1916

schools were established everywhere. The Sudan entered upon a career of peace, prosperity, and justice which it had never before known in its history-a period which may justly be compared to the corresponding period in the history of the Philippine Islands, which, thanks to our taking possession of them, have for eighteen years enjoyed a degree of prosperity, progress, mental and physical freedom, and general well-being such as they had never even approached in all their previous history, and such as they could not in the smallest degree have attained save by our aid and supervision.

Kitchener and Wingate did in the Sudan exactly what Admiral Dewey, GovernorsGeneral Taft, Wright, Smith, Forbes, and

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their associates, and Generals Wood, Bell, Funston, Barry, and others like them, did for the Philippines. In each case the gain was immeasurable for the natives themselves, and was also large from the standpoint of humanity as a whole.

Taken as a whole, nothing has meant more for humanity than this work of spreading civilization over the world's waste spaces, and as a whole it has reflected the highest credit on the various nations engaged in the task. The death of Lord Kitchener, who has been so prominent in this work, illustrates in striking fashion what a lamentable and evil thing it is that these great civilized nations should now be tearing out one another's lives.

T

HROUGH the courtesy of the Speaker, I sat in the front row of the Distinguished Strangers' Gallery yesterday afternoon [April 4] and for more. than an hour listened to Mr. McKenna's speech on the Budget.

The speech was not intended for home consumption by constituents or newspapers one thousand miles or more away, but was addressed to the audience surrounding the speaker, in a comparatively small roomwhich is the House of Commons. The audience was very keen to hear what the speaker had to say, and the speaker was equally keen to gain the attention and sympathy of his audience; and he promptly did both. Within ten minutes from the time he rose every bench was crowded-about four hundred thus gaining seats. Many were standing at the gangway, and nearly a hundred Members were in the Members' Gallery. The Peers' Gallery was crowded. The Ambassadors' Gallery was empty. The Ladies' Gallery, the Strangers' Gallery, and the Public Gallery were completely filled.

It seemed to me, and it was, a directors' meeting of a colossal corporation, at which the officer corresponding to the vice-president in charge of finances was telling the directors

how the corporation stood financially, what it had done during the past year, and what it expected to do during the next year.

There was no attempt at oratory, but just a plain business discussion. The speaker never lacked for a word, had none of the hesitation so frequent among speakers in the House of Commons; he had his subject thoroughly in hand, and he made a luminous exposition of it. Within a few minutes after he began he and his audience were in complete accord.

There were a good many "Oh ! oh! oh's !" when he told them that he proposed an income tax of twenty-five per cent, a tax on railway tickets, and a tax on matches; but they were not disagreeable "Oh's !" and there was much laughter and good-natured chaff when he told them about his proposed tax on mineral waters (soft drinks). There were many approving "Hear, hear's !" when he proposed a tax on cinemas (moving-picture performances), which he expected to yield $25,000,000.

The House gave him its closest attention. There was no talking or shuffling of feet or moving about; and except at the moments of laughter, approval, good-natured chaff, and occasional utterances of doubt expressed

And the net debt of Great Britain on March 31, 1917, will be $13,282,000,000 This is about twelve per cent of the national wealth of the United Kingdom and its dominions and colonies; about equal to their total income for six years, and to their savings available for investment for thirteen years. Only three per cent of the debt is held abroad, and the amount so held is less than half of one per cent of the total wealth.

But, while the debt will have increased about fourfold during the war if it lasts another year, the revenue derived from taxation has also correspondingly increased:

In 1913-14 the revenue was...... $991,215,000 In 1914-15

In 1915-16

In 1916-17 it is estimated at.

1,351,660,000 1,683,835,000 2,545,000,000

The increase in taxes for the coming year, as compared with the year just ended, is $861,000,000—almost as great as the entire taxation three years ago. Well may Mr. McKenna point out with justifiable pride that the increased revenue from taxation in the coming year, as compared with the year before the war, will be $1,554,000,000, while the poor German Chancellor, Dr. Helfferich, can find only an extra $120,000,000-about one-twelfth of the increased revenue of Great Britain and even that is doubtful.

It will be noticed that the revenue for 1916-17 exceeds the revenue for 1913-14 by $1,554,000,000. It is interesting to note how these increased taxes have been raised. It is shown in the following statement. The figures for 1913-14 are not available as I write, but the official figures for the three subsequent years as given in the speech of the Chancellor of the Exchequer are before me:

Total........ $1,133,470,000 $1,683,835,000 $2,545,000,000

These figures show that the increased taxation comes from three principal sources: the income tax, which is more than four times what it was before the war; the excess profits duty, which, although levied last year, has not as yet become payable to any considerable extent, and is thus practically a new source of revenue for 1916-17, and from which nearly one-half of the increase of the present year, as compared with the past year, was derived; and customs and excise, which includes duties levied on imports and practically all internal revenue. The excess profits duty was raised from 50 per cent to 60 per cent, and, as this has to be added to the income tax, the result is that of every $100 made in war profits $77 goes to the Government and only $23 is retained by the owner.

In foods the duty on sugar was raised one cent per pound, and it is estimated that this will bring in $35,000,000. On cocoa the duty was increased from three cents to twelve cents per pound, and on coffee and chicory from six cents to twelve cents per pound, these two items being relied upon to produce about $10,000,000 of increase. On motor cars the tax is doubled up to 16 horse-power, and trebled above that, so that a 60 horse-power car will have to pay $630 a year. The total revenue from motor cars and motor cycles is estimated at about $4,000,000, of which one-half is increase. As the streets of London are filled with placards asking people to economize in their daily expenses, and particularly to stop using motor cars, the gasoline for which must all

come from abroad, thus injuriously affecting the foreign exchange situation, it would seem probable that this tax is levied more in the hope of prohibiting the use of motors than of providing any considerable revenue.

The entirely new taxes are on places of amusement, railway tickets, matches, and mineral waters. A tax is to be levied varying from one-eighth to one-quarter of the price of a theater ticket. Mr. McKenna estimated the revenue from this source at $25,000,000, and, as the average duty is about one-sixth of the tax, this would indicate gross receipts in the moving-picture business of about $150,000,000.

Statistics published in the United States a few months ago indicated gross receipts from "movie" theaters of about $400,000,000, or approximately about $4 per capita. McKenna's figures indicate about $3.50 per capita in the United Kingdom.

On railway tickets all single fares less than 1s. 6d. are not taxed; above that sum the tax begins at two cents, or one-ninth, and rises to six cents on a ticket of twenty-five cents, and two cents for every twenty-five cents additional. Mr. McKenna stated that he proposed this tax with some reluctance. It would produce only $15,000,000 in a total revenue of $2,545,000,000, or about sixtenths of one per cent of the entire revenue. It would seem as if a good deal of a nuisance would thus be created for a very small return. This is almost the only part of the Budget upon which there has been any serious criticism. It is intimated in several of the morning papers that this item may be withdrawn.

A new tax is also proposed on matches, amounting to about eight cents per thousand matches. As Swan Vestas-the smoker's match-are sold at one cent a box containing seventy matches, which would be about fourteen cents per thousand matches, and as the tax is to average eight cents per thousand matches, this tax, which Mr. McKenna said ought "to bring in as much as $10,000,000," is at the rate of nearly 60 per cent. At this point of Mr. McKenna's speech there was good-natured chaff from all over the House about burning his fingers. The tax will bear with great hardship upon poor people, and will probably give rise to a good deal of discussion.

Finally, a tax is proposed of eight cents a gallon "on table waters prepared with sugar or fermented" and six cents a gallon on all

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others. Cider and perry will bear the same charge of eight cents per gallon. Soft drinks are thus expected to contribute $10,000,000 per annum.

The principles underlying the incidence of taxes to provide this phenomenal revenue of more than $2,500,000,000 in the midst of the greatest war of all time are worthy of the most careful study, not only for the United Kingdom, but for us in America; for it is quite among the possibilities that at no distant day we may have to devise a revenue of almost equal magnitude.

In general, it would appear as if, following the trend of legislation in recent years on both sides of the Atlantic, an effort has been made to saddle the expense of the war on the rich or well-to-do and let the laboring man go almost scot-free. The income tax, the estate duties (inheritance tax), the tax on bank checks, negotiable instruments, and other taxes paid by stamps, and the excess profits duty, all fall upon the comparatively wealthy; and of the new taxes those on matches and moving picture performances, sugar, cocoa, and soft drinks, are about all that affect the laboring man; and all of these amount only to about $80,000,000, or a little over three per cent of the total. It so happens that the laboring man is at the present moment the most prosperous person in the United Kingdom. Never before has he received such wages as he receives now. There are placards begging him to invest his money in Government funds, but, instead of doing this, he is rather inclined to squander a good part of what to him is sudden wealth. Whether the pendulum which has been swinging so long in the direction of the laboring man is to take a different direction as a result of this war is a subject much too large to be entered upon here.

How has John Bull taken this stupendous Budget? Like "Tommy" in the trenches, where he calls Ypres "Wy-pers," the big guns of the Germans " Jack Johnsons," and his own particular gun "Mother," and where his elastic spirits and good temper never fail under the most distressing circumstances, so here in the City and in the West End John Bull has taken this Budget, which is the heaviest blow to his pocket he has ever received, as if it were all in the day's work, about what he expected, and something that he will get along with "right-o !"

The Times" is no longer the Thunderer, but it is still a Thunderer, and, at all events, all

the Thunderer that remains under modern conditions; and the comment in the "Times " this morning says editorially that the Budget "can only be regarded with justifiable pride by all who have the maintenance of British credit at heart." In its news columns the headline is "Model Budget Speech," and in his report of the speech the writer says: "The House did not fail to appreciate the significance of Mr. McKenna's closing figures, and they were more enthusiastically applauded than anything else in his speech."

The speech and the comments upon it in different parts of the paper filled more than twelve columns, or the equivalent of two pages. There were arguments as to the wisdom or unwisdom of the tax on railway tickets, on matches, and on some other items, but as to the enormous figures there was no sign of grumbling or criticism of any sort. So with all the other papers, with the exception of the "Morning Post" and the "Daily Telegraph." These are the advocates of the new theory of Protection, which, in their view, ought to supplant the principles of Free Trade, which have been the basis of Great Britain's development for nearly a century; and these papers think that a great opportunity was missed for introducing the protective principle. But even these papers make no criticism of the size of the figures and the amount of money to be raised. The headlines are of the most cheerful character, such as: "John Bull's Purse;" "Well Able to Stand the New Taxes ;" No Serious Criticism of the Budget;" "Cheerful Taxpayers;" "Harder Hit but Still Happy;" "Strength of British Finance," and so on.

Of course there is much serious thinking about the hereafter, when interest and sinking fund, which at the close of the present fiscal year will amount to upward of $700,000,000 per annum, will have to be paid. If this vast amount of money had to come out of the United Kingdom alone, which has no undeveloped resources, it would indeed be a serious matter; but the strength of British finance lies in the dominions and colonies-Canada, Australia, and various parts of Africa, where there is still virgin land capable of supporting at the very least five hundred million people. It is as certain as anything in the future that there can be but one end to this titantic struggle, viz., the complete and overwhelming victory of the Allies. One result of this will be the anni

hilation of the German colonial system; another result will be some form of consolidation or federation of Great Britain and her

great dominions. This will be the great question for Englishmen after the war. It has been under discussion for almost an entire generation, during which the Imperial bond between the British Isles and their dominions in the four quarters of the globe has every year been growing stronger and stronger. The problem is full of extraordinary difficulties, and in time of peace it has been impossible to surmount these difficulties. But the splendid response made by the men of English race in Canada, Australia, and Africa to the mother country in its hour of need has brought about a condition of affectionate sympathy and mutual good will, and has at the same time shown the absolute necessity of some such form of confederation, so that when the war is over these difficulties will no longer be insurmount able. With their hard, practical sense, and the experience of a thousand years in finding practical solutions of difficult political problems, this problem will also be solved.

In a word, this Budget speech reveals the unparalleled financial strength of the "United Kingdom of Great Britain and Ireland, and the British Dominions Beyond the Seas." It is a mistake to suppose, as some bankers do, that wars are decided by financial considerations. Wars are decided by the hard blows struck by soldiers in the field and sailors on the high seas. We won our Revolution, although we had been hopelessly bankrupt for nearly three years before its close. The South continued to fight in the Civil War for nearly two years after it had become bankrupt. Turkey has been virtually bankrupt for nearly a hundred years, and has been making wars, sometimes successful and sometimes unsuccessful, during about one year in four of that period. On the other hand, it is equally a mistake to underestimate the influence of financial solvency upon the issue of a great war. Success in battle, on the land or on the sea, is the element of first importance, but financial credit is a close second. This record-breaking Budget was given forth on the same day that the German Chancellor made his feebly boastful speech in the Reichstag. No unprejudiced person can study. these two documents without reaching the conclusion that in the matter of finances Germany is to Great Britain as a pygmy to a giant.

I

N the Nation-wide discussion about preparedness it seems to be assumed generally that we can guard against foreign aggression by spending a million dollars or so on a well-equipped army and a wellequipped fleet. This is a curious fallacy. The great lesson of the war, the fact that has been writ large across Europe in letters of blood and fire, is that munitions and armaments are merely incidents of preparedness. Preparedness is a far deeper and more complex problem.

An individual in a community infested with gunmen may prepare for eventualities by purchasing a pistol. But a nation in a world of aggressive nations must look to more than its guns.

For the worst that war can bring it must be prepared in its agriculture, in its industries, in its transportation system, in its educational system, in its banking and currency, in the conservation of its natural resources, and, above all, in the conservation of the health and prosperity and happiness of its people. Unless a nation is so prepared it cannot stand the strain of a modern war. If Germany had been prepared with men and guns merely, the European war would not have outlasted the first year. Before the end of that time the representatives of Russia and France and Great Britain would have been dictating their terms in Berlin. In spite of her great armies and her clever generals, in spite of submarines and Zeppelins and 42centimeter guns, Germany, shut in from the world, must have succumbed to the starvation of her industries and her people.

Unquestionably Germany is the arch-exponent of preparedness. Therefore it will be wise for us in this matter to look to and learn from Germany.

Two factors have tended to make Germany great in preparedness. One is the fact that her fundamental law emphasizes the protection and care of the individual, just as our fundamental law emphasizes the protection and care of private property. The other factor is the policy of national cooperation in industry, in agriculture, in everything that tends to promote the general wellbeing. While we have clung tenaciously to a policy of individualism, Germany has pursued a policy of economic co-ordination, welding her industry together in a smoothly

working machine. Colonel Roosevelt's New Nationalism of a few years ago, which was so sternly rejected by our political leaders and our newspapers, merely stated in mild form certain theses of government and economics that have been accepted as truisms in Germany for over forty years.

Our own immigration statistics indicate that a great change has been taking place in Germany in the past few decades. From 1881 to 1890 we got nearly a million and a half immigrants from the German Empire. Up to the time the war began the German immigration dwindled until by 1913 it was less than fifteen thousand, or less than the immigration from Turkey. During the past decade, in fact, the number of persons who have settled permanently in Germany has exceeded the number that left her shores.

The secret of this change has been Germany's radical policy of conserving her workers. The so-called Prussian common law, promulgated by Frederick William in 1794, recognized the right of every subject to work and made it incumbent on the state to protect the poor. Bismarck made this one of the keystones of his internal policy. "Give the workingman work as long as he is healthy," he said; "assure him care when he is sick, insure him maintenance when he is old. . . . A man is entitled to say, 'Give me work,' and the state is bound to give him work." This was in 1884. It is only a few years back that unemployed workers asked a President of the United States what they could do, and his reply was, God knows!"' It is only three years ago that a man in New York City went about asking for work. The authorities gave him, not work, but a year in jail. This disposed of the man temporarily, but not the problem.

The workingman out of a job in Germany can register at the local labor exchange in any town and get work at his trade as soon as a job offers. Usually no fee is charged. The exchanges are run by the municipalities or by co-operative societies, usually with city and state appropriations. The different labor exchanges co-operate throughout the Empire. While the man is waiting for a job the exchange is his club. He can read or play games there free of charge and receive a meal, a drink, and a cigar for a few cents (in Berlin