperial Exchequer during that period, and the amount of Irish taxation remaining available for contribution to Imperial expenditure; also the Imperial expenditure to which it is considered equitable that Ireland should contribute."

It will be observed that Questions 1 and 2 deal with abstract points, No. 3 (except the last clause) with concrete facts.[103]

In their short unanimous Report the Commissioners began by stating that "Great Britain and Ireland must, for the purposes of this inquiry, be considered as separate entities."

To Question 1 they made no unanimous answer. This was immaterial, because, as a result of numerous tests (assessment to estate duties and income-tax, consumption of commodities, population, etc.) all arrived unanimously at an answer to the next question.

Answer to Question 2 (and incidentally, as will be seen, to part of Question 3): "That whilst the tax revenue of Ireland is about one-eleventh of that of Great Britain, the relative taxable capacity of Ireland is very much smaller, and is not estimated by any of us as exceeding one-twentieth."

The wording of the answer needs to be explained by reference to the text of the Report.

(a) In saying "tax revenue" the Commissioners meant to exclude non-tax revenue—e.g., Post Office receipts, etc.—but the Commissioners in their various separate Reports generally employed the figures of total revenue. Taking these as our basis, the Irish revenue then raised would have been nearly one-twelfth instead of one-eleventh of the British revenue. In other words, of the total revenue of the United Kingdom, Ireland paid nearly one-thirteenth. (b) As to the true Irish taxable capacity of "one-twentieth," some confusion arises owing to the use of the phrase by different Commissioners in different senses. Mr. Childers and Sir David Barbour appear to have meant one-twentieth of the United Kingdom's taxable capacity, the others one-twentieth of Great Britain's. In order to be on the conservative side, I shall adopt the former estimate. The discrepancy is not material to the conclusions of the Commissioners, as, for reasons which I need not go into, they agreed that the minimum amount of over-taxation was two millions and three-quarters.

Their answers, so far as they were complete, to the other inquiries contained in Question No. 3 about the tax revenue of Ireland and the net contribution of Ireland in the past to Imperial services, are to be found in figures included in the body of the Report, and these figures formed, of course, the basis of their unanimous conclusion as to the over-taxation of Ireland.

Two insoluble problems have had to be grappled with by the Treasury in preparing these Returns: first, to differentiate Imperial expenditure from local expenditure; second, to arrive at the "true" net revenue of the partners as distinguished from the revenue collected within their respective limits. Both these problems arise whenever an attempt is made to look behind a system of unitary finance into the burdens and contributions of different portions of a united realm, and the latter, though not the former, of the two may arise in just as acute a form if the realm consists of federated States with a common system of Customs and Excise.

With regard to the first problem, it is, of course, easy, in the case of a Federation, to distinguish between central, or Federal, expenditure and local, or State, expenditure, because the functions of the Federal Government and State Governments are delimited in the Constitution, and the separate expenditures form the subject of separate balance-sheets. But in a Union, and above all in a Union to which one part of the realm is an unwilling party, like that of the British Isles, it is clear that no absolutely accurate line can be drawn between Imperial and local expenditure. The Army, the Navy, and a number of other things are clearly enough Imperial, but there are many debatable items. For example, Is the upkeep of the Lord-Lieutenant an Irish or an Imperial charge? Is a loss on Post Office business in Ireland to be charged against Ireland, or should Ireland be credited with a proportion of the profits of the whole postal business of the United Kingdom? More searching questions still: Is the enormous charge for the Irish Police, which is under Imperial control, and exists avowedly for the purpose of forcibly maintaining, in the Imperial interest, an unpopular form of government in Ireland, to be charged against Ireland? Or, again, should Ireland be debited with the cost of the machinery for carrying out Land Purchase, a policy admittedly rendered necessary by the enforced maintenance in the past of bad land laws? Obviously such questions can never be answered so as to satisfy both Irishmen and Englishmen, because they go to the root of the political relations between Ireland and Great Britain. The Royal Commission, therefore, was naturally unable to give a unanimous answer to the last clause of Question No. 3 of their Terms of Reference—namely, "What is the Imperial expenditure to which Ireland should equitably contribute?" Some members held that under the Union even a theoretical classification was unjustifiable, while it was obvious that under the Union no effect could be given to it. Still, the classification had to be made, in order to arrive at a theoretical estimate of the financial situations of Great Britain and Ireland respectively, and the Treasury, charged with the preparation of this estimate, took the only course open to it in reckoning as Irish expenditure all expenditure which would not have to be incurred if Ireland did not exist. It was the perfectly correct course for the Treasury to take in dealing with the task set before them, and, as we shall see, it provides the only basis on which to construct the balance-sheet of a financially independent Ireland.

The insolubility of the second problem—that of discovering the "true" revenue of Ireland and Great Britain respectively—arises from the difficulty of tracing the passage of dutiable articles from one part of the kingdom to the other, and of tracing the incidence of direct imposts such as income-tax and stamps. The great bulk of Irish revenue is derived from indirect taxes on commodities, liquor, tobacco, tea, sugar, etc. Since the consumer pays the tax, revenue is rightly credited to the country of consumption. The tax, for example, on tobacco manufactured in Ireland may be collected in Ireland, but the revenue from Irish-made tobacco exported to and consumed in Great Britain is rightly credited to Great Britain. The converse holds true. Half the tea consumed in Ireland has paid duty in London, but the whole of the revenue from tea consumed in Ireland must be credited to Ireland. Now, since 1826, no official records had been kept by the Customs-houses of the transit of goods between Ireland and England, except in the solitary case of spirits. The data, therefore, did not exist, and do not exist now, except in the case of spirits, for an accurate computation. This is frankly confessed by the Treasury officials. They base their published figures on certain arbitrary methods of calculation which have never been submitted to any public inquiry, and which, as they admit, contain an element of guesswork. The matter is an exceedingly important one to Ireland, because ever since 1870 an increasingly heavy deduction has been made by the Treasury from her "collected" revenue, and her "true" revenue has proportionately diminished. Part of this deduction is no doubt due to the fact that her exports of tobacco and liquor have, in recent times, much exceeded her imports, but the margin for error is nevertheless large. Mr. Gladstone, in framing his Home Rule Bill of 1886, was so sensible of the inherent difficulties of the calculation that, while retaining Customs and Excise under Imperial control, he credited to the Irish Exchequer the whole of the revenue collected within Ireland. On the balance of Anglo-Irish exchange in dutiable articles, as roughly estimated at that time, this provision meant an annual allowance to Ireland of nearly a million and a half pounds, the principal reason being that Ireland, which is a larger manufacturer of spirits and tobacco, was exporting more than she consumed of these commodities. In the Bill of 1893, as part of a wholly different financial scheme, Mr. Gladstone abandoned the plan just described, and provided for the annual calculation of "true" Irish revenue, as distinguished from "collected" revenue; but it is a proof of the obscurity and intricacy of the whole business that the Treasury officials made a mistake of £400,000 in the initial calculation, with the result that Mr. Gladstone had to recast his financial scheme from top to bottom.

The same obscurity shrouded, and still shrouds, the "true" Irish revenue from income-tax and stamps, whose proceeds it is exceedingly difficult to trace under a system of unitary finance, and which are traced by the Treasury in a fashion again admittedly unreliable.[104]

In regard to taxes on consumption the same difficulty has been met with in Australia since the federation of the Colonies and the delegation to the Commonwealth Government of exclusive control over Customs and Excise. The product of these duties makes up the bulk of Australian revenue, and is far too large for the needs of the Commonwealth Government. The Constitution of 1900 provided that the surplus should be returned to the individual States in proportion to their "true" contributions to the revenue, and for the calculation of these "true" contributions an elaborate system of book-keeping was instituted, in order to trace the ultimate place of consumption of dutiable articles. Each State was then credited with its "true" revenue, and debited, among other things, with a proportionate share of the expense of any Department transferred by the Constitution from the State to the Commonwealth. The system caused general dissatisfaction, owing, as the Australian Official Year Book puts it, "to the practical impossibility of ensuring that in every case a consuming State will be duly credited with revenue collected on its behalf in a distributing State." That is the well-founded complaint of Ireland in regard to the Treasury returns. Hitherto in Australia efforts to change the system for another allocating the surplus on a basis of population have not been successful.[105] The Canadian Federal Constitution uses the basis of population for the distribution of small subsidies to the Provinces, but complaints have arisen as to its fairness. British Columbia, for example, for a long time complained that her subsidy was too small, one of the grounds being that her consumption of dutiable goods was unusually large. No means existed of verifying this complaint by figures.[106]

With this explanatory digression about a very important feature of Anglo-Irish finance, I return to the findings of the Royal Commission of 1894-1896. The figures supplied to them were as shown on the opposite page.

It will be noticed that the average "true" revenue of Ireland was stationary at a little over five millions from 1820 to 1850, rose with a bound to seven and a half millions with the equalization of taxes in the decade 1850-1860, and remained stationary at that figure for the remaining thirty-four years. Expenditure in Ireland quadrupled in the whole sixty-four years; and the net contribution to Imperial services, after rising from three and a half millions (in round numbers) in 1820 to five and a half millions in 1860, fell automatically, as the expenditure rose, and had stood at two millions from 1890 afterwards. Population had fallen by two millions, but the "true" revenue raised per head of population rose from 15s. 5d. in 1819 to £1 13s. 5d. in 1894, while the local expenditure rose from 4s. 7d. per head in 1820 to £1 5s. in 1894.

But the significance of these figures cannot be discerned without an examination of their counterparts on the British side of the account. In the whole period Great Britain's "true" revenue had risen from £51,445,764 to £89,286,978; her local expenditure from £4,439,333 to £30,618,586, and her net contribution to Imperial services from £47,006,431 to £58,668,392. Her population had increased from 13,765,000 in 1820 to 33,469,000 (estimated) in 1893, but her "true" revenue had fallen per head of the population from £3 13s. to £2 13s. 4d. (approximately), although her local expenditure had risen from 4s. 7d. to £1 2s. (approximately). In other words, a great increase of wealth had enabled the British taxpayer to pay far more while feeling the burden far less. The converse was true of Ireland.

The conclusion, therefore, might be extracted from the figures that, although by hypothesis overtaxed, Ireland was drawing a balance of profit, because, by having more spent on her—or, to put it in another way, by costing more to govern, she paid a million less to the common purse than if she had been taxed according to her capacity.

It was Sir David Barbour's great merit that he was not afraid of his own conclusions. He frankly stated, like all the other Commissioners, that Ireland's taxation, considered by itself, without regard to Irish expenditure, was unsuitable and unjust. He recognized that a system of taxation which was suitable for a rich, industrial, and expanding country like Great Britain was unsuitable for a poor, agricultural, and economically stagnant country like Ireland. He had before him the figures showing that two-thirds of the Irish population was rural, and that between three and four-fifths of the English population was urban.[107] He laid special stress on the fact that five-sevenths of Irish revenue, as compared with less than half the British revenue, was derived from taxes on commodities of general consumption, pressing heavily on the poor, and set forth the figures showing that the product of these taxes represented a charge of £1 2s. 0.95d. per head of the population in Ireland, and £1 1s. 0.05d. in Great Britain, although the wealth per head of Great Britain, as he admitted, "was much greater than the wealth of Ireland per head."[108] His conclusion was that this state of affairs, though regrettable, could not be helped, because, under the Union, whose permanence he took for granted, a change of general taxation to suit Ireland was simply impracticable. He did, it is true, point out incidentally that the same hardship might be said to affect poor localities in Great Britain and poor individuals in Great Britain, but he recoiled from the absurd fallacy involved in saying that on that account Ireland was not unjustly taxed. If he had gone to that length he could never have signed the unanimous Report.

I only mention this latter point because some outside critics have been bold enough to assert the fallacy in its completeness, proving, as they easily can, that the purchase of a pound of tea or a pint of beer is as great an expense to a man with 10s. a week in Whitechapel as to a man with 10s. a week in Connemara. Such reasoning nullifies the whole science of taxation. It would be as sensible to say that our whole fiscal system might wisely be transplanted in its entirety to any foreign country or to any self-governing Colony absolutely irrespective of their social and economic conditions and of their habits. Yet Ireland in these respects has always differed from Great Britain at least as much as any self-governing Colony and many European countries. The tea-tax produces scarcely anything in France; it produces an enormous amount relatively in Ireland, and is a greater burden there than in Great Britain. The wine-tax is not felt by Ireland; it is felt more by England; it would cause a revolution in France. Beer is taxed lightly in the United Kingdom, but the Irishman drinks only half as much beer as the Englishman. Meat is untaxed, but the Irish poor eat no meat. Spirits and tobacco are highly taxed, and they are consumed more largely in Ireland than in England. And so on. The whole Commission recognized that the circumstances of the two countries were different, and stated "that identity of rates of taxation does not necessarily involve equality of burden."

Nor could Sir David Barbour have dissociated himself from these conclusions without destroying the rest of his argument. He pointed out with truth that merely to reduce Irish taxation to its correct level, and to leave Irish expenditure where it was, would be to wipe out Ireland's contribution to Imperial purposes and leave her with a subsidy from Great Britain of three-quarters of a million. On the other hand, he held, as I have already indicated, that unduly heavy taxation in Ireland was already compensated for by an excess of local expenditure in Ireland as compared with Great Britain. But how, on its merits, and apart from the question of taxation, could such an excess be justified? The Act of Union had provided for indiscriminate expenditure in the event of a fiscal union. Most of the other Commissioners, indeed, had objected to the idea of distinguishing between "Imperial" expenditure and "local" expenditure, and striking a balance called an "Imperial contribution," without, at the same time, distinguishing politically between Ireland and Great Britain. In other words, they took up the not very logical position that Ireland must be considered as a separate entity for purposes of finance owing to the phrase about "abatements and exemptions," but not for purposes of expenditure. Whether this was a correct interpretation of the Act of Union has always been a matter of dispute, but the practical problem is little affected thereby. Sir David Barbour thought it an incorrect interpretation, and reached the more logical position that Ireland, both for revenue and expenditure, could be regarded as a separate entity. This view enabled him to put forward an argument which, while ostensibly palliating the over-taxation of Ireland, in reality condemned the whole of the political system established by the Union. We can, he said, in effect, rightly distinguish between Imperial and local expenditure, and it is permissible to spend more on Ireland than on Great Britain. By so spending more we not only cancel our debt to Ireland, but make her a present of a million which would otherwise go to swell her contribution to Imperial purposes. Now, to get at the pith of this argument, the reader must bear in mind what Sir David Barbour thought it needless to remark upon, that Ireland had, and has, a separate quasi-colonial system of administration of her own, but outside her own control, a system of which he approved. In other words, besides having to be considered in finance as a "separate entity," she was to a large extent in actual fact, politically, a "separate entity," though not a self-governing entity, to which through the channel of the Irish Government Departments a special large quota for local expenditure could be easily allocated. As an economist, therefore, and as an upholder of the strangely paradoxical system set up by the so-called "Union," Sir David Barbour was absolutely consistent.