to the Labour Party to reconsider the attitude they had adopted for the past three or four months "before it was too late "; but he failed to indicate what steps the Liberals would take if his appeal was disregarded.

The Labour Party was not unduly perturbed by the storm rumblings within the Liberal camp. Addressing a large Labour meeting at York on April 20, in connection with the Independent Labour Party's Conference in that city, the Prime Minister said that there was more falsehood than truth in the dictum, which they were never allowed to forget, that Labour was in office but had no power. Whoever was in office had opportunity, and opportunity was always power. Had they not recognised Russia? Was Singapore still being pursued? His duty, he said, was clear. It was, in accordance with the principles of the Labour Party, to carry on the business of the country, and to keep off a General Election which nobody wanted, and which, if it came, would settle nothing yet. He saw no reason why the country should be bothered with a General Election for two or three years. It would take at least two years to put Europe on a peaceful footing, to carry out their League of Nations programme, and to get industrial relations established in a normal way. When the time came for them to appeal to the country, he would do so without misgiving as to the capacity of the party to fulfil the responsibility which he believed would then be put upon it.

Whether and how much Labour would gain at the next election was a question on which prophesying was still futile, but there could be no doubt that as a result of his first term of office as Premier, Mr. MacDonald had greatly strengthened his hold both on his own following and on the public at large. At the Independent Labour Party Conference there were great searchings of heart over the action of the Government in laying down the five cruisers; nevertheless Mr. MacDonald's leadership was endorsed with enthusiasm. With that section of the public which judged politicians from personal rather than party considerations, he had become without question the most popular figure in British politics; he was in fact in a fair way to fill the same place in the public eye as had been occupied by Mr. Lloyd George in the heyday of his influence. His appeals to moral sentiment touched the public imagination much in the same way that Mr. George's appeals to other feelings had touched it in former days. The Press, as he acknowledged, had been very good to him; and the nation was now prepared to co-operate with him in an effort to secure a "victory of peace" as wholeheartedly as, a few years before, it had helped Mr. Lloyd George to win a victory of war.

CHAPTER II.

THE GOVERNMENT AND THE LIBERALS.

THE beginning of the summer season of 1924 in England was signalised by the opening of the great British Empire Exhibition at Wembley, on the outskirts of London. Such an Exhibition had been projected as far back as 1913, but the outbreak of the war had compelled the abandonment of the scheme for the time being. It was, however, taken up again after the war, and was now realised on a scale of unprecedented grandeur. No less than 12,000,000l. was spent on the erection of the buildings, and the exhibits were reckoned to be worth as much. The purpose of the Exhibition was to display the resources and possibilities of every part of the Empire, and the Governments of nearly all the Dominions, Colonies, and Dependencies had lent their active assistance to the promoters. The erection had not proceeded without numerous hitches, owing to labour and other troubles, and at the end of February grave doubts were entertained as to whether the opening could take place on the appointed day, April 23. By means, however, of a determined effort on the part of all concerned, the leeway was sufficiently made up to allow of the arrangements being carried out as originally planned.

The Exhibition was formally opened by the King in person amid a ceremony of great brilliance and solemnity, in the presence of over a hundred thousand spectators. The Prince of Wales, as President, in asking the King to declare the Exhibition open, touched on the "adverse factors" with which the promoters of the Exhibition had had to contend, not least of which was the inclement weather. The King in his speech said that the Exhibition might be said to reveal the whole Empire in miniature, containing within its 220 acres a vivid model of the architecture, art, and industry of all the nations which came under the British flag. It gave to the world a graphic illustration of that spirit of free and tolerant co-operation which had inspired peoples of different races, creeds, institutions, and ways of thought to unite in a single commonwealth, and to contribute their varying national gifts to one great end. Their thoughts, he said, went back to the Great Exhibition of 1851, and to the brilliant hopes of the growth of international peace and friendship with which it was inaugurated. Their own object was not quite so ambitious, and for that reason perhaps more likely to be attained. They believed that this Exhibition would bring the peoples of the Empire to a better knowledge of how to meet their reciprocal wants and aspirations, and that where brotherly feeling and the habit of united action already existed, the growth of inter-Imperial trade would make the bonds of sympathy yet closer and stronger. And if the Exhibition led to a greater development of the material resources of the

Empire and to an expansion of its trade, it would at the same time be raising the economic life of the world from the disorganisation caused by the war. A prayer was offered by the Bishop of London, and before leaving the Exhibition the King was presented by the Duke of Devonshire, Chairman of the Executive Council, with a gold globe resting on four lions, on which the Dominions and Dependencies were depicted in gold of a different colour.

Shortly before Parliament reassembled, the text was published of the replies of the British, French, Italian, and Belgian Governments to the Note of the Reparations Commission on the Report of the Committee of Experts. The British reply stated that the Government accepted and would do everything in their power to give practical effect to the recommendation of the Commission that the Allied Governments should adopt the conclusions of the Committee in regard to matters falling within the jurisdiction of those Governments. These matters were specified as the restoration of the economic and fiscal authority of the German Government over the whole of German territory, the steps necessary to give binding effect to new guarantees and controls, and the inclusion of all the financial liabilities of Germany under the peace treaty in a single annuity. Belgium and Italy concurred with England in accepting the Committee's recommendations unreservedly. M. Poincaré also gave a nominal acceptance, but with certain qualifications which rendered it nugatory. Although delay was dangerous, owing to the economic exhaustion of Germany, the British Government did not take any immediate step to overcome M. Poincaré's opposition, as France was on the eve of a General Election, the result of which might be conceivably to drive him from office and replace him with a more pliable negotiator.

Parliament reassembled after the Easter recess on April 29, and on the same day Mr. Snowden, the Chancellor of the Exchequer, introduced his Budget in a speech which earned general commendation for its lucidity and comprehensiveness. It contained only the faintest reflection of those tenets which were supposed to distinguish Mr. Snowden from the financiers of the other parties. Its watchword was not Socialism but Free Trade, and its principal objective was to realise what Mr. Snowden himself called "the great Radical ideal of the free breakfast table." In one all-important field, that of finance, as Mr. Asquith immediately pointed out, it failed to reveal any difference between the Labour and Liberal Parties; and this fact had an important bearing upon their subsequent relations.

The total expenditure for which Mr. Snowden budgeted was 790,026,000l. against 816,616,000l. in the previous year. This was made up of 305,000,000l. for the National Debt Services, 45,000,000l. for Sinking Funds (against 310,000,0001. and 40,000,000l. respectively), 34,840,000l. for other Consolidated Fund Services (against 30,470,000l.), and 405,186,000l.

for Supply Services (against 436,146,000l.). The Supply Service Estimates, Mr. Snowden explained, were inherited by the Labour Government from their predecessors, but they also had their responsibility for them. The Estimates for the fighting Services were 115,300,000l., a reduction of nearly 7,000,000l. The net increase in the Consolidated Fund Charges was due to increased local taxation grants owing to the Agricultural Rates Act.

In estimating revenue to meet this expenditure, Mr. Snowden said that he had felt justified in being rather optimistic. Employment, he said, though still very bad, was improving; and trade was showing flickering but hopeful signs of recovery. He therefore estimated a Customs revenue of 127,500,000l. and an Excise revenue of 140,000,000l., making 267,500,000l. in all. This was nominally 428,000l. less than the actual receipts of last year, which were 7,000,000l. above the estimate, but after making all necessary adjustments so as to compare like with like, it meant an increase of about 6,000,000l. or 24 per cent. Tax duties on the existing basis he estimated at 436,000,000l., as against 426,000,000l. estimated the previous year and 435,441,000l. actually received. Non-tax revenue (e.g. Post Office) he estimated at 109,000,000l. This would make the total revenue on the existing basis of taxation 828,100,000l. or 38,074,000l. above estimated expenditure.

In disposing of this surplus, Mr. Snowden aimed chiefly at cheapening the cost of living for the poorer classes. He proposed first and foremost to reduce the duty on sugar (which was still fourteen times the pre-war rate) from 25s. 8d. per cwt. to 11s. 8d. per cwt., equivalent to a reduction from 2 d. to 14d. per pound, to come into operation immediately. He mentioned that Mr. Baldwin had desired to take a similar step a year previously, but had refrained out of fear that the operations of sugar rings would deprive the consumer of the benefit. He thought that owing to the revival of beet-sugar production this danger could now be disregarded. The next relief for the poor consumer was to be a reduction in the duty on tea from 8d. to 4d. per pound, with similar reductions in the duties on cocoa, coffee, and chicory. Dried fruits and sweetened table waters would also be cheapened, and the entertainment tax abolished on seats below 6d. and reduced on seats from 6d. to 1s. 3d. Further, the inhabited house duty and the corporation profits tax would go, but there would be no alteration in the rates of income-tax or super-tax.

Besides eschewing all hint of Protection, Mr. Snowden in his speech struck two important blows for Free Trade. He stated that the Government did not intend to proceed with the proposals for Imperial Preference drawn up by the Imperial Economic Conference in the previous year, and enthusiastically adopted by Mr. Baldwin's Government. They had never believed, he said, that the interests of the Empire could be best served in the long run by a system of tariffs, and had repeatedly

They

expressed such views in the House and the country. greatly regretted any disappointment that might be caused to the Dominions and the Colonies, but for that the late Government must bear the responsibility. Further, the Government would not renew the so-called McKenna duties on imported motor cars and motor cycles, musical instruments, watches and kinematograph films beyond August 1, and even this interval was only granted as a concession to traders to clear off their duty-paid stock.

The total cost of the reductions in taxation was estimated by Mr. Snowden at 34,050,000l., in the current year, leaving a surplus of 4,024,000l. which he felt bound to keep. Even so, he did not suppose he had sufficient to meet all the expenditure outside the public Estimates which Parliament would sanction during the year. The Government, for instance, and the whole House was committed to the removal of the thrift disqualification for old age pensions, and he expected there would be calls also for housing and unemployment. This was the only hint of Socialism in Mr. Snowden's speech, and he immediately relapsed into sound Liberalism by stating that he hoped by unremitting vigilance during the year to effect economies without impairing efficiency.

Mr. Snowden claimed for his proposals that they gave some relief to every man, woman, and child in the country. The Budget, he said, was vindictive against no class and against no interest. He had distributed relief in such a way as to confer the greatest benefit on the greatest number; in a way which, he believed, by increasing the purchasing power of the people, would stimulate trade and industry; and he had kept in mind always the vital necessity of maintaining unimpaired national credit, on which the very existence of the country depended.

In the debate which followed both Sir Robert Horne, for the Conservatives, and Mr. Asquith, for the Liberals, expressed peculiar gratification at the way in which the National Debt was being reduced, though the former pointed out that the credit for this operation belonged so far to the predecessors of the present Government. Mr. Asquith called the Budget a "Free Trade Budget," and declared himself to be in hearty agreement with its main features. The next day, however, in a more studied speech, Sir Robert Horne presented it in a less complimentary light. He stigmatised it roundly as an "electioneering" Budget, and said that this was the common opinion. While it was the first Budget of a Socialist Government, no one could describe it as a Socialist Budget; it was conceived rather in the spirit of John Bright, who had been one of the most ardent opponents of Socialism. Sir Robert criticised the Budget on the ground that it did not aim at a just proportion between direct and indirect taxation. Before the war the proportion had been roughly 52 per cent. direct and 48 indirect; at present it was something like 63 to 37, and the Budget