Back In Bleak House

In theory Britain's Budget is one of her deepest State secrets. Only the Prime Minister and half a dozen of the highest Treasury officers are supposed to know its make-up before it is "opened" in the House of Commons. Until the moment of delivery it is kept locked in an ancient red morocco budget box. To be sure that the box will open at the right moment, a Government locksmith calls annually on the Chancellor of the Exchequer to oil the lock and fiddle with the key.

Despite all these precautions, somebody must have peeked last week because just before Neville Chamberlain unlocked his budget box in the House of Commons there was a great flurry on London's insurance market. Rates against increases in the income tax jumped from 15% to 45%, against increases in the tax on tea from 20% to 50%*

Because the King of England may not enter the House of Commons, it was the first budget speech that Edward VIII has missed in years. Every visitors' gallery was jammed with Britain's swankest. With one eye cocked at the clock the Chancellor of the Exchequer began to talk. One generality followed another. "Perhaps I may liken this budget," said he, "to the uncertain glory of an April day." (Haw! Haw! in the galleries.)

At length it was 3 o'clock, the hour at which the Stock Exchange and the tea houses in Mincing Lane close. Only then was Chancellor Chamberlain ready to release the bad news: The huge cost of Britain's rearmament program (some $1,500,000,000 plus) had swallowed up not only the expected treasury surplus but made it necessary to impose additional taxes. The basic income tax rate was being raised threepence in the pound: for every $5 a Briton receives, he must pay $1.18 instead of $1.13 in income tax. His daily cup of tea will be taxed another fourpence per pound. Imported beer will have to pay an additional pound per barrel.

Only solace was that exemption for married persons was being raised from $850 to $900, and the allowance for each child from $250 to $300. This was small comfort to the average Briton. With his Government launched on an enormous and costly campaign of national defense, he could see no likelihood of military expenses declining in the next year or two, every chance that taxes would soon mount to five shillings in the pound. Wailed Sir Francis L'Estrange Joseph, coal & iron tycoon: "The British Taxpayer is back in Bleak House."*

With these increased taxes the British budget balanced, with a minuscule surplus left over. But, as has been his fiscal custom, Chancellor Chamberlain had made no provision for paying anything on Britain's debt to the U. S.

"Why did the Chancellor of the Exchequer not mention our War debt to the United States?" snapped William Mabane, M.P. "This is the first time it has been ignored in a budget speech."

"Why bring that up?" boomed a voice from the back benches.

"For an excellent reason," continued Liberal Mabane. "Unless we effectively settle the matter we shall probably be in difficulties when it comes to discussing political questions with the United States. I am anxious that the question should be wiped out by agreement instead of leaving a hidden sore between the two nations."

Cried Laborite Arthur Greenwood: "The honorable Chancellor has balanced all his budgets either by defaulting in his payments to the United States or by robbing somebody's hen roost." To this, the best rejoinder Chancellor Chamberlain could think of was : "When the Labor Party was in power ... it received in reparations [from Germany] -L-54,000,000 and paid the United States -L-46,500,000. The National Government has received only -L-800,000 in reparations, and paid the United States -L-32,500,000." This seemed an excellent moment for moon-faced Winston Churchill to rise and call the Commons' attention to his own conduct as Chancellor of the Exchequer from 1924 to 1929. Said he:

"We have shaken ourselves entirely free from the Gladstonian structure and tradition of finance. The gold standard, an enormous sinking fund, the strict 'and punctual discharge of international obligations, all are gone, unwept, unhonored and unsung.

"The gold standard is dead and has been relegated for a long period to purgatory. We have no sinking fund except the balance of last year's surplus. We have gradually increased our taxation, and we have dealt with the American debt liability in a manner which no one would have tolerated in the years for which I was responsible. I was the last orthodox Chancellor of the Victorian epoch. . . . I feel I am entitled to ask the House to regard me as the last of the Mohicans."

*Next day Chancellor Chamberlain told the Commons that he had asked the great underwriting house of Lloyds to investigate rumors of a leak. Whether on inside information or guesswork, last-minute gamblers were supposed to have collected some $500,000 of insurance against last week's budget increases.

*Announcing his budget two years ago, Chancellor Chamberlain had quipped: "Great Britain has now finished Bleak House and is sitting down to enjoy the first chapter of Great Expectations" (TIME, April 30, 1934).

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