A Flutter on Harold

Spruce in black coat and striped trousers, Chancellor of the Exchequer Harold Macmillan was the very model of a Tory Cabinet member and Edwardian gentleman as he anxiously rose in the House of Commons to present his first budget.

First, Macmillan rehearsed the melancholy facts beneath Britain's hectic prosperity--the rising prices at home, the declining exports abroad, the dwindling gold and dollar reserves as imports soared. "The economy is still running at a very high level,'' he said, but "there is really no future in importing extra materials that we cannot afford, in order to turn them into extra goods that we do not export.'' Like workers in a candy factory,

Britons were gobbling up too much of their own products, and sooner or later the law of economics would catch up with them. Macmillan conceived his peculiar problem to be "to moderate the boom."

The Gamble. Within its own borders, Britain had a whopping surplus ($1.2 billion), but Macmillan refused to flirt with any idea of a tax cut. Instead, he increased taxes on company profits, tacked another few shillings on leaf tobacco to raise the price of a pack of cigarettes to 54-c-, and lifted the subsidy on bread (thus increasing the cost of a loaf to 12-c-). Mostly he aimed at forcing the public to keep its money in bank or sock instead of buying what should be exported.

His prize surprise proposal brought howls of laughter from both sides of the House. He proposed a new -L-1 bond, which would pay no interest at all. Instead, the interest would be put in a pool, and every three months the holder would stand a chance of winning up to $2,800 tax-free in a lottery held by the government. Anticipating moral objections, Macmillan insisted: "This is not gambling, for the subscriber cannot lose."

In a nation whose favorite weekly pastime is "having a flutter" by risking sixpence in football pools on the chance of winning $280,000, the proposal was hailed with glee. "Honest Harold always pays," headlined the Laborite Daily Mirror. "Give him your quid and you might win -L-1,000. Gambling? Oh dear, no!"

The Grumble. As expected, some church leaders grumbled about immorality. Laborite Harold Wilson taunted: "Now Britain's strength, freedom and solvency apparently depend on the proceeds from a squalid raffle." The left-wing New Statesman and Nation labeled Macmillan's proposal "the birth of the windfall state." But the august London Times defended the new bond, and so did the Financial Times.

A more serious criticism of Macmillan's budget was its failure to attack Britain's basic problem: lagging productivity. The latest treasury bulletin for industry exposed it baldly: since 1950, British wages have risen by 45% while output per man increased by only 7%. In the same period, when German wages increased by 40%, output increased by 38%. The Daily Express put Britain's condition bluntly: "Too little work for too much money."

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