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the verdict of Mr. Bonar Law be sound, we can no longer rely upon the second of these safeguards. The present head of the Treasury declares that the Treasury is almost powerless in the matter. There remains therefore only the departments: upon the efficiency of their internal organization everything must, according to Mr. Bonar Law, depend.
This opinion, frequently reiterated, gives additional importance to the investigations carried on by the Committee in the great spending departments. The number of those departments has multiplied with bewildering rapidity during the last four years. But, as spenders, two stand out pre-eminent. Of recent expenditure out of the vote of credit about 72 per cent. -excluding advances to the Allies and the Dominions—has been spent by the War Office and the Ministry of Munitions. The Admiralty is also, of course, a large though not an extravagant spender, and many of the new departments have already displayed considerable aptitude in acquiring habits of prodigality. In regard to the latter the Treasury cannot airily divest itself of responsibility. Hastily set up to meet emergencies, staffed largely by men and women inexperienced in public administration, compelled to improvise machinery, possessing no traditions-to whom should they look for guidance and control if not to the Treasury? Has the Treasury afforded it to the utmost of its power? It is difficult after a perusal of these reports to answer that question with a confident affirmative. Take an elementary point-the preparation and presentation of estimates. It is conceded that the fighting departments cannot, in war time, disclose estimates. The new administrative departments could hardly, perhaps, be expected to prepare estimates in the first year or two of their existence. Is there any valid reason why they should not prepare them now? Have they been encouraged by the Treasury to do so? The Committee suggests that they have not. 'We have reason to complain,' said the Chairman of one of the sub-committees, that the Treasury have not 'made this demand for estimates from these departments.' One result of this neglect is an overlapping and reduplication of functions; a second is a marked variation in rates of wages; a third is the lack of co-ordination between department and department in regard to the purchase of materials; and there
It is, however, upon the War Office and the Ministry of Munitions that the fierce light of investigation is most persistently turned in these reports. On the whole the War Office emerges creditably from the ordeal. That in the early stages of the war there was an enormous amount of waste and extravagance is true; but the vast scale of improvisation probably rendered it inevitable; and it is clear that there has been steady and substantial improvement as the months and years have gone by. There is, as the Committee have shown in detail, room for more; but there is reason to believe that the very able administrators now responsible, within the War Office, for finance, purchases, and contracts are fully alive to the defects of the original system, and are amending them as rapidly as circumstances permit.
Nor has there been any disposition either to resent or neglect the large number of detailed recommendations made by the Committee. In illustration, it may be mentioned that strict orders have now been issued as to the conservation of arms, ammunition, and equipment; that between January 1st and October 31st, 1917, no less than 285,000 tons of salvage were shipped from France to England, and that from waste fats collected from army camps alone there have been produced:
(1) Sufficient tallow to provide soap for the entire needs of the army, navy, and other government departments with a surplus for public use producing an actual revenue of about £960,000 per annum, and
(2) 1,800 tons of glycerine, sufficient to provide, at onefifth of the ordinary cost, propellant for 18 million 18 pr. shells.
Results hardly less striking have been obtained by the collection of woollen rags, cuttings from cotton textiles, and condemned boots. These things may seem to savour of those 'candle-ends and cheese-parings' which Mr. Gladstone (addressing be it noted a Scottish audience) once declared it to be the primary duty of a Chancellor of the Exchequer to save; but the results obtained have not only more than justified the care expended, but have helped to point a homely though timely moral. It is this: that if you look after the pennies the pounds will look after themselves; that, as Mr. Gladstone and the mid-Victorians understood, it is only by meticulous scrutiny into the details of expenditure that large
public economies will be effected. Shall we ever, after the present orgy of extravagance, recover the Victorian spirit of economy? The answer must in any case be doubtful : but what is not doubtful is that it will never be recovered until the responsibility for policy is once more in the hands of those who feel the pressure of direct taxation, or conversely, till the payment of direct taxes is co-extensive with the electorate. The Admiralty, apart from the relatively modest scale of its expenditure, calls for even less comment than the War Office. But the picture presented in these reports of the Ministry of Munitions is painted in very different colours. That Ministry is to-day probably the largest spending department in the world. Nowhere, therefore, ought the financial arrangements be more scientific. Nowhere, as a fact, would they seem to have been more haphazard. Be it admitted that much is to be forgiven to a new department, hastily called into being to meet a grave national emergency; be it admitted that the first duty of the department was to obtain delivery of the goods, regardless of cost, and that in the fulfilment of that duty a remarkable measure of success has been attained; but, making every acknowledgment and every allowance, the indictment preferred by the Committee against the methods of the Ministry is unspeakably grave. Nor has the Munitions Ministry displayed the same amenability to honest criticism as other less seriously impugned departments. Too often do we find in its official replies under the head of 'action taken 'the stereotyped phrase: No fresh instructions appear to be required.' That is not the opinion of the Committee, nor will it, we suspect, be the verdict of the taxpayers. There is not, for example, a business man in the country who has not felt the repercussion of the suicidal concession of the 12 per cent. bonus on wages.
This point, at least, has not escaped attention. In their second report (par. 16), the Committee draw attention to the appalling fact that an all-round increase of 10 per cent. in wages and in the cost of commodities purchased at home now involves an increase of about £130,000,000 a year in national expenditure. What degree of ultimate responsibility attaches to the expansion of credits, to the undue reliance upon loans, to the too tardy imposition of increased taxationthese are questions of the utmost nicety and withal very
highly controversial. It is, however, not open to doubt that we have become involved in a vicious circle. Higher wages mean higher prices; a rise in prices appears on the one hand to justify demands for an increase in wages and on the other certainly involves a larger demand for currency'; larger supplies of currency, unless accompanied by a proportionate increase in the supply of commodities, unquestionably tend to a further inflation of prices; and so on da capo. The Committee decline the attempt to determine the order of importance of these various factors; and wisely. Each factor in the progression is in part cause and in part effect. But whatever the order and whatever the relative importance, the results to the national exchequer and to the taxpayer who fills it are disastrous.
The sixth report, which was presented to Parliament so lately as May 15th, is certainly not inferior in interest to its predecessors, a fact which suggests that there are probably vast regions of governmental extravagance and ineptitude still unexplored. This report focuses the attention of Parliament and the public upon two striking illustrations of wasteful-and in one case of pernicious-expenditure. The one refers to the decision to establish a school of aerial gunnery at Loch Doon in Ayrshire; the other and worse case is the subsidy to the bakers. For the selection of Loch Doon as a site for a school of aerial gunnery there was, and perhaps is, something to be said. Admittedly the school was badly wanted, and it was not easy to find a suitable site. After an expenditure of at least £500,000 and of an immense amount of skilled labour, the project had to be abandoned. If, as seems probable, the site proved to be an impossible one, the Air Board is to be congratulated upon having had the courage to acknowledge a mistake and cut a loss. But no one will hesitate to endorse the comment of the Committee that Loch Doon will be remembered as the scene of one of the most striking instances of wasted expenditure that our records can show.'
The waste thus reprobated pales, however, into insignificance as compared with that involved in the subsidizing of the loaf. A more conspicuous instance of pernicious panic legislation, or rather administration, even this war has not, thus far, afforded. It is worth while, therefore, to recall the circumstances. In
the summer of 1917 the Government were somewhat seriously alarmed by the multiplying symptoms of industrial unrest. The spectre of the Russian revolution had not yet been laid at Brest-Litovsk, and the English Bolshevists were still talking loud. Accordingly a number of commissions were hastily appointed to investigate the causes of unrest and were bidden, in equally hot haste, to report. They did so, and most, if not all, the reports concurred in the conclusion that one of the most serious causes of unrest was to be found in the upward trend of the prices of the necessaries of life. As the unrest was mainly discovered among the best paid classes of labour, while the hardships referred to affected mainly the worst paid labourers, the accuracy of the conclusion is open to question. But the Government decided, again in hot haste, that whatever the cost to the Exchequer the price of the loaf must not exceed 9d. The orthodox' economists made their protest against this fatuous decision, only to be brushed aside by the 'practical' politicians and derided by the demagogues. But the report of the Committee proves conclusively that the 'doctrinaires' were right and the 'practical' men were wrong.
What has happened? Precisely that which a moment's reflection and a cursory investigation would have warned the Government to anticipate. In the price of bread, as of other commodities, there always has been and is a considerable amount of local variation. Imperfect means of communication; lack of facilities for distribution; varying degrees of efficiency among bakers; the provision or lack of up-to-date machinery all these and other elements enter into the price of the loaf when sold to the consumer. Not even a Government subsidy-calculated at a flat rate for the whole countrycan eliminate all such variations; and a rate calculated to give a reasonable profit to the less efficient has represented an enormous and unjustifiable bonus to the more efficient.
The facts, as elicited and set forth by the Select Committee, deserve close scrutiny, and will repay the attention of every taxpayer in Great Britain. Acting on the instructions of the Government the millers have, for the last nine months, been compelled to supply the bakers with flour at 43s. 9d. per sack. This sum was fixed on the assumptions that the cost of baking (allowing for reasonable profits to the baker) is 23s. per sack, and that the 4-lb. loaf is sold to the consumer at 9d. The