we are stronger and richer than any other European Power, are assured for the time against immediate attack by our sea-power, and can thus champion from a position of vantage the liberties and rights of the smaller European States against the might of the predominant continental Power. It is not necessary to suppose any special ill-will on the part of Germany against England; but there is an obvious opposition ideals and policy which points to a possible conflict. the same time there is more method in German proceed. ings than there was in Napoleon's. The sea-power o England being the obstacle, the German Government fo a long series of years has laboured at the problem ( being great by sea as well as by land, and has obtaine no small success. There is a possibility, such as ha not existed since the great French wars, that we ma have to fight for our very life, since every year that passe adds to the preparations of Germany, and we canno foresee what accidents or alliances may pave the way fo sudden operations which will test to the uttermost every preparation of our own. This is the real cause of the need for looking into our finances, but it does not poin to the hasty raising of new taxes almost anyhow-whic was Mr Lloyd George's inference-certainly not to th imposition of new taxes for such purposes as social reform What is necessary now, in finance as in other matter is preparation corresponding to that of Germany; tha is, the development of all the forces of the State, so that when an emergency comes, we shall be prepared to ac quickly in all directions. This means large expenditur but not at haphazard. On the contrary, there must b the most careful study of ways and means. We mus not be too sure of success. There is enormous wealth to draw upon. With gross income-tax income of about 1,000,000,000l., an probably an equal amount not coming under the incom tax, it may be considered that the existing charge fo army and navy, about 60,000,000l., in other words abou 3 per cent. on 2,000,000,000l., is a very small sum fo insurance, and the amount could easily be increased but we have to reflect that England is no longer the only rich country in the world. The United States ha both more population and more wealth; France is no far behind us; while Germany is about equal with France in wealth and has 50 per cent. more people. Our preparations may thus be very easily equalled or exceeded by one of our rivals, quite apart from any superiority in the art of peace preparation which, there is too much reason to believe, Germany possesses. The moral is, therefore, that our financial preparation must be wisely guided, the right things being done without waste and no irrelevant extravagances tolerated. The necessary taxation should also be as scientifically adjusted as may be, should press as little as possible upon the springs of industry, and be as line burdensome as may be to the taxpayer of every class so that we may be ready for a time of great ergency and unavoidably high taxation. These are thereal financial problems to be faced. The defect, hower, of our recent finance, aggravated by the present Podget, is that the problem is not faced, that irrelevant expenditure is incurred, that taxation is not adjusted, and that the industry of the country is crippled. Let us now see how the actual figures stand. The expenditure, according to the Budget estimates, before the changes proposed in the Budget itself, is as follows: In spite, therefore, of all we hear about army and navy and their enormous demands, we find they get little more than a third of the appropriations for expenditure, at a time when the very existence of the State is threatened and the country may therefore shortly be called upon for the most serious sacrifices. It is also to be noted that, while army and navy receive an appropriation of 62,000,000l., this was not a great advance on the total for the previous year, as might be inferred from a hasty reading of Mr Lloyd George's speech. It is an advance of about 3,000,000l.; the actual outlay in the previous year having been, army 26,840,000l., and navy 32,188,000, & total of 59,028,000l. This does not look like sensitivenes to the real position of the country in regard to defence. There are three items at least of the remaining ex penditure against which the charge of irrelevance waste at a time like this may be brought. These a (1) old-age pensions 8,750,000l., as to which there is t need here to say anything except that they have bee introduced with too little consideration of the contrib tory element and perhaps at the wrong time; (2) pay ments to local taxation account 9,483,000l., which are means of ministering to local extravagance, though it a good thing they are now brought to account instead being concealed as formerly; and (3) the charge for th reduction of the debt, about 10,000,000l., included in the total debt charge of 28,000,000l.-an item generally approved of as tending to improve the national credit and prepare for a rainy day, but which is nevertheles subject to the remark that debt-reduction may be an ought to be postponed in times like the present, when th tax system has got out of gear, to the far more importan questions of financial reform and preparation for inevi able conflicts. These three items amount in all to no les a sum than 28,000,000l. If they were properly handle the necessity for new taxes, which is the foundation the present Budget, would disappear, and a balance woul remain for the additional expenditure required for pr serving the national existence. It will be urged perhaps that the items of expenditur questioned are not 'irrelevant,' Old-age pensions, it ma be said, were made part of the law before the prese Budget, and must be provided for along with other Sta obligations. Although this may be an excuse, so far the present Budget is concerned, it is no justification the item in a question of the conduct of the authors the present financial situation. All that this excu amounts to is that the bad finance under this head con menced a year ago instead of in the present year. How ever desirable a proper system of old-age pensions ma be, it is difficult to justify its introduction at a moment when the very existence of the State is in question. Again, it may be said that the item of payments to local taxation account is really of old standing, and could not be altered suddenly, or without much arrangement. Practically it was unchangeable for the purposes of a particular Budget. Here again, however, our complaint is that, in view of the financial situation, steps have not been taken to save for the State the revenue collected by Imperial authorities, and properly of an Imperial character, instead of paying it over to local authorities. The task would have been arduous, but it has been lying before our political parties and their financial advisers for years, and the country suffers through its not having Tired attention. Lastly, as regards debt-reduction, it will he urged that it cannot be described as 'irrelevant' expenditure. contributes to the maintenance of the public credit, which has suffered great depreciation since the South African war. In a short time also there will be a sensible diminution of the permanent charge for the debt, which will be a real gain. The validity of a case for debt-reduction generally may, however, be admitted, without proving the large reduction proposed in the present Balget. There is a time for everything; and what is ere maintained is that the present is a time for seeing, above all, to the defences of the country, and for reducing axation until new indirect taxes can be applied, not for stracting large sums from the saving classes in order maintain the national credit-an object which that proeding, moreover, fails to attain. The fact that so many her countries, including our rivals, take advantage of at little improvement our debt-reduction makes in the arkets for securities should induce us to hold our hands. For instance, the more we reduce our debt, the easier We make it for Germany to raise the loans which it employs in war preparation. Why not use the money Ourselves in preparation instead of helping Germany to the same end? If we had large surpluses applicable to debt-reduction arising out of indirect taxes there might be a case for debt-reduction, even at the present time; but, as things stand, there is nothing to be gained. We maintain, then, that the expenditure specified is Р in fact 'irrelevant.' Under careful financial management the items in question would have been dealt with some how, so as to avert the alleged necessity for new taxes while yet providing adequately for the defences of the nation. Probably with careful management not a few other items would have proved capable of reduction. The Civil Services are not the sink of expenditure they are supposed to be; but, when one thinks of the growth d expenditure on education, without any certainty that th country gets value for its money, and with the knowledg that school pence and other such aids have been droppe to the loss of the education itself, an uncomfortable col. viction of huge waste in our financial arrangements mu be the result. The same is the case with the vast develo ment of inspectorships in recent years. There is neve any attempt in the annual financial statements to surve the subject as a whole, to explain in detail the suppose benefits to the country from each branch of expenditur and to grapple with the question whether the amoun of the outlay would not be more productive to the State if left in the pockets of individuals. It may be repeated, then, that, so far as expenditur is concerned, the financial problem is not faced. It ha not been faced in recent years, and it is not faced now At a time when great necessities are pressing and ever care should be taken to combine efficiency and economy much of our expenditure is merely irrelevant waste. Passing to the matter of Revenue, the question here whether we have the right taxes, namely, those whic press as lightly on the taxpayer as possible and at otherwise levied on sound principles, so that the Stat may be prepared for the crisis. With regard to this poin we get the following figures :— |