But he might just as easily, so far as he himself is concerned, save his million, not by such private "investment" of it, but by handing it over in the form of a loan to the Government to be used for purposes of war. The man in this case would receive reasonable interest on his money, less perhaps, but presumably more secure, than what would accrue to him from a private venture; but he would not, in thus lending his money, be handing over to the Government either a fully-equipped rose-garden, or a flotilla of excursion steamers, or so many little red-brick houses with trim little lawns attached to them. Only battles of flowers are capable of being fought with roses. Military positions in Belgium are not strengthened by building villas at Clapham, nor would our naval power be increased by a squadron of Margate Belles. What a loan would mean in this case as an alternative to a private investment would be that, instead of the construction of an establishment and the payment of wages to men for the purpose of providing either flowers, or new villas, or holiday jaunts, or penny squirts of scent, an establishment would be constructed and manned of a different kind altogether, the output of which would be machine-guns, or great cannon, or shells; and there is no reason in the nature of things why the normal yearly savings of the nation which seven years ago were approaching £350,000,000, might not be entirely devoted to the production of naval and military munitions without any loss to the investors, and with only a minute loss (in the shape of interest) to the country taken as a whole.

In the second place there is, as has been shown, an income of about £240,000,000, which comes into this country as the product of British-owned enterprises abroad. This represents, or represented in the year 1907, British-owned capital in foreign countries to the amount of £3,000,000,000, of which about £1,600,000,000 was owned in British Dependencies; whilst of the remaining £1,400,000,000, nearly £1,200,000,000 was owned in neutral countries (about £9,000,000,000 in America, North and South), and only about one-fifteenth of of the whole in countries now belligerent, whether allied or enemy-that is to say, in Germany, Austria, Turkey, Russia, France, Italy, and Belgium or their colonies. The British Dependencies, therefore, and the neutral countries of the world, contain within their own borders British-owned property to the value of nearly £3,000,000,000, and might, for three years at all events, in the . shape of free imports, lend this country £500,000,000 a year, and yet retain securities of nearly double the value of the debt. If to this sum be added the normal yearly savings of the United Kingdom, the annual total thus provided would approach

£850,000,000. The remainder, if provided by direct taxation, would mean an average of £4 per head of the population, taken from a total average of £48. This, however, is not the whole of the matter. If money for war purposes were for a period of three years obtained in the manner and to the extent just indicated, a new National Debt would be created, amounting to nearly £2,700,000,000, the interest on which payable abroad would amount to about £70,000,000, whilst the home interest would be about £30,000,000. Thus the permanent extra burden which (until the loans should be paid off) a war on the present scale continued for three years would, if thus financed, impose on the United Kingdom, would be not far from £100,000,000.

In the year 1813, the total interest payable on the then National Debt was £30,000,000, the debt itself being £940,000,000, of which £600,000,000 has been inherited from the eighteenth century. If the present war should be continued for another two years, the total debt, according to the foregoing computation, would (the debt existing before the war being included) amount to about £3,200,000,000, and the total interest payable at home and abroad would be perhaps £130,000,000.1 In the year 1812, the then interest on the debt was about £1 15s. per head of the population, out of a total average income of £22. The average interest per head two years hence, should the war be so far protracted under the conditions above supposed, would be about £3 per head out of an average income of £48. Should we assume that £140,000,000 were raised otherwise than by loans of home or foreign produce, the additional burden per head of the population would be about £3. The total average burden would be thus £6 out of £48, leaving a residue of £44, as against £22, which was, according to the most sanguine of credible computations, the total average in the year 1812.

In whatever way we look at the matter, we are brought back to the same conclusion, namely, that if the present war should be protracted to the maximum length for which, according to common computations, either this country or Germany could stand the strain, this country is to-day far better equipped, in point of material resources, for maintaining its present struggle against Germany than it was a hundred years ago for maintaining its struggle against Napoleon.

That, as compared with the wars of the past, all great wars must now, in proportion to their magnitude, be necessarily of

(1) This may be stated in another way. In 1812 the interest on the National Debt was £30,000,000, or about one-thirteenth of a national income of £400,000,000. If, at the close of the present war, the interest on the National Debt should have risen to £130,000,000, this would be only one-sixteenth, or oneseventeenth of a national income of £2,000,000,000, or £2,200,000,000.

short duration, is a point which is insisted on more strongly by nobody than by German writers such as Bernhardi; and we may reasonably say that three years of a war like the present is the modern equivalent for the ten years of the struggle of this country against Napoleon. Had the Napoleonic war and its expenses been compressed into three years, its annual cost would have approached £180,000,000. Had this been raised by direct taxation and home savings, the private income would have been reduced from £22 per head of the population to £12 10s. A similar method of financing the present war would reduce the private income from £48 per head to £24.

Had the Napoleonic War been compressed into a period of three years, the war loans actually raised would have amounted to about £120,000,000 annually, or nearly one-third of the income of the United Kingdom, the private average being reduced from £22 to about £15. Were the present war financed by means of loans in like proportion, one-fourth of the national income would be thus absorbed, the private average being reduced from £48 to £36.

*

By a curious coincidence the foregoing observations were being completed at the moment when the Prime Minister was, in a speech at the Guildhall (June 29th), going over the questions here dealt with, and practically on the same lines. He put the income and the normal savings of this country at figures slightly higher than those here given, the reason being that these last were mainly founded on data provided by statisticians some years ago. According to Mr. Asquith, the average private income to-day would be about £50 per head of the population, and the normal savings would be nearly £9. If these normal savings were applied to the purposes of war, about £600,000,000 a year would have to be raised in addition to them. This would mean an average contribution of about £13. And what would be the ultimate result? An average private income of £50 would be reduced to an average of £28.

Would such a reduction, if fairly and scientifically distributed, represent any unbearable hardship? If the nation could, towards the close of the Napoleonic wars, subsist on £17 per head (Professor Marshall, if I understand a passage in his writings correctly, puts the sum still lower), they could, without making a tragedy of the matter, subsist on £28 now. But the case may be put in a yet more illuminating way. About the year 1880 statisticians were generally agreed that the then income of the country was about £1,300,000,000, the average private income per head being £33, the normal savings £5, and the average actually spent on the daily wants of life being £28. In other

words, if the entire cost of the present war were paid for out of income, the country would be left, so far as its expenditure on necessaries and luxuries were concerned, in exactly the position which it occupied in a time of peace, shortly after the death of the late Lord Beaconsfield.

Mr. Asquith deals with the question of raising money abroad very much as it has been dealt with here. British enterprises abroad, he says, might conceivably be sold and their capital value realised; or, on the security of their capital value, this country might borrow appropriate products of foreign origin in the form of imports. But the selling of enterprises, he says, may be "brushed aside" as impracticable; whilst if borrowing in the shape of imports took place on "any considerable scale," this country would emerge from the war as a debtor nation, "with a huge annual drain on our goods and services in payment of interest and redemption of principal." The question of the ultimate redemption of principal is one of great complexity. The question of interest is simple. If this country could for three years borrow from abroad £600,000,000 annually, the interest payable would in three years' time amount to something between £80,000,000 and £100,000,000 annually. There is one point, however, which the Prime Minister might with advantage have brought forward, and which has already been mentioned here. More than half the British-owned enterprises external to the United Kingdom are situated within the British Empire, and more than half the interest is due to those who in a wider sense are our fellow-countrymen.

With regard to the repayment of the principal, some thinkers would no doubt contend that an Imperial Debt (or a National Debt on a larger scale) might, whatever its drawbacks, have its value as a standing institution. W. H. MALLOCK.

(1) With regard to this matter, the Prime Minister would seem, if his speech were reported correctly, to have been not entirely consistent with himself. He not only "brushed aside" as impracticable the idea of raising money by selling British property abroad, but he also declared the borrowing on the security of such property as practicable only on an "infinitesimal scale." In a subsequent passage, however, he called attention to the fact that, since the beginning of the present year, the excess of imports over exports had increased at such a rate that it would by next December amount to £260,000,000. This can only mean that the United Kingdom has been actually borrowing to that extent from abroad, an extent which is so far from infinitesimal that it amounts to nearly 50 per cent. of the total which has been mentioned in the foregoing pages as being, to say the least of it, not theoretically impossible.

PRIVATE THRIFT AND PUBLIC EXPENDITURE.

"Is Saul also among the prophets?" Some such interrogation must have occurred to many who heard or read the Budget statement of 1915. In that statement the then Chancellor of the Exchequer made an earnest appeal to the nation to practise the long disregarded virtue of thrift. "It is vital," he said, "that the⠀ national savings should be increased." Ten days later, in answer to a particularly foolish speech by Mr. Snowden, Mr. Lloyd George renewed his appeal and reiterated his warning. "The only saving," he said, "that will help the Government substantially is the savings of the people themselves-the saving of individuals, the saving of families, and the saving of the man who had an income in any shape or form. The savings of the people are at the present moment vital to the success of this country, and the man who cuts down unnecessary expenditure is contributing something material and important to the success of the country.'

This war has already taught us many lessons. If we are to win, it will have to teach us many more. But of all the lessons we have got to learn it may be doubted whether there is one which the average Englishman will find so difficult as that which Mr. Lloyd George has been attempting-somewhat tardily, it must be confessed to inculcate. Prophets of thrift have not indeed been lacking. More than a generation has passed since the amiable Mr. Samuel Smiles added a volume on Thrift to those on Self-Help and Character, remarking in his preface that it might have appeared as an introduction rather than an appendix, since "Thrift is the basis of self-help and the foundation of much that is excellent in character." Archdeacon Blackley devoted a large part of an honourable life to preaching on the same text. But these prophets, and others similarly inspired, though not actually stoned, have been politely ignored. For the cause so near their heart it would have been better had they been stoned. As it is, all classes of the community have indulged in wild and everaccelerating extravagance.

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Successive Governments have not been guiltless in this matter. On the contrary, they have led the way down a dangerous declivity. In the middle years of the nineteenth century public economy was not so lightly regarded. In 1816, the first year peace, the expenditure was just over £65,000,000; by 1822 it had (1) Since this paper was written the new War Loan has been announced, and appeals to private and public economy have multiplied a thousand fold.