The budget was introduced into the House of Commons by the chancellor of the Exchequer on May 1. He began his statement by a survey of the previous year, pointing out that the industrial trouble experienced in the first three months had had a serious effect on trade and on the revenue of the year. Summarizing what had been done in the reduction of debt, he said that the external debt had been reduced by £170,000,000; the floating debt by £246,000,000, the maturing debt by £260,000,000, and £88,000,000 had been added to the reduction of the deadweight debt. He pointed out that the expenditure for the year was less than the estimated expenditure by about £57,000,000, but the revenue was also less by £91,000,000, and the surplus of revenue over expenditure to go towards reduction of debt was £45,693,000. Customs and excise showed a surplus of £1,343,000 over the sum anticipated in the estimates. Beer, tobacco, tea, and sugar and the motor tax all realized more than had been expected, but the entertainment tax and spirits had fallen below the estimated sum. The inland revenue duties as a whole fell below the original budget estimate by £110,726,000, chiefly owing to the shortage of Excess Profits Duty, of which, however, there were still unpaid arrears. To the surplus of £45,000,000 to be applied to the reduction of debt had been added a sum of £25,000,000, which was included for debt reduction on the expenditure side of the budget. The estimated expenditure for 1922-23 was £910,069,000, and the estimated revenue was £956,625,000, leaving a surplus of £46,556,000. When, however, the proposed changes had been made, it was estimated that the revenue would be £910,775,000, and while the expenditure would be the same the surplus would only be £706,000. The chief changes proposed were: the reduction of the minimum charge for letters from 2d. to 1½d.; of the postcard rate to 1d., and of the minimum charge for printed papers to ½d., subject to certain conditions; also reductions in telephone charges; a reduction of the duty on tea from 1s. to 8d., and of the duty on coffee and cocoa by one-third. The standard rate of income tax was to be reduced from 6s. to 5s. in the £. The final balance sheet was as follows:
|Motor Vehicles Duties||10,600,000|
|Estate, etc., Duties||48,000,000|
|Land Tax, House Duty, and Mineral Rights Duty||3,000,000|
|Income Tax (including Super Tax)||329,000,000|
|Excess Profits Duty, etc.||27,800,000|
|Corporation Profits Tax||19,750,000|
|Interest on Sundry Loans||14,000,000|
|Borrowings to meet Expenditure chargeable against Capital||10,050,000|
|National Debt Services||335,000,000|
|Payments for Northern Ireland Residuary Share, etc.||2,500,000|
|Payments to Local Taxation Accounts, etc.||9,788,000|
|Other Consolidated Fund Services||2,650,000|
|Customs and Excise, and Inland Revenue Departments||12,275,000|
|Post Office Services||53,822,000|
|Provision for Supplementary Estimates||25,000,000|
|Expenditure chargeable against Capital||10,050,000|
In the debate which followed H. H. Asquith criticized the wisdom of remitting taxes out of what he stigmatized as a remarkably short surplus. John Robert Clynes declared that the war debt would eventually have to be liquidated by a graduated levy on accumulated wealth.
The debate was resumed on May 2 by Sir Donald Maclean, who specially criticized the decision to suspend the reduction of debt. He said that the only remedy for the present state of affairs was reduction of expenditure, which should have been applied two and a half years ago. Had retrenchment taken place at that time there could have been a reduction of 2s. in the income tax, lesser taxes on sugar and tea, and the country would have been placed in a position of which it might have been proud.
Bonar Law dissented from much of this criticism. He retorted that if Asquith had been chancellor of the Exchequer he would have presented a budget very similar to the one under consideration. One must not think too much of precedents, he said, but look on facts as they were and deal with them in the best way possible. He laid down the principle that it would be quite wrong to fix a certain time within which the debt must be paid off. He contended that the only real principle was that when trade was good and revenue expanding they should give every penny they could give without disturbing trade in order to meet the debt; but when trade was bad it was their duty to take into account what had been done and slacken their efforts in meeting the burden. The right course for the government to adopt, he held, was that when trade was as it was at present, expenditure should be met without adding to or deducting from the debt. Looking ahead, Bonar Law predicted that there were bad times in store, though perhaps not immediately. So far as human foresight could tell, there would be no world war for a very long time, and his belief was that the real strength of this country to meet the difficulty when it came would be found in a strong financial position far more than in anything else.
James Henry Thomas commented upon the admission by the chancellor that money from Germany was regarded as a windfall. He refrained from adding his congratulations, especially in regard to relief in indirect taxation, the burden of which on the working classes he described as appalling. He calculated that a working man with a wage of 3l. 10s. a week, and having a wife and three children, paid 8s. or 10s. a week in indirect taxation. Additional relief in this direction would have been a greater stimulus to trade than 1s. off the income tax.
Colonel John Gretton and Lieut.-Commander Joseph Kenworthy complained of the absence of relief for beer drinkers. The former said that the utmost amount which the chancellor of the Exchequer would risk by reducing the duty on beer by 30s. a standard barrel, thus allowing 1d. to be taken off the price of a glass of beer, would be £20,000,000. Neil Maclean advised the reduction of interest on government securities, stating that anything from £75,000,000 to £100,000,000 could be saved in that way, and 3s. taken off the income tax.
On May 9 Sir Eric Geddes, speaking at Sheffield, stated that the cuts in expenditure adopted by the government amounted to only £52,000,000 of the £100,000,000 recommended by the Economy Committee, of which he was chairman. He urged that the full economies must be carried out and taxes reduced, or trade could not recover. He said that the sweeping allegations of inaccuracies made by the Admiralty in its notorious memorandum against the report were untrue, and that the chancellor of the Exchequer stated that he could see no error in the calculations. The report recommended means of reducing an expenditure of £500,000,000 by £100,000,000. He congratulated the chancellor of the Exchequer on what he had been able to do, and firmly believed he was determined to act in the spirit of his budget speech. The reductions in the coming year were bound to fall in the two great groups which the committee called the Defence Force and Social Services. They believed that full economies could not be made until one minister was responsible for the whole expenditure on defense. As regards the Navy, they proposed a reduction of £21,000,000. in addition to any savings from the Washington agreement. The Navy had given a reduction of £16,000,000, including those savings, and so far as he could see the real naval economy was only some £4,000,000 per annum, and was a very remote possibility. A reduction of £20,000,000 was recommended for the Army in addition to the revisions of garrisons abroad. The Army had given approximately half that sum, including garrison adjustments. In the Air Force they proposed cuts of £5,500,000, of which about half had already been made. As to education, they proposed economies amounting to £18,000,000, and the actual cut was £7,500,000. They strongly urged the evils of the percentage grant system. He said that the country was not getting the best value for its expenditure on education. Until some alternative recommendations were found they looked to the government to give effect to the report of the committee, which were the only proposals before the country.
The Post Office vote was taken in the House of Commons on May 4. Frederick Kellaway then announced that, whereas in 1920-21 there had been a loss on the previous year's working of the Post Office of £7,300,000, at the end of 1921-22 the deficit had only been £1,800,000, and it was estimated that in the current year there would be a surplus of over £9,000,000, £7,500,000 of which would be applied to reducing postal and telephone charges. The Sunday collection of letters would also be restored. The charge for inland letters and letters to the United States and to all parts of the Empire, weighing not more than one ounce, would be reduced to 1½d.; the postcard rate would be reduced to 1d.; the printed paper rate would go down to ½d.; the telephone rental for private users would be reduced by 1l. 10s. a year; local message fees, extra mileage charges, and trunk calls made between certain hours would also be reduced. It had been decided to allow the establishment of a limited number of radio-telephone broadcasting stations in the country. These stations would be limited to a power of 1½ kilowatts, and furnished with wave lengths which would not interfere with other services. As regards air mails, the aerial parcels post to Paris effected a saving of from five to six days.
Advantage was taken by Stanley Baldwin of the vote for the Privy Council for trade and subordinate departments to review the position with regard to the markets of the world. With regard to England, he explained that the great difficulty was to find employment for an increased population in a country already industrialized up to the limit of safety. The coal trade was the only one of Britain's staple trades which had reached an economic level; it had already got back something like its prewar average in export trade, though the demand for industrial coal at home was low. The iron and steel trades and the cotton trade were going through a difficult time, but the wool trade was doing fairly well. The leather trade and the electrical trades, and the trade in textile machinery were busy. London was, he said, still the financial centre of the world, and there was every prospect of Britain's being able to recover, retain, and improve on the position in industry which it had always held in the world.
In the middle of May an effort was made by the Labour Party to secure legislation for the benefit of the unemployed. Thomas Griffiths introduced a Prevention of Unemployment Bill, the second reading of which was taken on May 12. The bill proposed to transfer to the Ministry of Labour the power to frame and carry into effect a coordinated national policy. He would from time to time advise the Treasury how to organize and spread over the different seasons of the year the various national works and services. The bill made provision for the appointment of local unemployed committees, representative of employers and workers, to keep in touch with economic conditions in their various areas, and it also gave power to the minister of labour to regulate late hours and conditions of labour. After a short debate an amendment for the rejection of the bill was carried by a majority of 90.
The discussions on the budget again brought to the fore the problem of economy, and on May 15 Austen Chamberlain explained to the House of Commons the steps that were being taken by the cabinet to that end. He said that the Treasury had already taken up with the departments the question of what immediate and prospective reductions could be made in their votes for the current year, and, as soon as their answers were received, would be engaged in discussing with them all possible means of effecting economy. He also announced that committees were being appointed to investigate (1) the practicability of a Ministry of Defence as recommended by the Geddes committee; (2) the amalgamation and coordination of services common to the various fighting forces; (3) the advisability of introducing a system of making lump sum instead of percentage grants to local authorities. Sir William Joynson-Hicks pointed to the failure of the Treasury in 1921 to effect economies, and to the fact that the Geddes committee had to be appointed because it could not control the departments, and asked if the Treasury could be assured that they had the cabinet behind them. Chamberlain characterized the question as unfair to the departments and the Treasury. Reductions of £70,000,000 had been made by the departments and the Treasury in combination before any proposals were submitted by the Geddes committee. The chancellor of the Exchequer, the Treasury, and the other departments knew, he said, that the government were behind them in the efforts they were making.
On the same day a discussion took place on the Turkish outrages which had been reported in The Times ten days earlier. Chamberlain said that the Turks appeared to be working on a deliberate plan to get rid of minorities. Their method was to deport Ottoman Greeks, large numbers of whom died on the road from hardship and exposure. For preference the Turks chose winter weather for driving the deportees into the mountains, children being driven forward with the rest. So severe were the conditions of deportation that the roads along which the unfortunate victims were compelled to march were scattered with dead bodies. Chamberlain stated that the Turks had been repeatedly warned that these atrocities, which had now been going on almost continuously for over seven years, would adversely affect Allied public opinion and Allied policy, but these warnings and protests had been entirely without effect. The details received showed such an appalling tale of barbarity and cruelty, practised as part of a systematic policy of extermination of Christian minorities in Asia Minor, that the British government - which had in the proposed terms of peace assumed a serious responsibility for the protection of minorities - could not allow such reports to remain uninvestigated, or such incidents to continue unchecked. It had been proposed, therefore, to the French, Italian, and American governments that they should each send a carefully selected officer to Trebizond or other Black Sea port, as might be most suitable, for the purpose of proceeding to the interior in order to make the necessary investigation.
In the middle of May the government experienced a defeat in the House of Commons on the second reading of the School Teachers (Superannuation) Bill. This measure provided for the payment by school teachers of a contribution towards their superannuation fund. One of the recommendations of the Geddes economy committee was that full inquiry should be held with a view to placing the superannuation of teachers on a sound contributory basis, under which the teachers and the authorities employing them would each bear a due proportion of the burden. Pending such an inquiry, the Geddes committee recommended that a 5% levy should be paid by the teachers, and the present bill was designed to give effect to this recommendation.
The objectors to the bill in the House of Commons urged that a revision of the terms of the pension scheme would constitute a breach of faith. They said that the expectation of a non-contributory pension was one of the government considerations which had induced teachers to accept the Burnham scale of salaries. Accordingly Stephen Walsh moved to postpone the second reading for six months. The debate proceeded for some time, and its adjournment was then moved by Lord Robert Cecil and opposed by the government, but the motion was agreed to by 151 votes to 148, a majority of three.
On the following day Chamberlain stated, in reply to a question from Clynes, that the government had decided to appoint a small select committee to ascertain and report whether any undertaking was given or implied by the government or Parliament that the provisions of the Teachers (Superannuation) Act, 1918, should not be altered while those scales remained in force. Chamberlain at the same time pointed out that the decision of the House involved a charge, and added that the government thought that the House should make provision for this charge at the earliest possible moment. Accordingly a supplementary estimate for a sum of £575,000 was introduced in the House of Commons on May 22. Opponents urged that the money should not be voted until the amount required was known. Godfrey Locker-Lampson moved to reduce the vote by £200,000. This amendment was accepted by Chamberlain, and the vote was then agreed to.
On May 19 Colonel Ernest Meysey-Thompson moved the second reading of a Trade Union Act (1913) Amendment Bill, the object of which was to provide that the application of trade union funds for certain political purposes should be endorsed by a majority in a ballot in which at least 50% of the members must take part; that all moneys intended for political purposes should be raised by a separate levy; and that every year contributing members should be given the opportunity of declaring whether or not they would go on contributing. This bill was opposed by the Labour members, and the second reading was carried, but the bill did not succeed in progressing beyond the report stage.
Another bill which passed its second reading during May, but did not get beyond the report stage, was the Separation and Maintenance Orders Bill moved by Sir Robert Newman. It proposed to add to the grounds upon which a man could claim a separation order from his wife, and would enable the court to grant a maintenance order whether the parties were living together or were separated, and would strengthen the powers of the court to enforce an order relating to maintenance or to the custody of the children or to access to them.
The second reading of the Finance Bill was taken at the end of May. Colonel Josiah Wedgwood moved to postpone it for six months, pointing out that the only reduction by which the workers would benefit was that made in the tea duty. Asquith took the opportunity to criticize the financial policy of the government, and Sir Philip Sassoon urged that the Treasury should be empowered to make special grants to enable the National Gallery to acquire art treasures from private collections.
The Genoa conference was referred to in the House of Commons on several dates in the course of May. A statement had appeared in various newspapers attributing to the prime minister a declaration that the entente between France and Britain was at an end. Prime Minister David Lloyd George denied that he had ever made such a declaration, and he wrote a letter to Louis Barthou requesting him also to deny it. On May 9 Chamberlain read Barthou's reply to the House of Commons categorically denying the allegations.
Lloyd George took advantage of the vote for the Foreign Office on May 25 to make a statement as to the results of the Genoa conference. He made it plain that the main concern was the problem of Russia. The representatives of Russia were present at the conference, and they represented more poverty, wretchedness, desolation, hunger, and despair than all the other nations. Without the assistance of the other nations it was hopeless for Russia, whatever its government, to expect to raise itself from the pit of squalid misery. There were three possible courses with regard to Russia: the first was force, which had not been suggested at Genoa; the second was the policy of leaving Russia to her fate until a more benevolent and acceptable government was in power. That course, said Lloyd George, was one which they might be compelled to adopt. The third course was that the government should not preclude relations with the Russian people.
Asquith expressed skepticism with regard to the armed forces which were said to be massing on the frontiers, but the prime minister said that he received his information from the prime ministers of Poland and Romania. Clynes commented upon the disinclination of the prime minister to go deeply into our relations with France. The question, in his view, was whether we had reached the stage when we could boldly say that we had guaranteed more goods by the Treaty of Versailles than we could deliver. In reply to criticism by Lord Robert Cecil, Lloyd George then affirmed that disagreement with France was one of the most disastrous things that could happen to the peace of the world. He expressed the desire that France and Britain should work together, but they must work together for peace in Europe; and upon that principle the government would work as wholeheartedly with the French democracy as they had worked together to defend Europe against the aggression of their common enemy. After a speech by Sir Laming Worthington-Evans, the government policy was endorsed by 235 to 26 votes.
The state of Ireland showed no improvement during May. On the first day of the month it became known that the rival Sinn Féin leaders, representing the Southern provisional government and the anti-treaty party, led by Eamon de Valera, had failed to find a basis of agreement. The peace conference at the Dublin Mansion House thereupon broke up, and the provisional government decided to proceed with the elections in June in order that the people might vote for or against the treaty. The day for the polling was fixed for June 16.
Outrages continued to occur at the beginning of the month. The occupation of various buildings in Kilkenny by irregulars of the Irish Republican Army led to sharp fighting between them and Free State troops, who ultimately succeeded in dislodging the raiders from their positions and taking a large number of prisoners. The irregular forces had concentrated at the castle, and severe fighting took place before this stronghold was captured.
In the meantime the Dáil appointed a committee, representing both the Free State party and the anti-treaty party, to consider the possibility of bringing about a truce and reuniting the army. Another committee appointed at the same time agreed upon a four days' truce from May 4 to May 8, with a view of giving time to ascertain a basis on which the army might be unified. This truce was subsequently extended by the Dáil until May 10, and afterwards for still longer. Nevertheless lawlessness continued to prevail in many parts of the south and west of Ireland.
On May 10 it was announced in the Dáil that the committee appointed to find a basis for peace negotiations had failed to agree and had broken up. The Dáil thereupon adjourned till May 17, the peace committee being desired again to endeavour to find some formula for agreement which might be placed before the House. Further outbreaks of disorder occurred in Belfast in the middle of the month, and a new curfew order was issued. At the same time a number of creameries and milk factories in the south of Ireland were seized by branches of the Transport Workers' Union, who hoisted the red flag over the buildings.
When the Dáil met on May 17 the reports of the two factions of the peace conference were read, showing that no agreement had been reached. A further adjournment and a further effort to find a basis of agreement also miscarried, and hopes of peace had been universally abandoned when the Dáil was surprised, on May 20, by an announcement that Michael Collins and de Valera had arrived at an agreement providing for a coalition of both parties.
The campaign of outrage showed no signs of subsiding. Murders and shootings took place in Belfast with little intermission. In Down and Antrim a number of mansions were burned down, police barracks and post offices were attacked, a bank was robbed and burned, and a railway bridge blown up. On May 22 William Twaddell, a Unionist member of the Northern Parliament and city councillor, was waylaid on his way to business and shot.
The agreement reached between the provisional government and the republicans was received with some misgiving in London, and Winston Churchill promptly asked the Sinn Féin leaders who had signed the Irish peace treaty to meet him in London to explain the effect of the new coalition agreement. Speaking in Parliament, Churchill said that there were nineteen battalions of imperial troops in the six northeast counties, and any further reinforcements considered necessary by the military authorities would be sent.
The conference between Churchill and the Irish leaders began on May 26. Its object was to clear up whether the Sinn Féin coalition compact was or was not compatible with the due fulfilment of the Irish obligations under the treaty. At the conclusion of the conference Churchill made an important statement as to the position in the House of Commons. He explained that the pact between Collins and de Valera would give the anti-treaty men 57 seats in the new parliament of Southern Ireland, leaving 64 for the supporters of the treaty. If de Valera and his ministers became members of the government without signing the declaration of adherence, the treaty would be broken and the imperial government would resume such liberty of action as the case might require. The Northern government had declared that, now that Collins and de Valera were to be members of the same administration, they could not have such dealings with them as were contemplated in the agreement previously reached. Before the constitution of the Irish Free State was adopted, it must be submitted to the imperial parliament. At the end of the month Ireland thus seemed no nearer to a settled condition than it had been at the beginning.
The engineering dispute continued throughout the month of May. On the 3rd Sir William Mackenzie opened an inquiry, under Part 2 of the Industrial Courts Act, into the causes and circumstances of the dispute. An attempt was made to bring the men and the employers together, but it failed owing to the refusal of the employers to discontinue the lockout while negotiations were in progress.
The shipyard dispute, on the other hand, was settled during the first week in May. The trouble in the shipbuilding industry arose over the decision of the employers to abolish the war bonus of 26s. 6d. per week. As the negotiations proceeded the proposal was modified to the withdrawal of 10s. a week on March 29, and of 6s. at the end of April. The unions balloted, and the men ceased work on March 29, when the notices to enforce the reduction expired. At the beginning of May the employers again amended their terms by splitting the reduction of 6s. into two - 3s. on May 17 and 3s. on June 7. On this proposal the unions again balloted; only about 30% of those entitled to vote did so, and the vote gave a majority against acceptance of 5,034. Since, however, the rules of the Federation required a two-thirds majority for the continuance of a dispute, the negotiating committee decided that they were obliged to bring it to an end, and members of the unions were instructed to resume work on May 8 on the terms stated above. The stoppage had lasted for nearly six weeks.
On May 10 Sir William Mackenzie issued his report on the inquiry which he held under the Industrial Courts Act into the engineering dispute. The report stated that the present difference was concerned, not with the men's right to contest or object to any change or innovation that the employers might desire to make, but with the question of what should be done in the interval which must elapse between the raising of the objection and its determination under the method of procedure provided. In his statement of conclusions Sir William Mackenzie said that the question of necessity in regard to overtime was related to the requirements of the work to be done and the business in hand, and as to this necessity the management alone were in a position to judge. The employers were willing that the kind of question which had been under discussion during the disputes should be settled by general national agreement, or determined in accordance with procedure set up by such agreement. To this view the unions did not take exception. As to information with regard to a proposed change in working conditions, Sir William Mackenzie said that it should be available to the workpeople directly concerned, or their representatives in the shop, before it was decided that the change should be made. The final opinion expressed was that the matter was one in which no agreement, however carefully devised, could fully take the place of good sense and goodwill between the parties, and the appreciation by either side of the difficulties and point of view of the other.
The issue of this report led to a new attempt to reach an agreement. On May 16 a joint negotiating committee, representing all the unions involved in the dispute, met the Engineering Employers' Federation in conference at Westminster. At first the spokesmen for the Amalgamated Engineering Union did not find themselves in accord as to procedure with the representatives of the forty-seven other unions, but after a short delay matters were arranged and agreement was reached on a united course of action on the part of the workers. At the first sitting of the conference the employers undertook to submit definite proposals to the negotiating committee of the united unions. When these proposals were submitted some hope was entertained of their acceptance. They provided for the application of the provisions for avoiding disputes to all sections and unions without distinction, and also suggested arrangements by which there would be reasonable notice given and prior consultation made possible in respect of contemplated changes in workshop management. The prospects of a prompt settlement, however, were dashed to the ground by the action of the executive of the Amalgamated Engineering Union, which declined to proceed with negotiations on the lines suggested by Sir William Mackenzie and adopted by the employers. The proposals were thereupon separately considered by the executives of the forty-seven unions apart from the Amalgamated Engineering Union, and after a long discussion it was announced that the conference had decided to submit the proposals to a ballot vote of the members of the unions.
As soon as the Amalgamated Engineering Union perceived that they were likely to be left alone in their struggle with the employers, they began to regard the position very seriously. Their members had already been unemployed for eleven weeks, and although the union had been relatively rich, their resources had become gravely depleted. Accordingly they decided to call a national conference of delegates at the beginning of June to consider the position.