Pleasing Budget

Hugh Dalton, Labor's shy new Chancellor of the Exchequer, had quite an audience. Present in the House of Commons were three distinguished predecessors: Winston Churchill, Sir John Anderson, Viscount Simon. Ex-cabbies and miners among the new Labor Members, many of them sitting on the floor of the overcrowded House, critically eyed their man. From the packed gallery peered the Bank of England's Governor Lord Catto. To lords and cabbies, Hugh Dalton was about to open the new Socialist Government's first budget.

In method, it was like any Tory budget. But its arithmetic was drastically different, not because socialists had written it but because Britain was at peace. Hugh Dalton achieved a miracle: he pleased almost everybody. To Britons, his budget brought a 10% cut in the standard income-tax rate, more deductions for wives, the abolition of a 33 1/3% tax on household goods. For business, the excess-profits tax was cut 32 1/2%.

To some 2,000,000 low-paid workers went the most important benefit: a single person making less than -L-2 75. ($9.40) a week henceforth would pay no income tax at all. A man with a wife and five children could make up to -L-9 35. ($36.60) a week before he must pay taxes. Said Dalton: "In the future it will pay to have five children." But Britons in the middle brackets would still be paying higher income taxes than comparable Americans.

Usually rated diligent but dull, Hugh Dalton blushed when the House cheered him last week. Tories were relieved. Bankers beamed. Even Lord Catto, certain that his bank would soon be taken over by the new Government, was not shocked. Britain's new budget was a good, middle-of-the-road job. Next day, prices rose on London's stockmarket.

Americans had some right to feel puzzled. Britain was asking for a huge U.S. loan, complaining that she could not pay normal interest (see INTERNATIONAL). Yet Britain could afford to lower her taxes. But the British were not trying to dupe the U.S. A cut in taxes was a matter of pounds, and Britain's world needs were reckoned in dollars. She needed foreign exchange for imports, foreign capital for reconversion and exports, and only U.S. dollars could fill the want. Nothing Hugh Dalton did to British taxes could provide the dollars.

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