Elixir of Rearmament

To a genuinely astonished House of Commons last week His Majesty's Government suddenly revealed that during 1937 they secretly entered the grocery business on a world scale.

Tall, bland Chancellor of the Exchequer Sir John Simon drew gasps from startled M. P.s by disclosing that as much as 150,000 tons of wheat have been bought by the Government in a single day, plus correspondingly gigantic purchases of sugar and whale oil. (The British lower classes can subsist indefinitely on bread and margarine--in which whale oil is a key ingredient.) What Sir John was really doing, as he "opened" the Budget last week, was unlocking the State secret that His Majesty's Government have craftily completed the first step necessary to prepare the Empire against immediate attack --i.e., for war (see p. 75). They have stocked their grocery shelves with enough edibles to feed British Islanders, according to Sir John, "during the early months of an emergency."

With M. P.s sitting silent as if stunned, Sir John explained: "The Government took the very unusual course of acting without first applying for statutory authority, in confidence that the House of Commons would understand our reasons and would, in due course, enable us to obtain legislation conferring the necessary powers" to pay for all this food. It has been bought by ostensibly private British syndicates whose members have confidence in Prime Minister Neville Chamberlain, a businessman whose reputation for commercial integrity is second to none.

"Absolute secrecy was essential," Sir John said, "to prevent prices from being raised by knowledge [among food sellers] of the Government coming into the market. Had it been known, of course, the effect on prices would have been disadvantageous to consumers generallv as well as to the Government." That U. S. wheatmen have not been asking much as they would have asked had n Sir John and Mr. Chamberlain been secretive, and by the same token U. S. citizens have not had to pay as much for wheat and bread as otherwise would have been the case.

Soak Everybody! Because the rich have been so drastically soaked for years in the United Kingdom (where many taxes are clearly confiscatory), Sir John Simon in effect made the keynote of his new Budget "Soak everybody!"

Everybody in the Kingdom drinks tea, has been paying for the cheapest grade about eightpence per pound plus sixpence tax. Sir John added another tuppence (4-c-), drew from all quarters of the House pained cries of "Oh!" and "Shame!"

The extra tuppence on tea, sternly declared the Chancellor, is "a small contribution, drawn from practically every home in the land" to help pay for rearmament.

British cars, trucks and gasoline are already so heavily taxed that last year 8 1/2% of the national revenue was taken directly from automotive Britons as such. Sir John soaked them further last week by raising the tax on gasoline from eight pence (16-c-) per gallon to ninepence (18-c-) Including the new tax, the British motorist will now pay about 39-c- for an imperial gallon of gas--equivalent to about 35 1/2for what U. S. citizens call a gallon. Immediately this week British omnibus companies raised their fares, so that Sir John upped gasoline tax really "soaked everybody."

27 1/2%. In world headlines Sir John Simon figured last week as the man who had just raised the basic British income tax rate to 27 1/2%--but this was more astonishing to less heavily taxed foreigners than to Britons, for they have been paying 25% anyhow. Excited about 27 1/2%, the New York Post put through a transatlantic telephone call, asked Fleet Street reporters to coax in a few Lodoners at random off the street to be questioned by New York. A van driver (truck driver), George Merrick, said: I think it is a very fair tax for the working man."

The Post: "Do you mind telling what you earn?"

Van Driver: "I make five pounds ($2 a week. I'm a married man with no children and I pay three pounds ($15) a year income tax."

The Post: "If you lived here and ma twice as much you wouldn't have to pay any income tax!"

Van Driver: "Thank you. I'm quite satisfied. I like it better here."

The Post: "Why do you say it is a fair tax?"

Van Driver: "Because it puts the burden on the shoulders of those most able to pay. We've got to keep the old flag flying you know."

John Revellion, a printer, said fr London: "The increase will cost me about ten pounds ($50) a year more. If that's the price of peace I think it is a good investment for me and perhaps for the world."

Miss Hilda Field, secretary, said she expects to pay about $35 more yearly, added: "I'll pay it cheerfully. In fact. I'd rather expected to have to pay more."

Although the King's subjects are not Pollyannas, last week they did show widespread signs of realizing that the United Kingdom is in more or less of a jam, has no alternative except to buy her way out by rearmament and piling up of food supplies under such shrewd, secretive bargain hunters as Sir John Simon and Neville Chamberlain.*

Concession to Industry. Year ago the Budget of the then Chancellor of the Exchequer. Mr. Chamberlain, carried what afterward were considered clauses "tending to overtax the British munitions industry" or "soak the profiteers"--depending on one's point of view. Since nearly every country has laid plans to soak wartime profiteers, what proceeded to happen in London last week may be of wide significance. The new Simon Budget not only does not further soak any presumptive British profiteers but actually contains a clause enabling British industrialists to make such heavy charge-offs for "depreciation" that in effect industry received last week a hidden exemption from the British income tax upping.

This the House of Commons took calmly, evidently persuaded that speed in rearmament is a vital necessity, that industry will work faster if oiled with the grease of a little profiteering.

The House, although not a single hearty cheer was raised during the 98-minute Budget speech, promptly authorized the Chancellor's income, gasoline and tea taxes.

Quietly triumphant, Sir John Simon remarked to friends that once again he had, without throat discomfort, got through a long speech thanks to the mysterious ''elixir'' which Lady Simon always mixes up beforehand. Orator Sir John takes nips of this from a phial, and the potent elixir is gradually diluted as he sips water, about one glass every half hour.

No great power today has a genuine "balanced budget" or equality of actual income and actual expenditure, and none has kept its national debt within prudent bounds. Comparatively, British Government finances make a good showing for the budget period 1938-39. National debt: $40,130,635,000--of which Britain owes the U. S. today $4,487,670,000. Expenditures: $4,721,990,000--an increase from last year of $407,500,000. Estimated surplus: $1,760,000--obtained by covering the actual deficit not shown in the Budget with a loan of $450,000,000 earmarked for Rearmament. Total expenditure for Rearmament in 1938-39: $1,676,250,000.

*The nonpartisan Tax Research Foundation estimated this year from latest available statistics (1934--35) that total revenue from all tax sources was raised in the following countries per capita in dollars thus:

United Kingdom $91.58

U. S. $77.22

French $73.86

German $71.24

Incomplete later figures suggested that the British subject still led in being most heavily taxed. Over a long period the average Briton has become so accustomed to this that he often, half-humorously, half-proudly, boasts about his proven ability to thrive while carrying the world's heaviest per capita tax load.

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