am not prepared to give official endorsement to any particular estimate.' 1

'Mr Hogge asked the Chancellor of the Exchequer the number of individuals who paid Super-Tax in 1914 and the number who were liable for Super-Tax last year?

'The Chancellor of the Exchequer (Mr Chamberlain) : The number of individuals assessed to Super-Tax for 1914-1915 was 29,996 at 31st May, 1920. This number may be slightly reduced when a few appeals, which it has not yet been possible to dispose of owing to the war and other causes, have been settled. The number of individuals assessed to Super-Tax for 1919-20 was 43,576 at 31st May, 1920. Assessments for 1919-20 may be made up to 5th April, 1923, and the number of persons liable to Super-Tax for that year is estimated at 59,000.' 2

In computing the national income, it is sometimes argued that sums paid out of taxation, such as old age pensions, ought not to be reckoned in national income at all, as they have already been paid for once before they are drawn by the pensioners.3

But, if we admit such an argument about old age pensions, it means very much more than the exclusion of incomes paid out of taxation. On this basis, we must exclude every income which passes through

1Hansard, June 3rd, 1920.

Ibid. Sir Leo Chiozza Money, in the Daily Herald, Dec. 19th, 1919, criticised the Board of Inland Revenue's Estimate of Income-Tax and Super-Tax (Cmd. 224), and showed the various methods by which payment of super-tax is avoided. He said: 'I will hazard a guess that the number of super-tax payers ought to be 75,000 instead of 59,000, and that the £417,000,000 (of taxable income) should be at least £650,000,000.'

3 For a full discussion of all such points, see J. C. Stamp, British Incomes and Property (P. S. King & Son), 1916, especially Chapter XII.

two hands at all, except such as is directly exchanged for goods. Let us see where this leads us.

The national income is usually calculated by getting as near as possible to the total sum of all the individual incomes in the country; but, on the basis of the old age pensions argument, we must obviously draw a sharp line between incomes drawn in return for the production and distribution of actual goods, and incomes drawn in return for mere personal services. If I have an income of £1000, and buy actual goods with £900, somehow or other that amount of goods has had to be produced; but if I spend the odd £100 on paying a servant or employee, and he in his turn purchases goods to live on, it is clear that for the two of us only £1000 worth of goods has been purchased. Yet our united income, in all the ordinary estimates, is reckoned at £1100.

No community, of course, could get on for five minutes under modern conditions if the whole if it were engaged solely in the production and distribution of material goods. We could not, for instance, do without teachers; and people who perform such functions as the teacher have quite as good a claim for maintenance as those who perform the function of coal-getting. Nevertheless, I have taken account here of the doctrine that, when we compute the national income available for distribution in real wages, we ought to confine ourselves to the product of material goods. And I have taken account of it for the following reason. So far, in all my calculations, I have used the ordinarily accepted basis of national income. I have quoted plentiful authority for so doing. But I deal with the special question of goods production specifically in order that I may anticipate the objection that the net distributable income might

turn out, on some other possible basis of calculation, to be smaller than I have said.

My answer to this objection is, I believe, overwhelming. Any reduction in the estimated income of the nation which we may make by deducting the incomes of non-productive individuals would be far more than compensated for by the turning of a huge army of nonproductive individuals on to productive work.1 This process would, under Socialism, be applied not merely to unnecessary services, but to the vast army engaged in the production of fatuous and futile luxuries. No doubt these luxuries are already reckoned in the goods produced, and in that sense, to turn the producers of them to more beneficial work would not add to the national income. It would not add to the national income as computed in the mere symbol of money; but it would add inestimably to it in the sense of increasing the number of valuable, useful commodities, and the number of people who could avail themselves of these commodities. Far from erring by over-estimating the potential national income, I am convinced that I have grossly under-estimated it.

1 This book was completed before the publication of Sir Leo Chiozza Money's The Triumph of Nationalisation (Cassell, 1920); otherwise I should, of course, have availed myself of its great wealth of fact and idea. I quote here from it (p. 21) a passage reinforcing my contention in the text :—

The Census of Production of 1907 revealed that the United Kingdom, which then had a population of 44,000,000, contained no more than 10,500,000 direct producers of material commodities. If we make allowance for the other really productive industries, such as transport and the productive professions, we see clearly that millions of unfortunate persons are condemned, through the lack of national organisation of work, to tasks which contribute little or nothing to the national welfare. It should be understood that the figure of 10,500,000 was inclusive of all the men, women, boys, and girls engaged in productive employment, including farmers and all agricultural workers.

'If we take industrial employment only, in 1907 the number of men, women, boys, and girls employed, including salaried persons, was only 7,000,000. Of this 7,000,000 only 4,250,000 were males aged eighteen and over, and one-fourth of them were engaged in mining.

XXI

TO COMPENSATE OR NOT TO COMPENSATE?

THERE is, then, sufficient wealth to distribute, and nationalisation is, according to the clearly and repeatedly expressed view of organised Labour, the way in which to distribute. But how to nationalise? Take the case of the mine-owners. All the commissioners on the Coal Industry Commission agreed that the mineral rights of the landlords should be taken over by the community; and the mining and other Labour representatives insisted that there should, for those rights, be no compensation, but only alleviation in cases of special hardship. The miners, however, declared for compensation, in the case of nationalisation, to the mine-owners themselves—as distinct from the landlords who owned the royalty rights. The Mining Council, according to the Miners' Bill, was to purchase the mines of Great Britain on a basis provided by ascertaining the average annual number of tons of minerals actually raised during the five years preceding the 4th of August, 1914.

We need not go into the details of the computation or its figures. The vital point is that the mines were to be purchased, and to be paid for by the issue of mines' purchase stock.

What does this proposition amount to? The mineowner, after the deal has taken place, no longer owns capital in the mines, but he owns capital; that is to say, in some form or other, other people have got to

work to provide him with his livelihood. He still has the power of exploitation; nor is it possible to remove it from him without depriving him of capital altogether.

It may be said that to hold Government stock is not obnoxious in the way in which to hold other forms of privately-owned capital is obnoxious, since it gives no direct control, at any rate, over the lives of other people. Government stock does indeed say to the workers: 'You must work to keep the individual who owns me,' but it does not say: 'The individual who owns me shall lay down the very details and the conditions on which you shall be allowed to work.'

But this argument ignores several essentials.

In the first place, a great many ordinary capitalists, as we have just seen, have no direct say in the control of the industries they own. That is left to managers and overseers, who, as their retention of their position depends on getting the greatest possible return on capital, dare not be even as generous as the private employer might be. Exactly the same applies to Government stock. Nobody is more inhuman than the Government official who sees that he has got to cut down expenses 'in the interest of the nation as a whole.' Those who had pre-war dealings with the Local Government Board do not need the war-time experience of dealings with the War Office, the India Office, the Ministry of Munitions, the Pensions Ministry, and the Ministry of Labour to make them aware how wholly callous and inhuman a Government department may be, even when its staff consists of disinterested and urbane individuals. Secondly, there is nothing to prevent the holder of Government stock from selling it and investing the proceeds in those other forms of capital which do actually give him direct

C.R.

P