the United States; and it is not yet clear that the New York money market is in a position to absorb securities on a sufficiently large scale. The final method is the raising of a loan in New York. The great objection to this is its extreme costliness. Money is still as cheap in London as it is in New York; and it is difficult to see how we can raise a great loan there upon terms which will not react unfavourably upon British credit at home. It should be recognised as a patriotic duty by all classes to limit consumption, and particularly the consumption of foreign manufactures and produce, to the utmost extent possible.

The war has already exercised a profound influence upon Local Government. The growth of local expenditure was one of the most alarming features of national finance. In 1897-8 the amount raised by rates was 44,534,000l.; in 1911-12 it was 76,655,0007. The total indebtedness of Local Authorities of the United Kingdom in 1887 was 227,405,000l., or 6.217. per head of the population; in 1911-12 it was 629,635,1607., or 14.027. per head of the population. When Mr Lloyd George introduced his first Budget of 1914, he told the House of Commons that the Government had come to the conclusion that further aid from the Exchequer was inevitable if the municipalities were to be saved from bankruptcy; and the Finance Bill of 1914 contained in legislative form the proposals of the Government for giving this aid. The effect of these proposals would have been to secure each year from the Exchequer a total sum of about 38,000,000Z. in aid of the local expenditure of the United Kingdom, as compared with grants at the rate of about 28,000,000l. per annum. The war broke out, however, before legislative effect had been given to these proposals; and the matter has been deferred for an indefinite period.

The war has not only deprived the Local Authorities of the promised relief from Imperial taxation, but it has rendered the financing of local loans and the administration of local finance generally very difficult. It is not yet clear that Local Authorities, particularly the Poor Law and the Educational Authorities, have realised the fundamental change that has taken place in their financial position and the pressing necessity that exists for retrenchment and economy. It is essential that public

opinion should undergo complete transformation before this can be effected. The causes of the growth of local expenditure have been (1) the continuous enlargement by Parliament of the area of local administrative activity, (2) the higher ideals which have arisen in regard to local government, (3) the increase of population, and (4) the demand of the people for a greater share of what have come to be regarded as the necessaries of life. The public must realise that the era of extravagance has passed away, and that for many years to come a policy of the strictest economy must characterise the administration of the local as well as the national government of this country.

The Napoleonic wars added over 600,000,000l. to our national debt, which in 1816 amounted to 900,436,000l. This vast burden of debt, together with the great losses incurred during the war, exercised a profound influence upon the national policy; and for nearly seventy years after the conclusion of peace the national finances were administered in a spirit of strict economy. In the late eighties, however, Parliament appears to have taken the view that the losses incurred at the beginning of the century had been made good, and that there was no necessity to continue to exercise the strict economy which had hitherto characterised the administration of the national finances. Between 1889 and 1911, that is to say in twenty-two years, the national expenditure was nearly doubled. (The expenditure for the year ending March 31, 1889, was 87,073,8721.; that for the year ending March 31, 1911, amounted to 171,996,000.) Mr Lloyd George then became Chancellor of the Exchequer ; and a further wave of extravagance swept over the House of Commons, with the result that the Budget for 1914-15 provided for a total outlay of 205,985,0007.

Before the war, the National Debt amounted to 706,000,000l. On March 31, 1915, it reached 1,165,802,000l. ; and, if the war continues until March 31, 1916, it will probably exceed 2,100,000,000l. The service of the Debt will then call for a further 55,000,000l. per annum. Pensions and allowances and further expenditure on armaments will probably require another 50,000,000Z. It would therefore be prudent to anticipate that the war will result in a permanent addition to the national expenditure of at least 100,000,000l. per annum. That

is to say, the total national expenditure will be running at the rate of 300,000,000l. as compared with 200,000,000Z. per annum before the war. We are quite rich enough to overcome the financial disturbance created by the war without crippling our economic development if we organise our finances and conserve our resources, but it is imperative that public opinion should become alive to the necessity for economy. It will, in all probability, be found necessary to broaden the basis of taxation, to adopt a tariff for revenue purposes, and to lower the limit of liability to Income Tax, say, to incomes of 1007., of course on a graduated scale. If some such measures are taken, public opinion, operating through Parliament, will be able to bring the required pressure to bear upon the spending departments of the Government; we shall be in a position to discharge our great financial obligations to our Allies; and the great fabric of British credit built up by the sacrifice and self-denial of our forefathers during the past century will be preserved for the benefit of future generations.

EDGAR CRAMMOND.

Art. 13.-WAR-ZONES, BLOCKADE, CONTRABAND, AND RIGHT OF SEARCH.*

WHEN a war is carried on by sea, neutral states must be affected by it. Their ships suffer, without any claim to redress, a curtailment of the activities and immunities which are within their right in time of peace. Experience, further, shows that belligerents tend to widen the range of these encroachments on neutral interests. In considering some of the manifestations of this tendency in the present war, we open one of the most astounding pages in the history of public law.

Mines and Mine-areas.-The simplest case in which war diminishes the freedom or safety of a neutral ship is where this is due to a naval battle. Thus it is said that a Norwegian ship was hit during the action off Heligoland on Aug. 28, 1914. Equal rights are here in collision-the right of an innocent neutral to pass without hindrance over the high seas, and the right of the belligerents to fight each other there. In the compromise which ensues upon this collision, the right which may be described as abnormal must not be allowed to impinge more than is necessary upon the right which may be described as normal; that is, the neutral ship may be required to choose another route, but it may not be subjected to a hurt which it has no chance of avoiding. If the Norwegian ship above-mentioned had no reasonable opportunity of escaping the risk of hurt, it is surely entitled to obtain redress from the combatant which did the hurt; otherwise the right of the belligerent would be exalted above that of the neutral.

This principle, thus derived from the simplest case, will be of use to us when we advance a stage and think not of a single battle but of naval operations spread over a large tract both of space and of time. The modern use of mines and wireless telegraphy makes it possible to form on the high sea a war-zone which is ampler in extent than the scene of a battle as fought in the days of the sailing ship, and in which the claim to neutral forbearance is of correspondingly longer continuance.

This article is in continuation of that on Neutrality, etc., in the April number of this Review.

Into this area, if mined, the neutral ship will enter at its peril; and, even if it be not mined, the neutral ship which enters it must abstain from acts such as the despatch of wireless messages which might be injurious to the belligerent. This interference with the neutral is, however, only permissible subject to two conditions: (1) the neutral must not be exposed to risks which he has no reasonable opportunity of avoiding-this means that the position of anchored mines must be notified to the neutral, and that unanchored mines may not be used; (2) the area mined must not be such as wholly to prevent the neutral's access to any port to which he may lawfully go; otherwise it would be a cancellation of his right rather than a compromise.

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The Hague Conference of 1907 discussed the subject of submarine mines, but could not arrive at any agreement of importance. The only restraints agreed to were the following. Mines must be so constructed as to become harmless, if unanchored, one hour after those who laid them have lost control, and, if anchored, as soon as they have broken loose from their moorings; and when anchored mines are laid, 'every possible precaution must be taken for the security of peaceful navigation,' the danger-zone being notified 'as soon military exigencies permit.' The present war has confirmed all that was said at the Conference by Sir E. Satow on the perilous latitude allowed to belligerents under the Convention. It had hardly begun before the German mine-layer was at work in the North Sea, no notice being given by Germany of the areas thus turned into death-traps for friend and foe alike. Contrast the notification given by the British Admiralty on Oct. 2, when announcing that it was about to follow the German policy of mine-laying in the open sea; the Proclamation indicated the danger-zone (it was off the N. Foreland) by latitude and longitude.

War-Zones in the High Seas.-Germany gave no notification as to the position of the mine-field created by

* We have the word of Sir E. Grey that no mines had been laid by the British in the high seas at this time, and that none were laid by them for a long time afterwards. See, e.g., Memorandum to the U.S. Government in Times,' Feb. 20, 1915.