To this we may add the value of the loans we have made to our Allies as under : Assuming these assets to be ultimately worth 50 per cent. of their face value, we have a - credit of 784 201 985 A credit balance of nearly 3,000,000,000l. does not ustify the profound depression manifested in some [uarters as to our liabilities abroad. Revenue and Expenditure.-We may now consider he position of the National finances. Mr Chamberlain resented the Budget for the current financial year on April 30. The principle items are given below, together vith the corresponding figures for the year 1913-4. REVENUE. 1919-20. Million £ 237.5 33.5 14 Stamps, Land Tax, etc. 47 Income Tax 15.0 354.0 Excess Profits Duty 300'0 35 Non Tax Revenue 41.0 198 Total Receipts from Taxes and P.O. 981.0 Miscellaneous 220-1 1201.1 Deficit to be provided by fresh 233.8 1434.9 As Mr Chamberlain pointed out, owing to the windingup of the war expenditure the current year must be regarded as an abnormal one; and the figures which he gave have altered substantially for the worse during the past five months. On the expenditure side demobilisa tion has taken longer than was anticipated, and the military and naval expenditure will be greater than was contemplated; moreover, pensions and other charges have been largely increased. On the revenue side the position is less favourable than was expected. It was anticipated that the Government could bring the food control to an end, but they have altered their decision. The winding-up of the Food Control would have meant the realisation of all the vast trading stocks in the hands of the Ministry of Food, and & return to the Exchequer of the trading capital which has been invested there. The retention of the Ministry of Food means that the capital must remain in the business. Therefore the revenue which the Chancellor anticipated from that source, estimated at 70,000,000, will not be received this year, though it is to be hoped it may come in during the next. At the moment it seems probable that the Revenue and Expenditure for the year will be approximately & follows (in million £): The deficit will therefore probably be increased from 34,000,000l. to 319,000,0007., making our total National Debt 7,520,000,000l. The National Debt in 1914 was 45,000,000Z.; to-day it is in the neighbourhood of 1,500,000,000l., against which we may set a substantial um in respect of Loans to the Allies and Dominions, say ,000,000,000l.; arrears of Excess Profits Duty 1919-20-21, 00,000,000l.; and saleable goods 400,000,000%. These tems amount together to 1,800,000,000l., and reduce the net amount of the National Debt to 5,700,000,000Z. Cost of Government.-Before the war the cost of the National Government was at the rate of 200,000,000l. a year, equivalent, on a national income of approximately ,400,000,000l., to say 8 per cent. It may be now estiaated in a normal year at 800,000,000l., or 22 per cent. f the national income. The position is, therefore, a erious one and calls for drastic treatment. To what nd should we direct our post-war economic policy, and pon what basis should we frame our scheme of the cost f National Government? Our post-war economic policy hould be directed to the following principal objects:(1) The reduction of expenditure, national and individual. (2) The increase of production on such lines as will ensure that the standard of living shall be considerably higher than before the war. (3) The limitation of the issue of Currency Notes. (4) The stabilisation of the value of money at home and abroad on the basis that 17. has now the same purchasing power in terms of commodities and services that 10s, had before the war. With regard to the cost of the Army, Mr Churchill tated on Aug. 12 that the Rhine Army is to be reduced to 1000 or 5000 men. We have 400,000 German and Turkish prisoners, requiring 100,000 British soldiers to look after them and feed them; we have more than 100,000 men in Mesopotamia, of whom 20,000 are British; we have more than 90,000 men in Egypt and Palestine; and we have 60,000 men in Ireland compared with 30,000 before the war. Then we must maintain our Army in India, and we must keep more than 100,000 men in France and Flanders on salvage work. Mr Churchill also pointed out that next year there will only be two great nations in the world which will be free from conscription, namely, Great Britain and Germany. France, Italy, Russia, Japan and the United States, to say nothing of the smaller Powers, are all proposing to continue compulsory military service. Mr Churchill said that our policy is to go back to the little British Volunteer Army of previous days, subject only to such modification and improvement in organisation and material as the war has suggested. He added that he was told, on high expert authority, that to reproduce the pre-war army, which cost 29,000,000l. before the war, would now cost, having regard to the reduced purchasing power of money and the increased pay, between 65,000,000l. and 75,000,000l. a year. With regard to the Navy, the cost for the current year will probably be 140,000,000l. Naval demobilisation appears to be proceeding at a fairly rapid rate; the strength at the date of the Armistice was 407,000 men; on July 24 it was 180,000, as compared with a pre-war strength of 151,000 men. It is rather difficult to resist the force of some of Lord Fisher's criticisms in connexion with Naval economy; but, if he would indicate an outline of his constructive policy, it would give a perplexed public a better lead than his drastic proposal to 'sack the lot.' The British public is not likely to draw a blank cheque on this vital question, even to a man who has rendered the nation such valuable services as Lord Fisher. It seems to me that we shall be fortunate if we can limit our expenditure on the Navy in a normal year to 80,000,000l. The economic value of sea-power cannot be expressed in terms of money; it is vital to the existence of the Empire as a world-power; but, if it were capable of such expression, an expenditure of, say, 80,000,000l. per annum appears small in comparison. The war has created a great new source of expenditure in the shape of the Air Force. Here we have no prewar experience to guide us in framing an estimate as to the amount we should expend on this branch of Imperial Defence. In August 1914 the British Air Service possessed a total of 272 machines, whereas in October 1918 the Royal Air Force possessed over 22,000 effective machines. So far as aero-engines are concerned, our position in 1914 was by no means satisfactory. We depended for a large proportion of our supply on other countries. By the end of the war British aero-engines had gained the foremost place in design and manufacture and were well up to requirement as regards supply.* As a provisional decision for us to work on until the whole question of our defence can be considered in relation to our financial position, Mr Churchill stated on Aug. 12, that he had instructed Sir Hugh Trenchard that he must provisionally frame his scheme within the limits of 25,000,000l. a year. Surely without unduly 'starving' this important branch of Imperial Defence we can hold our own on an expenditure of 15 to 20,000,000. The question of expenditure upon Imperial Defence should, however, not be considered merely from the point of view of what we can afford. It must be approached rather in the light of the new position and the new responsibilities of the Empire which have been created by the war. It may be confidently asserted that the British Empire can afford better than any other worldpower (not excepting the United States) to maintain an Army, Navy and Air Force adequate for the protection of its interests and the fulfilment of its engagements. One of the largest items of national expenditure for nany years to come will be the war pensions. The Minister of Pensions stated on Aug. 1, that the Budget estimate of nearly 73,000,000l. was already out of date. Additional expenditure had been authorised; and the lecisions of the Government on the recommendation of the Select Committee would call for an extra expenditure For the remainder of this year of about 11,000,000l.; so that the estimates should be treated as 84,000,000l., and * The Hon. C. A. Parsons, Presidential Address, British Association, Sept. 9, 1919. |