LONDON LETTER

What Happens if the Rains Come?

Beverley Baxter September 1 1950
LONDON LETTER

What Happens if the Rains Come?

Beverley Baxter September 1 1950

What Happens if the Rains Come?

LONDON LETTER

Beverley Baxter

IF YOU had looked in at Westminster at the proper moment, in the evening recently you would have seen a sweet smile on the face of the austere Sir Stafford Cripps. The reason was that the third reading of his finance bill (based on his Budget) was carried without a division. The three months’ battle was over and except in minor points he had had his way.

For your information, legislation dealing with finance is not subject to any time regulations. For example, if we debate Scottish mid wives or even Korea the debate automatically ends at 10 p.m. unless, by mutual agreement beforehand, we decide on an extra period. But finance debates only stop when they leave off, if you know what I mean.

I intend in this letter to discuss a subject which has always enthralled me—money. Let me hasten to add that I am not a financial expert either in public or in private, but ever since I was paid $6 as a boy soloist for singing at a concert in Guelph, Ont., I have liked earning money and enjoyed spending it. In fact I have never quite got over the astonishment at being paid for writing.

This week I had the privilege of hearing Frank Sinatra moan about love into the lips of a microphone. He definitely clings to the belief that love makes the world go round. It is an interesting theory, stubbornly

held by the romantics, but I would think that money is the real thing that keeps the world revolving on its axis.

Sir James Barrie said we were given memory so we could have roses in December. Well, one of the advantages of growing older is that in the garden of memory there are many roses. For example, I can look back to life in Canada before the 1914 war when the money that a man earned was his. If there was some form of income tax I never heard of it. Reason tells me that the government must have raised funds by taxation of some sort but broadly speaking your money was your own.

Those magic words “social security” were unknown. Life was a fullblooded adventure in which one asked only for opportunity. Parents brought up their children, often by great sacrifice, and in later life it was the joy of the children to ease the declining years of the parents. Nor did this lessen the affection of the young to the old. In most cases it was enhanced.

Charities were organized for those who fell by the wayside, it was not considered a crime to be rich, and although there were great inequalities there was always a feeling that in such a system of society there was hope for one’s children even if the prizes had eluded the older generaContinued on page 49

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tion. I do not claim it was an ideal existence, and certainly there were many people impoverished by sickness which drained their meagre resources in doctors' bills, but it had courage, self-reliance and adventure.

But evolution and revolution often march together. The teachings of that lazy old philosopher, Karl Marx, were bearing fruit and, in Russia especially, it was bitter fruit. Bernard Shaw, the Webbs and Ramsay MacDonald were preaching the Fabian conception of Socialism. The brilliant Lloyd George, when chancellor of the exchequer, declared that the rich must not only pay to the Treasury for living but must also pay for dying. The human conscience was awake. The economist and the politician were weaving new theories, the trade unions were discovering that in numbers there is strength. When the Kaiser’s war was over Russia had become a socialized state and never again Was the world to know freedom as we had understood the word.

Capitalism was on trial and the prisoner was arrogant. As usual Capitalism put its case badly, for the capacity to make a fortune is seldom allied to the power of intellectual exposition. If the bankers of New York could have commanded words they would have told the people that democracy never existed save as an ideal until Capitalism made it possible. They would have proved that the trouble was not in Capitalism itself but in the abuses thereof.

So there came the crash of 1929 and America’s unemployed were numbered by the millions. President Roosevelt decided that the State must intervene and brought in the New Deal.

Everywhere in the world, only differing in degree, the edifice of the all powerful State was rising. In Italy, Russia and Germany the State was absolute. In the U. S., Canada and Great Britain the State was becoming increasingly powerful but the institutions of human freedom had not been destroyed. But there came another war and when it was over Britain embarked upon its vast socialist experi-

And now, five years later, Sir Stafford Cripps smiles sweetly as he picks up his brief case and walks from the House, having brought in the largest peacetime budget in the history of his country.

There is full employment, wages are higher than ever before, to every man and woman there is free medical and dental treatment (to say nothing of a decent burial), food is subsidized so that the cost will not bear too heavily upon the family budget, there are children’s allowances, old-age pensions and national insurance. Fear has been driven away and security has taken its place. Do you wonder that the Socialists cry hallelujah, and wonder why the electorate was so stupid and so ungrateful as nearly to throw them out last February?

But today the ordinary Briton is scratching his head and asking what has gone wrong with a system which seems so basically sound and right. He looks at his pay envelope and compares it favorably with prewar years. He reflects that he is getting all the benefits I have enumerated. Good old Cripps! Soak the rich, that’s the game.

To celebrate his good fortune the same ordinary Briton goes to the pub and buys a pint of beer. The unseen fingers of Sir Stafford take fourpence

from him. Regardless of expense he purchases a package of 20 cigarettes for three shillings and fourpence. Sir Stafford’s share of that transaction is two shillings and fourpence.

Still happy, he takes his wife to the cinema and again Sir Stafford exacts his whack in entertainment tax. His wife says they must have a small plain mirror for Nellie. They buy one for 16 shillings. The shop price is eight shillings but Sir Stafford charges 100% purchase tax. But our plain man can get free medical care, that is something. “ You don’t pay the doctor,” says Sir Stafford, “but I have to, so I shall deduct so many pennies a week from your pay packet.”

“Where does the money go to?” says the worker as he sits at home and talks it over with his wife. “Blime! Before the war I could go to the pub with one shilling, buy a pint and a package of 10 cigarettes and a newspaper, and still have a penny in my pocket.”

Come back to the House of Commons for a moment. It is the last night of the finance debate and the Tory party has paid the compliment of asking a back bencher, Commander Gurney Braithwaite, to wind up for the Opposition. He makes a brilliant speech for he possesses the priceless gift of humor, yet he can punch like a heavyweight. Pointing to Sir Stafford Cripps he sweeps to the climax of his speech:

“I have never met so many blackcoated workers who cannot afford a holiday as in this year of grace 1950. We make them contribute to a socalled free medical service but debar them from the health-giving properties of the sea and the moors and the moun-

tains. Such was never the intention of parliament. And so frustrated thousands will have to spend the holiday season ruminating in their gardens while the nationalized express trains thunder past half empty. There they will sit—the owners of the railways on which they cannot afford to travel. Thus has Socialism struck resounding blows at the welfare state which can only wither and die unless the load of taxation is so lightened as to enable its harassed citizens to move and breathe.”

That picture is true. We must balance against it the low-paid worker who has to go to the hospital for an operation where he will get the best attention and convalescence without it costing him directly a penny. There is the contrast, the other side of the canvas. But is something wrong?

Let us look in at a board meeting of a firm which is one of our chief earners of dollars through its exports. The gross profit for the year is, let us say, 400,000 pounds. They decide to pay a dividend of 200,000 pounds, which represents 7%% on the capital. Nine shillings in the pound is deducted at source and paid direct to the Treasury. The individual shareholder must also pay surtax on the balance of the dividend if his income is above a certain level. That leaves an undistributed profit of

200,000 pounds to carry to reserve for development and essential replacement of plant.

“Oh no you don’t,” says Sir Stafford.

“You must pay me 10% of your undistributed profits.” So another 20,000 pounds are thrown to the rapacious paws of the Treasury.

The directors look at each other and ponder on this new state of affairs. How can you budget for hard times, for slump or recession or a rainy day if you are forced to behave as if there will always be full employment and full production? The strength of Britain in the past was in her savings which poured into the whole world and created overseas investments which ensured her supplies of commodities and opened markets for British goods. Where today will new enterprises find capital if there is no “adventure money” available? The Socialists answer that they can so control the nation’s economy that there will be no recession and that therefore the State can spend to the hilt.

If that is true then Socialism has won its battle. But can Britain and the sterling bloc live to themselves alone?

In any country the professional classes do not matter politically because they are not numerous enough; vet they contribute invaluable wealth to the nation in the realm of science, the arts and education. Take an actor who has struggled and starved for years then suddenly attains success— he is taxed unmercifully and can put almost nothing aside for the future.

Sir Stafford Always Wins

The Chancellor of the Exchequer is, in fact, like a farmer who takes a basket of grain to feed the chickens. He throws the grain to the chickens and then rushes among them to see how much of it he can get back. If he gets it all back the system is perfect, except that the chickens starve to death.

I shall end this letter with the strange story of two men, Sir John Black and Mr. L. P. Lord who are responsible for building up two of the largest motorcar industries in Britain. Anxious to reward them and also to ensure that each would remain with his company the shareholders voted them both

100.000 pounds worth of shares as a gift, on condition that they pledged themselves never to work for any rival firm.

Now what is the basis of the actual transaction? In each case the shareholders parted with shares worth

100.000 pounds but, as the recipients would have to pay not only income tax but surtax on the dividends, the chancellor is actually the gainer in revenue. But what did Sir Stafford do? He brought in retroactive legislation which made the gifts taxable as payments and then collected 95,000 pounds from both Black and Lord, leaving each of them 5,000 pounds. In other words there is now’ no system by which a firm can reward an employee for outstanding services or ensure he will not work for a competitor. To me it does not make sense, but then I may be lacking the modern viewpoint.

In Britain today the chancellor takes nearly half of the entire national income. To the modern Rockefellers, Beaverbrooks and Nuffields he says: “You can build an industrial empire if you like but I warn you that if you lose you lose and that if you succeed you will not be allowed to keep the profits. To you the loss, to me the gain.”

In your country you have no doubt seen the same tendencies at work. Elections now will be nothing but bribery—that is, it will be nothing but politicians bribing the people with their own money. And if the people prefer it that way then so shall it be.

But I wonder what will happen if the rains come. +